Udvar-Hazy still not convinced of the Boeing 777X

Air Lease Corporation (ALC) Chairman Steven Udvar-Hazy is still not convinced that the market really needs the passenger version of the Boeing 777X. The operating costs per seat of the big twin-jet are higher and the 787-10 is doing better. It is one of the reasons that lessors have yet to invest in the aircraft, Udvar-Hazy said on September 6 during the Deutsche Bank Finance & Leasing Conference. Udvar-Hazy has been a big fan of the original triple seven and noted that during his spell with ILFC and ALC, he has ordered over 110 777-200ERs and -300ERs. “It is still a workhorse and has replaced many Airbus A380s flying.” But the 777X, either in the 777-9 and -8F freighter version, is still absent from ALC’s backlog as Udvar-Hazy thinks it is hard to justify the investment. “The problem we have with the 777X is that it does not really offer a significant improvement in the per passenger per kilometer or mile cost of operation when you include capital costs. If we add up maintenance costs, crew, fuel, landing fees, it is just not offering a meaningful improvement over the current aircraft that are available,” Udvar-Hazy said. “In fact, our analysis shows that a 787-10 high-gross weight airplane has a lower seat-mile cost than a 777-9. Yes, there is a huge replacement market coming up (for the 777) and I am sure that Boeing will eventually overcome their obstacles with the FAA and EASA and have the airplane certified. But it is a very expensive airplane that is inching close to $200 million in acquisition costs. The number of users right now is very limited, there have been very few new orders in the last five years, and we just have to see how it evolves and whether it can establish a large customer base.” He added: “Until that’s done, I don’t think that any leasing company will touch the passenger version. For a lessor like us, it is premature to look at ordering the 777X when we can develop nice returns on the A350s and 787-9s and -10s.” The cabin of the first 777-9 is still occupied by lots of test equipment, as was evident in Farnborough. (Richard Schuurman) The lastest 777X order is from Air India The most recent order is from Air India for 10 777-9s. Turkish Airlines is also looking at buying the aircraft. According to Boeing data as of July 31, there were 363 unfilled orders for the 777X. The largest one is from Emirates, which has 115 on order. Emirates recently updated its order with a ‘new’ order for sixteen aircraft. This is believed to be a swap of 777-8s for more 777-9s, but the airline has been unwilling to confirm this and might have an announcement to make during the upcoming Dubai Airshow in November. Qatar Airways has 74 777X on order, including up to 50 777-8Fs for which it was the launch customer in January 2022. Singapore Airlines has 31 on order, Lufthansa 27, Etihad 25, Cathay Pacific 21, ANA 20, British Airways 18, Cargolux and Air India 10 each, and Silk Way West two. Ten aircraft are for undisclosed customers. As Udvar-Hazy said, no lessors have placed orders. In the order split per model, which Boeing shared for the first time together with the July orders and deliveries update, there are 420 gross orders. They include 322 777-9s versus 300 in the unfilled backlog, which means that 22 aircraft must be in the ASC 606 Adjustments category of orders that are not certain to be confirmed. The 777-8F has 55 orders as both gross and unfilled orders, so there is no question mark here. The 777-8, the yet-to-be-launched smaller passenger version, shows 43 gross orders but just eight unfilled orders, which is an indication that 35 aircraft are uncertain to be confirmed. The 777X was launched in 2013 by Lufthansa, soon followed by orders from Emirates, Etihad, and Qatar Airways at the Dubai Airshow. Entry into service was planned for 2019, but the first flight slipped to January 2020. Following the two fatal accidents of the Boeing MAX in 2018 and 2019, regulators took a tougher position on certain design aspects of the aircraft and ordered Boeing to build in more redundancy in some systems. Since then, the program has been hit by various delays. Boeing is waiting for Type Inspection Authorization from the FAA to start the certification phase of the aircraft. The airframer hopes to certify the aircraft in early 2025, but this is not confirmed. Despite the uncertainties, Boeing said in July during the Q2 earnings call will slowly resume production of the 777X by the end of this year after a pause since early 2022, a few months earlier than planned. Some 25 777-9s have been built but are awaiting completion.

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