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Wednesday, March 9, 2011

787 inducements

blog post photoMichael Mecham

The announcement Monday during the Asian Aerospace exhibition in Hong Kong that Air China has ordered five 747-8 Intercontinentals was good news for Boeing, which has seen the passenger version of the newest edition of its iconic intercontinental transport lag behind freighters.
But the news set some observers wondering what inducements Boeing might have offered to win the deal. “Can you say, ‘Compensation for 787 delays?’” piped in one of them.
This line of thinking suggests that the discounts were very deep on the new four-engine jet because of Air China’s discontent over delivery delays for Boeing’s two-engine wonder. 
It should be noted that Air China is no stranger to the 747. It bought its first in 1986 and ordered 16 over the years, including 14 747-400s. 
Those who have followed the 787 program might recall that when Air China and other Chinese carriers signed their initial intent to buy the new plane, Boeing officially changed its name from 7E7 (“E” for efficient) to 787. At the time, company officials noted the happy coincidence that the number eight just happens to be fortuitous in the Chinese language. 
The signing ceremony was in Washington and a big deal. The general agreement – formalities came later – was penned by Yang Jiechi, then China’s ambassador to the U.S., and Alan Mulally, then Boeing Commercial Airplanes’ CEO. 
With a list-price value of $7.2 billion (reportedly the largest ever signed for new aircraft by Chinese authorities), it easily exceeded another deal of the moment – a $1.4 billion commitment from China Southern Airlines to buy five Airbus A380s. 
Six Chinese carriers were involved in the 787 order, but when Yang and Mulally met the exact distribution of the 60 planes was not announced. 
But it was clear what China did want by being one of Boeing’s early 787 customers. It wanted at least one of the shiny new airplanes to carry passengers to the Beijing Olympics in August 2008. 
Well, we know how that worked out. 
Once the order was completed, Air China emerged as the buyer of 15 long-range 787-9s powered by Rolls-Royce Trent 1000s. With the 747-8I it will switch powerplants to a derivative of the Trent’s competitor on the 787, the General Electric GEnx-2B67. The GEnx is the sole powerplant on 747-8s. 
Here’s some other comments by people who don’t want to be quoted but who say they have heard from within Air China’s ranks (the airline isn’t talking). Some of the new 747-8s will be assigned to a VIP role for senior Chinese government officials. Apparently one reason for that assignment is that they prefer four-engine transports, thus ruling out any of the 19 777-300ERs that Air China has on order or the 10 777-200s it already flies.

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