Soaring Boeing Airliner Sales puts Company Back on Top

Soaring Boeing Airliner Sales puts Company Back on Top
Boeing is gaining strength through its new 787 Dreamliner, which begins production this year and goes into service in 2008.

Boeing is gaining strength through its new 787 Dreamliner, which begins production this year and goes into service in 2008.

By Terry Stephens

Boeing is back on top in airliner sales over Airbus, its fierce rival. Worldwide, airlines ordered 820 new planes from Boeing through Nov. 30, 2005. Airbus sales during that period lagged behind at 687 planes. Observers predict that Boeing’s lead is now so strong that it will be difficult for Airbus to regain the top slot.

After losing its position as the world’s leading marketer of airliners a few years ago, Boeing has recovered its edge in a big way. The company is gaining strength through its new 787 Dreamliner, which begins production this year and goes into service in 2008. Even Korean Airlines and Northwest Airlines, with deep investments in Airbus planes, have bought the 787 over the competing Airbus 350, which won’t come into the market until 2010.

Industry analysts are forecasting strong airliner sales in 2006 for both manufacturers, since world markets are expected to show growth for several years. Also, American air carriers that have stepped away from the marketplace in recent years to strengthen their financial position are expected to begin buying again this year.

What’s particularly impressive about Boeing’s 2005 sales roster is that so much development, marketing and selling was happening with nearly every model in its inventory. From Boeing’s new high-tech, composite-dominant 787 to its most-produced model, the 737, airline interest is running high. Even a new version of its venerable 747 is in the market, and its fuel-saving 777 is also grabbing market share from Airbus. Boeing’s 767 production line, tentatively set for closure in the wake of delays in selling 767 refueling tankers to the U.S. government, is finding new life in tanker and freighter sales to other nations.

The Dreamliner is by far the most popular aircraft either manufacturer has in the marketplace. Martin Bentrott, Boeing’s vice president of sales and marketing for the 787, told customers and financiers in a year-end meeting in Seattle that the company had already sold enough planes to fill the first three years of production. That speech spurred talk of creating two production lines for the 787 at the Everett plant.

Boeing’s customer orders during 2005 included 185 new 787s, 115 777s, 15 767s, 43 747s and 462 Renton-built 737s, pushing sales of that plane past the 6,000 mark and making it the most produced airliner in aviation history.

Sales successes for the 787 are presenting challenges for Boeing’s Everett assembly plant. Production plans call for delivering 96 of the new planes in the first two years, beginning in late 2008. But even if two production lines were set up, it’s not solely Boeing’s decision to ramp up production. Much of the plane is built or preassembled in other parts of the world and those Dreamliner component suppliers would need to be able to step up their own production to match the pace of an accelerated Boeing program.

The upward trend in aircraft demand is expected to continue well past the initial orders. The company has to pace itself, although Boeing already is studying how fast it could ramp up production by 2009, Bentrott said.

Another hot product is Boeing’s fuel-efficient, twin-jet 777-200LR Worldliner. The aircraft established a world record of 11,664 nautical miles for nonstop distance traveled by a commercial airliner last November when it made a 22-hour, 42-minute flight from Hong Kong to London. Richard Aboulafia of the Teal Group, an airline industry tracker, said market watchers considered an early December order by Hong Kong-based Cathay Pacific Airlines for a dozen 777s as a blow to Airbus, which is looking for buyers for its long-range jets.

Languishing in the shadows of Boeing’s roster of airliners is the 767, due to be replaced in the commercial airliner market by the 787, but still a candidate for an air refueling tanker role or freighter. Boeing has an order for four tanker planes each for Italy and Japan and several other countries are eyeing the plane as a tanker. Further negotiations may yet land a U.S. contract for new generation tankers as well.

Last November, the Dubai Air Show showcased Boeing’s 777-200LR and a 767 refueling tanker for the Italian Air Force. Also on display was a Boeing Business Jet in service with Royal Air.

The BBJ market is small, expensive, exclusive and growing. Jet Air, an Abu Dhabi-based executive business jet charter company, has four BBJs. So far, Boeing has sold more than 100 BBJs, each one sticker-tagged at $44 million for the basic 737 airliner body. Custom-designed interior fittings have ranged as high as $20 million.

The large business jet market began in 1996, when Boeing and General Electric announced the forming of a joint venture company, Boeing Business Jets, in response to interest in luxury executive aircraft with a range of more than 6,000 miles. Built in Boeing’s 737 assembly plant in Renton, Wash., the BBJ2, first delivered in 2001, is derived from the 737-800 model. It offers longer range, higher speed and lower noise and engine emission levels than earlier 737s.

Designed with conference rooms, sleeping accommodations, gourmet galleys and other amenities for 14 to 27 passengers, the BBJ2 offers 1,000 square feet of cabin space. One of Boeing’s BBJ2 aircraft built in Renton was flown 6,854 nautical miles to Jeddah, Saudi Arabia, in 14 hours and 12 minutes, the longest distance flown in a BBJ to date.

Boeing unveiled its first BBJ3 at the Dubai Air Show. Based on the airframe of a Next-Generation 737-900ER, the BBJ3 offers 35 percent more cabin space than the BBJ and 11 percent more than the BBJ2. Once a launch customer is signed, the BBJ3 will be Boeing’s latest entry in the large, long-range business jet market.

The profile of BBJ owners, according to Boeing Business Jets President Steven Hill, includes private individuals (40 percent), government heads of state (36 percent), corporate operators (14 percent) and charter operators (10 percent).

Also starring in Boeing’s array of hot-selling aircraft is the 737 airliner, with sales now surpassing 6,000 models in various configurations, making it the best selling aircraft in Boeing’s history. In 2005, Boeing launched the 737-900ER, the newest model of the 737 family, through an announcement of Lion Air’s sales agreement for buying up to 60 of the aircraft for the Indonesian airline. The first plane will be delivered in 2007. The same size as the 737-900, the plane carries 26 additional passengers (up to 215 in a single-class arrangement) and allows a greater range (up to 3,200 nautical miles).

So far, 86 airlines have ordered more than 2,700 models of the Next-Generation 737 models, including a November 2005 order from China for 70 Boeing 737s, a $4 billion sale that is reportedly the largest in China’s history. For Boeing, the sale is particularly significant, giving it a solid footing in the competitive aircraft market in China.

Earlier in 2005, Boeing sold 60 of its 787 jets to China for $7.2 billion. Boeing planes now make up two-thirds of China’s aircraft fleet, while Airbus holds a 28 percent share. The China market is expected to include a need for more than 3,000 new aircraft over the next 20 years, making China the world’s second-largest aviation market.

Even Boeing’s 747 jumbo jets, which entered service 35 years ago, are still in demand. Last November, Luxembourg’s Cargolux announced it would buy 10 of the new 747-8 freighters as the launch customer for the new model. The airline will take delivery of the first 747-8F in late 2009.

Nippon Cargo Airlines in Japan also ordered eight 747-8Fs. The airline already operates 13 of Boeing’s 747 freighters. Boeing 747 freighters account for more than half of the world’s freighter aircraft capacity, with Boeing freighters of all models providing 90 percent of that global capacity.

Without the new model sales, the 747 assembly line at the Everett plant would have been closed in a few years, since remaining orders accounted for only 42 more of the giant jetliners. Boeing is also promoting a 450-passenger version of the new 747-8, still smaller than the huge new Airbus 380.

About 1,000 of the 17,000 workers at the Everett plant are working on the 747 assembly line. New 747s will benefit from technology used on the 787 Dreamliner, including the same engines.

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