BA Boeing Co

By Benjamin Katz 

DUBAI -- Emirates Airline is reducing its order for Boeing Co.'s embattled 777X jet, electing to buy the smaller 787 Dreamliner instead, in the latest setback for the for the U.S. manufacturer's newest plane.

Emirates is still by far the biggest customer for the upgraded 777, with orders remaining for 126 planes. But the airline has been frustrated by delays to the aircraft, including those related to its new General Electric Co. engine.

Against that backdrop, the airline said Wednesday it would swap orders for 30 of the 777X for 30 of Boeing's 787s. The Dreamliner deal is worth $8.8 billion before customary discounts, at least $3.5 billion less than the value of the 777Xs that have been canceled. The order marks a partial revival of a deal first signed two years ago at the international air show in Dubai that had lapsed.

The 777X is now the biggest wide-body aircraft available to buy new after Airbus SE's decision to halt production of the A380 double-decker. That is a precarious position to be in as long-haul airlines around the globe move toward smaller planes that are better suited to fly a wider range of routes.

The trend has already hurt the 777X program. British Airways has deferred some deliveries for the plane as it pares capacity growth, while Deutsche Lufthansa AG has converted 14 of its firm orders into options, effectively removing them from Boeing's production schedule.

The plane's struggles come as the U.S. manufacturer is engulfed with the crisis surrounding its grounded 737 MAX. That aircraft has been out of service since March after two fatal crashes and has been losing ground to Airbus's rival A320neo. The plane maker is also battling with the slower demand for wide-bodies globally and has cut back 787 production for two years due to a lack of orders from China amid trade tensions with the U.S.

Emirates' decision to reduce its order for the 777X comes after it was forced to conduct a fleet and strategy review when Airbus announced in February that it would stop production of the A380 from 2021. The airline had built itself into the world's biggest long-haul carrier using the A380 to ferry passengers across the globe via its hub in Dubai.

Long-serving Emirates president, Tim Clark, has been frustrated with delays to the 777X. He told reporters Tuesday that he wasn't confident that Boeing would meet its already pushed back target to have the 777-9 variant in service by 2021 and the smaller 777-8 in the air by 2022, about a year later than planned.

Mr. Clark added that Emirates may need to reduce its 777X orders and replace the aircraft with another model to maintain growth plans over the next few years. However, the 787-9 variant ordered Wednesday, which can seat around 280 passengers compared with around 400 on the 777X, doesn't fit that requirement.

That may lead Emirates to add to a $16 billion deal for Airbus's rival A350-900 model announced on Monday with the European plane-maker's bigger -1000 model, Mr. Clark said.

Write to Benjamin Katz at ben.katz@wsj.com

(END) Dow Jones Newswires

November 20, 2019 07:26 ET (12:26 GMT)

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