Boeing 787 Cancellations In China

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China Eastern Airlines has abandoned plans to acquire 24 Boeing 787 Dreamliners but will instead purchase 45 737s, and Boeing expects more changes. The company says it is expecting to see more cancellations (and more orders) for its newest jet as it works through mitigation with customers affected by the aircraft's delayed arrival to market. More than 800 orders for the airliner have been placed worldwide and Boeing expects to increase production of the airliner from two per month to ten per month by 2013. At least one analyst believes the loss of the early China Eastern orders could actually turn positive for Boeing, even if the manufacturer can only sell most of those lost order spots.

Robert Stallard, an aerospace analyst with RBC Capital Markets, told Reuters that the China Eastern aircraft orders were likely placed at deep discounts. So, if Boeing can resell some of those orders at a more current prices, the overall margins could still be positive for the program. Boeing says it does not currently believe that the China Eastern cancellations will have an effect on the decision of other carriers in the region. The company expects Qantas, Air New Zealand and Korean Air Lines to hold firm to their more than 60 787 orders and Boeing China says there are no signs more Chinese carriers will cancel. China Eastern's move may reflect a more conservative view of the long-haul market and generally, the near-term state of the world economy. A protracted weak global economy could curb the need for larger long-haul jets. In that environment, smaller aircraft -- like the 737s China Eastern has now ordered -- could prove more attractive to conservative carriers.