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Why The Boeing Company's 777X Will Soar Into Open Skies

Boeing (NYSE: BA  ) aims to increase its dominance in the wide-body aircraft segment that's expected to thrive in the upcoming decades. Commercial aviation is projected to experience incredible growth in a world where rapid urbanization, development in emerging markets, and aircraft innovation will play pivotal roles. According to Boeing, around 24% of the world's demand is going to be for wide-body aircraft, accounting for more than 51% -- or $2.47 trillion -- of the total global fleet. It forecasts the need for an additional 3,300 medium wide-body airplanes in the next 20 years. 

Sensing the latent potential of this segment, the aircraft major's creating the successor of its 777. The new aircraft will serve three important purposes for Boeing: It will strengthen the company's wide-body portfolio, and it will be a superior jet to contend with its rivals' products. Let's take a look at Boeing's 777X playbook to see how it will make the most of the expanding wide-body market.

Turkish Airlines. Source: Wikimedia Commons

Re-engineering its marvel creation
Boeing leads the wide-body segment with more than 55% market share since 2005. Its wide-body fleet comprises the 747, the 767, the 777, and the 787, with the latter two being the company's most popular offerings.

Boeing unveiled the 777X -- the third generation of the 777 aircraft -- at the Dubai Air Show last November and the plane is slated to enter service in 2020. The 777X family has two versions: the 777-9X and the 777-8X. The 777 family is an extremely successful fleet, so there are huge expectations from the upgraded versions.

The 777X will deepen the company's wide-body portfolio, and from a design standpoint, it will combine the best of 777's and 787's design capabilities. The latest 787 Dreamliner technologies will go into designing the 777X flight deck, system control, and other such structures. This will not only enhance efficiency, but also add to overall passenger comfort and flight experience with larger cabins, bigger windows, and appeasing architecture. And the best part is that the 777X would be 22% more fuel efficient than the 777.

Boeing 777 300 ER in Dubai. Source: Wikimedia Commons

Boeing's followed Airbus' (NASDAQOTH: EADSY  ) strategy to reengineer its existing fleet instead of building a new plane from scratch at astronomical costs. In 2010, Airbus showcased a new version of its A320, dubbed the A320 NEO, that's expected to enter service next year.

General Electric (NYSE: GE  ) will be the exclusive provider of engines for the 777X. It is making a high-tech GE9X engine that would be 5% more efficient than any of the existing engines made by the company. The company's engine revenue grew to an unprecedented $22 billion in 2013, and with more orders coming its way from the likes of 777X, looks like this might just be the beginning.

Face off with competing aircraft
Without mincing words, Boeing Commercial Airplanes director Jim Haas said that their offering is "much more efficient than the A350 family of airplanes." The 777X is expected to be the largest and most efficient commercial twin-engine jet, consuming 12% less fuel and saving 10% on operating costs compared with competing jets. 

It is designed to contest archrival Airbus' long-range wide-body jets, and Boeing's already gloating over the big differences. While both the 777-8X version and the A350-1000 can seat 350 passengers, the larger 777-9X will seat 406. Airbus counters that "Boeing has packed in passengers densely." Both 777-8X and 9X will beat the A350-1000 on range. The 777X duo would cover more than 9,300 and 8,200 nautical miles, respectively, compared with the A350-1000's 8,000 nautical miles.

True, the A350-1000 will get a head start; it's scheduled to enter service in 2017, three years ahead of the 777X. But, Boeing expects that the latter won't take too much time to catch up, given its better fuel efficiency and amazing architecture.

Airbus A350 First Flight. Source: Wikimedia Commons

Mind-boggling response
The expansion of the international market and the ever-increasing necessity for business aviation to connect seamlessly across the world is generating the need for long-route wide-body jets. This means that orders will likely grow in anticipation of increasing demand in the next few years, and those planes that claim superior fuel efficiency and low operating cost will be a big draw for airlines.

The 777X has already drawn airline companies, bagging an unprecedented 259 orders worth $100 billion at list prices. Emirates, the biggest 777 customer, placed an order for 150 jets that could increase by another 50; Qatar Airways needs 50; Lufthansa's asked for 34; and Etihad Airways wants 25 of the aircraft. From the order trend, it's apparent that the demand for wide-body planes is rising in the Middle East. 

Boeing may also win orders from the third-largest European airline, British Airways, that's looking for the 747 jumbos' replacement. The airline's not made any assurances, but said that it's weighing between the A350-1000 and 777X. Boeing's also in talks with Ethiopian Airlines about an order for 10 of the 777X.

British Airways Boeing 777. Source: Wikimedia Commons

Foolish takeaway
The large number of orders for the 777X at this early stage has created history; in itself, a success for Boeing. It has given the plane maker a big boost and a solid position from which to advance into the growing wide-body market.

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Read/Post Comments (6) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 01, 2014, at 3:25 PM, JhonAndro wrote:

    The Boeing Company is the top performing A&D stock year to date. The company is globally the largest player in commercial airplane manufacturing, with 60% of its portfolio exposed to commercial businesses.

  • Report this Comment On April 01, 2014, at 4:35 PM, hunter3203 wrote:

    Boeing's strategy with having both the 787 and now 777X is far superior to Airbus's reliance on just the A350 to cover the same range of requirements. You simply can't make one aircraft efficiently cover that large of a segment of the market.

  • Report this Comment On April 01, 2014, at 8:26 PM, magilagorilla wrote:

    Actually ANA just bought 20 more 777-9x planes so the order total now stands at 279. Quite impressive 6 years before the plane will be available.

  • Report this Comment On April 02, 2014, at 6:00 AM, Tyeward wrote:

    I´m not worried about Boeing´s dominance in this area. What I would really like to see is Boeing pull out the plans for the Ecoliner (if there are any) and float that around to see if it gains traction. That would be a very hard aircraft to beat if it was built.

  • Report this Comment On April 02, 2014, at 12:15 PM, wilcollect wrote:

    Remolded Black Boxes so they blow away from the aircraft, survive the crash, float, & signal the GPS location to the Satellite so that it can be found with five days -- Of course pilots and a bunch of other wrong doers do not want the black boxes found. The HN370 will never be found. Put out a $1,000,000 reward and maybe it will

  • Report this Comment On April 19, 2014, at 2:14 PM, dwightlooi wrote:

    Here's an point worth pondering...

    The 777-200LR was and is never a big seller. Of the over 1550 777s sold, only 59 are -200LRs. In fact, some users -- like Air India -- have had to sell their pretty new 777s at fire sale prices. It is for this reason the 777-9X will be the launched first and be given priority.

    But this also begs the question whether the recent wide body trend towards 8000~8500 nm range is a mistake. Yes, some middle eastern carriers want that and they place big orders. But it doesn't change teh fact that 90% of the world's widebody routes are 6,700 nm or less. 75% are 6000nm or less. Range is not "free" range costs weight and directly impacts capacity and fuel efficiency in missions that don't need the additional range.

    It is entirely possible to a double stretched 777-10X with 450~460 seats and 6,700~7,000 nm range. Giving up the range will mean that the Maximum Take Off Weight, Engines, Wing and undercarriage can remain identical to the 777-9X. It's be a simple stretch of 10~12 fuselage frames. The operating economics of a wide body twin with 747-8i capacity and better economics than either the 747-8i or the A380 will be the final nail in the coffin for four engined airliners. It may also become the 777-300ER -- the dominant large wide body -- of the next two decades.

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