China gives 7E7 a boost

The Boeing Co. will pick up a key order today – perhaps the key order – for its new 7E7 jetliner when Chinese government officials sign a deal for 60 or more of the jets.

Analysts said the deal, coming in a hotly contested campaign against a major push by Airbus, is bigger than its $7 billion-plus price tag.

“This is a strong endorsement of Boeing’s view of the market from a key customer,” said Richard Aboulafia, an analyst with the Teal Group in Virginia.

According to news reports in China, the government is interested in buying 60 Dreamliners for its six airlines – Air China, China Eastern, China Southern, Hainan, Shanghai and Xiamen.

“I’ve seen numbers from 60 to 80,” said Paul Nisbet, with JSA Research in Rhode Island.

All Chinese airliner orders are approved by the government and made through China Aviation Supply Co.

The order, which would be the largest Dreamliner deal to date, would be worth $7.2 billion at list prices, although it’s highly likely the Chinese received a discount. It would give Boeing 186 announced 7E7 orders. Of those, final contracts have been signed for 56.

Boeing spokesman Todd Blecher confirmed that the Chinese are ordering 7E7s, but said it was up to China to announce the details. He called the deal a “substantial agreement.”

Boeing has invited VIPs to the midday signing ceremony at the Commerce Department in Washington, D.C. Chinese Ambassador Yang Jiechi and Boeing Commercial Airplanes chief Alan Mulally will be among the signers.

In April, Boeing predicted it would sell 200 7E7s by the end of December. It missed that target, but analysts said it didn’t matter, so long as major new orders came early in 2005.

What does matter is the source of the orders. Boeing’s two biggest 7E7 deals so far have come from Japanese airlines, All Nippon Airways, which placed the 50-jet launch order, and Japan Airlines, which ordered 30 jets.

But those were almost expected, since Japan is widely viewed as a “Boeing country.”

On the other hand, China is “certainly an area where Airbus is doing their best to thwart the order with their A350,” Nisbet said.

Given that Boeing had to counter the push from Airbus, Friday’s order from China is pivotal, Nisbet said. “Yes, this is the one, if it’s indeed close to the 60 number,” he said.

The 7E7 order also “stands in stark contrast to the China decision on the A380,” Aboulafia said.

Chinese officials are expected to be in Paris Friday to sign a deal for five A380s superjumbos from Airbus.

Airbus has pushed hard for the A380 order, pointing out the symbolic value of having Chinese airlines fly the world’s largest jet in time for the 2008 Beijing Olympics. But “after all this talk … Boeing walks straight up to the plate and gets 12 times as many,” Aboulafia said. “You won’t get a better endorsement.”

That endorsement could influence other potential 7E7 buyers, including Qatar Airways. The airline’s chief said last week, during ceremonies in France to celebrate the Airbus A380 rollout, that his airline hoped to wrap up a deal for as many as 60 7E7s by the Paris Air Show in June.

Jet-leasing company International Lease Finance Corp. also is in talks with Boeing for 7E7s.

In other news on Thursday, Boeing confirmed that Thai International Airways was the customer that had ordered six 777-200ER jets in late December. The sale was listed in Boeing’s 2004 order totals as one to an unidentified customer.

The deal would be worth $1.1 billion at list prices, but again, it’s likely the airline received a discount. The planes will be delivered between August 2006 and October 2007.

Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.