NBAA Convention News

2008 sales boost Boeing order book by 21 aircraft

 - October 6, 2008, 9:12 AM

Describing it as a “very exciting time to be an OEM,” Boeing Business Jets announced that during the past year it has added 21 aircraft worth approximately $3 billion to its backlog. Overall, the company claims a total backlog of 59 aircraft consisting of 33 of its BBJ family and 26 widebodies worth a total of $8.2 billion.

Those numbers were released during a press conference here at NBAA’08 by company president Steven Hill, who added some revisions to the company’s previous tally. According to Hill, last year’s tally of 151 BBJs in service has been amended to include eight 767-300ER VIPs and two 777-200 VIPs that were never considered in the previous total. Also included in the new figures are four BBJs and four BBJ2s sold directly by Boeing in green condition to a leasing company that entered VIP service this year. Based on these additions, Boeing Business Jets now claims a total of 190 aircraft ordered since the company’s beginning in 1996.

Boeing Business Jets said customer interest is still strong for its BBJ family with all models still drawing customer attention. In terms of its current orders, the largest percentage of aircraft–32 percent, including the majority of its widebody VIP jets–was headed to the Middle East, while Europe and Russia saw the next largest amount at 24 percent combined. North America and Asia trail at 22 and 18 percent, respectively. The overall largest usage for the aircraft is with private customers accounting for 59 percent of the executive liners.

Boeing Business Jets also revealed numbers that show its products are retaining their value well. Recent BBJs on the market sold for 140 percent of their original owners’ investment price. The company credits big demand and low supply with buoying the price, with airplanes on the market selling within two to three months.

One impact the company is experiencing from the current economic turmoil is in customers taking a wait-and-see approach before committing to a late-in-the-next-decade delivery date for a new aircraft. Savvy customers are watching to see if earlier delivery slots could become available as commercial airframes are reassigned as a result of financial hardship from the air carriers.

Boeing Business Jets believes most of its clients are apparently reasonably insulated from the credit crunch as it has not yet reported any order cancellations. According to Hill, the company sees few of its aircraft purchase transactions involving financing, with cash being the preferred medium for most of its customers.

The company is also feeling fallout from its current labor difficulties. “We want to see that our customers get their aircraft as soon as possible but we’ll have to evaluate customer by customer the impact of the strike once it is over,” said Hill. “What we will do is look at every customer the same, commercial or VIP, treat them all fairly versus where they purchased an aircraft, and sort it all out when the factory is finally humming again.”

Given the unknown outcome of the strike, Hill said the company’s first priority will be to bring current contracts as close to the delivery date as possible before quoting new order proposals. Current availability for the BBJs, 747-8 VIP and 777-200 VIP runs to  the late 2014 time frame, while the 787 VIPs are predicted to have a 2020 open date.

Like Airbus, Boeing Business Jets is concerned about the amount of near-term available completion slots, given the number of green VIP aircraft sold by the two airframers along with potential commercial conversions. Hill believes any completions shortage would be viewed as an opportunity for expansion by existing facilities as well as spark new entrants into the market.

The company recently delivered its first two green BBJ3s–analogous to the 737-900ER–to completions specialist DeCrane Aerospace, where their auxiliary fuel tank system and head-up display systems are being installed and certified as part of the completions process. Both aircraft are expected to enter service next year.

With regard to the nine 747-8 VIPs the company has sold, Hill described a new flexible plan for the overhead space in the aircraft developed with  supplier Greenpoint Technologies. The initial deliveries of the first green aircraft are approximately two years away, and the OEM is planning to make the area more accommodating by rerouting ducting and wiring, enabling customers to make customized modifications to the aircraft before delivery to the completions center, including creating a grand hall or lounge with a 12.5-foot-high ceiling. Other options call for the area to be fitted out as a luxury berthing compartment. Boeing Business Jets recently held a meeting in Abu Dhabi with the nine Gulf 747-8 VIP customers to discuss their preferences.