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Market Challenges Remain For Boeing's 747-8F

Close to three years without a new order, plus an impending delay.
Boeing 787 Dreamliner, COMMENT, Business Trends

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Boeing has been struggling for much of the last year to get both 787 and 747-8F programs closer to their certification goals. With the 747-8 program already in a loss position, Boeing desperately needs not just new orders to solidify the backlog but also needs to start turning the current backlog into deliveries to start earning revenue.

It is a remarkable turnaround of fortunes for the 747 – once commanding premium prices in the absence of a direct competitor to now being saddled with ballooned program costs.

There are still concerns that a double dip recession is but a heartbeat away, that would ultimately hurt the 747-8F if customers curtailed their freighter operations – we witnessed this with many (passenger and freighter) 747-400s being parked at the height of the recent downturn and very few have been revived into active status.

To that end, the performance benefits of the 747-8F will mean that it remains a unique freight hauling machine that simply will not be matched for at least the next 15 years by anything comparable in size – a late delivery would actually be beneficial so as not to saturate the market with capacity when freight yields still have yet to recover to pre-2007 levels, even in the resurgent Asia-Pacific markets.

The other problem is that despite Jim McNerney’s optimism that there would be further interest in the 747-8F, that has yet to materialise – it is only of concern because the airplane is close to three years without a new order.

The other problem is that since its entry into service, the 777F has given many operators a more flexible airplane to deploy when traffic is down yet still benefit from big cuts in fuel burn and trip cost.

While neither is a substitute for the other, it is more likely than not that as we see more 747-400s hit the desert, few, if any will be reactivated and even less will be converted - paving the way for the 747-8F and 777F to dominate the upper market segment in which Airbus has no presence.

The big challenge however, remains certifying the airplane – Cargolux has been as patient as All Nippon Airways and any further slide in deliveries puts the 747-8F further away from being a profitable endeavour.

This column was written by FBE Aerospace analyst Saj Ahmad, the views expressed are his own.

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