Boeing Can’t Give Away 787s

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Last February, Boeing Co. (NYSE: BA) had 11 early models of its 787 Dreamliner sitting on the tarmac in Washington state. The planes were for sale at substantial discounts. Yet, according to a story in The Wall Street Journal from Friday evening, Boeing hasn’t sold a single one.

These 11 planes are heavier than the production model now and also require a number of repairs in order to meet federal standards. In February, Bloomberg cited unnamed sources who said Boeing built a “record inventory” of the planes before getting certification in 2011 and that there are “dozens of older versions” that the company had begun upgrading.

The 11 planes that are available were originally ordered by Russia’s Transaero Airlines (four planes), Indonesia’s PT Lion Mentari Airlines (five planes) and RwandaAir (two planes). Boeing had been expected to sell the planes for more than 50% off the list price of $218.3 million (the list price for a 787-8 in February was $211.8 million).

PT Garuda Indonesia and Malaysia Airline System Bhd were among potential buyers back in February. Malaysia Air lost a 777-200ER somewhere over the Indian Ocean in early March and the company’s financial troubles have probably made a 787 purchase unlikely. The Wall Street Journal reports that current prospective buyers include Chile’s LAN Airlines, which has ordered two of the planes, and a Korean buyer that has ordered a third.

If Boeing can’t find buyers for the planes, it will have to write them down, and even at a discounted $100 million per aircraft that’s $1.1 billion against the company’s bottom line at some point. Given the difficulties Boeing had getting the 787 in the air, that’s just more embarrassment it really doesn’t need. Another potential impact is that the low-priced planes could hit margins when they are sold and unit costs could pile up, at least briefly.

We’ve noted before the steep discounts to list prices that Boeing is taking on its newest planes. A production 787-8 can currently be had for about $115 million. A buyer for a non-production version likely will demand a substantial discount from that already discounted price. Fortunately for Boeing, there are only 11 of these planes.

ALSO READ: Why a Boeing 787-9 Costs $250 Million