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Boeing 777X: Huge Uncertain Future At Qatar Airways

Aug. 10, 2020 9:59 AM ETThe Boeing Company (BA)CPCAF, CPCAY, DLAKF, DLAKY, EADSF, EADSY9 Comments


  • Qatar Airways Sticks With Boeing 777X, though we have doubts on the size of the role in a post-pandemic world and the timing of the service entry.
  • Boeing 777-300ER to be phased out by 2025 as part of green initiative.
  • Qatar Airways still sees a spot for Boeing 777X, but its role might be smaller than envisioned.
  • Analysis of the fleet suggests that 50% of the Boeing 777X could see a very long deferral eventually leading to a delay of the entire program.
  • This idea was discussed in more depth with members of my private investing community, The Aerospace Forum. Get started today »

In a recent report, I discussed Qatar Airways threatening Boeing (NYSE:BA) and Airbus (OTCPK:EADSF) to exclude either jet maker from future aircraft procurements if the jet makers would not be willing to cooperate with the Gulf carrier on delaying aircraft deliveries. The airline has a $17.7B identified backlog with Boeing and $7.5B with Airbus using actual market values (not list prices) sourced from our Boeing and Airbus backlog monitors, interactive dashboards available to subscribers of The Aerospace Forum.

Boeing 777X Qatar Airways

Source: Boeing

What we found is that even though, Boeing has a significantly bigger exposure to Qatar Airways than Airbus, the words of Akbar Al Baker should be taken with a grain of salt. There are various reasons for that. The first one is that in the coming years, even with the travel market being depressed now, Boeing and Airbus will be the biggest players on the market. That is not expected to change for another 10-15 years at least. So, even if Al Baker ceases doing business with one… it will leave the airline as an exclusive customer to the other. Might be good news for Boeing or Airbus it seems, but we analyzed the Qatar Airways fleet and concluded that the airline leverages the existing duopoly to balance its fleet perfectly between Boeing and Airbus. Airbus exclusively provides the single aisle aircraft of the fleet, Boeing dominates in the freighter fleet and in the passenger wide body fleet there is a 45-55 division in Boeing’s advantage. That all leads to a 50:50 distribution between Boeing and Airbus in the fleet of Qatar Airways and clearly demonstrates the company’s purchasing practice.

It’s unlikely that Qatar Airways truly intends to stop doing business with either jet maker. The airline simply knows that near-term demand for new aircraft is virtually zero while it has

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This article was written by

Dhierin Bechai profile picture

Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure: I am/we are long BA, EADSF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (9)

farmersgroup profile picture
Why is Boeing down today?
@farmersgroup Nobody wants their planes...They are losing a lot of money, etc
Business travel is done - death by zoom. And without business travel “points” subsidizing recreational travel, it’s gonna be very ugly for very long. So plane demand will be very slow to recover. By the time BA finishes giving away all those 737Max for blowout prices the comac919 wil be flying in Asia and Middle East. BA will go chapter 11 as soon as bankers see best date to be shareholders instead of debters.
Good analysis, Quatar may not know the answers and has conversion agreements written into their contract.
Jacobin777 profile picture
Excellent analysis.

Like the previous B757/B767 program which ran concurrently, Boeing will need to run concurrent programs to address competitive gaps in their portfolio.

Boeing made a mistake of making the B77X a derivative plane. It should've been a B77W to (almost) A380 capacity-sized plane.

Yes, COVID-19 has put a dent on larger-sized planes but IMHO, long-term it would've been the proper route to take.

The excuse of "it would have cost $x billions of dollars to build a new plane" does't hold. Boeing certainly had the $ billions to waste on stock buybacks, etc. rather than investing for the future. In an ironic way, COVID-19 would've pushed out the need for larger-sized planes into the future - IMHO just when travel would be back to 2018-2019 levels and a new B777 replacement would've been ready.

Regardless Boeing has a lot on their plate and if approached properly, they can do well in the future.

For the record, I'm long Airbus.
415003 profile picture
Maybe they’ll start using Russian aircraft or in the not to distant future an Asian. :),
Who Dat? profile picture

Or in 10yrs, Tesla/SpaceX will have their own commercial aircrafts to compete head on with BA.......better yet, an aircraft that can fly through space and back
Solid analysis. We are in the what if world. Vaccine is out and treatment protocols have made pandemic mild in six months. Air traffic will be out the roof and airlines will be scurrying for deliveries and maintenance.
Cylontymany profile picture
Must be some good smoke your toking on!Lol!!!
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