In the 1980s, Boeing's (NYSE:BA) 767 was the most modern plane -- the first twin-engine wide-body that could carry a good number of passengers over long distances. Scott Hamilton of Leeham says that in those days, airlines used only "three- and four-engine airplanes" for trans-ocean air travel. But after the FAA gave approval to a twinjet for a 120-minute flight over water, the 767 became the most common flight on transatlantic routes.
After an uninterrupted 32-year production run, the passenger version of the plane is having a tough time attracting new buyers. But interestingly, Boeing plans to double the production rate of the plane to two per month as demand for the plane's derivatives evolves. Let's take a look at Boeing's first wide-body twinjet's journey through the years and where it's headed.
Going back to the roots
In the late 1960s, Boeing launched the 747 jumbo jet -- the first ever wide-body -- and received magnificent response as it completely transformed the experience of long haul air travel. The popularity of wide-body aircraft rose in the 1970s, hinting that there was a good market for bigger planes. This is when the idea of developing the next generation wide-body dawned on Boeing.
Aging airplanes, stricter environmental regulations, soaring fuel price, and increasing demand for more efficient planes were among other things that triggered Boeing to initiate a program to build a new wide-body. The 767 is bigger than the single-aisle 757 but smaller than the 777. Also, while the 747 had four engines, Boeing designed the 767 with two engines -- thanks to the adequately powered turbofan engine. In 1978, the company started marketing the 767 to potential airlines. The plane entered service in August 1982 with its first delivery to United Airlines, its launch customer that placed orders for 30 767s valued at $1.2 billion.
However, after the entry Airbus' (NASDAQOTH:EADSY) twin engine A330 in 1994, demand for the 767 passenger variant began dwindling. Boeing launched the 787 to replace the passenger version of the 767 and take on the A330. In the past decade, Boeing has delivered just 145 767s.
Order status and current backlog
The 767 family so far has received orders for more than 1,100 units. Boeing will be delivering its 1,065th 767 by the end of this year. The top-selling 767 model series, 767-300ER, saw its backlog dry up after deliveries of all 583 planes, with the last one going to Air Astana. Presently, Boeing has unfilled orders for 45 767-300Fs, all of which are to be delivered to FedEx, and four 767-2Cs that are to be delivered to the US Air Force. The 767-2C is a new commercial freight version build on the 767-200ER model.
Is the end near?
One question that's often asked is whether Boeing will upgrade the 767 to reignite interest in the plane. But one possible justification for Boeing not doing so could be that the 767-300ER is similar in size to the Boeing 787-8 -- the former is 180 feet long and the latter 186 ft -- but the 787 offers a far superior range than the 767. The 767-300ER offers a maximum range of 5,990 nautical miles while 787-8 offers 7,850 nautical miles. True, the 787-8 is pricier at $218.3 million (list price) compared with 767-300ER that's available for $191.5 million (list price), but the Dreamliner offers more value for money seating 242 passengers versus 214 with 767-300ER.
Early during the year, Boeing withdrew the 767-200ER and 767-400ER from its commercial airplane price list. The American major won't be offering the two planes any further, unless it receives a bulk order. The 767-200ER entered service in 1984 and received orders for 121 units through 2005 -- the year it bagged the last order that came from the Japanese air force. The other withdrawn series, the 767-400ER, was introduced to compete with Airbus A330-200, but failed to attract much attention. It managed to get aggregate orders for 38 units through its entire life.
Three years back when 767's firm orders were shrinking, its production line was being planned to be converted and retooled for the 737. But the plane got a saving grace in the form of a solid contract valued more than $35 billion from the U.S. Department of Defense for 179 KC-46A tankers, which is based on the 767-200ER. Besides the U.S., Japan and Italian air forces use variants of the 767-200ER for military purposes. According to Boeing, "The 767 has a bright future in expanded applications, particularly for military use in tanker and command-and-control applications."
The outlook for the passenger version looks bleak, particularly after Airbus announced it would upgrade the A330 (A330neo). But there are hopes tied to 767's commercial and military freighter versions as Boeing doesn't currently have an alternative -- and isn't planning one for the foreseeable future.
ICRA Online and Eshna Basu have no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.