Boeing Sees Larger 787 With Chance to Boost Orders by 60%Thomas Black and Mark Barton
Boeing Co. said its stretched 787 Dreamliner promises to match sales of the smallest variant, boosting the plane’s order tally as much as 60 percent, as it expanded its wide-body lineup to blunt an Airbus SAS challenge.
The 787-10 is in “great demand,” Chief Executive Officer Jim McNerney said in a Bloomberg Television interview today at the Paris Air Show, where United Airlines agreed to buy 20 of the jets and Air Lease Corp. ordered 30.
Building a Dreamliner capable of seating about 330 people is part of Boeing’s strategy to upgrade two aircraft families, along with the 777, to defend its lead over Airbus in sales of the twin-aisle planes used for long-haul flying. The 890 Dreamliner orders before today were split between 535 for the 787-8 and 355 for the bigger 787-9.
“Experience has told us that based on what we see out there today that the -10 could be at least as big as either of the other two,” McNerney said before Chicago-based Boeing formally introduced the new variant.
Boeing also got a boost when Korean Air Lines Co. agreed to buy five more 747-8 Intercontinentals, as the passenger variant of the jumbo jet is known, along with six Boeing 777-300ERs, the planemaker’s largest twin-engine model. The sale, not a firm order, had a list value of $3.6 billion.
The U.S. company is trying to fend off Airbus’s latest foray into the twin-aisle market with different versions of its A350 jet -- the -900, a Dreamliner competitor, and the -1000 that will take on Boeing’s eventual upgrade to the 777. The -900 plane flew for the first time last week.
Airbus parent European Aeronautic Defence & Space Co. holds an advantage in stock returns in 2013. The Toulouse, France-based company’s shares rose 46 percent this year through yesterday, topping Boeing’s 37 percent gain in the same period. Boeing rose 0.4 percent to $103.48 at 12:07 p.m. in New York, while EADS added 0.3 percent to 43.12 euros in Paris.
United, a unit of United Continental Holdings Inc., is converting 10 existing Dreamliner orders into the new 787-10 and buying 10 more planes. The Chicago-based carrier said the deal would make it the so-called launch customer in North America and push its Dreamliner tally to 65 planes.
Air Lease said it would take 30 of the 787-10 variant and three 787-9s. Deliveries for the Los Angeles-based lessor would start in 2019, a year after United starts getting its jets. Commitments for the 787-10 have reached 102, McNerney said during the Air Lease announcement today. At a list price of $290 million a plane, that’s an order value of about $30 billion.
Boeing had received 40 commitments for the 787-10 from Singapore Airlines Ltd. and GE Capital Aviation Services even before the plane became formally available. The 787 is the first jetliner built chiefly of composite plastics, delivering what Boeing says is a 20 percent improvement in fuel economy over comparable twin-engine aircraft.
An upgraded version of Boeing’s 777 will be announced this year, McNerney said. The first variant, the 777-9X, will be followed by the smaller 777-8X with longer range, Boeing has said. With the 787 and 777X models, Boeing will have five twin-engine planes with seating capacity ranging from 210 to more than 400.
“The breadth of that product line will give customers around the world more choice than our competitor will be able to offer,” McNerney said.
Boeing has been marketing the 777X and will get board approval to develop the plane once enough customers commit to it, McNerney said. The 777X will have 11 percent more cabin area than the A350-1000, allowing for 10-seat rows, Boeing said in a presentation today.
“In our kind of game, with the amount of money we spend up front on things, you want to have solid, stable customers at the beginning,” McNerney said. “That’s what we’re hard at work doing right now.”
Sales of the 787-10 may prompt Boeing to boost production again after doubling output to 10 a month by the end of this year from five at the end of 2012, McNerney said.
“That will put pressure on us to think seriously about increasing production rates above the 10 a month, which is already a huge production rate for a wide-body airplane,” McNerney said. “That is a great problem to have.”