AIRSHOW-Boeing 737 draft orders reach 700

DUBAI Sat Nov 12, 2011 11:30am EST

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DUBAI (Reuters) - Boeing (BA.N) has notched up a further 100 commitments for its revamped 737 MAX, lifting the total to 700 spread between nine customers as it narrows this year's gap with European rival Airbus EAD.PA, the head of its commercial division said.

Boeing has not yet secured firm orders for the 737 MAX, an updated version of its best-selling model with new engines due to enter service in 2017, but hopes to have some firm contracts as well as further provisional orders by end-year or early next.

"We have got commitments for over 700 aircraft so we think the customers like what we are doing and we continue to talk to additional customers," James Albaugh, chief executive of Boeing Commercial Airplanes told a group of journalists on Saturday.

Boeing said in late October it had 600 draft commitments.

Powered by more efficient engines burning less fuel, the 737 MAX and Airbus' rival A320neo models mark an attempt by the planemakers to defend their roughly equal share of the narrowbody segment, expected to produce $2 trillion in total sales over 20 years.

Strategy battles over a cash-generating part of the business which is eyed by new competitors such as China and Canada have dominated the aviation industry for months.

From Sunday, the contest comes to the Dubai Air Show where Airbus is expected to announce orders of some 100 A320neos and Boeing executives said they were talking to fly Dubai and Oman Air who had expressed interest in the 737 MAX.

Airbus decided to spruce up its 150-seat mid-haul passenger jet a year ago by promising 12-15 percent fuel savings with new engines. After pondering whether to leapfrog Airbus with a more radical but costlier redesign, Boeing followed suit in August.

Uncertainty beforehand about whether the U.S. planemaker would pick a new plane or adopt new engines meant "one or two" customers were granted the unusual right to switch models from the existing 737NG to the 737 MAX, Albaugh said.

Only one customer, American Airlines AMR.N has been identified publicly. Boeing is fine-tuning the performance guarantees and pricing before signing firm contracts.

Boeing plans to sell the more efficient 737 MAX for more than the $81 million list price of the current 737 model.

The A320neo sells for a 7-8 percent premium to the classic A320. Asked if he thought the 737 MAX would fetch comparable premiums compared to the 737NG, Albaugh said, "I hope so".

Airbus has 1,058 firm orders and 187 commitments for the A320neo. Albaugh said he expected the planemakers to maintain a roughly even share of the crucial narrow-body market over time.

ORDERS LIKELY

The Middle East's largest air show also marks a debut Dubai appearance for the 210-250-seat carbon-fiber 787 Dreamliner, which entered service this month after lengthy delays.

Albaugh said savings from the decision not to develop an all-new 737 would be used to help upgrade the long-range 777 and possibly add a stretched 787-10 version of the Dreamliner.

He said he expected an updated model of the 365-seat 777 to enter service around the end of the decade.

Asked about the prospects for 777 orders at the air show, Albaugh declined to comment but said Boeing hoped to announce "a few" orders at the November 13-17 event. Boeing has said it is heading for a record year in orders for the 777.

"The 777-300ER airplane is in demand and we have orders for 132 so far this year and I can tell you we are talking to half a dozen other customers about orders for the plane."

Industry sources told Reuters on Friday Emirates was in talks to by at least 30 777s and possibly as many as 50 in a deal worth up to $15 billion. Both sides declined to comment.

Albaugh said Boeing was watching out for any sign of contagion from Europe's debt crisis but noted Gulf passenger traffic was still growing, though at reduced rates this year.

However he said financing unit Boeing Capital Corp would take a more strategic role in supporting Boeing sales campaigns by helping airlines to find finance when called upon to help.

Once a standalone lessor, the financing arm had reduced its role to one of lender of last resort in recent years but a huge 460-plane order split between Boeing and Airbus attracted attention in July on moves by both firms to act as finance arrangers.

(Reporting by Tim Hepher; Writing by Jason Benham, Tim Hepher; Editing by Praveen Menon and Sitaraman Shankar)

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