Military

What Does a Boeing 777-9X Cost?

Emirates 777-300ER
The Boeing Co.
Last week, Boeing Co. (NYSE: BA) announced that it had firmed up its configuration plans for the 777-9X, the latest addition to the 777 family of planes, scheduled for production in 2017 and delivery to customers in 2020. The company did not go into specifics, but the announcement means that Boeing has now firmed up the specifications for the new plane and will begin detailed design work on parts, assemblies and other systems for the new plane.

The 777-9X has a list price of $400 million, following a 2.9% price increase announced on July 1. It is the most expensive plane on Boeing’s current price list and is nearly $140 million more costly than a 787-9 and about $22 million more expensive than the larger 747-8. Boeing said it had orders and commitments from six customers for 320 of the new 777X family of planes.

There are currently two aircraft in the 777X family: the 777-8X that has a capacity of 350 passengers and carries a list price of $371 million, and the 777-9X that has capacity for 400 passengers at a list price of $400 million. Based on the company’s highly successful 777 family, the 777X planes add a wing made of the same composite material used for the 787 Dreamliner and will use a new engine from General Electric — the GE9X — which the companies say is the most advanced, fuel-efficient commercial engine ever made. The 777X will also use many of the same flight deck technologies used on the 787.

The 777X aircraft are important parts of organic growth strategies of the three largest Middle Eastern carriers: Emirates, Qatar Airways and Etihad Airways. Emirates has order 150 of the planes, Etihad has ordered 25, and Qatar Airways has ordered 60, accounting for about 65% of all orders for the new planes.

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Emirates is by far the largest customer for the 777X. The other airlines that have placed orders for the 777X are Lufthansa with an order for 20, All Nippon Airways (ANA) with an order of 20 and Cathay Pacific with an order for 21.

A report at Arabian Aerospace noted that the 777X’s “immense range and payload capability” promise to deliver the lowest fuel burn and trip costs of an twin-engine planed and will open up more non-stop routes for the three large Gulf carriers from their hubs in Dubai, Abu Dhabi and Qatar.

Etihad Airways revealed last week that it had received an injection of $2.5 billion in cash from the government of Abu Dhabi, a subsidy that U.S. and European carriers say violates the Open Skies agreement by supplying government subsidies to the Gulf carriers, enabling them to charge lower fares and compete unfairly with the legacy carriers. A group called the Partnership for Open & Fair Skies delivered a 400-page filing to the U.S. Department of Transportation last week claiming that the three Gulf carriers “have not stimulated any meaningful new demand and are instead diverting passengers from other airlines, inflicting harm on the U.S. aviation industry.”

Boeing has no U.S. airline signed up as a customer for its 777X planes, so even though the company has had little to say publicly about the dispute with the Gulf carriers, it is not too hard to guess where the company comes down: on one side, 235 orders worth about $94 billion at list prices and on the other side, zero orders and zero dollars.

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The 777X was launched at the Dubai Air Show in 2013 with 259 orders and commitments. All orders from the Gulf carriers were announced at that time and none of the carriers has increased its order. Lufthansa had already announced an order for 34 of the planes, but has since cut that by nine. It is fair to say that neither the 777-8X nor the 777-9X is selling like hotcakes. And as long as the orders remain low, the price will remain high.

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