Boeing Wins Big Orders for New 787 From Virgin, Air Canada
Boeing won more than $6 billion in orders for its new carbon-composite 787 Dreamliner jet from North American and European airlines, lifting Boeing's shares on Tuesday.
Since its market launch in April 2004, Boeing said the light-weight, fuel-efficient 787 has racked up 544 orders worth more than $75 billion, making it the most successful launch in the company's history.
Orders from Virgin Atlantic and Air Canada, announced on Tuesday, mark an important victory in Europe and North America over European rival Airbus in the lucrative market for wide-body planes.
“With more than a year to go before we introduce the (Dreamliner), we’ve had more orders than we’ve had for any airplane in our history,” said W. James McNerney, Jr., chief executive officer of Boeing, in an interview on CNBC. “We’re very proud of that and the impact the technology is having on airlines and their desire to work with us. The Virgin order is huge.”
In the past few years, Asian and Middle Eastern airlines have taken the lead in ordering 787s.
Scott Carson, the chief executive of Boeing's commercial airplane unit, said the 787 remained on track to be rolled out of the factory near Seattle in July, have its first test flight at the end of August, and be ready for delivery in May 2008.
The new plane has handed Boeing dominance in the lucrative market for larger, wide-body jets, heavily outselling Airbus.
Britain's Virgin Atlantic said it will buy 15 787-9 jets valued at about $2.8 billion at list prices. Deliveries are to begin in 2011.
The order, however, was less than earlier indications of a deal for up to 24 787s, according to a source familiar with the matter.
Virgin Atlantic's order includes options on 8 additional 787-9s and purchase rights on a further 20 planes. Virgin Atlantic said the total deal could be worth up to $8 billion.
Dampening the impact of the order, however, Virgin Atlantic Chairman Sir Richard Branson said he would consider buying Airbus' A350 if the Airbus jet proved to be more fuel-efficient than the 787.
Branson later told CNBC's Phil LeBeau that Virgin plans to test bio-fuels next year in an effort to reduce carbon emissions and increase efficiency.
“It would be wonderful if we could change the color of Virgin from red to green,” Branson said in the CNBC interview.
The new engine designed to run on bio-fuel will be jointly developed by Boeing and General Electric. GE is the parent company of CNBC.
Boeing's McNerney said the use of bio-fuels in the airline industry is more than just a dream, but noted, “We’re closer to the beginning than the end.”
He said response to the new Dreamliner has been strong.
Air Canada said it exercised options and purchase rights for an additional 23 787s, bringing its total orders for the aircraft to 37 from 14. The order for the 23 planes is worth about $3.5 billion at list prices.