Here is a brief excerpt from an article by Julie Johnsson for Bloomberg Businessweek. To read the complete article, check out others, and obtain subscription information, please click here.
Photograph by Jens Goerlich
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Auto dealers have long been willing to take an old clunker off a potential buyer’s hands in order to clinch a sale of a shiny new model. Now airplane makers are following suit. Boeing is acquiring previous versions of the 747 from airlines ordering its new, tough-to-sell 747-8. Of the 19 older 747s that have changed hands so far this year, Boeing has snapped up seven, according to data compiled by Ascend Online Fleets. That makes it the biggest buyer of the used jets in 2013.
While the purchases put Boeing on the hook for finding new operators, it helps nurture demand for the newer 747-8—among a class of fuel-thirsty four-engine aircraft that airlines frown upon these days. New sales are pivotal to keeping 747 assembly lines humming as Boeing slows output 13 percent to 1.75 planes a month and stashes some unsold 747-8s in desert storage. “It unloads a problem [from airlines] to Boeing,” says Douglas Kelly, senior vice president for asset valuation at aviation consultant Avitas. “It’s just like trading in your car.”
While Boeing declined to comment on specific customers or aircraft sales, the Ascend data show that this year’s sellers of 747-400s to the world’s largest planemaker are all buyers of the 747-8 family, which includes both passenger and all-freight versions. The buyers are Korean Air Lines and Cathay Pacific Airways, as well as Cathay’s Dragonair unit and its cargo joint venture with Air China.
Production of the 747-400 ended in 2009. New features on the 747-8 include improved engines and an elongated version of the fuselage hump that gives the plane its distinctive profile. It entered commercial service in 2011, two years late, after Boeing diverted engineers to the delayed 787 Dreamliner.
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To read the complete article, please click here.
Julie Johnsson is a reporter for Bloomberg News. To read her other articles, please click here.