Is Boeing’s 747-8 Flying Into the Sunset?

By Douglas Royce, Aerospace Analyst, Forecast International.

The Boeing 747-8 program is getting crushed by low demand.  Boeing delivered nineteen 747-8s in 2014, and with annual net order intake averaging only seven aircraft from 2011-2014, the 747 backlog is shrinking fast.  Boeing began the year with a backlog of 36 orders for the 747-8, down from 55 a year earlier.  With production far outstripping order intake, Boeing’s backlog for the 747-8 will continue to shrink unless it cuts production sharply.

Boeing now plans to cut production to 1.3 aircraft per month in the fourth quarter of 2015.  Another rate cut to one aircraft per month will follow in March 2016.

In the airliner segment, demand has shifted away from very large aircraft like the 747 to smaller twin-engine widebodies.  The -8I Intercontinental hasn’t sold well, and demand for the model will always be weak.  The 747-8I and the even larger Airbus A380 aircraft are cost-efficient only when flown at near full capacity, making them suitable only on routes that connect very large city pairs.  That is a niche market.

Even if the market grows in the future, Boeing’s recently launched 777X program includes the 777-9X model.  While not capable of carrying as many passengers as the -8I, the -9X will seat over 400 passengers and will offer the superior economics of operating a twin-engine aircraft versus a four-engine aircraft.  The -9X will almost eliminate the need for the 747-8I in Boeing’s product line when it enters service late in the decade.

That wouldn’t be a big problem for the program if the air cargo market was stronger.  After all, the driving force behind the 747-8 program has always been demand from the air cargo market for a new, more fuel-efficient version of popular 747 freighter models.  The air cargo market was booming when the 747-8F program was launched, but it has since entered the doldrums.   Sales of the -8F Freighter have also been hurt by increasing use of widebody airliner belly compartments to carry air cargo, reducing the need for dedicated freighters. Shippers have also been turning to cheaper ground-based transport modes instead of air cargo, further reducing demand for freighters.  Airlines also have the option of converting used airliners into freighters rather than buying new-build freighters like the -8F.

Boeing is hoping to ride out this period of low demand by stretching out production of the aircraft in its backlog and finding orders where it can.  Russian cargo operator Volga-Dnepr signed a Memorandum of Understanding at the 2015 Paris Air Show committing to buy 20 new 747-8Fs, but there is a good possibility that the airline will fail to convert all 20 commitments into firm orders.

Assuming that Boeing books only four to six net orders per year in coming years, the 747-8 backlog will continue to shrivel.  Boeing will have to decide whether demand justifies keeping the line open.  We do not believe that Boeing will produce the 747-8 at a rate below one per month, and, assuming order intake averages about five aircraft per year as projected, Boeing is forecast to deliver the last 747-8 in 2018.

The U.S. Air Force announced in January 2015 that it had selected the 747-8 for its Presidential Airlift Recapitalization program.  The program will acquire the new Air Force One in a sole-source acquisition deal, avoiding a competition for the contract with the only other four-engine airliner currently in production, Airbus’ A380.

For the full report and forecast production numbers, please see Forecast International’s Civil Aircraft Forecast.

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