Emirates mulls swapping a third of Boeing 777X orders to 787 - Hindustan Times
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Emirates mulls swapping a third of Boeing 777X orders to 787

Bloomberg |
Feb 03, 2021 02:37 PM IST

The Gulf carrier is seeking to switch between 30 and 40 of its 115 commitments for the 777X to the Dreamliner.

Boeing Co.’s biggest 777X customer is weighing whether to swap as many as a third of its orders for the smaller 787 Dreamliner, said a person familiar with the matter, adding to the uncertainty swirling around the behemoth jet’s future.

Emirates airline (FILE Photo)
Emirates airline (FILE Photo)

Gulf carrier Emirates is seeking to switch between 30 and 40 of its 115 commitments for the 777X to the Dreamliner as it calibrates fleet plans, said the person, who asked not to be identified discussing private considerations. The moves could further squeeze the profits of Boeing’s newest jet, which faces a lengthy regulatory review and design changes.

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The U.S. planemaker signaled Monday that it’s at risk of losing nearly 40% its 777X order haul because the latest delay to the plane’s debut -- now slated for late 2023 -- gives customers the right to walk away from sales contracts.

Boeing lowered the 777X backlog to just 191 jets in a regulatory filing, far fewer than the 309 firm orders listed on its website. The drop is due to an accounting standard that requires sales at risk of falling through to be removed from backlog, the company said in an email.

The falling tally underscores the precarious future of the 777X, which is heir to the 747 jumbo as the largest passenger plane in the company’s product lineup. The coronavirus pandemic has crushed demand for twin-aisle aircraft built to cruise across oceans, and orders for wide-body jets such as the 777X, the 787 and competing Airbus SE models are expected to be the last to recover from the slump.

Boeing announced a $6.5 billion charge for the 777X when it reported fourth-quarter earnings last week and said the latest delay would leave the plane’s debut three years behind its original schedule. Cancellations, production cuts and flight-testing risks could bring additional losses, the company warned in its annual financial filing with the U.S. Securities and Exchange Commission.

Emirates, one of the 777X’s initial customers, declined to comment. It had previously signaled its intention to swap more of its 115 orders for Dreamliners after whittling down its original order in late 2019. The Dubai-based carrier may have more leverage to do so if its contracts have provisions -- standard in the industry -- that allow customers to bolt if an airplane’s delivery is more than a year late.

Delays for the 777X “have resulted in, and may continue to result in, customers having the right to terminate orders and or substitute orders for other Boeing aircraft,” the company said in the SEC filing. Such contract terms wiped out more than 1,100 planes from Boeing’s backlog of another model, the 737 Max, amid a lengthy grounding after two fatal accidents.

Boeing declined to comment, but pointed to Chief Financial Officer Greg Smith’s comments during a Jan. 27 call with analysts.

“The decline in backlog in the fourth quarter reflected aircraft order cancellations and removal of aircraft orders from our backlog due to the ASC 606 accounting standard, including our most recent assessment of 777X backlog due to the revised schedule,” Smith said.

Emirates boasts the world’s largest long-haul fleet of Airbus SE A380 and Boeing 777.


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