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Wednesday, December 3, 2014

Boeing 777X to Garner Demand in Middle East, Asia Pacific

Woodrow Bellamy III

[Avionics Today 12-3-2014] At the 2013 Dubai Airshow Boeing launched the latest variant of its 777 family, the 777X, six years ahead of its projected entry into service. Since then, the wide-body jet has attracted a healthy demand, with 300 orders and commitments from six different customers; and Boeing indicates they will achieve firm configuration on the 777X in 2015. But the aircraft manufacturer still faces one challenge: How to keep demand going for the current generation 777 while its customers know a newer and more efficient model is coming right behind it.
Computer rendering of the Boeing 777-9X. Photo: Boeing.
"The bigger issue — and probably the far more challenging issue — is bridging that gap with the current 777," Richard Aboulafia, vice president of analysis at the Teal Group, told Avionics Magazine
Airlines looking to replace the existing wide-body aircraft with newer and more efficient models within the next several years have two choices when considering Boeing's offerings. They can either purchase the latest 777 model now (the 777-300ER) and likely take the first delivery of it in 2017 or 2018; or they can order the 777X and wait until at least 2020 to receive it. 
"They’re running at record [production] rates on the current 777, they’ve already told people there is a new model coming. Keeping at that record rate, how do you keep selling current generation 777s to bridge that gap? And my guess is, if you don’t, you have to watch those output rates fall," said Aboulafia.
Delta Air Lines recently announced an order that illustrates the challenge Boeing is seeing with its 777X not coming on line until 2020. The Atlanta, Ga.-based carrier placed an order in November for 50 Airbus twin-aisle jets, split between the A350 and A330neo models, to replace its aging fleet of Boeing 747s and 767-300s. Both of these aircraft are entering service prior to the 777X, with the re-engined A330-900neo scheduled for introduction in the fourth quarter of 2017. 
Despite the time gap, Boeing is confident it can overcome this challenge, which is mainly a production schedule issue. The manufacturer wants to effectively bridge the legacy 777 production rates to the introduction of the 777X in 2020. Right now Boeing is producing 100 classic 777s per year, a record for that aircraft family.  
Boeing president and COO Dennis Muilenburg discussed demand for the legacy 777 during the annual Credit Suisse Global Industrials Conference in New York this week. 
"We’re very confident we’ll be able to fill that bridge. We’re filling slots in 2017 and 2018 now. The 300ER is unique in the market right now. The installed base is 1,200 aircraft [of which] 40 percent are more than 10 years old," Muilenburg said during a question-and-answer session at the conference.
Furthermore, Boeing has already captured demand for the 777X in the Middle East and Asia, two regions of the world where long-range wide-body jets are in high demand. All of the customers that have ordered the 777X so far — including All Nippon Airways, Emirates, Qatar, Etihad and Cathay Pacific — are based either in the Middle East or the Asia Pacific markets, with the exception of one, Lufthansa, which is based in Germany. 

"History shows us that the guy with the biggest twin jet wins. People want something that has two engines and as many seats as possible. The A350-1000 is 350 seats, 777-9X is 407. That should leave unbelievably good economics on the latter," said Aboulafia. "People like range, but its really Asian and Middle East airlines that place a big premium on range. Eight thousand to 8,500 nautical miles makes the 777X a range machine. That makes it a lot more attractive to Asian and Middle East carriers." 

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