Lufthansa announce ordering 59 wide-body Boeing Co. 777-9X aircraft in Frankfurt, Germany, on Sept. 19, 2013
(Corrects the units of thrust in the 11th paragraph and in the embedded graphic)
Boeing (BA)forever changed aviation in 1970 when it introduced its 747 jumbo jet,
whose size and range revolutionized flying and became a cultural icon in
the process. It’s since gone on to log orders for more than 1,500 of
the humpbacked behemoth’s various models. But now the world’s No. 1
maker of commercial aircraft is poised to offer a model that may kill
off its best-known creation.
Betting it can capture the operating
economies of a huge plane in a smaller one, Boeing is undertaking a
radical makeover of its smaller 777 jet that will be ready to take
flight by decade’s end. The new 777X model will boast the biggest
engines ever put on a plane, a record wingspan that can be shortened by
having the tips fold up after landing, and lower operating costs.
Cramming all this cost-saving technology into a smaller plane that
operates with two engines—rather than the four needed by jumbos—could
herald an end to the race to build ever-larger jets that’s driven much
of modern aircraft design.
The 777X will be the first twin-engine
jet able to ply long-haul routes with payloads comparable to the larger
jumbos. That’s likely to accelerate airlines’ shift away from mammoth,
four-engine fuel-guzzlers such as Boeing’s latest 747-8 and Airbus’s (EADSY)
double-decker A380. “My assumption is the 747 is dead, or will be dead
in a year or two,” says Adam Pilarski, senior vice president at
aerospace consultant Avitas. Like the 747 four decades ago, he says, the
777X is aimed at a market segment where it lacks a direct rival and
“may have a very good run.”
The first model, the 777-9X, will be able to fly as far as
8,000 nautical miles with more than 400 passengers while burning
20 percent less fuel than the current 777, now the world’s biggest
twin-engine jet. A second variant, carrying about 350 people, will
follow and push the range past 9,400 nautical miles—far enough for a New
York-Singapore nonstop flight. Experts expect airlines to approve.
“It’s just very difficult to stop the compelling, strong economics of
the big, long-range twin airplanes,” says John Plueger, president of Los
Angeles-based jet lessor Air Lease (AL).
though Boeing’s board has yet to grant final approval for the plane’s
launch, Boeing already has grabbed an $11 billion order from Lufthansa (LHA:GR)
for 34 of the jets. Peter Arment, an analyst at Sterne, Agee &
Leach, predicts the tally may reach “well over 100 orders” worth more
than $34 billion at list prices after the plane’s expected unveiling at
the Dubai Airshow in mid-November.
By rolling out an aircraft that
will eliminate the need for a megajumbo at many airlines, Boeing may
cannibalize sales ofits own 467-passenger 747-8, whose $356.9 million
list price makes it the aircraft manufacturer’s most expensive model.
George Ferguson, a senior analyst with Bloomberg Industries, says Boeing
has little choice but to take that risk, since Airbus in 2014 is set to
begin deliveries of its new midsize A350 widebody, which will compete
head to head with the current 777. Explains Pilarski, a former executive
at McDonnell Douglas, which Boeing bought in 1997: “If they continue
with the status quo, the 777 will begin losing market share.”
The 777 is the top-selling plane in Boeing’s lineup. Able to
carry as many as 350 people, it lists for $320.2 million for the largest
model, although discounts are common on all planes for launch customers
and those ordering in bulk. The catalog price of the 777X, expected to
be about $340 million based on Lufthansa’s order, hasn’t been made
public.
Most airlines’ interest in jumbos cooled years ago. Boeing
has won only 40 orders for the passenger version of the 747-8, which
entered service in 2012, and has received none so far in 2013. Instead,
Boeing has drawn far more excitement from customers over its much
smaller (210 seats to 330 seats), super-efficient 787 Dreamliner. Still,
Randy Tinseth, Boeing’s vice president for marketing, insists the 747
remains critical to the company’s goal of offering a range of products
to satisfy demand for planes with 200 to 500 seats. “We’re bringing the
777X to the market eyes wide-open with how it will fit in the family,”
he says. “We’re confident the 747-8 will be a great airplane to
complement what we’re doing there.”
The bottom line: Boeing has an $11 billion order from Lufthansa for its 777X, a cost-efficient replacement for jumbo jets like its 747.
- Businessweek
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