United, of course, won’t pay anything near the list price. In fact, industry consulting firm Leeham quotes sources who say the United will pay just $130 million per plane. The usual discounted price on the plane is around $150 million.
While it may sound like Boeing is giving away one of its premier products, the good news for the aircraft maker is that the United order would add to the backlog of 777s. That allows Boeing to keep the production line for the current version of the plane going until the new 777X is ready for delivery to customers. First delivery for the 777X is presently scheduled for 2020.
To keep its production line for the 777 running, Boeing needs 40 to 60 orders annually for the plane to bridge the production gap to the new version. In early December, the company’s president and COO, Dennis Muilenburg, said that Boeing had firm orders for 300 of the current version of the plane and customers had options on another 150. The company took orders for 63 of the planes in 2014.
In mid-December Air France-KLM deferred delivery of 10 new 777-300ERs the airline was supposed to take in 2015 and 2016. The airline cited cheaper fuel costs, saying that the financial case for buying more fuel-efficient planes is less compelling now than it once was. Boeing — and rival Airbus with its current version of the A330 — will continue to have difficulty selling these current versions of their aircraft because the planes are not much more fuel-efficient than 10-year old models. And that explains the likely steep discount that United is getting to place the order.
Boeing’s stock traded up about 0.6% in the mid-afternoon on Wednesday, at $131.95 in a 52-week range of $116.32 to $144.57.
ALSO READ: Airbus to Steal Sales From Boeing?
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