How Coronavirus Brought Aerospace Down to Earth
An airline about to take a new 787 told the jetmaker "The deal was off, unless Boeing was willing to increase the 55 per cent discount it had already agreed on the $338m list price. "
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April 21, 2020 - by Peggy Hollinger for ft.com
The industry has been one of the hardest hit, with contracts cancelled, production halted and pleas for big bailouts
At the end of March, just days before Boeing was set to hand over a new 787 Dreamliner to one of its most valued customers in the Middle East, the airline's head of procurement picked up the phone to the US aircraft maker. The deal was off, unless Boeing was willing to increase the 55 per cent discount it had already agreed on the $338m list price.
In normal times, an airline would hesitate before threatening to cancel an order at such a late stage. Cancellation would normally mean heavy penalties and forfeiting the downpayments, which for Boeing's state of the art twin-aisle model amounted to close to $100m of the agreed $150m price tag.
But these are not normal times.
Boeing caved in and cut the price by a further 15 per cent, according to people involved in the deal. The US aircraft maker — which declined to comment on the contract details — saw more value in getting the jet out of the hangar than haggling for a few million dollars more.
Despite supplying more than 90 per cent of the world's commercial aircraft, Boeing and its European rival Airbus do not have much leverage when nearly all their airline customers are fighting for survival....
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