AIRBUS SE Boeing is on track to build about 500 777s before it transitions to the successor 777X model in 2020, based on its current production rate of 100 a year. Through November, it had orders for 267 of those planes.
Boeing has said it is confident it will sell the additional 233 planes before the 777X enters service. It declined to comment on Air France-KLM.
But analysts are concerned that Boeing may struggle to land those orders, and may need to drastically lower the 777 sales price to avoid cutting production before it ramps up the 777X.
Air France-KLM had planned to use the twin-engine 777s to replace older 747 aircraft, which have four engines and are more costly to fly. But in view of lower oil prices, the airline said it would defer the 777s. The airline said it had no plans to defer 787 or A350 aircraft.
Airbus Group recently said it will cut production of its A330 as it transitions to the wide body A330neo, which has updated engines.
Both Boeing and Airbus say they expect there will be demand for the current-production planes, even in a period of lower oil prices. But both face the challenge of car makers, who need to sell end-of-production models even as they switch to newer ones.
The twin-engine 777, one of Boeing's most successful and profitable planes, had little competition from the Airbus A340, a four-engine model that guzzled fuel by comparison.
But with Airbus due to deliver the A350 - its first mainly carbon composite, fuel-efficient aircraft - on Monday, the competition is now much more stiff.
On Thursday, Boeing said it had sold six 777s, helping to fill the production gap. But the deferral of 10 orders from Air France could eventually widen the gap again.
"As time passes, that only increases the risk that routine deferrals become conversions" into the 777X, said Richard Aboulafia, an analyst at Teal Group.
"Going head to head with the A350" gives customers leverage," he said. "Convert, or we defect."
(Reporting by Alwyn Scott; editing by Gunna Dickson)
By Alwyn Scott
