Boeing loses US$600m on Guggenheim exit
12 / 01 / 2011
AVIATION asset manager Guggenheim Aviation Partners showed Boeing time really is money after cancelling its order for two new 747-8 jumbo-freighters, which Boeing has seen delayed until mid-2011.
Boeing suffered an earlier cut in the deal with Guggenheim halving its original 2006 order of four freighters, which have list prices of US$319.3 million each. Guggenheim reduced the order by 50 per cent in December 2009 because of uncertainty surrounding the timing of the deliveries.
In September 2010 the need to redesign components extended Boeing’s year-wait to 18 months. The design forced engineers to make more changes than expected, leading to problems that now have to be fixed, including buffeting around the wheel well on landings and vibration during flight. Boeing is adding a fifth test jet to speed up the work, boosting the initial fleet of three.
“Guggenheim has been a great customer, so we’re very disappointed, but it’s part of the ebb and flow of business as you work on development programmes,” Randy Tinseth, Boeing Commercial Airplanes unit’s marketing chief, says.
The new freighter, which has 16 per cent more cargo space than the 747-400, came on offer in 2005. The fifth variant of the plane includes new engines and the longest wing Boeing has built to date.
“The cancellation was a direct result of the delays and the commercial consequences of those delays,” Guggenheim’s chief executive officer Steve Rimmer explains. “It’s very disappointing for us as we wanted to stay with the programme.”
Boeing has experienced a fiery start to the year with allegations from WikiLeaks that US diplomats were acting like market agents in trying to get international governments to purchase Boeing aircraft over European rival Airbus.