With less than three years before the 777-9 enters service, Boeing executives say they are feeling no pressure to heavily discount the new aircraft type to increase sales.
“We’re seeing airplane pricing holding up pretty well. It’s competitive, but not unusual,” Dennis Muilenburg, Boeing’s chairman, president and chief executive, told analysts on a fourth quarter earnings call on 25 January.
The 777X backlog became a discussion topic on the earnings call due to concerns that Boeing’s order book relies heavily on Middle Eastern carriers with declining balance sheets. Emirates, Etihad and Qatar account for 235 of Boeing’s 306 firm orders for the 777X family. Iran Air also has committed to buy 15 777-9s.
Boeing’s sales efforts on the 777X also seem to have gone cold over the last 2.5 years. Since July 2014, Boeing has added only one firm order for 10 777X aircraft from an unidentified customer to the backlog.
But Muilenburg insists there is nothing yet to worry about, saying that the 777X backlog is in “very good shape”.
Instead, Boeing’s sales efforts are focused on filling the bridge from the existing 777 models, including the 777-300ER and 777 Freighter, to the 777X, which introduces a new composite wing and GE Aviation GE9X turbofan engines.
Boeing had originally hoped to keep 777 deliveries on a steady pace through the transition to the 777X, but a soft widebody order market blew up those plans. Monthly production has fallen over the past to year from 8.3 to seven. It will continue declining to five by August, then fall to an effective rate of about 3.5 per month as the 777X enters the production system in 2019.
The 777 backlog is 90% sold-out in 2018 and 2019 at planned rates, Muilenburg says. That percentage includes Iran Air’s commitment to order 15 777-9s, which has yet to be finalised.