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Boeing Sees First 787 Cancellation, Lags Airbus

Boeinghas announced the first cancellation of an order for its delayed 787 Dreamliner, signaling that airlines may be getting impatient for deliveries of the new, fuel efficient plane.

The U.S. aircraft maker, which updated its online order book on Thursday, also lags rival Airbus in the race for orders this year, as the flow of plane sales appears to have leveled off after three boom years.

In this hand hout computer-generated image provided by Boeing shows the company's new series Boeing 787 Dreamliner, Wednesday, April; 27, 2005.  A senior Boeing Co. official on Wednesday brushed off the threat of European rival Airbus SAS's "superjumbo," saying orders for Boeing's smaller, more fuel-efficient Dreamliner were robust. (AP Photo/Boeing) ** EDITORIAL USE ONLY **
AP
In this hand hout computer-generated image provided by Boeing shows the company's new series Boeing 787 Dreamliner, Wednesday, April; 27, 2005. A senior Boeing Co. official on Wednesday brushed off the threat of European rival Airbus SAS's "superjumbo," saying orders for Boeing's smaller, more fuel-efficient Dreamliner were robust. (AP Photo/Boeing) ** EDITORIAL USE ONLY **

In a joint statement on Thursday, Boeing and Azerbaijan Airlines said they had finalized an order for two single-aisle 737s and two twin-aisle, extended range 767s, worth about $450 million at list prices.

One of the 767s replaces one of the three 787s that Azerbaijan had ordered in February last year. The cancellation of one of the 787 orders is the first for Boeing's new plane, which has been delayed three times by problems with unfinished work from suppliers and shortages of some key parts.

The plane is now set for its first test flight in the fourth quarter and first delivery in the third quarter of 2009, about 15 months behind the original schedule.

Some airlines will now have to wait more than two years longer than originally expected for 787 deliveries, but Azerbaijan is the first to cancel an order.

"We look forward to operating the 787 and benefiting from its advanced performance features," said Jahangir Askerov, president of Azerbaijan Airlines, in a statement. "However, the 767-300ER is the economical and logical choice to fulfill our interim capacity targets."

Boeing's 787 was designed to supersede the 767, which was one of Boeing's best-sellers throughout the 1990s. The older plane has seen a resurgence of interest from airlines, especially in its freight version, as both Boeing and Airbus take longer than expected to introduce their new ranges of mid-sized planes.

The 767 has also been in the spotlight recently as it is the basic airframe Boeing will use in its bid to win a $35 billion aerial refueling contract from the U.S. Air Force. That competition is to be rerun after government auditors found errors in the award of the contract earlier this year to Northrop Grumman and Airbus' parent EADS.

Including the latest Azerbaijan deal, Boeing said it has 551 net firm orders for commercial aircraft so far this year. Earlier on Thursday, rival Airbus said it had 711 net orders as of the end of July.

Boeing won the sales race last year with an industry record 1,413 orders for 2007, capping three years of boom sales. Industry analysts expect orders to drop off slightly this year, as airlines scale back operations in the face of high fuel prices.

For the month of July, Boeing recorded only 70 new orders, down from 147 last July.

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