Boeing has landed Qatar Airways as the launch customer for its 777X freighters, with the latter placing an order for 34 of the new freighters as well as a surprise purchase of 737 MAX passenger jets in a $30 billion-plus packaged deal.
US President Joe Biden has hailed Qatar as a major U.S. non-NATO ally.
The deal comes at a time when Boeing is facing a chronic industrial and financial constraints.
With the news of Qatar Airways placing orders with Boeing, shares of the U.S. planemaker went up by 5.1%.
The deal for 25 of the largest version of the MAX, the 737-10, plus 25 further options, widened the fallout from a dispute between Qatar Airways and Boeing’s competitor Airbus.
Earlier this month, Airbus had revoked a contract with Qatar Airways for 50 competing A321neo jets as part of a spiraling dispute that began with disagreements over paint peeling off issues on the A350 jets.
In a statement, the CEO of Qatar Airways, Akbar Al Baker said, “Qatari and U.S. aircraft and engine negotiators had lost a lot of sleep” in the intervening two weeks to shape the deal, which is in contrast with its relation with Airbus.
“We like to build long-term relationships with trusted partners where both parties work together towards a common purpose,” said Baker at the White House during a signing ceremony attended by leaders from Boeing and General Electric Co.
Airbus declined comment.
The freight part of the deal represents the first order for a cargo spin-off of the 777X, the world’s largest twin-engine passenger plane whose entry to service has been delayed for more than three years to late 2023 or beyond.
According to Boeing, the 777X freighter would enter service in 2027.
“(The 777X) will be an absolute world-beater,” said Boeing’s CEO Dave Calhoun.
In order to win the freighter deal, Boeing has agreed to convert a third of Qatar’s existing order for 60 777X passenger planes, for which there is currently less demand, to the cargo version.
For Boeing, the deal represents a respite from the recent safety related issues over the MAX as well as delays with the 777X passenger jet and 787 Dreamliner; it also sees the US planemaker winning points for its contribution to the US economy, especially since it comes in the wake of intense political and regulatory scrutiny.
Incidentally, the Airbus A321neo continues to dominate sales in the part of the market served by the largest MAX variant.
According to Boeing, the freighter deal alone would sustain more than 35,000 U.S. jobs with an annual economic impact of $2.6 billion.
Nearly half of the global cargo by value travels by air, and 50% of that cargo usually travels in the belly of passenger planes.
The Wuhan Coronavirus pandemic has had a devastating impact on airlines; with plummeting demand for air travel, airlines were forced to park unused passenger jets, driving up demand for cargo space at a time when e-commerce has been a lifeline for many.
Economists have warned this trend could start to unravel as the pandemic eases.