Cargolux 747-8F delivery impasse ended, delivery on October 12

Cargolux Boeing 747-8F LX-VCB RC502

It took until the second question at today’s Qatar Airways 100th airplane delivery event for CEO Akbar Al-Baker to be asked about the contract dispute between Cargolux, of which Qatar is a 35% stakeholder, and General Electric that abruptly cancelled delivery of the cargo carrier’s first two 747-8Fs.
Al-Baker declared the dispute between Cargolux, Boeing and GE resolved over the 2.7% fuel burn shortfall on the freighters, and that the launch customer for the type will take delivery on October 12, pending an October 6-7 Cargolux board meeting. 
However, sources indicate that there is no dispute between Qatar Airways and Boeing in respect of 787 delay compensation. Sources point to a more likely influence being Qatar Airways’ knowledge of the 747-8 performance shortfall and related compensation terms as a result of managing the purchase of two 747-8I VIP aircraft for the Qatar government. GE and Boeing are developing a performance improvement package (PIP) to address just over half of the 2.7% fuel burn shortfall suffered by the 747-8′s GEnx-2B67.

However, service-entry of the PIP is believed to be at least two years away – with customers being asked to pay for the upgrade. The engine will need additional upgrades to redress the balance of the performance deficit, and there is the prospect of an additional charge being made for this PIP.

At the time of its publication early Friday, the Flightglobal report (excerpted above) called the negotiations ongoing and there was a “constructive dialogue” between the parties. Clearly, the gap was closed in the hours before Qatar took its100th aircraft, a new 777-200LR.
Industry sources say that Cargolux will remain the launch customer for the type, with Boeing very likely to make its first deliveries to Atlas Air and Cathay Pacific Cargo following its belated handover to the European cargo-hauler.

12 Responses to Cargolux 747-8F delivery impasse ended, delivery on October 12

  1. -- October 1, 2011 at 12:32 am #

    “the impasse had been resolved between the cargo company and General Electric over a 2.7% fuel burn shortfall in the new jets”
    Is that figure for the engines or the aircraft? From your article it sounds like the aircraft but considering the original comment is about a dispute with GE, it sounds more like the engines.

  2. Guru Josh October 1, 2011 at 6:36 am #

    Did Akbar Al Baker explicitly call it a 2,7% fuel burn issue? The GEnx-2B engine is believed to have a 2,7% SFC issue alone (engine level, fuel burn = airplane level), so as the plane is overweight on top, block fuel should be off by more than 2,7%.
    I doubt that any customer, more so a cargo operator, would make such a fuss on ‘just’ a 2,7% block fuel issue.

  3. Christopher Dye aka CubJ3 October 1, 2011 at 7:01 am #

    So, it looks like the issue was that Cargolux had not gotten the level of compensation for its 748s that Qatar gotten for the 748Is, not the other way around.

  4. V V October 1, 2011 at 9:08 am #

    Agree with Guru Josh.
    It is weird that 2.7% of sfc made such a noise especially when you know that they must have somekind of remedy that is contractually defined to compensate a fuelburn shortfall beyond the tolerance.

    The reality is that worldwide Available Freight Tonnes Kilometer (AFTK) is increasing much more rapidly than the Revenue Tonne Kilometer (FTK).
    Perhaps they do not need to further grow their AFTK in the short term especially with the current financial troubles in Europe.
    Or perhaps there is a last minute hurdle on the financing plan.
    http://www.iata.org/pressroom/pr/Pages/2011-09-01-01.aspx

  5. dopydem October 1, 2011 at 2:27 pm #

    I thought the issue was more about the operators having to pick up the cost of the PIP kits as well as the cost of installing them. The PIP installation is in effect of a partial engine rebuild. That ain’t cheap.

  6. Tom October 1, 2011 at 6:32 pm #

    Jon,

    isn’t Boeing going to deliver some own “PIP”s and some improvements to the avionic?
    The 747-8F und the 787-8 programmes are actually not finished and Boeing has to start the 737MAX, 767-Tanker and continue the 787-8, 747-8I! Is there any capacity for this “micro” project?

  7. alloycowboy October 1, 2011 at 8:12 pm #

    I always amazing how not having the right airplane part at the right can lead to a synergistic agreement.

  8. Guru Josh October 2, 2011 at 4:29 am #

    @Tom Boeing’s own PIPs, as far as made public, cover the flight management computer software (certified with 747-400 s/w) and 5,000-6,000 lbs of empty weight reduction (usually not a full remedy).
    I’d like to add two other scenarios for the dimplomatic impasse:
    1) What if Boeing sent the latest ‘more sober’ performance statement to Cargolux just the week ahead of first delivery?
    2) What if during that first board meeting with Qatar at the table Cargolux realized that Qatar in terms of compensation had been treated much more favorable than they ever had been, so that as a long-term/launch customer they felt betrayed?

  9. V V October 2, 2011 at 12:20 pm #

    Re: By dopydem on October 1, 2011 2:27 PM
    I thought the issue was more about the operators having to pick up the cost of the PIP kits as well as the cost of installing them. The PIP installation is in effect of a partial engine rebuild. That ain’t cheap.

    As long as the shortfall beyond the tolerance defined in the contract is compensated by the remedies, there is not any reason for Boeing to put in place the PIP. It is either the installation of the PIP or payment of the remedies.

    The terms of the contractual commitments are normally well defined in the contract to avoid any trouble during delivery. This fuss sounds like, “Give me some more concessions.
    Or perhaps there have been some hiccups in the financing plan in the last minute.

  10. RC20 October 2, 2011 at 4:39 pm #

    Maybe we will find out more as time goes on.

    Its good to see at least these back on track.

    Atlas, me thinks its a cost cutting move in face of the level off or drop in cargo.

    Weird is to find that two 747-400ERF sit in the dessert still, while 747-200Fs and conversions of various persusions are flying cargo.

  11. tom October 3, 2011 at 6:04 am #

    @V V,

    no customer will be amused, if he will learn the product he will buy doesn’t comply to the promised specs and that the remedies will be available in two or three years.
    All these issues where know before the big party should take place…
    Was is it just a poker game?

  12. Jon October 4, 2011 at 10:18 pm #

    So, really, this is GE’s fault. Two PIP’s over 4 years is pathetic. I would demand that GE provide one PIP that addresses the full 2.7% and have that ready by 4Q 2012. There’s just no excuse, especially has this shortfall has been known by GE for almost two years now. If the engines were at spec, the 747-8 would be exceeding its promised performance by a significant margin.