No end yet to U.S. jetliner buying spree

WASHINGTON Wed Sep 5, 2012 4:53am EDT

A Boeing B 767-323ER jet of American Airlines lands at the airport in Zurich July 14, 2012. REUTERS/Arnd Wiegmann

A Boeing B 767-323ER jet of American Airlines lands at the airport in Zurich July 14, 2012.

Credit: Reuters/Arnd Wiegmann

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WASHINGTON (Reuters) - U.S. airlines could place hundreds of orders for new jets on top of their recent wave of purchases -- leaving billions of dollars' worth of orders for U.S. manufacturer Boeing Co (BA.N) and European rival Airbus EAD.PA still to fight over.

After sitting out a boom in plane orders in the past decade to sort out chronic financial difficulties, carriers led by American Airlines plunged into the market last year to take advantage of fuel-saving models offered by Airbus and Boeing.

Senior planemaker officials said in separate interviews the so-called replacement cycle, in which airlines seek to drive down operating costs by switching to efficient and newer planes, had some mileage left to run in the key North American market.

Barry Eccleston, president and chief executive officer of Airbus Americas, said Delta Air Lines, Alaska Airlines and US Airways had still not decided which new airplanes to buy.

"There are still several major campaigns for airplanes in the hundreds yet to be conducted," he told Reuters journalists.

Delta Airlines Inc (DAL.N), the second largest U.S. carrier behind United Continental Holdings Inc (UAL.N), has placed an order for Boeing 737-900ER aircraft to replace 757s but is expected to return to the market to update the rest of its narrowbody fleet.

As the world's biggest but most mature market, long-deferred replacements of older models dominate U.S. purchases.

In emerging markets, it is the additional frequencies and routes needed to keep up with economic growth that drive orders.

Both trends are contributing to generally upbeat forecasts for passenger plane demand over the next 20 years despite growing concerns over Europe's financial crisis. Airbus raised its long-term industry forecasts for aircraft deliveries earlier on Tuesday.

"I do think there's some work yet to do on the replacement cycle," said Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes.

"Southwest, American, United have all aggressively now committed to that replacement cycle. Delta last year was a big win for us with the 737-900ER, but I believe they have a long way yet to go. One hundred airplanes is a first step in what I would think would be more steps as you take a look at their fleet makeup," he said.

ALABAMA EXPORTS

Eccleston said an assembly plant Airbus plans to open in Alabama would mainly serve the U.S. market, but could also meet demand in South America where many airlines are expanding.

Boeing's Tinseth said Airbus's presence there would make no difference to competition for narrowbody business from U.S. carriers.

He said Airbus may have underestimated demand for this type of plane, the largest segment of the market reckoned to be worth some $2 trillion over two decades, as it places more emphasis on demand for the biggest jets such as the 525-seat A380 superjumbo.

He also said Boeing was sticking to its timeline for refreshing its widebody line. It plans to stretch its newly delivered 787 Dreamliner to add more seats in a version to be called 787-10 and then do a makeover of the 777 minijumbo.

Boeing said this week it still planned to deliver a next-generation variant of the popular 777 widebody by the end of the decade, denying a newspaper report that it had slowed the process.

"Our plans haven't changed," Tinseth said.

"We've been engaging with our customers on both the 787-10X as well as the 777X. On the 787-10X we have great confidence now in what that airplane could do ... so we're really at a point there where we have to ask the question what will be the condition of the production system of that airplane, when will it be ready, what kind of cost will this airplane take.

"We have to do our due diligence and when we have confidence in those things, the business case and so on, we'll bring that to the board and bring that to the market."

Aircraft names are traditionally followed by the letter X until they leave the drawing board and get launched to market.

Asked about the future of the 757, Boeing's largest narrowbody jet that ended a more than 20-year production run in 2005, Tinseth said Boeing had not formally abandoned a study known as "new light twin" for a possible replacement.

More than 1,000 are still in service.

However, he stressed that 95 percent of the 757's job can now be accomplished by a revamped version of the smaller 737.

Airbus is targeting the same market with its A321neo, also a smaller jet. Both say their priority is to deliver on existing projects.

A Boeing spokesman said any studies were broad in nature.

(Additional reporting by Andrea Shalal-Esa; Editing by Edmund Klamann)

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Comments (1)
Numb3rTech wrote:
Congratulations to Boeing. The best plane maker in the world.
I will only fly on Boeing aircraft. I do not trust any other brand when flying commercial.

Sep 05, 2012 1:37am EDT  --  Report as abuse
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