Boeing 747: Eighth Time's the Charm?

The 747. More a legend than a plane. King of the skies, tyrant of the air, occasional destroyer of airline balance sheets. This magnificent beast continues its long reign, knowing that the world's attention has shifted towards Toulouse, and Airbus's misguided effort to wrest control of the shrinking jumbo market away from Boeing. Through the '90s and early 2000s, new variant proposals were mooted and fell by the wayside, forgotten like a growing child's abandoned toys.

This has now changed. Eyes are gradually shifting away from the unpleasant A380 experience and towards the 747-8, which is practically a new plane. This too has turned somewhat unpleasant, with serious delays exacerbated by the ultimate program horror, the 787. The year 2010 was the first in the program's history to not see a 747 delivery. But the program is now back on track.

However, in 2008-2013, the cargo market took a very heavy blow, with record shrinkage rates. It's coming back, but the market basically lost two or three years of growth, and the short term outlook remains anemic. Also, there have been just three airline endorsements of Boeing's new 747-81 (Lufthansa, Air China, and Korean). Earlier this year, Boeing made the inevitable rate reduction to just one per month. Few aircraft production programs recover from this kind of drop.

Of course, the market for large planes is small — less than 5% of the market by value — and as Boeing up-gauges the 777 as the -9X it will get smaller still. Also, Airbus has been extremely aggressive about A380 pricing.

But the A380 is basically sized for the 550-seat market. A 450-seat design with modem engines and systems will almost certainly have better seat mile or freight ton costs. It will also be easier to fill, with more belly cargo and an opening front cargo door. Emirate's -8F order, coupled with its decision to switch its A380F orders to pax versions, emphasized the 747's status as best large cargo plane ever. This point has been further reinforced by the A380F shelving.

The airline prospects are intriguing. ANA, JAL, Cathay, and other key players haven't committed to the A380. Any of these would make great customers. But they show few signs of buying anything large. We expect the 777-9X to sweep this market.

In conclusion, it's hard to feel optimistic about the long-term future of this plane. The -8F will just limp along, while the -81 will last just long enough to produce the next Air Force One, before the end of the decade.