NEW BOEING JET PULLS IN $95 BILLION IN ORDERS
c.2013 New York Times News Service
Three Middle Eastern airlines signed up Sunday to buy 225 of Boeing’s new 777X jets, helping to bring the initial batch of orders for the plane to $95 billion, a strong start for sales of the commercial jet.
That total, based on list prices, includes 34 jets that Lufthansa had previously said it would order. The latest deals came on the first day of the Dubai Airshow, as airlines from the Persian Gulf region announced more than $150 billion in orders for a variety of planes.
The flood of orders highlighted how the big money in aviation is shifting to the Middle East and Asia; orders from the region also provided a boost to Airbus’ beleaguered A380 jumbo jet, the world’s largest passenger plane.
The airline Emirates, which ordered 150 of the 777Xs, said it would also buy 50 more A380s, which have had disappointing sales overall. The A380 deal would be worth $23 billion at list prices, though Boeing and Airbus offer undisclosed discounts on nearly all their sales.
Airbus is under pressure to revive interest in the A380. The plane has had no buyers so far this year, and Airbus has said that the lack of demand could result in a cut in production.
Still, the biggest news from the air show was the formal rollout of the twin-engine 777X, which will provide a more fuel-efficient replacement for Boeing’s popular 777 jets by about 2020.
Boeing executives reiterated Saturday that they would consider several sites to build the plane after union machinists in Washington state resoundingly rejected a proposed contract extension last week.
The updated 777 will have new engines and lighter-weight carbon composite wings and will save 12 percent on fuel costs compared with rival planes, Boeing said.
It will come in two versions: a 777-9X, which will be able to fly more than 400 passengers for up to 8,200 nautical miles, and a 777-8X, which will seat 350 passengers but fly more than 9,300 nautical miles.
Boeing said the planes, which are still being designed, would be formally named later. Production is scheduled to begin in 2017.
Besides the order from Emirates for 150 of the planes, Etihad Airways announced that it would buy 25 of the 777Xs. Emirates and Etihad are both based in the United Arab Emirates. Qatar Airways said it would buy 50 of the new jets.
All told, Boeing said it received orders on the first day of the air show for 342 planes, including 737s and its new 787 Dreamliner. That included the 1,000th order for Dreamliner, the first passenger jet made substantially with carbon composites to reduce weight and fuel costs.
The 777X and the 787 will both compete with Airbus’ forthcoming A350 family of jets, which also will be made extensively with carbon composites. The A350 models have already picked up several orders from customers who had traditionally bought Boeing planes.
Boeing had said that it would build the 777X in Washington, possibly creating 10,000 jobs, if the machinists approved an eight-year contract extension that would protect the company from strikes through 2024.
But the workers rejected the proposal by 2-to-1, with many workers taking issue with provisions that would freeze their pension benefits, increase their health care costs and provide salary increases of only 1 percent every other year on top of cost-of-living escalations. As a result, Boeing said it would open up the competition for the plant to cities in South Carolina, Alabama, California and Utah.
Thomas Buffenbarger, the president of the International Association of Machinists and Aerospace Workers union, told Reuters on Friday that Boeing had pushed hard for a quick labor contract extension in Washington because it was worried that the development of the A350 was running about two years ahead of the 777X.
Buffenbarger conceded that the union was now in “a precarious situation.” But because the existing contract does not end until 2016, the union does not intend to approach Boeing about further negotiations.
Raymond L. Conner, the chief executive of Boeing’s commercial aircraft division, told reporters in Dubai on Saturday that the company had no plans at this point to reopen the talks with the union.
Some of the other states in the running have offered tax incentives to Boeing and could also provide cheaper labor that is not necessarily unionized. The Washington Legislature passed tax incentives for the company Nov. 9, and Gov. Jay Inslee has said he would work to resolve differences between Boeing and the union.