Dream On

We were told earlier this year that the Vice-chairman, President and CEO of Boeing’s Commercial Airplanes, Ray Conner, had written a letter to Prime Minister Muhammad Nawaz Sharif and shown interest in the conversion of PIA’s existing 777-300ERs into the new 787 Dreamliner. Reports to this effect called the Dreamliner an airplane “with the right size, unique capabilities, and unmatched passenger experience” to suit Pakistan.

The news reports, which appeared in a number of publications, said that driven by the recent race in Pakistan’s aviation market particularly after the launch of the PIA Premier Service on its Independence Day, Boeing has shown keen interest in transforming PIA’s operations and help to restore its profitability. In this regard, the Boeing President expressed the hope that his company “sees a viable opportunity to convert the PIA’s existing 777-300 ERs into the new 787 Dreamliner to fulfil the vision of the Prime Minister.”

The conversion he referred to was not physical conversion of planes but the conversion of an order from the highly successful B-777 to the B-787. To put things in perspective one has to understand that a year back America’s own United Airlines converted 10 firm orders for the Boeing 787 to the 777-300ER.

At the time of the change, the finance chief of United said that the changes were part of the airline strategy to improve operational reliability, grow capacity with demand, and enable us to achieve our long-term goal to improve margins and return on invested capital. United had firm orders for 48 787s, comprising 27 -10s and 21 -9s. However, the airline has not disclosed which variants it has converted to the 777.

Given this, it comes as a surprise that Boeing wants PIA to convert the order the other way round. It said that Boeing is interested in the success of PIA and assures its fullest support. PIA, which is making all possible efforts to revive its lost glory, may get five new 787 Dreamliners from Boeing, a letter written by Boeing company to Mr Nawaz Sharif, Prime Minister of Pakistan, hinted. It seems Boeing is doing a special favour to PIA. Or is it?

It was reported this year in an international magazine that the Boeing Co has lined up buyers for 10 of the early, overweight 787 Dreamliners whose years in storage made them emblems of the jet’s factory woes and a drag on profit.

Widely respected news wire Bloomberg reported that the planes, dubbed “terrible teens” for their assembly struggles and their places near the start of the production run, have an assessed value of roughly $1 billion, or less than half the catalog price. The original customers balked because the aircraft were too heavy, limiting their range.

Ethiopian Airlines is in advanced discussions to buy eight of the early-build 787s. Air Austral, based on France’s Reunion Island in the Indian Ocean, has already ordered two of the jets.

Bloomberg reported that unloading the 787s would be a boost after the aircraft sat outside Boeing’s largest Seattle-area factory for about five years. They were visible symbols of the delays on the Dreamliner program, with black plastic shrouding their windows and 17,000-pound (7,700-kilogram) counterweights dangling from the wings in place of engines to keep the jets balanced.

The 787 is the world’s first airliner built mainly from composites instead of traditional aluminium. The jet ran more than three years late while Boeing worked out kinks with the carbon-fibre materials, onboard systems and a manufacturing process that relied more heavily on suppliers. Eager to convert a record order backlog into cash, Boeing stepped up production before the Dreamliner was certified as airworthy. The plane-maker wound up having to retrofit about 60 of the first jets to match design changes made during flight testing.

The planes required most extensive work, including heavy structural reinforcements, to bolster their composite shells, and were set aside while Boeing focused resources on later models that it could get more quickly to customers. Carriers, including ANA Holdings Inc.’s All Nippon Airways and Transaero Airlines, eventually opted to take other aircraft.

Selling and delivering the teens would reduce Boeing’s 787 backlog, which stands at about $7 billion. The question on our minds is that why are we so interested in taking on board such aircraft in the first place. And who is making money on this deal.

Published in The Express Tribune, October 10^th, 2016.

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