Top cargo carrier Qatar Airways has signed to be the launch customer for Boeing’s next-generation 777X freighter still in development, agreeing Monday to buy 34 of the widebody aircraft in a deal that seemed inevitable given recent bad blood between the airline and European manufacturer Airbus.
The Middle East carrier also announced that it has options for 16 additional freighters beyond its firm commitment and signed an agreement for up to 50 737-10s, the largest 737 MAX single-aisle passenger jet. As part of the agreement, Qatar will convert 20 of its 60 orders for 777X passenger aircraft to the 777-8 freighter. Qatar is also ordering two current production 777 freighters to get faster access to aircraft and meet customer demand.
Boeing said the freighter deal is worth more than $20 billion at current list prices and represents the largest freighter commitment in Boeing history by value. First delivery of the new freighter is anticipated in 2027.
Qatar Airways is the largest air cargo airline in the world by throughput — not including express carriers FedEx and UPS, which get a huge boost from hauling parcels in the domestic U.S. market — and has a fleet of 26 Boeing 777, two 747-8, and two 747-400s freighters, and one Airbus A310. During the pandemic it has also operated six 777-300 passenger planes in dedicated cargo mode, but has returned four of them to full passenger mode. The new aircraft will be used to expand and renew the cargo fleet.
Qatar Airways urged Boeing in 2019 to offer a freighter version of the 777X, which Boeing is now calling the 777-8. The carrier had few alternatives for a large, long-haul cargo jet because of a nasty spat with Airbus and Boeing no longer offering its current lineup of freighters later this decade. Boeing is shutting its 747-8 production line this year and must discontinue making the current 777 variant in 2027 to comply with new international emissions standards.
Boeing said it will build the 777-8 at its Everett, Washington, assembly plant. It has invested more than $1 billion to support 777X production.
The announcement coincided with U.S. President Joe Biden’s meeting Monday at the White House with Qatar’s emir, Sheikh Tamim Bin Hamad Al-Thani.
“The economic impact of this sale will reverberate throughout the United States. It’s a win for our workers, our manufacturers and our suppliers. These new freighters will be manufactured and assembled by American workers on American soil in Everett, Washington,” Commerce Secretary Gina Raimondo said in a statement. “And the aircraft will include GE9X engines produced by GE Aviation, also built and assembled in the U.S. Both Boeing and GE Aviation rely on hundreds of suppliers located in states across the U.S., many of whom will play integral roles in the production of these freighters.”
The Middle Eastern airline’s decision is a huge validation for Boeing. Certification of Boeing’s 777X design has been delayed several years by technical snags, distractions associated with the 737 MAX grounding and COVID. Boeing (NYSE: BA) lost $4.3 billion in 2021, the third consecutive year of losses but an improvement from $11.9 billion in 2020.
During a presentation of fourth-quarter earnings last week, Boeing officials said they expect to deliver the first 777X passenger plane in late 2023. The company has completed engine and airplane performance testing for the 777X, flown more than 1,800 flight hours and is close to beginning certification flight testing under Federal Aviation Administration supervision. German flag carrier Lufthansa will be the first customer for the 777X passenger plane. Boeing says it has 334 orders from eight airlines for the passenger model, with the 777-8 designed to go against the Airbus A350 and the 777-9 for a new market segment.
The plane should be attractive to cargo haulers because it has a payload capacity nearly identical to the 747-400 freighter while offering a 25% improvement in fuel efficiency, emissions and operating costs. Technological improvements include a new carbon-fiber composite wing and fuel-efficient engines. With a range of 4,410 nautical miles, the 777X will enable airlines to make fewer stops and reduce landing fees on long-haul routes.
Relationship with Airbus sours
Qatar Airways also placed a firm order for 25 737-10 aircraft and purchase rights for 25 additional airplanes, with a total value of $7 billion at list prices.
Qatar Airways predictably spurned Airbus’ new A350 large freighter after taking Airbus to court in December over complaints that exterior paint on its A350 passenger planes is deteriorating and jeopardizing safety. Airbus says the paint issues are cosmetic.
The dispute between an airline and major aircraft manufacturer has gotten unusually nasty, with the carrier grounding 21 A350 aircraft, canceling an order for 50 Airbus A321 neo single-aisle passenger jets and releasing a video showing the alleged damage on its A350s.
Qatar Airways, which is seeking $600 million in damages, said the surface degradation exposes aircraft’s lightning protection system to damage and the underlying composite structure to moisture and ultraviolet light. Other defects include cracking in the composite fuselage and damage around many rivets. It is demanding Airbus investigate the root cause of the problem and determine if repairs will correct it.
Demand for air cargo accelerated during the COVID pandemic with the drastic reduction in international passenger flights, the surge in e-commerce orders and extensive delays in ocean shipping. Boeing forecasts that the global freighter fleet will grow by 70% in the next 20 years as international trade and e-commerce continue to flourish.
Boeing has dominated the factory-built freighter market for years, with Airbus completely on the sidelines after pulling the plug on the A330-200 medium-size freighter last decade due to lackluster sales. Airbus has now reengaged with the introduction of a freighter version of its popular A350 twin-aisle passenger jet and since November has secured 15 orders from Singapore Airlines, CMA CGM and Air Lease Corp. (NYSE: AL).
Boeing booked record orders for new and converted freighters last year, including 84 orders for 767, 777 and 747 freighters, driven by e-commerce growth and demand for faster, more reliable transport amid widespread logjams in ocean shipping. That exceeded the previous record of 80 production freighters set in 2020. During the year it also opened, or made plans for, 10 new assembly lines around the world for passenger-to-freighter conversions.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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