DTN News - BOEING NEWS: Few customers For Boeing 747 Despite Upgrade

Defense News: DTN News - BOEING NEWS: Few customers For Boeing 747 Despite Upgrade

Source: DTN News - - This article compiled by K. V. Seth from reliable sources By Julie Johnsson and Andrea Rothman
(NSI News Source Info) TORONTO, Canada - June 4, 2014: (CHICAGO) — Boeing’s iconic 747 jumbo jet is gliding deeper into its twilight years, with a new Air Force One fleet offering the strongest sales prospect for a passenger model that no longer fits most airlines’ needs.

Even as Boeing talks with Emirates airline about an order for the upgraded 747-8, the carrier played down the chances of a deal because it’s buying 150 Boeing 777X jets. That plane will be bigger and more efficient than the current 777, a twin-engine aircraft so capable that it’s cannibalizing Boeing’s jumbo sales.

Commercial success has proved elusive for the 747-8, the latest update to an almost 50-year-old plane known for its distinctive humpbacked fuselage. While the 747-8 is a lock to win bidding that opens this year to replace the president’s fleet, waning demand for the cargo variant further imperils an assembly line that has slowed to just one or two planes a month.

‘‘Air Force One is it, unless a miracle happens in the airfreight business,’’ said Glen Langdon, president of Langdon Asset Management, a San Francisco firm that has extensive experience selling used 747s and other wide-body freighters.

Discussions with Emirates were disclosed this week by John Wojick, senior vice president for sales and marketing at Chicago-based Boeing’s commercial airplane unit, at the annual meeting of the International Air Transport Association in Doha. Emirates is the world’s largest international airline and it operates a fleet of A380s from rival Airbus Group.

Boeing is fighting to land customers, even using trade-ins of older models to seal deals. Boeing faces a ‘‘material’’ accounting loss if it can’t win sufficient 747 orders to recover the costs of development, according to a company filing. So far, Boeing has tallied just 51 sales for the passenger variant, known as the 747-8I or Intercontinental, since Deutsche Lufthansa AG placed the first order in 2006.

This year’s 747-8 order count: one. It wasn’t always so grim. Pan American World Airways announced a $525 million order for 25 of the first 747s in 1966, effectively launching a program that would go on to produce almost 1,500 planes.

But Boeing outdid itself with the 777-9X, the first twin-engine jet designed to carry a jumbo’s haul of 407 passengers. Meanwhile, a glut of the previous 747 iteration remain parked, and Boeing cut 747 production twice last year, to 18 jets a year, as the backlog dwindled.

‘‘We expect 747-8 sales to increase with the economy, and customers flying the airplane tell us they love its strong performance,’’ Randy Tinseth, a Boeing vice-president for marketing, said in an e-mail. ‘‘That’s why we continue to invest in the 747-8, to make it even better.’’

The 747-8’s likeliest sales are to the Pentagon. The Air Force is planning to upgrade the all-747 presidential aircraft fleet by 2023 and has also begun studying whether to replace the ‘‘Doomsday’’ fleet, four 747-200 jets hardened against nuclear blasts that provide a mobile military command, Charles Gulick, an Air Force spokesman, said in an e-mail.

The White House’s fiscal year 2015 budget proposes spending $1.65 billion over five years to replace its aging Air Force One fleet, which began ferrying President George H.W. Bush in August 1990.

*Link for This article compiled by K. V. Seth from reliable sources By Julie Johnsson and Andrea Rothman
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IATA more upbeat on premium air travel demand

PARIS, Sept 17 (Reuters) - There are "signs of an upturn" in the number of airline passengers travelling first or business class -- a measure of business confidence and the most lucrative sector for carriers, an industry body said on Thursday.
Latest July statistics from the International Air Transport Association add to flickering signs of recovery in the economy but offer little relief for battered finances of airlines themselves since yields remain low, the Geneva group said.
In July the number of premium travellers on international markets fell 14.1 percent compared with the same month last year, but this was less than the 21.3 percent decline in June.
"Premium travel correlated with world trade which bottomed in May and started rising in June, but further rises are forecast to be relatively weak," IATA said in a monthly report.
Yields, or average revenue per seat sold, fell 23 percent in July and premium revenues fell 35-40 percent, IATA said.
Economy travel fell 1.2 percent in July.
"Passenger numbers are now starting to turn up but there is a long way to go before activity returns to levels seen in 2007 and early 2008," IATA said.
"Moreover, with economic growth forecast to be relatively weak and much excess capacity (in the market), the problem of low yields remains."
On Tuesday IATA raised its forecast for total airline losses in 2009 by $2 billion to a record $11 billion. [ID:nN151702].
(Reporting by Tim Hepher; Editing by Mike Nesbit)

