Why Boeing Is Buying Up Older 747s

Airbus has acquired three of the nine A340s sold this year after buying back 10 of the jets in 2012. “In some exceptional cases, Airbus has bought back A340s to support new business,” Andreas Hermann, vice president and head of A340 re-marketing at Airbus, said in an e-mail. “Regardless of the negative perception of some, the A340-500/600 continues to provide efficient lift for long haul.” Boeing officials remain optimistic that the cargo market will revive, bringing new orders for the latest version of a jumbo jet that’s been a freight-hauling workhorse since the 1970s.

In some ways, the 747-8 is a victim of Boeing’s engineering success: The 777’s extended range version has a maximum distance of 7,725 nautical miles (14,305 kilometers), giving airlines the ability to use a twin-engine plane on routes once reachable only by four-engine jumbos. A 747-8 outfitted to carry passengers has a listed range of 8,000 nautical miles.

With 53 unfilled 747-8 orders, Boeing has enough work to keep the 747-8 production line busy through the end of 2015, figures George Ferguson, senior aerospace analyst for Bloomberg Industries. “They see a mission for those aircraft,” he says. “The market isn’t exactly telling us that.”

The bottom line: Boeing is taking old 747s in trade in order to encourage sales of its newer $350 million 747-8 jumbo jet.

Article Appeared @http://www.businessweek.com/articles/2013-08-01/why-boeing-is-buying-up-older-747s#r=read

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