Sunday March 14, 2004
Singapore Air Potential 7E7 Launch Customer?
March 12, 2004
Singapore Airlines has asked Boeing for a specific proposal on the new 7E7 jetliner along with information on a potential purchase of 777s, aircraft industry sources familiar with the matter said.
A handful of other airlines are also talking seriously about the possibility of becoming launch customers for the 7E7, which if built would be the aerospace company's first all-new plane in about a decade, the sources said.
Also said to be working closely with Boeing on the 7E7 at this point are All Nippon Airways, Deutsche Lufthansa, Emirates and some Chinese carriers, according to one source.
"There's enough of an interest that there's a bit of a race going on," said the source, who asked not to be identified.
Boeing, which does not yet have formal board approval to launch the 7E7, has ramped up efforts this year to sell the plane. The Chicago-based company hopes to have a launch customer by mid-year, perhaps before the Farnborough Air Show outside London in July.
On a conference call this week, program manager Mike Bair said, "We are still working with more than 50 airlines; obviously a smaller number of that we are really in detailed conversations, which is about potential launch customers."
Bair also said US airlines are among those who might be on board a launch, but given the massive losses most have sustained in recent years, others have discounted this.
Chief Executive Harry Stonecipher recently said in an interview that Boeing would probably launch the fuel-efficient airplane with only one customer, but not without one. The plane would enter service in 2008.
Stonecipher returned to active management duty at Boeing late last year and has publicly supported the plane's development since then.
List pricing is around USD$120 million, although sources said for launch customers, the tag will be far lower, perhaps USD$85 million or so in 2004 dollars.
Singapore Airlines, said to be a tough negotiator on its aircraft purchases, is the only airline that has put forth a formal Request for Proposal, sources said. That request has been in the works for four to five months.
A spokeswoman for the Singapore carrier declined to comment on the 7E7 negotiations, but noted the company issued Requests for Proposals to both Boeing and Airbus last month on its medium- and long-haul and regional needs.
Another aircraft industry source said that while Singapore issued an RFP, it does not necessarily mean that the airline is further along in talks than the other carriers, which may have less formal procedures.
"There are some airlines that insist on a very formal process," said the source. Aircraft manufacturers, responding to the airlines' "wish lists," include details on price, performance standards, what sort of training will be provided, how many manuals are included, and so forth.
Also crucial in the initial negotiations, particularly for a launch customer, are potential guarantees to the airplane's residual value. When a new type of aircraft is launched, no one knows for sure how much it might be worth in 10 or 20 years, especially if few other carriers step up to buy.
I know this has been discussed before, but not with an article to go with. I was just wondering if this changes anybody's mind on who might be the launch customer?