By Rebecca Rayko
AWN Editor
Staying true to its plan, Boeing is becoming ever more involved in aftermarket services for its aircraft in hopes of regaining some lagging profitability.
Under a new program that offers "total solution" fleet management, Boeing signed a $1.3 billion deal with DHL Worldwide Express to convert 44 Boeing 757 passenger jets to cargo use, upgrade the aircraft and provide maintenance for 15 years.
DHL will lease the 757s from Boeing, which purchased the first 34 757s from British Airways. Boeing Airplane Services president Joe Gullion says the company will identify the final 10 757s to purchase for DHL in 30-60 days.
Gullion called the deal, which was conceived a few months ago in Brussels, a first for Boeing and for the industry. The deal follows other Boeing innovations in recent days, such as Boeing's increased role in the financial services arena and plans to become more involved in in-flight entertainment systems.
"There is definitely a move for OEMs to provide more services," Gullion says, and Boeing is simply following the model outlined by companies like Dell, IBM and General Electric. The 757 conversion program and leaseback deal with DHL underscore Boeing's focus on the aftermarket, he says.
Similar freighter conversion deals will soon be offered by Boeing on its 737 and 767 models, Gullion says.
"We have active programs on the 767 and 737s right now," he says. "We plan to launch the 767 program in November and the 737 in the middle of next year."
Boeing already has interested launch customers for these new programs, says Gullion.
DHL will use its newly converted 757s as replacement aircraft for its fleet of aging Boeing 727Fs, which are being forced into retirement due to new environmental standards coming into effect. The company's plans called for getting these replacement aircraft into service quickly, which meant looking to outside sources for maintenance and other services. DHL turned to Boeing for a total solutions concept, although the company considered other options in the Airbus family, says Terry Nord, DHL Transportation Network director.
"We looked at the 737 and the Airbus A300/A310, the A320/A321 but they couldn't meet our criteria," he says. But DHL will continue to operate their fleet of A300B4s for a number of years, he added.
DHL International will operate the 757s on its European network from six hubs with feeds from the Middle East and Africa. The first 757s will join the fleet in the first quarter of 2001, and the 44th aircraft will be delivered by November 2003.
The 757 conversion work, which Boeing estimates will cost between $7-$9 million per aircraft, will be managed by Boeing Airplane Services from its Bellevue, Washington, headquarters, but engineering work will be performed at other facilities such as the Wichita center. Boeing partners Israel Aircraft Industries/Bedek and Singapore Technologies will also work on the conversions.
Nord revealed that future fleet coordination efforts, for which he is responsible, will be driven by this new program indicating the possibility of future sale-leaseback deals with Boeing. Boeing is expected to derive revenues far beyond the $1.3 billion base over the life of the 15-year maintenance program.
Observers note that Boeing's purchase of the 757s from British Airways give the manufacture an advantage on future orders from BA, which is expected to place a major order in the 100-seat jet category soon. Boeing hopes to sell BA its new 717 model while Airbus is offering its A318. Boeing has sweetened the deal a bit with its purchase of BA's 10-15 year old 757s, but BA's most recently ordered narrowbodies were from Airbus.
