China Deal Marks Boeing's Best Month for 787s in Three Years

Increase font  Decrease font Release Date:2016-10-13  Author:katrina  Views:1417
Tips:Boeing finalized an order for a dozen 787-9 Dreamliners from China Southern Airlines on Wednesday, making October already the best month for 787 sales in three years.

Boeing finalized an order for a dozen 787-9 Dreamliners from China Southern Airlines on Wednesday, making October already the best month for 787 sales in three years.

At list prices, the China Southern order is valued at US$3.2 billion. However, according to market-pricing data from aircraft-valuation firm Avitas, the real value of the order after standard discounts is about US$1.7 billion.

Last week Qatar Airways inked an order for 30 Dreamliners.

Widebody-jet sales have been slow this year. Before this month Boeing had added just 19 net new 787 orders for the year.

Guangzhou-based carrier China Southern is the largest airline in China by fleet size and already operates 10 of the smaller size 787-8.

It used those planes to launch six new nonstop global routes, connecting Guangzhou to London and Rome in Europe; Vancouver, B.C., in North America; Perth in Australia; and Auckland and Christchurch in New Zealand.

In addition, China Southern subsidiary Xiamen Airlines has taken delivery of six 787s, half of its separate order for a dozen.

Earlier this month, Xiamen began scheduled service between Shenzhen and Seattle, the airline's first direct route to the U.S., using a 787.

China Southern's new order raises the total 787 order tally above 1,200 jets for the first time. And October will be the first month the 787 order backlog has grown since April.

With the 500th delivery of the 787 approaching, Boeing's unfilled order backlog at the end of last month had shrunk to less than 700 airplanes.

For accounting purposes, Boeing desperately needs to sell more Dreamliners so that it can spread over more airplanes the enormous accumulated nonrecurring development costs that are still deferred to the future - approximately US$30 billion.

Boeing's accounting now spreads those costs across an assumed order total of 1,300 airplanes. While very welcome, this month's new orders wouldn't yet justify raising that projection.


 
 

 
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