BA abandons plans to buy super-jumbo
Monday 09 December 1996
The move is a blow to the US planemaker which was counting on BA to back the $7bn (pounds 4bn) development programme by placing an early order for the proposed family of 450-550 seater jets. The launch of the 747-500X/600X range is four months behind schedule.
Even if the go-ahead is given in the next six months the jets, which will cost $200m each and carry 30 per cent more passengers than a conventional jumbo, will not be in service until 2001 at the earliest.
BA's withdrawal is the latest complication for the super-jumbo programme. It has also been affected by uncertainties over what engines will power it and plans by Airbus to launch its own 600-800 seat double-decker aircraft, the A3XX.
Ron Woodard, president of the Boeing Commercial Airplane Group, said: "The odds of launching this programme are a little better than 50:50 but it is not a slam dunk. We will be betting the company on this project and we have a tough business case to prove."
Although BA is still part of the airline working group advising Boeing on the project, it is not now thought to be actively negotiating an order. BA is instead concentrating on other priorities - the merger of transatlantic services with American Airlines and its goal of saving an extra pounds 1bn by the end of decade by turning itself into a "virtual airline".
So far only two long-haul carriers - Thai Airways and Malaysian Airlines - have said they intend to buy the new Boeing aircraft. Thai and Malaysian have indicated they would purchase 12 jets but Boeing needs more orders from a bigger number of airlines to launch the programme. John Roundhill, director of engineering on the programme, said Boeing was talking seriously to half-a-dozen airlines about the stretched 747. Other carriers who would be interested include Cathay Pacific, Qantas, Lufthansa, Air France and North West. But BA is the big prize.
"We know they have other things on their mind but it is very important to have BA as a launch customer," said Mr Roundhill.
Boeing and Airbus meanwhile continue their cat and mouse game over the development of their rival super-jumbo programmes.
Mr Woodard said Boeing estimated the market for 500-plus seater aircraft at only 470 over the next 20 years and claimed that the Airbus A3XX could cost $18bn-$20bn to develop. Airbus puts the market at 1,380 aircraft and says development costs would be $8bn-$12bn. Boeing announced a deal last week to collaborate on the engineering design and analysis of the 747- 500X/600X with its US rival, McDonnell Douglas. Not to be outdone, Airbus has brought Alenia of Italy on board to help develop the A3XX.
The Italian company will have a 10 per cent stake in the A3XX but will not, at present, take a direct shareholding in Airbus alongside the existing partners, British Aerospace, Aerospatiale of France, Daimler Benz of Germany and Casa of Spain.
Mr Woodard said there were "no plans or even dreams" to develop the collaboration with McDonnell Douglas into a merger of the their respective commercial aircraft businesses. He also said that the Alenia-Airbus tie-up would not change Boeing's relationship with the Italian company which is a long- standing supplier to Boeing which estimates that the total market for new aircraft will be 16,000 jets worth $1.1000bn over the next 20 years.
Of this, aircraft the size of the 747 and bigger will make up 18 per cent by value but only 7 per cent by number - equivalent to just over 1,100 aircraft. The biggest growth will be in single-aisle aircraft led by the burgeoning demand from the Chinese who alone are forecast to account for nearly a tenth of all deliveries between now and 2005.
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