Boeing closes in on huge order of 787s; 50-plane, $5B deal likely to be announced at Paris show - Dreamliner sale to leasing giant is bitter pill for rival Airbus

Next week at the Paris Air Show, the largest aviation gathering of the year, Airbus will undoubtedly announce a lot of airplane orders. But Boeing is set to steal the show. The most influential player in the aviation business is working to...


Next week at the Paris Air Show, the largest aviation gathering of the year, Airbus will undoubtedly announce a lot of airplane orders.

But Boeing is set to steal the show.

The most influential player in the aviation business is working to finalize this weekend a huge order for about 50 Boeing 787 Dreamliners, worth at least $5 billion even with discounts.

The deal will ensure that International Lease Finance Corp. (ILFC), the biggest airplane leasing company in the world, owns more Dreamliners than any other customer. The biggest previous 787 order from a single buyer was All Nippon Airways' 50-plane launch order in 2004.

ILFC founder and CEO Stephen Udvar-Hazy is likely to announce the order Tuesday.

In contrast, Hazy will hold back any commitment to the rival Airbus A350 jet until the European planemaker gives more solid and detailed specifications for the aircraft. Some other big industry players seem likely to do the same.

For Boeing, capping the show with the big, unexpected ILFC order would be a surprise that extends the 787's strong momentum and nicely sets up the rollout of the first Dreamliner in Everett next month. But Airbus could leave Paris still short of a convincing demonstration that its airplane is a solid competitor.

Hazy hinted at his plans in an interview at the annual conference of the world's top airline executives in Vancouver, B.C., last week. Subsequent conversations with two Boeing executives with knowledge of the negotiations established the size and likely timing of the deal.

Both executives cautioned that the deal isn't yet sealed and could be delayed beyond the air show. But Hazy's comments in the Vancouver interview suggest strongly that he wants to announce in Paris.

What does he see happening at the air show?

"We're looking for more momentum for Boeing," Hazy said.

Is he expecting significant Boeing orders in Paris? "Yes," he said emphatically, flashing a big smile.

From him? "Let's just say Boeing top management has been spending a lot of time with ILFC," Hazy said. "Draw your own conclusions."

ILFC placed an initial order for 20 Dreamliners in fall 2005, giving the new airplane an important endorsement. At the Farnborough Air Show in London last year, Hazy added two more 787s.

The Paris order would be worth $7.6 billion at list prices. But Hazy will certainly have won a large discount. Using estimates from aviation valuation firm Avitas, the ILFC purchase price should be about $5.1 billion.

Hazy has ordered just more than 700 Boeing and 600 Airbus jets since founding ILFC in 1977. Airlines across the globe tap his company's massive jet portfolio when they want to lease, rather than buy, a jet.

The strategic importance of the Paris deal to Boeing is that ILFC will lease its 787s to many airlines around the world, widening the Dreamliner's already broad customer base. Those airlines are likely to place follow-on orders with Boeing as they add more planes to their fleets.

In an interview at a March trade conference, Hazy said he could see ILFC eventually owning 100 787s.

As for the new competitive jet from Airbus, Hazy said last week that he's not ready to give his seal of approval to the A350.

That jet is going through its third major iteration. The latest revamp, an entirely new airplane with a composite plastic airframe like the 787's, was announced a year ago at Farnborough.

But since then Airbus hasn't even firmed up most of the orders placed for the original version of the A350, including one from ILFC.

"The air show is a critical milestone," Hazy said. "Airbus is working hard to convert some of those old orders to new orders. It's going slower than we all thought."

Hazy said Airbus executives' intense focus on fixing production problems with the A380 superjumbo jet has diverted management and engineering resources and "hurt the A350 program."

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