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Fri 25 Sep 2009 08:48 AM

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Oman Air 787 order hinges on maiden flight

Carrier to decide whether to cancel order worth up to $1.2bn for six Boeing 787 planes.

Oman Air will decide whether to cancel an order worth up to $1.2bn for six Boeing 787 Dreamliners after the plane's maiden flight, but the US planemaker has won few friends over its handling of delays, the carrier's chief executive said.

Industry veteran Peter Hill said Boeing had failed to reassure customers that the 787 would promptly deliver the efficiencies promised by its revolutionary lightweight design.

He also predicted that a severe industry downturn caused by a mixture of weak demand and scarce credit, coupled with excess capacity, would last for another 18 months but said Oman Air had based its own growth plans on conservative forecasts.

Boeing has said it expects to fly the lightweight, fuel-saving plane by the end of 2009 after two years of delays. "I think we will take a decision once it has flown. Let's see when it flies," said Hill, a British executive who joined Oman Air a year ago after more than four decades in airlines.

"There have to be concerns about Boeing's ability to deliver that aircraft as it was originally designed. My predecessors bought it on the basis of a whole load of performance guarantees and delivery dates. So far Boeing haven't demonstrated that the confidence we put in it is going to be met in the near future."

The airline has six 787s on order worth up to $200 million each at list prices through Kuwaiti aviation leasing firm Alafco. Delivery has been pushed back to 2014 from 2012.

The 787 is designed to carry 210 to 290 people, boasting better environmental performance and comfort for passengers. Light composite materials make up half of its structure.

Hill said unanswered industry questions lingered over the weight, reliability and fuel economics of the 787, but conceded weight was a perennial problem in new aircraft types.

"Boeing are playing it very close to their chest. It doesn't help for great dialogue between customers and the company and that is a criticism," Hill said. "We are not being kept informed enough on what's really going on. That begs the question, do they really know how to solve some of these issues?"

Boeing Chief Executive Jim McNerney said this month the planemaker had a "lot of confidence" in its latest 787 schedule.

Oman Air is separately taking delivery of Airbus A330s and opening routes to London, Paris, Munich and Frankfurt.

It plans to expand from a regional player into an international airline focusing on the Gulf state's relatively untapped potential as a tourist and business destination. But it will avoid confronting larger Gulf rivals as network carriers.

Oman Air is negotiating a deal to outsource maintenance and repair operations, to be finalised in 6-12 months, Hill said.

Global airlines are expected to lose $11 billion this year. Hill, who began as a trainee in 1961 and most recently ran Sri Lankan Airlines, said the industry would be sick for some time.

"This crisis is probably the worst I have ever experienced because it is triple whammy everywhere you look. Fewer people travelling, more seats than ever chasing fewer passengers than ever and there is no money around for financing new fleets.

"I don't think we are going to see a huge change over the next 18 months or so. It is going to be a long, long slog until eventually we find ourselves slowly coming out of it."

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John 10 years ago

Boeing is reaping what it sowed, because all the unbridled hype about the 787 was based on paper not reality and the Screamliner is clearly in deep trouble if even the head of a small airline is voicing concern. The delays are unacceptable and Boeing is lucky the world's economy tanked when it did because almost every major carrier would have canned their orders for the pie in the sky. So little about the technology has been tested in commercial practice, so the teething troubles will make a few loose wires on the A380 seem like a picnic. The Europeans are going to have terminal cases of schadenfreude, having born the brunt of the base gloating Boeing showed when Airbus was in trouble.