Airline trade group forecasts deeper 2009 losses

WASHINGTON (Reuters) September 15, 2009, - The world's airlines are expected to post losses totaling $11 billion this year as weak passenger traffic and cargo demand pressure revenue, the International Air Transport Association said on Tuesday.
The association previously projected losses of $9 billion due to rising fuel prices and weak revenue.
The Geneva-based trade group forecast industrywide losses of $3.8 billion in 2010.
"The global economic storm may be abating, but airlines have not yet found safe harbor," IATA Director General and Chief Executive Giovanni Bisignani said in a statement.
IATA expects revenue to slump 15 percent in 2009, and Bisignani said the revenue projection was driving the trade group's lowered outlook. During a conference call, he said revenue would not return to 2008 levels until 2012 at the earliest.
"After every crisis, we never see yields return to the starting point," he said during the call.
Bisignani said smaller- and medium-sized carriers have not had the access to debt markets that their larger peers enjoy, putting them in a more fragile condition. In coming months, the airline industry could see other bankruptcies, he said.
IATA also revised its loss estimates for 2008 to $16.8 billion from $10.4 billion to reflect accounting changes and restatements.
"The bottom line of this crisis -- with combined 2008-9 losses at $27.8 billion -- is larger than the impact of 9/11," Bisignani said.
For 2009, IATA said it expects passenger traffic to fall 4 percent, compared with its June estimate of 8 percent. It sees cargo demand falling 14 percent.
The updated forecast assumes oil prices average $61 a barrel, up from $56 a barrel in the previous forecast.
Sentiment on airlines has improved recently as cost-cutting has helped soften the blow from weaker demand and some airlines have given signs that revenue trends may be poised to improve.
On Monday, Delta Air Lines Inc (NYSE:DAL - News), the world's largest carrier, boosted its operating margin forecast for the third quarter, citing lower expected fuel costs. It also said revenue per available seat mile would show a smaller decline in the third quarter than in the second quarter.
(Reporting by John Crawley; additional reporting by Karen Jacobs and Deepa Seetharaman; Editing by Maureen Bavdek and John Wallace)

UPDATE 1-Air cargo drops in May, recovery still far off-IATA

* Air freight drops sharply in May, showing recovery far off
* Cross-border passenger traffic also weakens further
* Mexican carriers see 40 pct traffic drop due H1N1 flu
By Laura MacInnis
GENEVA, June 25 (Reuters) - Demand for cross-border air freight dropped 17.4 percent year-on-year in May, suggesting international trade is still a long way from recovery, a global airlines body said on Thursday.
The International Air Transport Association (IATA) said that passenger demand fell a more modest 9.3 percent year-on-year in May, and repeated its view that for airlines, "this crisis is the worst we have ever seen".
"We have lost several years of growth and yields are under severe pressure. Airlines are in survival mode. Cutting costs and conserving cash are the priorities," Giovanni Bisignani, IATA's director-general, said in a statement.
The latest reading of international air traffic includes the first estimate of the impact of H1N1 flu on airline travel.
Mexican carriers saw their passenger traffic fall nearly 40 percent in May, compared to a 9.2 percent drop among all Latin American airlines, said IATA, which represents 230 carriers including United Airlines (UAUA.O), Cathay Pacific (0293.HK), Emirates [EMIRA.UL] and British Airways (BAY.L).
U.S. airlines also reported weak demand to Latin American destinations affected by the newly-discovered virus which has now spread to a global pandemic, the figures show. [ID:nNLB765857]
Air cargo is a leading indicator for world trade, and equity markets are watching it closely for signs of economic recovery.
IATA said the 17.4 percent drop is a relative improvement compared to the 21.7 percent year-on-year fall in April, but remains far from full health.
It said although manufacturers have begun to add to their product inventories in anticipation of an eventual economic rebound, "inventories remain 10 to 15 percent higher than normal in relation to sales levels, indicating that a significant recovery is not expected in the near term".
Passenger traffic demand is slightly stronger than the 11 percent drop seen in March, indicating "a floor may have been reached," but it also has a long way to go, said IATA, which has estimated airlines will lose $9 billion in 2009. [ID:nL8380291] (For the full IATA statement, see: www.iata.org) (Reporting by Laura MacInnis; editing by Mike Nesbit)