Tags: boeing | 777 | backlog | sales

Boeing Says 777 Delivery Backlog Damps Sales

Monday, 14 May 2012 05:15 PM

 

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Boeing Co. said the about 3 1/2-year wait to deliver a new 777 aircraft is crimping sales at a time airlines have made the plane their top choice for ferrying international travelers.

Boeing plans to boost production of the wide-body, twin- engine jet to 8.3 per month by the first quarter of next year to meet demand, from seven now. The output increase couldn’t come sooner for John Wojick, chief of Boeing’s North American sales, who called the wait “frustrating” in an interview.

“That’s probably our biggest challenge in the sales department right now,” he said. “To be honest with you, if we could build more today, we could sell more today.”

Last year, carriers snapped up 202 of Chicago-based Boeing’s 777, the largest twin-engine plane on the market, as they seek to cut fuel costs on international routes. The 777’s success contributed to Airbus’s halting production of its four- engine A340 in November, and is putting pressure on the European planemaker to offer a redesign of the largest variance of the twin-engine A350, which boosts range and passenger capacity.

The 777 is the best plane for international routes, such as those to China and Brazil, where traffic is growing the most, said Michael Derchin, an analyst with CRT Capital Group LLC in Stamford, Connecticut. The aircraft is also popular as a long- distance freighter, he said.

“There’s a real, immediate demand for 777 capacity, particularly in these longer-haul growth markets,” Derchin said.

Production Boost

Boeing fell 0.3 percent to $73.32 at 2:55 p.m. New York time. They were little changed this year before today.

Chief Executive Officer Jim McNerney and Jim Albaugh, head of the commercial airplanes unit, who are meeting investors in St. Louis tomorrow, will update shareholders on their strategy.

Boeing won’t boost 777 production for now beyond the planned ramp-up next year because of “significant investment that we would incur to go above that rate,” Wojick said in an interview at an AMR Corp.’s American Airlines hangar on May 11 at the Dallas/Fort Worth International Airport, where the 787 Dreamliner arrived as part of a worldwide tour. The output increased to seven from five last year.

The company is looking at making improvements to the 777-300ER, introduced in 2004, which will keep the plane popular into the future, he said.

Dreamliner Waiting List

Boeing, which delivered the 1,000th 777 last quarter after entering it into service in 1995, had 358 unfilled orders for the plane through April. New orders of the 777 have dropped to seven for the first four months of the year. Wojick said orders, which “come in clumps typically,” dropped after all-time highs in 2011.

“We had a record year last year,” he said. “That speaks for itself on the demand and attractiveness of the 777.”

The 787 Dreamliner, the first composite-plastic passenger jet that’s designed to save fuel, will also suffer because of the waiting list, Wojick said. The plane entered into service last year after a three-year delay because of design-to- production complications. Through April, there were 843 unfilled orders for the 787, which is being produced at a rate of 3.5 per month.

“We’re still seeing people firming up options and some incremental customers for the product, which is great,” Wojick said of the 787.

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