Bloomberg News

Boeing May Lose 747-8 Orders as Dubai Aerospace Seeks 777s

November 09, 2011

(Updates with share price in last paragraph.)

Nov. 4 (Bloomberg) -- Boeing Co. may lose the sale of 10 jumbo-jet freighters with a list value of $3.3 billion as lessor Dubai Aerospace Enterprise Ltd. seeks to shift the order to the smaller 777, three people familiar with the matter said.

Dubai Aerospace would lease the 777s to Gulf carrier Emirates, said the people, who asked not to be identified because the talks are private. Boeing said yesterday that Dubai Aerospace had converted five of its 15 747-8 orders to 777s, with the five new planes to be leased to Emirates.

Switching the remaining Dubai Aerospace freighter orders to 777s would be a cut of about 10 percent in Boeing’s backlog for the 747-8, the planemaker’s biggest model ever. The 747-8 freighter lists for about $333 million, and the 777 cargo plane retails for $280 million. Airlines typically buy at a discount.

“We are constantly working with our customers to evaluate how to best suit their needs,” said Jim Proulx, a spokesman in Seattle for Chicago-based Boeing. “We don’t comment on the discussions.”

Mohammed Al Zarouni, executive director of state-owned Dubai Aerospace, declined to comment. Spokesmen for Emirates weren’t available late today in Dubai.

Dubai Aerospace has dropped most of its aircraft purchases since its finances weakened in the global recession. Created in 2006 with the goal of becoming one of the world’s biggest aircraft lessors, the company ordered 100 planes each from Airbus SAS and Boeing at the 2007 Dubai Air Show.

Previous Cancellations

All the Airbus orders have since been canceled. Boeing has delivered three planes so far to Dubai Aerospace, and has just 20 orders from the lessor left on its books -- the 10 747-8s and 10 777s.

The 747-8 is the newest version of Boeing’s four-engine jumbo jet, with a bigger wing and an elongated version of the iconic fuselage hump. Deliveries began in October, two years behind schedule, and total four so far, all of the freighter variant.

Atlas Air Worldwide Holdings Inc. cut three 747-8 freighters on Sept. 21 from a 12-plane order, citing “lengthy delays and performance considerations.”

Boeing now has unfilled orders for 102 747-8s on its books, split between 66 freighters and 36 of the passenger model, known as the Intercontinental. The 777 is Boeing’s biggest twin-engine plane.

Boeing fell 0.6 percent to $65.80 at the close in New York trading. The shares have gained 0.8 percent this year.

--Editors: Ed Dufner, James Langford

To contact the reporters on this story: Susanna Ray in Seattle at sray7@bloomberg.net; Andrea Rothman in Toulouse, France, at aerothman@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; edufner@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net


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