Atlas Air Boeing 747-8F N852GT inside the Boeing Factory.

Atlas Air Boeing 747-8F N852GT inside the Boeing Factory.

More troubling news for Boeing’s 747-8 Freighter program today. Atlas Air has announced that they have terminated orders for three Boeing 747-8Fs, “due to delays and performance considerations.” The three aircraft they cancelled are test aircraft that end up being less efficient than later 747-8Fs produced.

Jim Proulx with Boeing communications told Business Week that Atlas Air’s decision is ’œabsolutely unrelated’ to Cargolux delaying their first 747-8 delivery. ’œThough the first airplanes off the line are slightly short of expectations, these early-build models nonetheless will be great airplanes with unparalleled efficiency and low costs. As with all programs, we’ll continue to focus on performance improvements that increase the value these airplanes will bring to our customers.’

Atlas Air will still received nine 747-8Fs through 2013.

William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide, said via press release that, ’œAs prudent asset managers, terminating the first three aircraft was the right decision for our fleet, our customers and our stockholders. We expect the remaining 747-8Fs in our order to be better-performing aircraft than those we have terminated.”

The first three 747-8Fs delivered to Atlas will be contracted out to British Airways, where the next two will enter service with Panalpina. With the additional new 747s, Atlas plans to retire five of their Boeing 747-200s that they currently operate.

This comes on the heels of Atlas Air’s stock dropping 13%, after an analyst downgraded their shares from “buy” to “neutral.” The concern stems from the down economy. Could this have been less about the efficiency differences of the 747-8F or a good excuse for Atlas to take delivery of less aircraft without penalty?

There is still no word on when Cargolux will take delivery of their two Boeing 747-8Fs.

Jim Prouix with Boeing Communications explained what Boeing is currently planning to do with the three aircraft involved in Atlas’ change of contract to “We are working to place the airplanes with other customers.”

Prouix also reiterated that Boeing’s dealings with Cargolux and Atlas are separate. “The decisions by Atlas and Cargolux were independent and involved distinct contracts and issues. We continue to work through unresolved contractual issues with Cargolux and look forward to delivering its airplanes.”

In March 2010, Atlas Air started operating the Boeing 747 Dreamlifters. It was strongly suspected that this deal was part of a compensation package to Atlas for the delays of the Boeing 747-8F. Boeing stated that “Atlas’ Dreamlifter contract is not at issue in this matter.”

Image: Jon Ostrower

EDITOR-IN-CHIEF & FOUNDER - SEATTLE, WA. David has written, consulted, and presented on multiple topics relating to airlines and travel since 2008. He has been quoted and written for a number of news organizations, including BBC, CNN, NBC News, Bloomberg, and others. He is passionate about sharing the complexities, the benefits, and the fun stuff of the airline business. Email me:
Photo Gallery: United Airlines First Boeing 787 Dreamliner

Yes, I have to believe that the two issues are not related. Here’s my $0.05 bet (I never bet more than a nickel, even on a sure thing…

1. Cargolux and Boeing will work out their differences and deliver the first two airplanes within in a month. It will cost Boeing a few bucks and it has already cost both of them some ‘Face.”
2. Atlas will continue its orders for several more 748F units and recieve them on schedule. Both parties will be happy.
3. The cancelled units earmarked for Atlas will be quickly sold to others, placed farther down the 748F delivery que and at slightly reduced prices. Boeing and the up-listed customere(s), as well as Cargolux and Atlas will again be happy campers.
4. The three (or five) questioned, early-build aircraft will enter service and work long, productive lives while closely monitored by Boeing and their operators.

In other words, the current storm will blow over and will be forgotten within six months by all but a few bean counters at Boeing. Boeing’s greatest instant need is to see the 748F in operational service (as in SOLD and Delivered) as quickly as possible. While they won’t give away those early builds, the will be sold at attractive prices. Bottom Line: Cargolux and Atlas saw an opportunity to reduce their acquisition costs and they implemented the opportunity. Boeing started in a poor position but will recover well. Boeing has lost a bit more “Face,” but the loss won’t last long. Their books are mostly in the black (thank you 737 program). Once these snags pass and the 787 and 748 programs enter full production, Boeing will do just fine. Gawd, how many times in the last five years have we had to say this? In the end, developing one new and one almost-new aircraft at the same time proved to be a real challenge for Boeing and it cost them a bundle. On the bright side, the DID IT. Both the 787 and 748 are ready for service flight and Boeing’s balance sheets will improve in the next year. A lot!

pessimistic flyer

Boeing did what? Wait and see, the EIS of the 787 will be a nightmare. Saying that Cargolux and Atlas saw an opportunity to make a dime on the side, is ridiculous. Is was time that somebody told these arrogant managers in Seattle that enough is enough. It is not good enough to promise, you have to deliver.

Leave a Reply

Your email address will not be published. Required fields are marked *