Posted on September 30, 2011

A dispute that has held up Boeing Co's (BA.N) first delivery of a stretched model of its 747 jumbo jet could be resolved when the chief executive of Qatar Airways visits Boeing's turf on Friday.

The delivery, scheduled to take place 10 days ago, had to be scrapped at the last minute when the customer, Luxembourg-based freight carrier Cargolux Airlines International SA CLUX.UL, refused to accept delivery.

The surprise move came immediately after Qatar Airways finalized the purchase of a 35 percent stake in Cargolux, triggering speculation the jumbo 747-8 Freighter had become a bargaining chip in negotiations over delays affecting another plane, the 787 Dreamliner.

Qatar Airways CEO Akbar Al Baker (pictured), seen as one of the aerospace industry's biggest tormentors, is scheduled to travel to Seattle on Friday to take delivery of a Boeing 777-2000LR, the longest-range jetliner.

Al Baker, who once said Boeing was run by "bean counters and lawyers," has established a reputation as a scourge of the aircraft industry, keeping manufacturers and media in suspense at air shows and heaping criticism on Boeing, its rival Airbus (EAD.PA) and other aerospace suppliers. Any deal over 747-8 delays would need Al Baker's approval.

Seattle-based aerospace analyst Scott Hamilton, who closely follows the two Boeing programs, said Cargolux and Boeing had reached the outlines of a deal on compensation payments for 747-8 delays, allowing delivery to proceed next month. "It is important to get the 747-8 delivered as much as the 787. It has been delayed for two years and they need to get the airplane out and get cash coming in to the company," Hamilton said.

Boeing declined to comment on the likelihood of a deal. "We continue to talk and continue to be optimistic and look forward to delivering the airplane," Boeing spokesman Jim Proulx said.

Boeing had to scrap plans for a loud musical bash last week to mark the inaugural delivery of the first stretched jumbo after the European company refused to take delivery, in an unusual snub for the hand-over of a new aircraft.

The 787 Dreamliner reached its first customer, All Nippon Airways Co Ltd (9202.T), earlier this week, but the flagship 787 and revamped 747 are both two to three years behind schedule. Qatar has ordered 30 Dreamliners.

Having been forced to cancel a concert for workers for the delivery of its first 747-8 last week, Boeing hopes to inject some sparkle into the delivery of Qatar's 100th Boeing aircraft at a special ceremony at its Everett production plant, 30 miles north of Seattle. But the aborted 747-8 delivery has left some bruised egos at the plant, as well as anxieties over the timing of revenues.

"It was hugely embarrassing not only because of all the effort they put into the ceremonies and fun going around it, but when you have a launch customer refuse to take an airplane it is serious," Hamilton said.

Qatar bought its first Boeing 707 in 1977, the same year that Cargolux ordered its first 747 jumbo.

Boeing 787 Dreamliner

Boeing's discomfort deepened when another customer, Atlas Air Worldwide Holdings Inc (AAWW.O), reduced its order for a dozen 747-8 freighters by canceling three aircraft already built. Each 747-8 is worth more than $300 million at list prices, although airlines and cargo carriers typically get a discount, especially for bulk orders. Cargolux has ordered 13.

The 747-8s are part of an inventory of undelivered jets valued at $16 billion, including many 787s that need finishing work, turning Boeing's site into a cramped parking lot. Brinkmanship over the 747-8 is just one piece of a larger jigsaw affecting several suppliers as Qatar expands its fleet.

Qatar Airways is in simultaneous talks to double its order for Airbus A380 superjumbos to 10 in a deal worth just under $2 billion at list prices, industry sources said.

Such a deal could be announced at the Dubai air show in November along with a long-awaited engine choice that could see a joint venture between General Electric Co (GE.N) and Pratt & Whitney, a unit of United Technologies Corp (UTX.N), powering Qatar's planned superjumbo fleet.

The Engine Alliance joint venture competes with Rolls-Royce Holding Plc (RR.L) to sell engines for the world's largest passenger jet.

While criticizing Boeing and Airbus over delays, Al Baker is likely to have some influence over design as the rival plane makers plan ahead for a market to replace Boeing's 777 mini-jumbo, one of the most successful wide-bodied aircraft.

Boeing will likely update Al Baker on tentative designs for an upgraded 777 with close to 400 seats called the 777-8X or 777-9X, which would have new GE engines and a modified wing.

Boeing Commercial Airplanes Chief Executive Jim Albaugh told Reuters it would be ready to defend the 777's leadership of this lucrative market segment by around the time Airbus brings out its competing 350-seat A350-1000 in 2017. "We will just see what happens on the 1000 and we will be in the market very soon after they are in the market, if not before," he said in an interview at the 777 assembly line at Everett this week.

Al Baker has accused Airbus of failing to listen to buyers' concerns over the A350 and has threatened to buy more 777s.

source: Reuters