Aug. 19, 2019 © Leeham News: There have been no widebody orders placed by China with Boeing since President Trump launched a trade war in March 2018, hurting American’s biggest exporter and affecting the US balance of trade.
In fact, there have been no announced orders by China with Boeing since October 2017. Only 22 China orders were announced in 2017.
Boeing has a large number of Unidentified 737s listed on its website. It is widely believed that China accounts for perhaps as many as 25% of these, but Boeing won’t comment.
China historically accounted for between 25% and 33% of Boeing’s annual deliveries.
Since 2011, China took delivery of more than 170 widebody passenger and freighter jets, or 9.3% of all widebodies delivered by Boeing.
Boeing—and Airbus—count on a surge in demand for widebodies in the 2020 decade as current ones in operation age.
Boeing 777-200ERs already are on their way out, replaced by Boeing 787s, up-gauging to 777-300ERs, by Airbus A330s and A350s.
Boeing 767-300ERs are also in retirement, with several hundred passenger models remaining in service, others converted to freights and 767-200s largely in the boneyards.
Facing production gaps on its 777 and 787 lines from 2022, Boeing needs widebody orders—especially following the 737 MAX crisis and the billions of dollars in compensation charges and added costs (totaling nearly #7bn already) that have been announced.
China’s in-service widebody fleet is relatively young. Only 35 aircraft, including freighters, are more than 12 years old, the age at which the government likes to see aircraft “flipped” for new ones. There are 174 widebodies less than 12 years old.
Although this might suggest China simply isn’t ready to place orders for widebody jets—and the first delivery slots don’t appear until 2022—Boeing CEO Dennis Muilenburg nevertheless remarked at a recent investor meeting that there have been no widebody orders since the Trump trade war with China began.
LNA was the first publication in any medium to report (on Aug. 5) that Boeing was pushing back the development and entry-into-service schedule for the 777-8 by two years.
We pointed to weak sales, the fact that the 777-8 is a highly niche airplane and shifting priorities at Emirates Airline (the largest customer of the -8) as the reasons.
Another emerged last week: “de-risking” the 777X program by concentrating on the 777-9.
De-risking the 777X program by delaying the 777-8 has a familiar and perhaps fatal ring to it.
Airbus began delaying the A350-800 development as the program schedule move to the right for the A350-900 and -1000.
“De-risking” the program was one reason given.
Orders began shifting from the A350-800 to the A350-900 and A350-1000. Pretty soon, there were very few orders for the -800. And soon thereafter, Airbus canceled the program.
There are 45 777-8 orders, after adjusting for a reduction by Etihad Airways in its fleet restructuring. (Etihad’s full 25 777X remains on Boeing’s website, but the carrier indicated it will reduce this to six, all 777-9s.)
Emirates is negotiating for 40 Boeing 787-10s and publicly said it will reduce its order for 150 777Xs on a one-for-one basis. The -8s (35 of them) are believed the most vulnerable.
Hence, the future of the -8 is in real jeopardy.
Highly niche airplanes, including the long-range models, never have sold more than 100 units, although the Airbus A340-600 came close at 98. The Boeing 707-138, the first of the specialty long-range jets (for Qantas Airways) sold just 10. The Douglas DC-8-62 sold 51. The Boeing 747SP sold 45 and the Boeing 777-200LR sold 60.
The 777-200LR is the basis for the 777F, of which 227 have been sold.
This may well be the future of the 777-8. LNA is told Boeing already is pitching the 777-8F as the immediate follow-on to the 777-9. The -8F was intended to follow the -8 passenger model by two years.
It may well be that the freighter model could come before the 777-8 passenger model.
But not before 2024 by our forecast.