This article was originally written and published at AeroTime News on October 11, 2019.
On October 12, 2011, Cargolux operated the first commercial flight of the newest version of the Queen of the Skies, the 747-8. While the flight only carried freight from Seattle-Tacoma International Airport (SEA) to Luxembourg, both Boeing and Cargolux could not be any less excited. The then-president and Chief Executive Officer of Boeing Commercial Airplanes, Jim Albaugh said that the 747-8 Freighter was “truly the Queen of the Skies for the 21st Century”. Frank Reimen, who was then the CEO of Cargolux, added that the company was looking “forward to the efficiency and environmental benefits that come with this great airplane”. A year later, on June 1, 2012, Lufthansa (LHAB) (LHA) introduced the Boeing 747-8I, a passenger version of the quad-jet, dubbed the Intercontinental.
Yet the Queen’s newest iteration never really took off.
Ever since it was announced in 2005, orders were rather scarce. Airlines ordered a total of 154 as of September 30, 2019, even falling short to the Airbus A380, its direct competitor. But the business case for it was, and still is, an interesting one. Boeing had a big advantage over the Super Jumbo as the 747-8 could be operated as a freighter – Airbus’ huge cargo plane never left the design sheets. Furthermore, its operating economics were far superior, at least according to Boeing – the aircraft “will offer 22 percent lower trip costs” compared to the A380, Boeing’s press release stated.
The United States manufacturer also predicted that the industry will have a need of “900 airplanes – passengers and freighters – in the 400-plus-seat segment” up until 2025. But the prediction was way off. Combined total orders for the 747-8 and the A380 are less than half of the initial prediction – 444 (154 for the 747, 290 for the Airbus A380).
So, why the Intercontinental is just a Local?
A lot of emphasis was put onto the freighter version, the 747-8F. Two launch customers for the 747-8 family were cargo companies – the aforementioned Cargolux and All Nippon Airways’ cargo subsidiary, Nippon Cargo Airlines. Boeing launched the aircraft on November 14, 2005, with 18 firm (10 from Cargolux, eight from Nippon Cargo) orders and 16 options, both from the same two cargo airlines. The passenger version of the Boeing 747-8 attracted its first customer on December 6, 2006, when Lufthansa (LHAB) (LHA) inked a contract for 20 firm and 20 options for the Intercontinental.
The emphasis on cargo operations for the 747-8 is even more clear when you focus on the split of orders and deliveries between the Freighter and the Intercontinental:
Out 154 orders, 47 were for the Passenger version. Since the last delivery on December 10, 2017, Boeing received zero new orders for the 747-8I. In contrast, the cargo Queen has 107 standing orders, with a backlog of 19 aircraft, as of September 30, 2019. However, its last order was 10 months ago, when Volga-Dnepr UK ordered three 747s on December 29, 2018.
With a backlog of 19 aircraft, the production of the Queen is set to cease in 2023, as Boeing currently produces 0.5 747-8s per month since September 2016. In 2016, the manufacturer already lingered around with the idea of ceasing production completely in 2019, as it had to incur a reach-forward loss of $1.1 billion due to weakening demand for the 747.
The current Chairman, President and CEO of Boeing, Dennis Muilenburg on July 21, 2016, noted that the company was monitoring the “air cargo market and aggressively drive productivity and cost reduction as we work to win additional orders to support ongoing production”. It seems like the strategy somewhat paid off – UPS salvaged the program in 2016 and once more in 2018 with relatively big orders. Both times United Parcel Service (UPS) ordered 14 Boeing 747-8 freighters, extending the backlog with 28 total additional units.
But in 2019, another hero that would save the Queen from Bowser, who wants to conquer Boeing’s Everett plant and cease the production of the 747-8, is more than likely not to be around the corner.
Unfortunate timing or ill-advised launch?
When Boeing delivered its first 747-8F in 2011, the global economy was just recovering after the 2008 financial crisis that had sent global trade spiraling downwards. The air freight market, however, never truly recovered.
In 2009, the demand for transferring cargo dropped – during the year, the average load factor (LF) on a freighter aircraft was 44%. A year later, LFs slightly recovered, reaching the peak of 56%. But in 2011, a worrying trend resurfaced, as load factors stumbled once again, according to IATA. To this day, they hardly recovered. The latest numbers (as of August 31, 2019) indicate that global load factors have returned to the same level as they were 10 years ago – average LF is 44.6%, IATA reports. But what is even more worrying is that the demand for air freight is on decline for the tenth consecutive month, which is the longest period since 2008, when the world’s economy was battling a recession. While global factors have had their fair share of impact on the state of air cargo demand, like the U.S. – China trade war, something else might indicate that the 747-8 is simply an ill-advised product.
Boeing’s order data from January 2018 till September 2019 showcases that customers ordered 18 brand-new 747 freighters. But in the same period, airlines more than gladly filled up backlogs of the other two wide-body freighters that Boeing produces – the 767-300F and the 777F. In total, Boeing received 91 combined orders for the two jets – 31 firm commitments for the 767-300F and 60 for the 777F.
A European commission report indicates that operating costs related to fuel dropped massively between 1980 and 2004. Since then, it started to rise massively – if in 1998 it reached its lowest point when 11% of total operating costs were related to fuel, in 2006 the number was 19%, amounting to a total bill of $90 billion, according to IATA. In 2018, airlines spent a combined $180 billion or 23.5% of total operating costs.
No matter which way you spin it, a quad-engine aircraft like the 747 consumes a lot more fuel than a twin-engine, even if the newest iteration of the Queen is equipped with state-of-the-art GEnx engines, which are also mounted on the wings of the 787 Dreamliner.
However, with falling cargo demand and geopolitical tensions still rising, the future looks grim for the Boeing 747-8. The future of the newest 747 became a game for the Queen’s throne, where in the end, politics and operating economics have the last word. Unless an order comes in, the 747 might join the retired double-decker club, which the Airbus A380 opened on February 14, 2019.
The Queen of the Skies will still fly for years to come – cargo operators usually operate their aircraft for much longer (for example, DHL has several Airbus A300s) and the 747 offers unprecedented operation capabilities. The combination of great range, payload capabilities and the nose cargo door, which significantly reduces the time to load or offload cargo, provides a very good reason to keep the Queen flying. In addition, the newest Air Force One will be the 747-8. Boeing plans to deliver it in 2024.