Tuesday, June 18, 2013

Boeing Wins Orders for Stretched 787: WSJ

June 18, 2013, 7:31 a.m. ET 


The Wall Street Journal

LE BOURGET, France—Boeing Co. said Tuesday it had signed up the first five customers for a new stretched version of its 787 Dreamliner, a milestone in a marketing push it hopes will reignite sales of the aircraft after the current version was temporarily grounded this year.

The orders it received for 102 of the enlarged Dreamliners are valued at a total of nearly $30 billion at the plane's list price of $290 million, but the actual value is likely to be smaller because early customers tend to get steep discounts.

The buyers of the new plane, called the 787-10, include Air Lease Corp.,  International Consolidated Airlines Group SA's British Airways unit, General Electric Co.'s aircraft-leasing group Gecas, Singapore Airlines Ltd. and United Continental Holdings Inc.

The 787-10 is designed to compete with the newest plane from Airbus, the A350, which flew for the first time last week. Airbus, a unit of European Aeronautic Defence & Space Co. hopes the A350 will capture a large chunk of the market for long-distance wide-body aircraft. Boeing also aims to launch a new, larger version of its 777 by year's end to fend off Airbus's assault on its most lucrative jets.

The orders unveiled Tuesday prompted Boeing's board to formally approve the launch of the 787-10, allowing the company to commit to contracts and take deposits on the aircraft, as well as to prepare for design work and eventually manufacturing.

Boeing's board gave preliminary approval to the larger plane eight months ago, allowing the company's sales teams to begin negotiations with prospective buyers. The Wall Street Journal reported last week that Boeing would launch the 787-10 this week at the Paris air show.

Steven Udvar-Házy, chief executive of Air Lease, said he was pleased about the formal launch of the stretched Dreamliner, which he said he had been working with Boeing to design for the past 2½ years.

The 787-10, which has about 320 seats, is the third version of the Dreamliner, and is expected to be the last. The jet won't fly as far as the 787-8, the smaller 240-seat version of the jet, or the 787-9, a second version with 270 seats, which Boeing expects to start delivering next year.

The 787-8s, which are already in service, were grounded by global regulators from January through late April after twin incidents in which their lithium-ion batteries caught fire.

Boeing said Tuesday that the 787-10, which it plans to start delivering in 2018, will be as much as 25% more fuel-efficient than older aircraft with a similar range of up to about 7,000 nautical miles, or about 14 hours of flying.

The new orders put further pressure on Boeing to accelerate production of the Dreamliner beyond its current target of 10 jets a month, which it expects to hit at year's end. Boeing has additional factory space in its new North Charleston, S.C., facility to step up production, but such an increase largely depends on its vast supply chain, which has struggled in the past.

Airbus has announced commitments for its A380 and A320 during the air show, but new orders for the long-range A350 haven't materialized. John Leahy, Airbus chief operating officer for customers, has hinted some may be announced at the show.

Mr. Leahy was quick to criticize Boeing's new jet, comparing the 787-10 to another stretched wide-body Boeing developed early in the past decade, which met limited success. Boeing has already received nearly three times as many orders for the 787-10 as it did for the jet to which Mr. Leahy referred.

Air Lease said it would order 33 787s altogether, including 30 787-10s. Gecas is ordering 10 of the stretched version. United Airlines parent United Continental is ordering 10 new 787-10s and converting an order for 10 of the smaller versions of the plane into an order for the bigger aircraft. British Airways ordered 12 787-10s. Singapore Airlines has ordered 30.

Boeing also landed an order Tuesday for five of its 747-8 passenger jets and six 777-300ER jets from Korean Air Lines Inc.  The order is a boost for the struggling jumbo 747 as demand for large jets has slumped and the air-cargo market has remained stagnant, prompting Boeing to trim production for 2014.

—David Pearson and Daniel Michaels contributed to this article.  

Source:  http://online.wsj.com