Boeing 747 on hold as British Airways extends reign
If it's the end of the line for Boeing Co.'s 747 jetliner, nobody told British Airways. The largest operator of the hump-backed icon -- dubbed the Queen of the Skies on its debut in 1970 -- is plumping up seat cushions, hanging fresh curtains and upgrading entertainment systems on 18 planes. Yet competitors can't seem to park the four-engine aircraft fast enough.
Upgrading the best-selling 747-400 version of the jumbo bucks a wave of retirements that have cast doubt on the model's future, with Singapore Airlines Ltd. and Japan Airlines Co., which once vied with BA for the title of No. 1 operator, ending flights more than three years ago. Demand for the latest 747-8 variant has also faded as airlines prefer leaner twin-jet types.
A clue to BA's lingering love affair with the 747 lies in the model's ability to eke out capacity from scarce operating slots at its London Heathrow hub at a time when lower fuel prices make retaining older planes an option. The revamped jets, the first of which returns next month from a refit center in Cardiff, Wales, will also get 16 extra business-class seats, aiding deployment on lucrative trans-Atlantic services.
"It makes hard business sense," JLS Consulting Director John Strickland said. "These aircraft have a lot of life in them and can be used in very effective commercial ways. Given the capacity constraints at Heathrow and the high demand they have on certain routes, it's still a very good model."
While BA has parked or scrapped 15 of its oldest 747s, about half its remaining 42 planes were built in the late 1990s, and "ought to have a good 10 years of life at least left in them," said George Ferguson, a Bloomberg Intelligence analyst. Of the 694 747-400s built between 1988 and 2009, only 266 passenger variants remain in service, down from 362 in 2011, according to analysis of fleet data held by Ascend Worldwide, he said. Most are retired as they approach their mid-20s.
The arrival of Boeing's 777 in 1995, just six years after the - 400's introduction, marked the start of the jumbo's slow decline, with its stablemate able to carry almost as many people but with two engines. The latest 787 Dreamliner and the Airbus Group SE A350 are hastening the retreat by combining twinjet economics with composite materials that offer a 20 percent efficiency saving versus planes far newer than the 747.
Boeing is also slowing output of the 747-8, the stretched model that replaced the -400 amid weak sales. The backlog stands at just 17 planes, excluding freighters, after delivery of the last of 19 ordered by Deutsche Lufthansa AG, the only major airline to sign up to the passenger version.
At British Airways, the revamped 747s will be no shrinking violets, with the jets earmarked for high-frequency destinations including Chicago, Boston and New York, as well as cities such as Lagos, Dubai, Riyadh and Kuwait where the onus is on maximizing seat numbers on one or two daily flights.
With fuel costs forecast to fall further amid concern over a slowing Chinese economy, BA's combination of "mostlypaid-for 747s" and modest spending on "surface treatments" will look more and more attractive versus a bill in excess of $250 million for the latest Boeing and Airbus models, said Robert Mann, an aerospace consultant in Port Washington, New York.
The relatively low capital outlay on sprucing up the 747s means BA will be under less pressure to utilize them should the cost and demand landscape change, according to Strickland. "If things turn sour they can stand any of these aircraft down almost at a moment's notice knowing there are no expensive capex commitments," he said. "They can dip into the availability of these aircraft and not worry that they have an expensive asset that needs to be sweated come what may."
The extra business seats on the revamped 747s will take the total to 86, only 11 fewer than on BA's Airbus A380s, making it easier to switch between models without crimping availability of highyield berths.