Posted by: mulrickillion | November 12, 2011

Boeing: MAX at 700 and More (777, Boeing Capital)

Posted by Robert Wall at 11/12/2011 

Even though Boeing is seeing increased customer commitments for its 737MAX reengined narrowbody and the 777 widebody, it has still decided to lean more heavily on Boeing Capital in sales campaigns to bolster its chances for success down the road.

The commitment intake for the 737MAX now stands at more than 700 aircraft with nine customers, says Boeing Commercial Airplanes president and CEO James Albaugh on the eve of the Dubai air show — the previous figure was more than 600 units.

The company is working on finalize pricing and performance guarantees so it can turn those deals into firm orders, possibly by the end of the year but possibly not until 2012.

Albaugh projects that within about six months the 737MAX order intake will be roughly on par with Airbus’s A320NEO (new engine option) orderbook, which now stands at more than 1,100 firm orders.

Demand also has been strong for the Boeing 777, with 132 orders booked year-to-date. Albaugh says “we are talking to a half dozen customers right now” for additional orders. Emirates is expected to expand its commitment to the product during the Dubai air show.

Emirates also is interested to see what Boeing plans in terms of the 777 refresher program, the 777-8X and 777-9X, and is looking for an entry into service around 2017. But Boeing may not match that timeline. Albaugh says “we are looking at the end of this decade for this airplane.” Currently, the aircraft maker is assessing the non-recurring costs of the program and the technologies to feed it.

Another issue for Boeing has been grappling with the dearth of near-term production slots for many of its aircraft; a problem Airbus shares. For Boeing, that means its backlog is around seven years, far greater than it is happy with because it leaves potential customers waiting. Boeing is mulling whether to boost narrowbody output to 44 aircraft per month (it is currently working on increasing production to reach 42 aircraft per month).

A further rampup of widebody production – now set to go to 8.3 aircraft a month in 2013 – is not currently being looked at. However, Albaugh says that as 787 output increases, and Boeing reaches a rate of ten aircraft per month, there will be much attention put on increasing that to eleven and twelve aircraft.

Production rates for the 747-8 are still low, but Albaugh notes the company is in detailed discussion with two to three potential customers to sell the aircraft with oen or two more deals possibly being secured before year-end.

Despite concerns Airbus has been expressing about the availability of aircraft delivery financing as a result of the European economic crisis, Albaugh says “we have not seen the issue that Airbus talked about.” However, he says, “our strategy is going to be that Boeing Capital is much more than a lendor of last resort,” adding that “when our customers come to us and want help with financing, you will see Boeing Capital to be much more strategic” in helping airlines secure the money they need. 

Boeing: MAX at 700 and More (777, Boeing Capital)

>>See also A350-900 Delay Could Hit –1000

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