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Cathay Pacific Could Shrink Boeing 777X Order
Hong Kong’s largest airline, Cathay Pacific, plans to reduce its order of Boeing 777-9Xs from 21 aircraft to 10-15 aircraft, according to a report from the South China Morning Post. Two internal sources briefed on the issue stated that the airline would “optimize” its order, removing billions of dollars in cost in the next few years.
The initial order valued at $7.4 billion was announced in December 2013, with aircraft arriving in 2021 through 2024. Passengers would experience a new first class cabin and business class cabin on the new flagship on key routes like those to London and New York.
“The 777-9X promises us improved payload range capability and reduced operating costs, in addition to a significant reduction in environmental emissions, ” then CEO of Cathay Pacific John Slosar said after the order. “We think it will be an ideal fit for long-haul destinations in North America and Europe, in particular those routes where we carry high volumes of passengers and cargo each day. Cathay Pacific is committed to modernizing its fleet to provide a superior experience to passengers.”
However, many factors have changed this sentiment. Challenges faced in the production of the Boeing 777X and economic factors faced by Cathay Pacific, including the current Covid-19 pandemic and subsequent border closures, have caused interest in the aircraft to drop for the Hong Kong-based airline.
In turn, these market conditions have made it one of the worst in Cathay’s history. In 2020, Cathay Pacific lost $2.79 billion, the largest loss for the airline in its 70-year history. Also, the carrier operated 10% of its schedule compared to 2019. At the end of last year, Cathay Pacific had 44% of its aircraft parked and its average aircraft utilization down 63.9%.
Currently, Cathay Pacific’s long-haul fleet consists of 43 Airbus A330-300s, 27 Airbus A350-900s, 14 Airbus A350-1000s, 17 Boeing 777-300s and 48 Boeing 777-300ERs. Some of its current fleet of Boeing 777-300ER aircraft is parked in the deserts of Australia, with smaller long-haul aircraft like the Airbus A350 operating for the airline.
In October 2020, Cathay Pacific announced the deferral of the new generation aircraft to “2025 and beyond.” Furthermore, during its March earnings call, Chairman Patrick Healy stated that advanced negotiations were in play for a further deferral of the Boeing 777X, though no mention of an order reduction. Additionally, the airline has deferred orders of its Airbus aircraft, including its Airbus A350 aircraft to 2023 and Airbus A321neo aircraft to 2025.
Boeing 777X Orders
The move comes amid a rough patch for Boeing and its 777X program. In February 2021, the aircraft manufacturer slashed its firm order count in half from 309 to 191. In particular, the largest customer, Emirates, reduced its order from 151 to 126 aircraft. The Boeing 777X was slated for its first delivery in 2020, but delays and economic conditions have postponed the first deliveries to 2023 at the earliest.
Currently, Boeing has eight Boeing 777X customers on the books, including All Nippon Airways, British Airways, Cathay Pacific, Etihad Airways, Emirates, Qatar Airways and Singapore Airlines. The Abu Dhabi, United Arab Emirates-based Etihad Airways expressed uncertainty in its order for the next-generation jet after announcing plans to remove its predecessor, the Boeing 777-300ER, from its fleet by the end of 2021. Etihad has 25 of the aircraft on the order book, including Boeing’s only orders for the Boeing 777-8X variant. Meanwhile, Singapore Airlines strengthened its commitment to the new generation Boeing 777, converting 30 Boeing 787-10 orders to 20 Boeing 777-9X orders and 19 Boeing 787-10 orders.
Most airlines will be receiving these larger aircraft during the onset of long-haul flying returning to pre-Covid-19 levels. The launch customer of the Boeing 777-9X, Qatar Airways, expects to take three of the type by 2023. Meanwhile, British Airways plans to take its first aircraft in 2024, and Lufthansa intends to receive all 20 of its Boeing 777-9X by 2025.
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