Gunning For Orders - 747-8 Intercontinental

It is with great pleasure that today’s entry comes from my colleague, Chris Cook.

Boeing’s 747 sales teams no doubt are feeling disheartened by the lack of securing follow on -8I customers during the course of 2007, but with a new-year, they will certainly be wiping the slate clean, and working energetically hard on securing the all-important second -8I customer.

A handful of key carriers that formed part of the 747-Advanced “Working Together” working group when Boeing was studying the requirements for the new 747-400x, seem to have indicated that they no longer have any more interest in the 747.

Two of these carriers, both customers for the super-efficient 787 Dreamliner and over-hyped A380, are Singapore Airlines and Qantas. Singapore Airlines’ interest in the new 747 started off strong, but slowly waned off, similarly at Qantas as well. Qantas’s CEO, Geoff Dixon, recently remarked that the 747-8 is a ‘tarted-up 747’, and that it has fallen out of favour with him.

Image courtesy of Boeing

This comment was enough to have any 747 stalwart’s feathers ruffled, but is Dixon, like Singapore Airlines, playing a bluffing game considering Dixon also said after the launch of the 747-8I: “Boeing’s claims on the 747-8I’s efficiencies, range and payload make the airplane very attractive to us, and we are very interested in the -8, there’s no doubt about that.”

Interesting to note, is that both Qantas and Singapore Airlines interest in the 747-8I appeared to have faded when Boeing opted for the longer fuselage, thus reducing the range from 8,300nm to 8,000nm. The 8,300nm range allowed Qantas to fly year-round non-stop between Melbourne and Dallas with a full payload, but now that is just no longer possible, for example.

However, the longer length fuselage has many major selling points, making it even more attractive to many other Asia-Pacific customers, most notably Cathay Pacific Airways. Lufthansa and British Airways were also very heavy proponents of the 76,3m long 747-8I, and coupled with the idea of the new 747 being able to hold its residual value longer, (no pun intended), this swung Boeing to opt for the bigger 747.

Another key factor that came into play regarding the likes of Qantas slowly backing away from the 747-8I, was of course Airbus.

Image courtesy of Airbus

Perhaps the biggest challenge that Boeing’s 747-8I sales teams’ faced was the pricing pressure or discounts that Airbus offered on the A380 to match the fuel-efficiency, operating economics and discount price the 747-8I offered. It was no secret that when Airbus announced the third delay in the A380’s entry into service, both Singapore Airlines and Qantas were seriously considering the new 747 at the time.

The delay was a major disappointment to the airlines, and ironically enough, a disappointment to Boeing. Airbus, quick to see the imminent threat of the 747-8 gaining huge momentum, offered Qantas and Singapore Airlines exceptionally compelling discounts/incentives on the A380s, in place of compensation pay for the delay of the airplane, swinging both carriers to firm up their options for next to nothing prices. Boeing could not match the low price Airbus was offering for the A380, as I perceived it, and coupled with the range decrease of the -8I, these airlines fell out of favour for ordering the new 747.

Another challenge the 747 sales teams’ had to, and still have to content with, is the formidable 777-300ER.

Image courtesy of Tim Dauber

Korean Airlines, Cathay Pacific Airways, Air New Zealand, Japan Airlines, All Nippon Airways and Singapore Airlines have all opted for the 777-300ER even with the 747-8I on offer to them as well. It is, of course, far too premature to say whether or not these carriers will opt for the 747-8I in the future.

The economics the 777-300ER offer is just so compelling. Singapore Airlines has commented that the biggest competitor to the 747-8 is the 777-300ER, which is one of the reasons why Boeing had to increase the length of the 747 to 76,3m in order to reduce seat/mile costs and have ‘clearer’ water between the two large airplanes.

Air New Zealand once commented that “if Boeing launched the 747-Advanced (-8), we will probably buy it.” The carrier later opted for the 777-300ER. What is clear is that the airlines are willing to operate less capacity airplanes, such as the 777 over the 747-8, as the economics, risks and flexibility is exceptionally compelling.

This truly is the A380’s major competitor as well. Clearly, Boeing’s philosophy of super-efficient, point-to-point, twin-engine wide-bodies is the way of the future for the commercial aviation market, period.Boeing will secure more 747-8I orders; it is just a matter of time.

This year, Boeing will be working hard with General Electric on further tweaking the bleed-enabled GEnx-1B67 engine, as well as finalising all aerodynamic treatments to the 747 to try and eek out more efficiency, and thus range.

Of course, it will not be until the 787 Dreamliner is underway with flight-testing with the GEnx that Boeing will be able to have even more concrete data about the performance of the engine that can then be extrapolated onto the 747. This is one of the reasons why Emirates have said they would prefer to wait until mid-year until placing their much anticipated order for the 747-8I.

Image courtesy of GE

If Boeing is able to increase the range of the airplane, to say, 8,150nm or 8,250nm, this could be an added catalyst for an even greater influx of orders. True, the GEnx is in flight-testing on the 747-100 test-bed and is reported to be performing better than expected, but the bleed-enabled engine has yet to start testing. We all eagerly await the results but they should be very closely matched to the bleed-less engines.

British Airways is tentatively planning on announcing the second wave of fleet renewal orders towards the end of 2008, and whilst the proposed 787-10x, 777-300ER and Airbus A350XWB offerings are being seriously evaluated at the airline, once again the 467-seat Boeing 747-8I may enter the limelight as an attractive alternate.

According to British Airways’ CEO, Willie Walsh, it is “unlikely” that the 747-8I will be re-evaluated, but he would also not rule it out completely either, sparking belief that there might just be some glimmer of hope for a new 747 order from BA.

British Airways is planning on ordering aircraft to replace the bulk of the 747-400 fleet, so it would only seem logical that BA re-evaluates the -8I, the true -400 replacement airplane. BA has indicated many times that there are routes in the airline’s diverse route structure that would be ideal for the “less risky” 747-8I according to the airline’s commercial director, Robert Boyle.

Further, Boyle has been quoted saying; “BA very much pushed Boeing to produce the 747-8.” It was no secret either that BA was also instrumental on pushing Boeing to lengthen the 747-8I to the same length as the -8F, as payload was more important than the range, so why then would BA ultimately reject an airplane that they literally told Boeing they wanted?

Airbus was once again reported to have tabled an 11th hour proposal to BA, that ultimately pushed the ‘near-certain’ 747-8I deal out the window. But the next question really is; can Boeing secure the order this time around?

Willie Walsh is seen as a pro-Airbus man, and this was really amplified when the only comment he made regarding BA opting for the A380 over the 747-8I, was; “I liked it better.”

Whilst the chances of Boeing finally securing BA as a -8I customer are very slim, Boeing no doubt will be fighting hard to have the 787-10x and 777-300ER/777x endorsed by them.

Boeing’s CEO, Jim McNerney, has recently commented that he would not be surprised if one or more of the 10 key-potential 747-8I customers they are in deep discussions with, sign up for the variant this year.

“When you look at an airline like Emirates that’s got a big 777 fleet, [and] a big A380 fleet, there’s got to be some room in a fleet like that for a 747-8 size, and when you have the commonality with the 747-8 Freighter, it makes the economics work even better,” said Tinseth recently. The 747-8 truly is a phenomenal airplane.

Christopher Cook
Johannesburg, South Africa
Pilot and Boeing 747-400/-8 Enthusiast

13 comments February 4th, 2008