Boeing Cargo Plane Wins Clearance, Just As Market Turns Sluggish

Boeing Co. (BA) plans to deliver the first of its delayed new 747-8F cargo planes early next month, though the global air freight market has turned sluggish.

The company said Friday that U.S. and European regulators signed off on the revamped version of its iconic jumbo jet, paving the way for launch customer Cargolux Airlines International SA to receive the first of the three 747-8Fs it ordered in 2007.

Boeing plans to deliver at least a dozen 747-8s this year, including a VIP version configured for passengers that has yet to be approved by regulators. The aircraft program remains in a loss-making position after a series of production and design delays left it more than a year behind schedule.

While air cargo carriers are kitting out their fleets with new planes such as the Boeing's 747-8F and 777 freighter - which offer better range and fuel performance - the new capacity comes as global demand remains below pre-recession levels, sagging after a surge in business last year driven by restocking.

The International Air Transport Association recently described the market as "in the doldrums", and the weakness has been most pronounced in the Asia-Pacific markets that account for more than a third of the global total. Hong Kong airport, the world's largest air cargo hub by volume, saw a 6% drop in tonnage in June compared with the previous year.

Other shippers are more upbeat, and those taking the new planes say they have an advantage because of their superior operating economics compared with older aircraft.

Cargolux said it was "delighted" at the impending 747-8F arrival, though has yet to identify where it will use the plane alongside its existing fleet of 747-400 freighters.

The Luxembourg-based carrier is the world's third-largest all-cargo airline, with Qatar Airways recently taking a 35% stake as part of a broader strategic alliance.

Some international shippers are more upbeat about market prospects despite broad economic uncertainty, and the sector is traditionally stronger in the second half of the year as retailers build stock for the holiday shopping peak season.

Executives of Atlas Air Worldwide Holdings Inc. (AAWW) - which hopes to receive the first of its 747-8Fs in October - said earlier this month that delayed shipping by retailers amid the uncertain economy could help international air freight carriers.

"Any bounce in consumer sentiment or in [retail] sales ... is going to favor air because any postponed purchases at this point have to go air," Chief Executive William Flynn told analysts on the company's post-earnings conference call.

Susan Rosenberg, a United Parcel Service Inc. (UPS) spokeswoman, said Friday that the shipping giant hasn't seen any big changes in air freight demand since it added some Europe-to-Asia flights over the summer to accommodate activity. She noted that it was still too early to forecast peak shipping season, although "we're initiating that dialogue with customers."

UPS and FedEx Corp. (FDX) - the world's largest air freight carriers - haven't ordered the 747-8F, and both cancelled deals to acquire the larger Airbus A380 freighter, effectively killing the cargo version of the world's largest passenger airline.

Boeing expects to deliver between 25 and 30 747-8s and 787s this year, with more jumbos than the delayed Dreamliner, which is expected to win approval from U.S. and Japanese regulators later this months. All Nippon Airways Co. Ltd. (9202.TO) will take delivery of the first 787 in September.

The 747-8 has a list price of about $300 million, and Boeing has firm orders for 114 of the jets - 78 freighters and 36 passenger jets - plus commitments for 20 more. Deutsche Lufthansa AG (LHA.XE), expects to receive the first of the 747-8I passenger version early next year.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com

-Bob Tita, Dan Michaels and Melodie Warner contributed to this article.

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