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Absence of SIA B7E7 Order Reduces Prospect of Sea Change

September 6, 2004

The absence of an order for the B7E7 from Singapore Airlines (SIA), for now at least, makes it necessary to reconsider whether the new Boeing [BA] product will have a profound effect on medium-size widebody residual values, as some in the industry have suggested. SIA was expected to announce a major order for the B7E7. But the delay -- and the carrier's consideration of an Airbus alternative -- suggests that the indicative economics of the all-new Boeing product are not sufficiently compelling for the competition to be dismissed out of hand. With the possibility of Airbus also offering the A330-200 Lite to other potential B7E7 customers, there may yet be an alternative to the Boeing product. However, SIA's delay in making a decision may also be a ploy to extract further concessions from Boeing.

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