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UPDATE 1-Korean deal ends search for new Boeing 747-8 buyer

Published 12/04/2009, 07:27 AM
Updated 12/04/2009, 07:30 AM

* Follows three-year wait for second airline buyer

* Korean Air to make components for new version of jumbo

* Deal follows recent visit by U.S. President Obama

(Adds bullet points, detail, background)

By Rhee So-eui and Shin Jieun

SEOUL, Dec 4 (Reuters) - Korean Air said on Friday it would purchase five Boeing 747-8 Intercontinental jetliners worth $1.5 billion at list prices in a potentially key deal for the successor to the jumbo jet.

South Korea's top carrier becomes only the second airline after Germany's Lufthansa to order the plane, which has waited almost three years for a second passsenger-carrying customer as it was outsold by a sister freight version.

Industry executives say airlines are often reluctant to be the only customer for a new plane, due to the possible costs of dealing with any teething problems, and Boeing had been under pressure to find a second buyer to avoid losing Lufthansa.

Korean Air, the world's biggest air cargo carrier, already has arrangements to operate seven 747-8 freighters.

The latest purchase comes after Korean Air said in October it had been selected to produce wing structure components for the 747-8 through its "Tech Centre" aerospace division.

It already provides parts for other Boeing models.

The deal also comes on the heels of a November visit by U.S. President Barack Obama who called for increased economic ties.

Obama and South Korean President Lee Myung-bak pledged during the Seoul visit to make progress on approving a free trade deal that has yet to be ratified by legislatures in either country, two years after its signing.

The legendary 747 family has been in the air since 1969 and is Boeing's biggest and most recognisable commercial plane.

In October, Boeing took a $1 billion charge because of high production costs on the planned new version. It also delayed the first flight of the freighter version until early 2010.

The 747-8 will seat 450 passengers and use new engine and wing designs, but is considered less of a clean break in technology than Boeing's new carbon-composite 787 Dreamliner, which is also preparing for a maiden flight.

Korean Air has 10 787 Dreamliners on order, as well as 14 wide-body 777s and a handful of single-aisle 737s from Boeing.

It has ordered 10 A380 superjumbos worth $3.3 billion from Boeing's European rival Airbus, part of EADS.

Until now, Boeing had previously sold 27 passenger versions of the 747-8 airplane worth $300 million each at list prices.

These include 20 planes for Lufthansa and seven earmarked as specially fitted VIP versions for private individuals or organisations who have asked to remain anonymous.

The Chicago-based planeaker has sold 78 freighter versions of the 747-8, with a ticket price of $303 million each.

Most airlines are holding back on plane purchases due to the weak economy and a slump in air travel but both Boeing and Airbus see a large market in Asia as demand recovers. (Additional reporting and writing by Tim Hepher; Editing by Jonathan Hopfner and Simon Jessop) ((soeui.rhee@thomsonreuters.com; +82 2 3704 5650; Reuters Messaging: soeui.rhee.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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