The Boeing Co. landed a multibillion-dollar order for long-range jets from a Hong Kong airline on Thursday, in what could be the first of three major deals that could fall like dominoes across the Asia-Pacific region.
The deal was a blow to Airbus, which is struggling to find buyers for its long-range jets, analyst Richard Aboulafia of the Teal Group said. “The A340 is certainly in trouble, and that contributes to the snowball effect.”
Cathay Pacific Airlines said Thursday it plans to order 12 extended-range 777-300ERs from Boeing while leasing another four from International Lease Finance Corp.
The airline said it also will add three Airbus A330-300 jets, which it will lease.
The airline said it plans to take delivery of the planes from 2007 to 2010. International Lease Finance already has ordered the four planes it will lease to Cathay Pacific, a Boeing spokesman said, but the deal represents more than $2.7 billion worth of new business for Boeing at list prices – although analysts say airlines have been negotiating discounts of about 25 percent.
The deal also gives the airline the option of adding 20 more planes to the order in the future.
The deal is not yet final, but the announcement came as welcome news at Boeing.
“This is one of the world’s best airlines choosing one of the world’s best planes,” Boeing Commercial Airplanes chief Alan Mulally said in a statement. He called Cathay Pacific’s decision “especially rewarding,” given the airline’s reputation for profitability and passenger service.
And it could be the first of several big orders to come.
Next week, Australian airline Qantas is expected to announce its plans to order as many as 100 long-range jets worth more than $15 billion at list prices. Singapore Airlines also is in the market, looking to buy as many as 60 long-range jets.
Boeing is expected to grab a majority of those orders, and could sweep them all, analysts said.
“I just have this feeling, when it comes to Singapore and Qantas, Boeing is probably going to wind up with the majority of the wins,” Leeham Group analyst Scott Hamilton said.
Both airlines are in the market for midsized, long-range jets, and in those categories, Boeing planes are simply better than Airbus planes, Aboulafia said. “It’s the result of a badly flawed product strategy.”
The Airbus A340, which competes with Boeing’s 777, is “a legacy dinosaur that didn’t go too well,” he said. “If it’s 777 vs. A340, (Boeing) is pretty well unstoppable.”
Hamilton agreed, saying that high fuel prices make Boeing’s twin-engine 777 jets more attractive to airlines than the four-engine A340. “Airbus has a real tough sell with the four-engine airplane,” he said.
The Airbus A350 competes better with Boeing’s 787, both analysts agreed, but “on balance, the 787 is the better airplane,” Hamilton said. The 787 is lighter, brighter and all new, he said. “Those things count.”
On Thursday, The Australian, Australia’s national newspaper, reported that Boeing appeared likely to win the Qantas bid next week.
Boeing’s 777-200LR Worldliner “appears to be a clear winner,” the paper reported, citing unnamed Qantas insiders, and the 787 is a “short nose in front,” compared to the A350.
Qantas particularly likes the longer range of the 787-9, which would allow it to fly “long, thin routes” between Australia and secondary West Coast cities such as San Francisco and Seattle, the paper said.
Reporter Bryan Corliss: 425-339-3454 or corliss@ heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
