x Abu Dhabi, UAEWednesday 26 July 2017

Agreement between Boeing and IAM allows a smoother transition from the 777 to the 777X, with GCC airlines the biggest buyers.

A Model of a Boeing 777 plane at the Dubai Airshow. Pawan Singh / The National
A Model of a Boeing 777 plane at the Dubai Airshow. Pawan Singh / The National

A deal between Boeing and its machinists last week will boost confidence among Arabian Gulf carriers, who are big buyers of the company’s newest jetliner – the 777X, analysts say.

After months of negotiations, Boeing reached an agreement with the International Association of Machinists (IAM) to manufacture the aircraft in Everett, Washington.

If the deal had fallen through, Boeing would have had to consider moving to another location, recruit new machinists and engineers, costing it billions of dollars.

“In short the contract agreement between Boeing and IAM allows a smoother transition from the 777 to the 777X. And with GCC airlines among the biggest buyers, that will instil confidence in them that Boeing has de-risked the 777X development so as not to screw up like they did with the 787 [Dreamliner],” said Saj Ahmad, the chief analyst at StrategicAero Research.

Boeing chose the Dubai Airshow last November to unveil the 777X aircraft, securing a total of 259 orders and commitments worth US$95 billion. The orders were mainly from Emirates Airline, Etihad Airways, and Qatar Airways.

Previously, Boeing’s flagship 787 development programme was delayed by more than three years because of challenges with engineering, supply chain glitches and a labour strike in 2008.

Will Horton, an analyst at the Centre for Aviation (Capa), said that Emirates had been vocal about wanting the 777X to be assembled in Washington.

For all airline customers and prospective ones, the Boeing-IAM agreement brings stability and a clear outlook to the 777X”.

“New aircraft have proven complex enough for airframers without the need of resources and time to be spent on new assembly lines and their workers. Boeing’s South Carolina assembly plant has proven challenging,” said Mr Horton.

News reports higlighted the challenges facing the South Carolina plant such as delayed production quotas along with finding skilled workers in the state.

“Boeing will leverage the strength of its experienced workforce and robust supply chain in and around Everett to ensure the 777X kicks off as strongly as sales have and as the current 777 is today,” said Mr Ahmad.

“It’s a good result especially for Boeing. They’ve effectively broken the union backs in getting this contract approved by the smallest of margins,” he added.

But despite the union’s deal success, Boeing still faces some challenges.

“The Boeing-IAM agreement does not mean airlines will take their eye off the 777X project. They will want performance specifications to be met or extended and the aircraft delivered on time. This is a large enough challenge,” said Mr Horton.

Asked for its reaction to the Boeing-IAM deal, Emirates said in an email that it did not feel it appropriate to comment on a supplier’s internal issue.

Etihad and Qatar Airways were not immediately available for comment.

Meanwhile, Boeing said that it closed 2013 with deliveries of 648 planes, marking a company record. It also booked 1,531 gross commercial orders for the year. According to a Reuters report, Boeing beat Airbus for the second year in a row.