How Much Does a Boeing 747 Cost: 2017 May See Last Flight on US Carriers
In September of last year, the chief engineer on Boeing Co.'s (BA) 747 jumbo jet program, Joe Sutter, passed away at the age of 95. Now, the last two U.S.-based carriers still flying the plane are setting the stage to retire their remaining 747s, probably by the end of this year.
United Continental Holdings Inc. (UAL), which had originally planned to end 747 service at the end of 2018, said in a statement on Wednesday that the airline's last 747 flight will come in the fourth quarter of this year. United took its first delivery of a 747 in 1970 and flew the plane between California and Hawaii.
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Here's part of the airline's statement:
It's a bittersweet milestone — this jumbo jet with its unmistakable silhouette once represented the state-of-the-art in air travel. Today, there are more fuel-efficient, cost-effective and reliable widebody aircraft that provide an updated inflight experience for our customers traveling on long-haul flights.
Delta Air Lines Co. (DAL) has fully booked its 747 flights through November of this year, according to Bloomberg News, and the airline has not disclosed when the iconic plane will make its last flight for the airline.
Assuming President-elect Donald Trump and Boeing sort out their differences over the next version of Air Force One, the two planes that are scheduled for delivery in 2024 may be the last 747s built.
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The first 747-100s sold at a list price of $24 million. Adjusting for inflation that same 747 would sell today for more than $149 million, less than half the actual list price of a new 747-8 passenger jet that lists for $378.5 million or the freighter version at $379.1 million. Boeing hasn't got many buyers for its humpbacked plane, but price is not the problem.
Since January of 2015, Boeing has taken orders for just 10 747s, and it has a total of 21 jumbo jets on its backlog, 10 passenger jets and 11 freighters. Beginning last September, Boeing cut production of the planes from one to just one-half per month.
In late July of last year, Boeing lowered the number of 747s in its program accounting block from 1,574 planes to 1,555 and took a pretax charge of $1.2 billion against the program. In a filing with the U.S. Securities and Exchange Commission the company added:
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If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747.
Demand for new cargo planes has stalled as well, not primarily because cargo shipments have declined but because new planes like the 787 and Airbus A350 have increased capacity to carry cargo on commercial passenger flights. This so-called belly cargo offers both the carriers and the shippers better economics.
Boeing made a de facto decision several years ago to let the 747 program live its natural life and die a natural death when it chose not to compete directly with the larger A380 superjumbo jet from Airbus. Given the then-high cost of fuel, Boeing would have had to replace the four engines on the 747 with more fuel-efficient versions. The A380 jet, if it can be filled with 500 to 600 passengers, is more efficient than the 747 as a passenger plane, and Boeing did not see the market for these massive planes growing enough to justify the investment to compete. In effect, Boeing gave Airbus the very-large airplane market.
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Another irony of these large planes is that the A380 is, in fact, a dual-aisle version of the design that Boeing rejected in the 1960s. A delivery delay of 12 A380s destined for Emirates Airlines has once again put the superjumbo plane in the red. With only Emirates as the plane's single major customer, the A380 may be the airplane equivalent of a dead man walking.
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