Air Berlin to cut $1.7B in Boeing aircraft orders

German airline Air Berlin Plc said Tuesday it will cancel $1.7 billion worth in orders for Boeing 787 aircraft to adjust to lower market demand.

On top of its order cut, to 15 planes from 25, it has also reduced its option for additional 787 aircraft to five aircraft from 10 and delayed delivery of nine Boeing 737 planes to 2015.

The 737s were scheduled to be delivered in 2010 and 2011. Air Berlin said the decision came about through mutual agreement.

Air Berlin, Germany's second largest airline after Deutsche Lufthansa AG, said the decision is part of an effort to adapt to market conditions and to meet specific operative requirements.

"The agreement with Boeing demonstrates that Air Berlin believes in the future of the 787 aircraft," Ulf Huettmeyer, the company's chief financial officer said in an Air Berlin statement.

"We look forward to the first delivery in November 2015. For Air Berlin, the agreement means a significant reduction of its financial obligations due to lower and much more distributed investment profile," Huettmeyer said.

The news sent shares of Air Berlin a quarter percent higher to just over euro4 in Frankfurt afternoon trading.

The Boeing Co., headquartered in Chicago, recently started flight testing on the long-delayed 787 project and is expected to start delivering the aircraft to customers later this year. The twin engine long-haul aircraft can seat between 210 to 330 passengers depending on the configuration.

The Boeing 737 is a smaller twin engine, short and medium-haul aircraft, and one of the best-selling aircraft of all time.

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