Vegas-based Primaris in deal with Boeing

Thursday, Oct. 21, 2004 | 11:10 a.m.

SUN STAFF AND WIRE REPORTS

A Las Vegas-based startup air carrier plans to be the U.S. launch customer for Boeing Co.'s new 7E7 "Dreamliner" twin-engine jet.

Primaris Airlines Inc., which has no plans to offer flights to or from McCarran International Airport, was identified in a joint press release as the company that plans to buy 20 7E7s and 20 Boeing 737 jets from Boeing, the world's second-largest maker of commercial aircraft. The deal is estimated to be worth $3.8 billion.

A representative of Primaris could not be reached for comment today.

Primaris also has options to purchase 15 more 7E7-8s and 25 more 737-800s, Boeing said in a statement. Boeing has now won commitments for 86 7E7s, scheduled for first delivery in 2008.

Primaris plans to outfit the 737s with 94 seats and the 7E7s with about 150 seats, both in an all-business configuration.

Chicago-based Boeing is counting on the 200- to 300-seat 7E7 to replace its current 767 jumbo jet and regain market share from Toulouse, France-based Airbus SAS, which overtook Boeing in commercial-aircraft deliveries last year to become the world's biggest maker. Primaris, which still is raising funds, will cater to business travelers and expects to begin operations next year.

Primaris President Mark Morris said last year that the company's business model is to offer flexible scheduling for business travelers so that they can make itinerary changes and not have to book several days in advance to obtain reasonably priced tickets. The company plans to establish memberships that would enable the company to expedite security checks on passengers.

Last year Morris said the company is looking at offering flights between New York, Boston and Washington, D.C., and London, Paris and Frankfurt. He also said the company would consider flights between thee East Coast cities and the West Coast.

Earlier this year, Primaris was rebuffed in its application to offer service to the West Coast from Washington's Ronald Reagan National Airport.

Primaris, newly certified as a commercial airline, currently flies Boeing 757s in charter service. The chairman of the company is Jake Garn, a former U.S. senator from Utah who once flew aboard the space shuttle.

But some analysts are pessimistic about the deal.

"While travelers say they want this, there does not appear to be a willingness to pay for it," said Susan Donofrio, an analyst for Fulcrum Global Partners, in a report. Donofrio, who has a "sell" recommendation on Boeing's shares, says Primaris may have difficulty getting started.

The planned order makes Primaris Boeing's second-biggest 7E7 customer. Boeing secured its first 7E7 order in July with All Nippon Airways Co., which is purchasing 50 of the planes worth $6 billion. Air New Zealand Ltd., Vietnam Airlines Corp., Blue Panorama and First Choice Holidays Plc. have also ordered the model.

The order brings Boeing a step closer to its target of winning orders for 200 7E7s this year and 500 by the time the plane first flies in 2007. Boeing says the aircraft will be 15 percent cheaper for airlines to operate than planes of the same size and will make passengers feel more comfortable with bigger windows and more humidity in the cabin.

The twin-aisle 7E7-8 model will have 217 seats in a typical seating arrangement, a range of 9,775 miles and will fly at about the same speed as current jetliners.

Boeing is betting that airlines will prefer smaller aircraft for more direct international routes as opposed to large aircraft that fly to big cities and force passengers to take connecting flights. Airbus, which is considering a modification of its A330 model to compete against the 7E7, believes that connecting flights will continue to be popular and is investing in a 550-seat A380 schedule for first delivery in 2006. Boeing's jumbo jet is the 747.