Chicago/Toulouse/London: Boeing Co is nearing an agreement with Qatar’s flagship airline for a multibillion-dollar commercial jet order, following US approval of a long-stalled sale of F-15 fighter jets to the Arabian Gulf nation.
Qatar Airways is in late-stage talks to acquire at least 30 Boeing wide-body jets and would take 787 Dreamliner and 777 models, said the people, who asked not to be identified because the talks are private. The order would be valued at upwards of $6.7 billion (Dh24.5 billion) at catalogue prices, although airlines typically negotiate discounts.
Akbar Al Baker, chief executive officer of government-owned Qatar Airways, told reporters in late August that the carrier was poised to make a “large” aircraft purchase, adding to its backlog of orders for Boeing and Airbus Group SE planes. The US approved fighter-jet sales to Arabian Gulf allies including Qatar, Bloomberg News reported Wednesday.
Boeing declined to comment on the discussions, as did a spokeswoman for Doha-based Qatar Airways.
Double boost
The two deals would provide boosts to Chicago-based Boeing as the world’s largest commercial aircraft manufacturer and second-largest defence contractor. The fighter-jet sale would help keep the company’s St Louis assembly lines busy through the early 2020s as US orders wane. That transaction could be valued at more than $7 billion for Boeing, Howard Rubel, an analyst at Jefferies, said in a note to clients.
Boeing and Airbus have struggled to land sales of twin-aisle jetliners this year as a glut of second-hand 777 and Airbus A330 models curbed demand and the sold-out 787 was unavailable in the near term. Airlines in many parts of the world have reined in expansion plans as traffic has lagged behind projections, leading to overcapacity that drags down air fares.
“From a producer standpoint, it’s badly needed,” Richard Aboulafia, an aerospace analyst at Teal Group, said by phone. “From a customer’s, it doesn’t make sense unless it comes at the expense of another order,” he said, referring to Qatar’s bulging order backlog that includes an agreement to take Airbus A350 wide-bodies.
Production plans
If it is completed, the Qatar Airways purchase would be Boeing’s largest twin-aisle sale this year, providing a little more visibility into its plans for the 777, Boeing’s largest twin-engined plane, as well as the Dreamliner, the company’s marquee carbon-fiber jet.
Boeing CEO Dennis Muilenburg said earlier this month that sales campaigns underway could determine whether the plane maker boosts 787 output — and whether a dearth of orders will force it to again slow the assembly of the current-generation 777 models until an upgraded version of the plane debuts in 2020. While Boeing needs to sell 40 to 50 of the large jets annually to sustain current production plans, it has only netted eight 777 orders so far this year.
“Obviously, pressure there, a number of campaigns under way. We need to be successful on some of those campaigns over the next two months to three months to hold that seven-a-month rate structure,” Muilenburg told a Morgan Stanley conference.
Al Baker had said repeatedly that Qatar Airways intended to exercise the options it held to purchase 30 Dreamliners, a move that would double its Boeing 787 fleet. The carrier, which has global ambitions to match those of Dubai-based Emirates and Abu Dhabi-based Etihad, also holds orders for another six Boeing 777 and 60 of the upgraded 777X, according to the planemaker’s website.
Very strained
The Qatar Airways CEO has signalled his growing frustration with Airbus in recent months, threatening to switch an order for 48 Airbus A320neo family planes to Boeing 737 Max jets after declining to take delivery of the first Airbus narrowbodies because of an engine cooling issue.
Airbus has also drawn Al Baker’s ire for its struggles to meet delivery deadlines of the A350, the European company’s most advanced jetliner, which competes with the 787 and 777. The airline was the first buyer of the new Airbus wide-body.
“Our relationship is very strained,” he told reporters last month. “What’s happening at Airbus with the deliveries is seriously affecting our growth.”
