Boeing seeking buyers for early Dreamliners

Bloomberg NewsFebruary 27, 2014 

Boeing is struggling to find buyers for 11 of its earliest 787 Dreamliners, collectively valued at $1.1 billion, after two airlines dropped orders for the holdover models from the jet’s troubled birth, people briefed on the plans said.

The partially completed planes, which are heavier than new 787s and can’t fly as far, have been parked for about four years at Paine Field in Everett. Black plastic shrouds the windows, and 17,000-pound counterweights dangle from wings in place of engines to keep the jets balanced.

Boeing began building Dreamliners before getting U.S. certification in 2011, amassing a record inventory that included dozens of older versions requiring repairs to meet federal standards. Boeing is starting to upgrade the last of the 787s to be fixed as it boosts sales efforts, said the people, who asked not to be identified because the talks are private.

The work shows the “diversion of personnel and resources needed to deal with unprofitable aircraft,” said Richard Aboulafia, an aerospace analyst at Fairfax, Va.-based consultant Teal Group. “It is a commentary on plans gone badly wrong.”

Boeing’s marquee jet, the first airliner built mainly from composites instead of the traditional aluminum, ran more than three years late while the company worked out kinks with the carbon-fiber materials, onboard systems and a manufacturing process that relied more heavily on suppliers.

The early Dreamliners are known in the industry as the “terrible teens,” a nod to their place in the assembly-line order and the factory woes. The teens weigh more than other 787s due to custom-fitted reinforcements and needed the most work among the more than 60 early Dreamliners that required post-assembly modifications.

“We are actively marketing those airplanes and have several available opportunities,” said Doug Alder, a Boeing spokesman in Seattle, declining to elaborate.

Boeing has approached Indonesia and Malaysia Airline System as well as Latin American and Middle Eastern carriers about the early 787s, said one of the people.

The 787s are the last of those that Boeing mothballed to fix supplier work done out of sequence and to resolve issues that surfaced during flight tests. The faults included an electric-panel fire and structural weakness where the plane’s wings melded with its body, the repairs that spurred the structural modifications on the so-called teens.

All Nippon Airways, the first commercial 787 operator, and other customers opted to ditch the teens for planes manufactured with the enhancements.

Barring a global aerospace slump, Boeing should be able to place the reworked 787s with bargain-hunting airlines seeking twin-aisle jets to fly shorter, densely traveled routes, said Douglas Kelly, senior vice president for asset valuation at Chantilly, Va.-based aviation consultant Avitas.

“Asia seems like exactly the right place,” said George Ferguson, senior analyst with Bloomberg Industries in Skillman, N.J., especially if Boeing targeted sales to potential customers of the re-engined A330 contemplated by Airbus. “You can see it as a competitor to the A330.”

Buyers would probably pay less than half the current $211.8 million list price of the 787-8 version, Kelly said. The 787 teens have a market value of $115 million each for a single-unit or small lot sale, according to Avitas estimates.

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