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28th Jan 2005, 09:11
NEW YORK (Reuters) - Boeing Co. (BA.N: Quote, Profile, Research) will sign on Friday deals worth up to $7.5 billion to sell 60 of its 7E7 Dreamliner planes to six Chinese airlines, a source familiar with the transactions said on Thursday.
The orders are a coup for Boeing as it battles European rival Airbus (EAD.PA: Quote, Profile, Research) for customers. They are also a big boost for the 7E7, a mid-sized airliner expected to offer low fuel and operating costs when it debuts in 2008.
"Obviously, it's a plus," said Cai von Rumohr, an analyst at SG Cowen. "I'm a bull on the 7E7. Boeing has a better product (than rival plane Airbus A350) which will get more than half the market."
Boeing shares rose 2.2 percent to close at $50.97, outperforming the American Stock Exchange Defense , Index which gained 1.2 percent on the day.
Boeing may have been helped by its ability to start delivering planes in the first half of 2008, in time for the Beijing Olympics later that year, von Rumohr said. The A350 -- which Airbus is positioning as the 7E7's rival -- will not be available until late 2009, he added.
The 7E7 range will offer models with 289 to 217 seats, to cost about $120 million each.
Boeing has predicted that China will become the world's second largest commercial aviation market, behind the United States, within 20 years. The company said China will need 2,300 planes over the next two decades as increasingly well-off Chinese take to the air.
The source, citing U.S. government and company officials, said the aircraft were being purchased by China Southern Airlines Co Ltd. (1055.HK: Quote, Profile, Research) , China Eastern Airlines Corp Ltd. (600115.SS: Quote, Profile, Research) , Air China (AIRC.UL: Quote, Profile, Research) , Shanghai Airlines Co Ltd. (600591.SS: Quote, Profile, Research) , Hainan Airlines Co Ltd. (900945.SS: Quote, Profile, Research) and Xiamen Airlines.
'POINT TO POINT'
The deal comes as Airbus has been making inroads in the Asian markets which Boeing long dominated. Earlier on Thursday, Air China said it had agreed to buy 20 of the airline's A330-200 planes.
France's Transport Ministry also recently said China Southern was close to buying five A380 superjumbo planes.
Boeing missed its target of 200 firm commitments for the 7E7 by the end of 2004 despite late-year deals with Japan Airlines Corp. (9205.T: Quote, Profile, Research) and Continental Airlines (CAL.N: Quote, Profile, Research) .
The big China order was a positive sign for Boeing's strategy of not taking on the Airbus' double-decker super-jumbo and focusing on a smaller plane aimed at customers who wish to bypass major hubs, said aviation consultant Richard Aboulafia.
"The Chinese are clearly more enamored of the point-to-point Boeing approach," he said.
Boeing, in a statement, said it would sign preliminary agreements during a ceremony at the U.S. Commerce Department attended by the Chinese ambassador to the U.S., Yang Jiechi, and the president of the China Aviation Supply Co., Li Hai.
"Boeing and China have reached a substantial agreement that deepens our long-standing relationship," Boeing spokeswoman Amanda Landers said, without elaborating on the deals.
Sen. Maria Cantwell, a Democrat from Washington state, where Boeing does much of its manufacturing, met a Chinese delegation Thursday that included embassy and airline representatives, said Charla Newman, a spokeswoman. (Additional reporting by Tim Dobbyn in Washington)
© Reuters 2005. All Rights Reserved.
The orders are a coup for Boeing as it battles European rival Airbus (EAD.PA: Quote, Profile, Research) for customers. They are also a big boost for the 7E7, a mid-sized airliner expected to offer low fuel and operating costs when it debuts in 2008.
"Obviously, it's a plus," said Cai von Rumohr, an analyst at SG Cowen. "I'm a bull on the 7E7. Boeing has a better product (than rival plane Airbus A350) which will get more than half the market."
Boeing shares rose 2.2 percent to close at $50.97, outperforming the American Stock Exchange Defense , Index which gained 1.2 percent on the day.
Boeing may have been helped by its ability to start delivering planes in the first half of 2008, in time for the Beijing Olympics later that year, von Rumohr said. The A350 -- which Airbus is positioning as the 7E7's rival -- will not be available until late 2009, he added.
The 7E7 range will offer models with 289 to 217 seats, to cost about $120 million each.
Boeing has predicted that China will become the world's second largest commercial aviation market, behind the United States, within 20 years. The company said China will need 2,300 planes over the next two decades as increasingly well-off Chinese take to the air.
The source, citing U.S. government and company officials, said the aircraft were being purchased by China Southern Airlines Co Ltd. (1055.HK: Quote, Profile, Research) , China Eastern Airlines Corp Ltd. (600115.SS: Quote, Profile, Research) , Air China (AIRC.UL: Quote, Profile, Research) , Shanghai Airlines Co Ltd. (600591.SS: Quote, Profile, Research) , Hainan Airlines Co Ltd. (900945.SS: Quote, Profile, Research) and Xiamen Airlines.
'POINT TO POINT'
The deal comes as Airbus has been making inroads in the Asian markets which Boeing long dominated. Earlier on Thursday, Air China said it had agreed to buy 20 of the airline's A330-200 planes.
France's Transport Ministry also recently said China Southern was close to buying five A380 superjumbo planes.
Boeing missed its target of 200 firm commitments for the 7E7 by the end of 2004 despite late-year deals with Japan Airlines Corp. (9205.T: Quote, Profile, Research) and Continental Airlines (CAL.N: Quote, Profile, Research) .
The big China order was a positive sign for Boeing's strategy of not taking on the Airbus' double-decker super-jumbo and focusing on a smaller plane aimed at customers who wish to bypass major hubs, said aviation consultant Richard Aboulafia.
"The Chinese are clearly more enamored of the point-to-point Boeing approach," he said.
Boeing, in a statement, said it would sign preliminary agreements during a ceremony at the U.S. Commerce Department attended by the Chinese ambassador to the U.S., Yang Jiechi, and the president of the China Aviation Supply Co., Li Hai.
"Boeing and China have reached a substantial agreement that deepens our long-standing relationship," Boeing spokeswoman Amanda Landers said, without elaborating on the deals.
Sen. Maria Cantwell, a Democrat from Washington state, where Boeing does much of its manufacturing, met a Chinese delegation Thursday that included embassy and airline representatives, said Charla Newman, a spokeswoman. (Additional reporting by Tim Dobbyn in Washington)
© Reuters 2005. All Rights Reserved.