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Business Home > Aviation
 
Boeing secures Air China 747-8 order

Brooke Sutherland (Bloomberg) / 3 March 2013

NEW YORK - Air China, the nationís biggest carrier by market value, agreed to buy two Boeing 747-8 aircraft in the planemakerís first sale of the models this year.

The airline also will purchase one wide-body 777-300 plane, 20 single-aisle 737-800 jets and eight 777 freighters, according to a statement. The planes have a combined catalogue value of $4.8 billion and Boeing granted “significant price concessions” through credit agreements, the airline said in the statement.

Boeing, based in Chicago, hasn’t sold more than five 747-8 aircraft a year since Deutsche Lufthansa purchased 19 of the planes in 2006, and concern that persistently weak demand could prompt the company to curtail production has been mounting. The orders may help alleviate some of the pressure, according to Stephen Levenson of Stifel Financial.

“There has been concern that the dearth of orders could mean whitetails on the tarmac or insufficient demand to keep build rates at the current two per month,” the New York-based analyst wrote in a note to clients yesterday. Boeing “has been making a major effort to book more 747-8 orders particularly from carriers in the Asia-Pacific territory that may be best- suited to their use.”

That helps to balance the production schedule and backlog, said Levenson, who recommends buying the shares.

The 747-8, 777-300 and 737 aircraft ordered have a catalog value of about $2.6 billion, while the 777 freighters command about $2.2 billion. The agreement also includes the right to sell seven older 747 freight models back to Boeing and the option to convert four of the new 737 orders to one additional 777-300 jetliner, Beijing-based Air China said.

Boeing expects to increase its deliveries to China by 60 per cent this year, the head of its operations in the country was quoted as saying in the China Daily.

 

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