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Boeing 777X Faces Delays Due to Lack of Demand

By Lou Whiteman – Jul 24, 2020 at 11:34AM

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It's a tough market in which to sell large, international-focused airplanes.

Boeing (BA -0.03%) is reportedly prepping to delay the debut of its new 777X plane for as much as a year amid continuing questions about demand for the large airliner.

The 777X has had a troubled development process, plagued by issues, including engine problems that delayed flight testing in 2020 and a failed airframe test last September. The plane flew for the first time in January, but even prior to the COVID-19 pandemic, Boeing seemed unlikely to start deliveries until 2021.

Boeing's 777 assembly line in Everett, Wash.

Image source: Boeing.

Falling demand for large, international-focused aircraft, coupled with a likely lengthy certification process, will apparently push initial deliveries into 2022 at least. Reuters reported Friday that Boeing could announce as soon as next week, during the company's quarterly earnings report, that it will delay the 777X debut due to market conditions and other issues.

The report lines up with comments made by an Emirates official earlier this month. Adel Al Redha, Emirates' chief operating officer, said his airline does not expect to take delivery on the 777X in 2021 as planned and is considering swapping some of the planes it has on order for smaller 787 Dreamliners.

Losing even part of the Emirates order would be a big blow for Boeing. Emirates currently has 115 777X planes on order, a substantial part of the plane's 309 order backlog. But with airlines expecting international travel to take years to return, a full fleet of large aircraft is likely not a priority.

The delay would allow Boeing to buy time in hopes of a quicker-than-expected recovery, which might help boost demand.

Boeing is fighting through issues throughout its commercial product portfolio. The company has a glut of new aircraft manufactured but not yet delivered, and intends to cut production rates heading into 2021 to ease its stockpile.

Prior to the pandemic, Boeing had been counting on sales of Dreamliners and other large planes to generate cash while the company works through issues with its 737 MAX. But with overall demand for aircraft of all sizes falling, Boeing is going to have a hard time quickly stemming its cash burn.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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