Mon, Apr 10, 2017
Company Will Then Lease Them To Cargo Airlines
With orders for new 747 jumbo jets stagnant, Boeing has reportedly come up with a plan to ... temporarily at least ... continue to build the freighter variant of the iconic airliners.
Bloomberg News reports that Boeing intends to buy completed 747s from itself, and then lease the airplanes to cargo airlines. As the air cargo market, which has been in a slump of late, recovers, Boeing hopes to be able to repay the loans it has taken out to continue to manufacture the 747. Loans and operating leases related to the jumbo jet account for about 25 percent of the portfolio managed by Boeing's lending division, according to the report.
The effective closure of the Import-Export Bank by Congress has also played a role. The EXIM Bank was a key sales tool for Boeing with foreign airlines. Another factor is that traditional leasing companies are not anxious to buy airplanes for which there is a shrinking customer base.
The leaseback arrangement carries some risk for Boeing, according to the report, if sales don't improve.
Boeing currently has lease deals with Russia and Azerbaijan, neither of which is on particularly sound financial footing. It recently landed a deal with UPS that could help sustain the line into the future.
But the 747s days as a symbol of luxury travel are over, according to most analysts. Outside a contract with the USAF for a new Air Force One, the 747s later years will mostly likely be spent shuttling oversized cargo. The demand for a four-engine passenger jet has shrunk to almost nothing.
(Image from file)
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