How Apple Could Help Boeing Sell New Freighters

Military

Published: October 1, 2015 9:35 am

Last Updated: April 27, 2020 11:10 pm

In a report from Tuesday that almost slipped past us, Luxembourg-based Cargolux, Europe’s largest air freight carrier, said it is talking with Boeing Co. (NYSE: BA) about purchasing five new 747-8F freighters. At a list price of $379.1 million each, the deal would be worth about $1.9 billion before discounts.

The new freighters would be based in Zhengzhou, China, to serve a joint venture between Cargolux and Henan Civil Aviation Development & Investment, owner of 35% of Cargolux. Zhengzhou is home to the main Foxconn manufacturing plant. Foxconn, officially Hon Hai Precision Industry, assembles much of the world’s supply of iPhones from Apple Inc. (NASDAQ: AAPL).

Cargolux CEO Dirk Reich told Reuters earlier this week:

[I]n the last weeks before the weekend of the (iPhone 6s) introduction, we have seen big shipments from China to all over the world particularly the U.S. It looks like the sales are in the same range as they were last year, so it is an early sign of the high season for air freight starting.

Apple said on Monday that it had sold a record 13 million new model iPhones during the first weekend of availability.

The joint venture, which Reich calls “Cargolux China,” should have its plans in place by the end of this year and expects to begin service in 2017. He is not especially concerned by the slowdown in China’s economic growth:

I think the uncertainty in China is overvalued. If you go and look at the production facilities particularly in the hinterland and look at consumption, goods of Europe are now being consumed by hundreds of millions of people in the hinterland

A deal for the additional 747 freighters, if it comes, would help Boeing keep its 747 production line going for a while longer. The company reported unfilled orders for 29 of its biggest planes at the end of August, 16 commercial jets and 13 freighters. Boeing is cutting 747 production to one a month next year, so an order for five of the freighters is especially welcome.

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