In the largest ever wide-body aircraft deal, Singapore Airlines on Tuesday agreed to buy up to 77 of Boeing Co.'s new 777-200B passenger planes for $12.7 billion.
The deal, announced in Singapore and in Boeing’s hometown of Seattle, was a blow to European plane maker Airbus Industrie, which had hoped the airline would buy its A330 aircraft.
The world’s other major jetliner builder, McDonnell Douglas Corp.'s Douglas Aircraft unit in Long Beach, was not a final contender for the order from Singapore Airlines, whose previous multiplane order in 1994 was split between Boeing and Airbus. Singapore Airlines is also one of the world’s biggest users of Boeing’s 747 jumbo jet.
Still, the new Boeing award is bullish for some Southern California subcontractors that supply components for the 777. For instance, AlliedSignal Aerospace in Torrance makes the plane’s cabin pressure control system, among other parts.
Boeing executives called the order a major victory for the world’s largest aircraft manufacturer and said it was an important step in marketing the all-new aircraft to other airlines.
“This was a very hard-fought campaign, and we’re delighted to have it come out our way,” said Larry Dickenson, vice president of Asia/Pacific sales for Boeing. “If we hadn’t gotten it, it would have been a major disappointment.”
Dickenson said Boeing hopes to make the 777 the flagship of the Asian fleet.
Thirty-four of the new aircraft are on firm order, and another 43 are on option. Deliveries for Singapore Airlines’ 777s will take place between 1997 and 2004.
Singapore Airlines said it is ordering a total of 157 Trent engines, including 35 spares, for the new planes from Britain’s Rolls-Royce. The order covers 61 of the twin-engine planes. No decision has been made on which engines to use for the remaining 16 jetliners in the order.
Singapore Airlines Managing Director Cheong Choong Kong said the bids were very close but that the airline chose the 777 because the aircraft has a 10% greater capacity than the twin-engine A330 and therefore more revenue potential.
“We have spent considerable time studying the options and discussing them with the manufacturers,” he said.
Analysts said the decision to choose Boeing over Airbus is a defeat for the European manufacturer but not a knockout blow.
“Naturally, a long-term industry like this focuses heavily on the day a major announcement is made, but I don’t think this will deter Airbus from continuing slowly to gain market share against Boeing,” said Chris Avery of Paribas Captial Markets in London. “It beat Boeing on market share terms in 1994, and it’s clearly not going to have a good year in 1995, but there is still all to play for again in 1996.”
Dickenson said the 777 has been a big success since it first came into service in June. Boeing said it now has commitments for 230 of the jetliners.
“This sends a message to those that haven’t decided on the 777 that this is the wave of the future,” he said.
Singapore Airlines declined to give an estimate for the value of the engine order, but Rolls-Royce said in a separate statement issued in London that the order for its new Trent engines was worth $1.87 billion.
Singapore Airlines is now the eighth carrier in Asia to commit to the 777, joining All Nippon Airways, Thai Airways International, Japan Airlines, Cathay Pacific Airways, China Southern, Japan Air System and Korean Air Lines.