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Thursday, August 26, 2004 - Page updated at 12:00 A.M.

Singapore makes big 777 order, holds off on 7E7s

By David Bowermaster
Seattle Times aerospace reporter

ELAINE THOMPSON / AP, 2002
The first 777-300 extended-range jet in its Everett paint hangar.
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Boeing's happy confirmation of a $4 billion order from Singapore Airlines for 18 777s yesterday was tempered by the disappointing news that the prestigious carrier will not be among the first customers for the all-new 7E7.

After scrutinizing the technical specifications of the 7E7, which is due to enter service in 2008, Singapore decided the economics were not sufficiently compelling to place an order.

The absence of a 7E7 deal is likely to surprise the aviation industry. For months, industry gossip and news reports anticipated Singapore would be the next large 7E7 customer to follow All Nippon Airways' deal for 50 7E7s, which launched the program in April.

Boeing for long-haul


Singapore Airlines chose the 777-300ER over the Airbus A340-600 to upgrade it's long-haul fleet. Here's how the two models compare.

Boeing 777-300ER

Seat capacity: 365
Range (nautical miles): 7,880
List price (millions): $203.5-231.5

Airbus A340-600

Seat capacity: 380
Range (nautical miles): 7,500
List price (millions): $194.5-201

Source: Boeing, Airbus, The Airline Monitor

Singapore had been weighing the short-range 7E7-3 against its chief competitor, the Airbus A330-200, for flights within Asia. Airbus reportedly offered to configure a lighter-weight version of the A330-200 for Singapore, to compete with the lightweight, all-composite frame and new, fuel-efficient engines of the 7E7. But Singapore passed on both jets.

"[Singapore Airlines] has decided not to place any order for the regional aircraft because the proposals submitted did not meet SIA's financial criteria," the company said in a statement to the Singapore stock market. "The airline will continue to use the 777-200 to serve the regional routes."

The 7E7-3 is optimized for flights up to 3,500 nautical miles. The baseline, 7E7-8 model has a range of 8,500 nautical miles. Both can seat 217 passengers in three classes or 289 passengers in two classes.

Jim Higgins, an aerospace analyst with Credit Suisse First Boston, theorized Singapore might be waiting on the 7E7s until it sees whether the profitability of its intra-Asian routes declines as a new wave of low-cost airlines enters Asia in two to three years.

"We believe that Singapore is acknowledging the real possibility that low-cost-carrier competition, even in structurally fast-growing intra-Asian markets, will both stimulate incremental volume and take share from the incumbents," Higgins wrote in a research report to clients.

Status quo for short-haul


Singapore ordered neither 7E7s nor A330s for its regional fleet, sticking with 777-200s. Here's how the two models compare.

Boeing 7E7-3

Seat capacity: 217
Range (nautical miles): 3,500
List price (millions): $120

Airbus A330-200*

Seat capacity: 253
Range (nautical miles): 6,450
List price (millions): $139.6-146.5

* Airbus offered Singapore a "light" version of the A330-200. These numbers are for the traditional A330-200.

Source: Boeing, Airbus, The Airline Monitor

"We applaud that caution, as we believe developments in more mature intra-North American and intra-European markets support that hesitation," he wrote.

"While we're disappointed they didn't decide to make a decision about regional airplanes at this point, it doesn't mean they're not going to down the road," said Bob Saling, a Boeing spokesman. "We're going to hang in there and keep working with them."

Regardless, Boeing is extremely pleased Singapore selected the 777-300ER over the Airbus A340-600 for its high-capacity, long-haul routes, such as Singapore to Europe.

Singapore placed firm orders for 18 777-300ERs and options for 13 more. The deal would be worth roughly $7 billion at list prices if Singapore exercises all its options. "That's a nice order, a great victory," Saling said.

The planes will be delivered between 2006 and 2010. With room for 365 passengers in three classes, the 777-300ER will begin replacing some of Singapore's 29 747-400s, the oldest of which entered service in 1989.

By the time deliveries are complete, Singapore will have 77 777s in its fleet, making it the world's largest 777 operator.

The Singapore order helped push Boeing's stock price up $1.59, or 3.1 percent, to a 52-week high of $52.50 yesterday.

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com

Copyright © 2004 The Seattle Times Company

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