Trouble for the Boeing 777X as Emirates considers swapping one-third of order for smaller 787s
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.
“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.
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- Receive a Domestic Main Cabin round-trip companion certificate each year
- Statement credit for TSA PreCheck/Global Entry fee (up to $100)
- First checked bag free
Cons
- Doesn't make sense if you don't fly Delta
- SkyMiles aren't the most valuable airline currency
- Earn 90,000 bonus miles after you spend $4,000 in purchases on your new Card in your first 6 months.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. Payment of the government imposed taxes and fees of no more than $80 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights. Plus enjoy Main Cabin 1 Priority Boarding and settle into your seat sooner.
- New: Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide including takeout and delivery in the U.S., and at U.S. supermarkets.
- Earn 1X Mile on all other eligible purchases.
- Enjoy a per-visit rate of $50 per person for Card Members and up to two guests to enter the Delta Sky Club when traveling on a Delta flight.
- Fee Credit for Global Entry or TSA PreCheck® after you apply through any Authorized Enrollment Provider. If approved for Global Entry, at no additional charge, you will receive access to TSA PreCheck.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs up to two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
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- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees