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Boeing Shares Big Order With Airbus; Makes Rosy Market Projections

March 7, 1996

SEATTLE (AP) _ Boeing issued a rosy prediction for the aircraft market as a big jet leasing firm underscored the industry’s upswing with a multi-billion dollar order.

International Lease Finance Corp., which rents jets to airlines, said Wednesday it would buy 18 of Boeing’s 777 jumbo jets and a mix of 38 Airbus Industrie jetliners. The orders are valued at about $6 billion.

The order, one of a series of huge aircraft purchases in recent months, underscored Boeing’s bright 20-year outlook, which raised demand expectations by 6 percent from last year’s forecast.

``We think that the market is coming back and we’re happy to say it’s also coming back to manufacturers as well as airlines,″ Nancy Bethel, vice president-marketing for Boeing Commercial Airplane Group, told a news conference.

Wednesday’s news was tempered by a Wall Street Journal report that United Airlines was unhappy with its new 777. It was a special embarrassment for Boeing because United was the original customer for the jumbo jet and first to put it into service last year.

Boeing and United officials downplayed the report, saying none of the complaints involved safety and most were simply teething pains for an otherwise reliable aircraft.

In a Feb. 13 letter to Boeing, Joseph O’Gorman, United’s director of fleet operations, the 10 new 300-seat jets it has purchased so far have been ``a major disappointment.″ The airplanes’ time out of service has been intolerable, he wrote.

O’Gorman later said in a statement issued through Boeing that the 777 has outperformed all other new airplanes United has introduced.

``Unfortunately with any new airplane there are going to be some issues that you have to work out,″ Bethel said. ``We’re on top of it and we’re working closely with United to make that happen.″

Boeing captured nearly 70 percent of the world’s commercial jet market in 1995 and is aiming for at least two-thirds of the market over the next 20 years.

Last year, Boeing predicted the world’s airlines would need about 15,000 new jets through 2014. This year’s estimate, through 2015, pegs it at 15,900 planes.

Demand for new jetliners over the next 20 years will top $1.1 trillion, with Asia showing the fastest growth, Boeing said.

Boeing projects passenger traffic increasing at 5.1 percent a year worldwide and 7.1 percent in the Asia-Pacific region. China’s air travel growth is expected to average 11.5 percent.

The early 1990s were disastrous for airlines, with a worldwide recession and the Gulf War causing enormous losses. But airlines were able to sustain profitability last year and with it, the confidence to buy new aircraft, Bethel said.

``Our industry appears to have made it through the bottom of the cycle,″ she said.

Commercial jetmakers delivered fewer planes in 1995 than the year before, but orders for new aircraft more than doubled from 347 to 714.

ILFC did not place a value on its order, but Boeing said its share would be about $2.8 billion.

ILFC, a subsidiary of insurer American International Group Inc., also ordered 26 widebody Airbus jets and 12 smaller planes. Airbus did not announce a dollar value of the orders, but published prices would put the total at about $3.2 billion.

Deliveries of the 777s will begin in 1999 and the Airbus planes will be delivered starting next year.

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