x Abu Dhabi, UAE Thursday 20 July 2017

Some relief for Boeing as Air China places large order

Air China, its nation's biggest carrier by market value, agreed to buy two Boeing 747-8 aircraft in the plane maker's first sale of the models this year.

Air China, its nation's biggest carrier by market value, agreed to buy two Boeing 747-8 aircraft in the plane maker's first sale of the models this year.

The Chinese carrier will also buy one widebody 777-300 plane, 20 single-aisle 737-800 jets and eight 777 freighters, according to a statement on Friday. The planes have a combined catalogue value of US$4.8 billion (Dh17.63bn) and Boeing granted "significant price concessions" through credit agreements, the airline said.

Boeing has not sold more than five 747-8 aircraft a year since Lufthansa bought 19 of the planes in 2006, and concern that persistently weak demand could prompt the company to curtail production has been mounting.

Friday's orders may help to alleviate some of the pressure, according to Stephen Levenson of Stifel Financial Corporation. "There has been concern that the dearth of orders could mean whitetails on the tarmac or insufficient demand to keep build rates at the current two per month," the analyst wrote. Boeing "has been making a major effort to book more 747-8 orders particularly from carriers in the Asia-Pacific territory that may be best-suited to their use".

That helps to balance the production schedule and backlog, said Mr Levenson, who recommends buying the shares.

The 747-8, 777-300 and 737 aircraft ordered on Friday have a catalogue value of about $2.6bn, while the 777 freighters command about $2.2bn. The agreement also includes the right to sell seven older 747 freight models back to Boeing and the option to convert four of the new 737 orders to one additional 777-300 jetliner, Air China said.

Separately, Cathay Pacific Airways said on Friday it had cancelled an order for eight Boeing 777-200 freighters and instead had agreed to buy three 747-8 freighters.

* Bloomberg News