[Infowarrior] - Boeing's 747-400, a Faded Queen of the Skies

[Richard Forno]

I've not flown the A380 yet but I'm hard-pressed to see how anything can compare to the 747 on longhaul flights.  Call me old fashioned if you want.   ---rick


Boeing's 747-400, a Faded Queen of the Skies

By Kyunghee Park and Andrea Rothman on June 21, 2012

http://www.businessweek.com/printer/articles/58194-boeings-747-400-a-faded-queen-of-the-skies

Back in the late ’80s, global airlines scrambled to place orders for Boeing’s (BA) 747-400 widebody, then the industry’s most coveted aircraft for its sheer size, high-tech cockpit, and creature comforts. Now, ten-year-old passenger 747-400s are worth a record-low $36 million, about 10 percent less than similarly aged planes last year, according to London-based aviation consultancy Ascend, as carriers seek more fuel-efficient models. There’s even little interest in converting the passenger jets into air freighters because of a slump in air cargo demand.

Some 48 of the humpbacked passenger 747-400s worldwide have also been placed in storage, according to Ascend. The onetime “Queen of the Skies” has been shunned in favor of Boeing’s smaller 777 widebody (which has two fewer engines sucking fuel) or Airbus’s mammoth A380 double-decker. “There’s not a lot of demand for the 747,” says Paul Sheridan, Ascend’s head of consultancy Asia. “They’re mostly being broken up for parts.”

The decline in prices contributed to Singapore Airlines (SIA2) having a surprise loss in the quarter ended March after the sale of the carrier’s last 747-400 brought in less than it expected. Japan Airlines has stopped using the planes, and operators including Cathay Pacific Airways, Korean Air Lines, and Malaysian Airline System (MAS) are following suit to help counter jet fuel prices that have jumped about 30 percent in two years. “When oil prices are high,” explains Cathay Pacific Chief Executive Officer John Slosar, “the last thing you want to do is hold on to your older planes.”

The Hong Kong-based airline said last month that it’s speeding up the retirement of its 21 passenger 747-400s. The carrier will shed nine through early 2014 as it adds more 777-300ERs for long-haul flights. Cathay is also retiring three 400-series freighters this year due to the arrival of new 747-8 cargo planes that are slightly larger and more fuel-efficient.

Although the original 747 was developed in the 1960s, the first 400 variant—which was more fuel-efficient and required one fewer cockpit crew member—was delivered to Northwest Airlines in 1989. The standard version can fly as far as 7,260 nautical miles (13,450 kilometers), carrying 416 passengers in three classes. Boeing delivered the last of the 400s series jets—all told, some 694 were sold—in 2009.



Newer aircraft use less fuel because of the development of more efficient engines and of lightweight materials. Boeing’s new 787, for instance, has a fuselage built from reinforced plastics, compared with the 747’s heavier aluminum shell. “We’re seeing a lot of airlines understanding that they need more fuel-efficient planes, and that bodes very well for us,” says Jim Albaugh, the head of Boeing’s commercial-plane business.

But such changes also can provide rivals an opening. Thai Airways International (THAI) is in the process of selling four 747-400s and it will begin phasing out the model in 2013. The carrier will begin receiving six of the A380s it has on order later this year. Flying 747-400s now “doesn’t make sense,” Amranand says. “It’s obvious that with this sort of fuel price that it will cost you.”

Simple math tells the story. Malaysian Airline System, which received its first A380 last month, will consume 1,181 barrels of fuel flying the 494-seat aircraft to London from Kuala Lumpur, according to Maybank Kim Eng Securities (MAY) analyst Wong Chew Hann. The carrier’s 359-seat 747-400s use about 999 barrels of fuel on the same route, he says. Fuel accounts for about a third of airlines’ costs, according to the International Air Transport Association, so the Airbus jumbo’s 16 percent edge in per-passenger efficiency is a big selling point.

The A380, which surpassed the 747-400 as the world’s largest commercial plane when it entered service in 2007, has become the flagship for carriers including Singapore Air and Qantas Airways (QUBSF). That’s left rivals still reliant on the 400 series at a disadvantage in terms of costs and prestige, says Maybank’s Wong. “It takes an A380 to beat an A380,” he wrote in a June 8 research note.

European carriers, operating in slower-growth markets, are replacing 747-400s less quickly. British Airways, the biggest 747-400 operator with its fleet of 55, according to Ascend, will retire the last of its fleet in about 10 years. “It’s a great aircraft. Customers love it,” says Willie Walsh, chief executive of BA’s parent, International Consolidated Airlines Group (IAG). “We could replace some of them with 777-300ERs, which we are doing, but we are not looking to replace all of them.” Nonetheless, BA has also ordered 12 Airbus A380s, which will start arriving in about a year.

Although Deutsche Lufthansa (LHA) is already flying A380s and has ordered some 747-8s, it will still continue using its 400 series planes. “We will use it for quite a number of years,” says CEO Christoph Franz. One reason for the loyalty: Lufthansa owns them outright and their costs have long been accounted for.

The bottom line: Prices for used 747-400s, the world’s most popular widebody plane, have dropped 10 percent in the past year. Blame it on costly fuel.


---
Just because i'm near the punchbowl doesn't mean I'm also drinking from it.