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Boeing’s slow-selling 747 buoyed on talks with Emirates

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Bloomberg News
Published:
CHICAGO — Boeing is talking to Emirates, the world's biggest operator of the Airbus A380 superjumbo, about a potential sale of its rival 747-8, providing a boost for the iconic hump-shaped jet whose sales have faltered.
Emirates' need for better fuel burn on its largest jets has opened a window of opportunity for Boeing, which is pitching the airline the passenger version of an updated 747, known as the -8I or Intercontinental, said John Wojick, senior vice president for sales and marketing at the Chicago-based manufacturer's commercial airplane unit.
The talks give Dubai-based Emirates leverage as it pushes Airbus Group to upgrade its A380 with fuel-efficient engines, said Richard Aboulafia, an aerospace analyst at Teal Group. Boeing would gain momentum for a storied jet with few sales prospects aside from replacing the Air Force One fleet, he said.
“It would keep the -8I going through the decade and deliver an unpleasant blow to the A380 that's long overdue,” Aboulafia, a vice-president at the Fairfax, Va.-based consultant, said of a potential Emirates order.
Emirates' possible interest comes as Boeing fights hard to land new customers for the 747-8, even using trade-ins of older models to seal deals. Boeing has landed just 51 orders for the passenger version of the jet, which currently is only operated by Deutsche Lufthansa AG, one of four customers.
Until Emirates surfaced, Boeing's brighter sales prospects included the Pentagon. The U.S. Air Force is planning to upgrade the all-747 Presidential aircraft fleet by 2023 and has also begun studying whether to replace the “Doomsday” fleet, four 747-200 jets hardened against nuclear blasts that provide a mobile military command, Charles Gulick, an Air Force spokesman, said in an e-mail.
Boeing's talks with Emirates are at an early stage, and Wojick didn't say how many aircraft the gulf carrier may want to buy, speaking in an interview in Doha, Qatar, at the annual general meeting of the International Air Transport Association.
“We're talking to anybody who has the size and capacity requirement, and obviously Tim is someone” who fits into that category, said Wojick, referring to Tim Clark, the Emirates president. “We'd love to be able to get the airplane into Emirates.”
Clark said separately that he's focused on his major order for the Boeing 777X, which he announced last year.
Even with 90 superjumbos still to be delivered, Emirates is prepared to buy additional double-decker jumbos should Airbus commit to adding new engines with better fuel efficiency, Emirates Chief Commercial Officer Thierry Antinori said in a May 20 interview.
“Tim Clark has made it clear he'd like to have a re- engined A380,” Airbus Chief Operating Officer John Leahy said in Doha at the meeting. “We take comments from our largest customers seriously but there are no negotiations under way at the present time.”
Boeing already offers some benefits through the 747-8, the latest version of the jet that pioneered long-range travel in the 1970s, Wojick said. The Intercontinental made its commercial debut in 2012, five years after the A380 and consumes less fuel and has lower cash operating costs than its Airbus rival.
“The new engines they're pressing Airbus to put on their plane, we've already got four of them,” Wojick said “We think we have a good solution.”
Aboulafia cautioned against putting too much stock into Emirates' exploration of the 747-8, which is designed to haul 467 passengers to the A380's 525-seat capacity.
“It's really hard to tell what's a general realization that the -8 might be a good plane for them and what might be getting leverage against Airbus to re-engine the A380,” he said.
Air China is set to get its first 747-8 this year and Korean Air Lines will get its first next year. Transaero has also ordered the plane. The 747-8 is also produced as a freighter. Last year Boeing sold a total of 17 of the jumbos, against five cancellations, according to Ascend Worldwide data analyzed by Bloomberg Industries.
Boeing had a backlog of 51 jumbo orders at the end of April, less than three years of production at its current output of 1.5 jets per month, according to data posted on its website. The planemaker aims to maintain production output at 18 jets a year, Wojick said, after cutting 747 program rates twice last year amid waning demand.
Story tags » 747

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