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Trouble for the Boeing 777X as Emirates considers swapping one-third of order for smaller 787s

Feb. 03, 2021
3 min read
Trouble for the Boeing 777X as Emirates considers swapping one-third of order for smaller 787s
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Emirates is reconsidering its commitment to Boeing's newest jet, the 777X. The Dubai-based carrier is considering swapping as much as one-third of its order of the 777X for the smaller Boeing 787 Dreamliner, according to a person familiar with the matter.

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As first reported by Bloomberg, Emirates is looking to swap between 30 and 45 of its 115 777X orders for Dreamliners. The move would be a troubling one for Boeing and its 777X program, as Emirates is the largest customer of the yet-to-be-launched aircraft.

Emirates' move isn't the first of its kind. Boeing indicated on Monday that it's at risk of losing nearly 40% of its 777X orders because of delays. With the 777X now slated to debut in 2023 — more than two years later than previously expected — customers are permitted to walk away from their contracts.

Related: All about the new Boeing 777X

This week, Boeing lowered the backlog of the 777X to just 191 aircraft, according to a regulatory filing. That number, much lower than the 309 firm orders that are listed on the planemaker's site. Boeing said in an email that the drop is the result of an accounting standard that requires sales at risk of not happening to be removed from the backlog.

In its fourth-quarter earnings call, Boeing detailed that it had taken a $6.5 billion charge for delays to the 777X. The delay could bring additional losses to Boeing when it considers cancellations, production cuts and flight-testing risks.

Emirates, which was one of the first 777X customers, declined to comment on the report that it's looking to drop some of its 777X order in favor of the 787 Dreamliner.

As the coronavirus pandemic continues to set back the aviation industry, airlines have largely set aside their long-haul routes. As such, the demand for wide-body, twin-aisle planes has decreased — including for the future of the 777X, which is set to be the heir to the superjumbo Boeing 747. Orders for wide-body aircraft with both Boeing and Airbus are expected to be the last to recover from the pandemic-spurred drop in demand. Boeing has already said that it's cut the output of its Dreamliners.

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“The decline in backlog in the fourth quarter reflected aircraft order cancellations and removal of aircraft orders from our backlog due to the ASC 606 accounting standard, including our most recent assessment of 777X backlog due to the revised schedule,” Boeing Chief Financial Officer Greg Smith said on a call with analysts last month.

Boeing saw a similar slump in orders for the 737 MAX aircraft following its nearly two-year worldwide grounding. More than 1,100 orders for the plane were removed from Boeing's backlog of the 737 Max.

Related: Boeing’s bad quarter: Company delays 777X, 737 MAX timeline as COVID hits business

In its fourth-quarter earnings report, Boeing posted a record net loss of nearly $12 billion. The two-pronged dagger to Boeing consisted of the ongoing effects of the beleaguered 737 MAX, as well as the COVID-19-spurred downturn in demand.

"I'm sure glad 2020 is in the rearview mirror," Boeing CEO Dave Calhoun told CNBC.

Featured image by Photo by Zach Wichter/The Points Guy
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

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  • Unlimited 3x points on the broad category of travel and dining
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  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more