Why Boeing's Dreamliner pitch to Pakistan is a big win for both jetmaker, airline

A recent pitch by Boeing Commercial Airplanes boss Ray Conner to Pakistan, offering to swap an order for five 777 jets into a Dreamliner purchase instead, could benefit both the airline and help the jet maker avoid an embarrassing production cut, an aerospace analyst suggests.

In a private letter the Puget Sound Business Journal obtained and published earlier this month, Conner urged Pakistan's Prime Minister Muhammad Nawaz Sharif to convert Pakistan International Airways' existing order for five Boeing 777-300ERs to some new Dreamliners.

Conner told the Pakistan prime minister that switching to Dreamliners would make Pakistanis proud to fly their national airline again, but also would restore profitability to the money-losing airline by reducing fuel and maintenance costs on the jets. This would help PIA prepare for privatization, Conner added. Conner told the Pakistan prime minister that switching to Dreamliners would make Pakistanis proud to fly their national airline again, but also would restore profitability to the money-losing airline by reducing fuel and maintenance costs on the jets. This would help PIA prepare for privatization, Conner added.


In a recent analysis that Netherlands based analyst Dhierin Bechai wrote about the Conner letter published here, he suggested Boeing had more than PIA's best interests at heart when it proposed the order swap.

Conner was thinking about Boeing's own Dreamliner production lines, Bechai suggested.

"The letter tells it all," Bechai said."To me, the letter is a sign that Boeing is trying to fill delivery slots for the Boeing 787 so that it can increase rates to 14 per month, in the best case, and in the worst case, be able to fill up slots that are freed up now. I think the letter is a sign of Boeing preparing itself for another (production) rate cut, where it is aggressively trying to convert 777 orders to orders for the Dreamliner," Bechai wrote.

"In times where Boeing has been discounting the Boeing 777-300ER to increase its attractiveness and fill the big holes in the production (line), this letter seems to be very odd." Bechai added. "To me it is also clear that Boeing is not really concerned about PIA to the extent it claims in the letter, but is trying to facilitate a swap here that benefits their own plans."

Though Boeing has its own agenda, Bechai said such a deal remains good for Pakistan's national carrier.

The Dreamliner is better suited for PIA's fleet and would really help the airline cut costs, Bechai explained.

The analyst emphasized that PIA's own challenges and difficulties stretch beyond the airline's fleet, though, and plague "management layers of the company."

Conner's letter to Pakistan's prime minister emerged just before Indian airline Jet Airways asked Boeing to postpone delivery of its order for 10 new Dreamliners for two years.

Bechai's report suggests Boeing will announce a Dreamliner production cut within six months.

(Andrew McIntosh - Puget Sound Business Journal)