Air Canada bets on Boeing

EVERETT – The Boeing Co. scored a major order from a predominantly Airbus customer on Monday, announcing it had sold 32 777s and 787s to Air Canada.

The Boeing Co. is likely to announce today that it will build its proposed 787-9, a stretched version of the Dreamliner. Boeing will start building the plane in 2010, with it ready to enter service by 2012. Here’s how it compares with the basic 787-8 version:

Length: 202 feet, 20 feet longer

Passengers: 259, 36 more

Range: 9,545 miles, about 230 miles less

It was a milestone order in several respects. It’s the first announced order for the 787-9, a proposed stretched version of the Dreamliner that before Monday, Boeing hadn’t officially committed to build.

The Air Canada order “does mean we’ve made a decision to make and deliver the 787-9 in 2010,” Boeing spokeswoman Yvonne Leach said.

The deal also is the largest 787 order to date from an established North American airline, plus it’s the first announced order for Boeing’s proposed 777 freighter, and only the third order for its ultra-long-range 777-200LR.

But most importantly, it was Boeing’s first sale to Air Canada since 1989 and a signal that perhaps the company has turned the tide against Airbus, analysts said.

“Airbus aircraft is what they’ve been buying recently,” said Paul Nisbet with JSA Research. Given that, Monday’s order “certainly is a resounding turnaround,” he said.

“It’s significant way beyond the size of the order,” said Teal Group analyst Richard Aboulafia. “This is another Airbus customer converted to Boeing because of the 787.

“This is a major counter-attack,” he added.

Air Canada now operates a predominately Airbus fleet. Of the 171 large jets it flies (planes with more than 100 seats) only 43 were built by Boeing – all of them 767s the airline ordered in the 1980s.

The deal is also significant for Air Canada, which just emerged from bankruptcy in October.

The new planes will “move Air Canada into a clear leadership position among North American international carriers,” said Robert Milton, the chairman, president and chief executive of ACE Aviation Holdings, Air Canada’s parent company. “No other carrier in North America is in a position to order the latest and most capable variants of the 777 – the 200LR and the 300ER – and also the 787.”

Under the deal announced Monday, Air Canada will take 18 777s and 14 787s.

The 777s are a mix of Boeing’s newest extended-range 777-300ER and 777-200LR passenger planes, plus two 777 freighters. Deliveries will start next year. The deal, which should be finalized by mid-year, also gives Air Canada options on 18 more 777s.

The order is the first announced order for the 777 freighter, and an indication that Boeing is moving closer toward committing to build it.

Boeing has yet to decide on that, spokesman Marc Birtel noted. “We’re still currently in discussions with a number of potential customers.”

Air Canada also will take 14 787s, a mix of 223-seat 787-8s and 259-seat 787-9s. Deliveries will start in 2010, and the airline is taking options on as many as 46 additional Dreamliners, which would make Air Canada the largest 787 operator, if it takes all 60.

The firm orders are worth about $6 billion at list prices, although Milton signaled that his airline got a better price. “I am confident no one has ever done better on a deal,” he said at a press conference Monday.

The airline plans to use the planes on flights between Canada and Asia. It also plans to boost its international air cargo service, and the new jets will allow it to eliminate stopovers in Alaska.

Milton said the new planes will replace aging 767s. The money the airline saves with the efficient new planes will more than offset the cost of acquiring them, he said. “We have estimated the fuel burn and maintenance cost savings alone on the 787 to be 30 percent, versus the 767s they replace.”

The only downside to the deal, Milton said, is that Boeing cannot deliver the 787s any sooner.

But Boeing Commercial Airplanes chief Alan Mulally said that his company has essentially sold out all the 787s it can build through 2010.

Air Canada said the bulk of the financing would be guaranteed by the U.S. Export Import Bank.

Also Monday, Boeing announced that Copa Airlines of Panama had placed an order for five 737s, with the option to take as many as 10 more. The firm orders would be worth about $250 million. The airline operates a fleet of 21 737-700s and 737-800s.

The Associated Press contributed to this report.

Announced deals

China60

All Nippon Airways50

Japan Airlines30

Primaris Airlines20

Air Canada14

Continental Airlines10

Korean Air 10

First Choice Airways 6

Ethiopian Airlines 5

Blue Panorama 4