Dubai airshow opens with Emirates' 18 bln USD order of Boeing 777 aircraft

English.news.cn 2011-11-14 02:47:17 FeedbackPrintRSS
DUBAI, Nov. 13 (Xinhua) -- Dubai's state-owned carrier Emirates Airline on Sunday ordered 50 Boeing 777-ER long-range planes worth 18 billion U.S. dollars, the largest dollar-value order in the Chicago plane producer's history.

This order came with the already placed order of 40 Boeing 777- ERs and Emirates also has options to purchase another 20 Boeing 777-300 jets, said Sheikh Ahmed Bin Saeed Al-Maktoum, chairman of Emirates Airlines, at a press at the Dubai International Airshow which kicked off Sunday.

If options for an additional 20 777-300 ERs are exercised, the total deal is worth about 26 billion U.S. dollars.

"The financing is secured, we finance conventionally as well as with Islamic Bonds," Sheikh Ahmed told the press. "This order is expected to be delivered from 2015 on."

"(The) record-breaking dollar value is another milestone for Emirates and affirms our strategy to expand our long haul destinations and continue to excel as a world's leading carrier," said Sheikh Ahmed.

The Emirates now has the world's largest fleet of 95 Boeing 777s in service. Two weeks ago, the airliner reported a net profit of 225 million U.S. dollars for the first half-year of 2011/2012, a 76 percent decline year-on-year.

But Sheikh Ahmed said the airline was poised for further expansion. "We are very confident of the Emirates' growth."

As the leading aviation event in the Middle East, the biannual Dubai airshow runs until Thursday. Organizers said fair this year will be the biggest yet and expects some 55,000 professional visitors.

The year 2011 has seen Middle East-based carriers such as Emirates, Qatar Airways and Abu Dhabi's Etihad expand their routes and fleets to build intercontinental hubs, a boost of confidence for the aerospace industry.

Etihad, which flies to 86 cities, will add six new destinations including Maldives, Chengdu and Shanghai over the coming six months. Etihad has an existing order of 35 Boeing 787-9 Dreamliners.

Emirates Airline flew for the first time to Baghdad on Sunday, operating an Airbus A330 between Dubai and Baghdad. The airliner has already started to serve the route to the southern metropolis of Basra from February.

Rolls-Royce, the global power systems company, said at the Dubai airshow that it has won an order from Saudi Arabian Airlines, worth up to 500 million U.S. dollars, to provide engines and support for four Airbus A330 aircraft already announced and four options.

These aircraft, which are due to enter service from 2013, will be in addition to Saudi Arabian Airlines' existing fleet of eight Trent 700 powered Airbus A330s, and will bring the total of Trent 700 powered A330s in the fleet to 16, Rolls-Royc said in a statement.

While the Middle East carriers are looking for expanding their global and regional market, the region will require 2,520 aircraft with an investment of 450 billion U.S. dollars in the next 20 years to meet growing demand, Boeing said.

Meanwhile, analysts warned that the sovereign debt crisis in the Eurozone may affect business travel between Europe and Middle East, which can be a challenge for the Gulf carriers as Europe is one of their largest markets.

"This may force the Gulf carriers to cut frequencies and lower their fares on European routers to remain profitable," an analyst at Frost & Sullivan was quoted by the English daily Gulf News as saying.


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Full throttle


Gulf airlines can afford a little arrogance
16 November 2011 | By Una Galani

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Gulf airlines can afford a little arrogance. Qatar Airways’ outspoken chief executive gave planemaker Airbus a blunt lecture on strategy at the region’s air show, telling the European group to “go back to basics” before changing tack and placing a $6 billion order for at least 80 new planes – hot on the heels of a mega $18 billion order for Boeing from Dubai-owned rival Emirates. The cash-and-swagger confidence may seem like hubris. But it underscores how Gulf carriers are gaining altitude over the industry.

There are two big advantages Gulf airlines have over rivals. Advancement in aircraft technology mean many long-haul flights now require just one stop, and the Gulf is perfectly located between the East and West. A third of the world’s population are within a four-hour flight. What’s more, everything is new. Airports and aeroplanes are more efficient. As for the trade unions, known for hampering the aims of Australia’s Qantas and British Airways to manage costs, well, they don’t exist.

Global airline industry net profit will shrink 40 percent next year to $4.9 billion, or less than a third of 2010 levels, according to the International Air Transport Association. But three Gulf carriers are more than coping. Dubai-owned Emirates, the world’s largest airline by passenger numbers, accounted for roughly 20 percent of the industry’s profits last year. Eight-year old Etihad reckons it will break even this year. And Qatar Airways has made a net profit for the last two years with 30 percent year-on-year route expansion.

A weak global economy is expected to at least halve Middle East growth in passenger traffic from 20 percent last year. But it makes sense for Gulf carriers to continue full throttle with plane orders if they can remain profitable in a downturn. The region’s airlines are forecast to have 2.9 percent EBIT margins next year, more than three times that of European airlines, according to IATA. And there are still many routes under-served or not handled at all by Gulf carriers, according to the Centre for Asia Pacific Aviation.

That explains why the Middle East is expected to account for around 11 percent of global commercial airplane orders between now and 2030. Airbus and Boeing may have to get used to the lectures.


Context News
Qatar Airways returned to the table on Nov. 15 to sign a $6.5 billion plane order with Airbus hours after cancelling an announcement at the last minute and telling the European aviation group to “go back to basics” at the Dubai Air Show.

Chief Executive Akbar Al Baker made a second appearance to announce the firm order for five A380 superjumbos and 50 A320neo jets, plus options, hours after announcing an “impasse” in negotiations.

“Price was not at all an issue,” Baker said of the stall in talks. “The issue was with the A320 aircraft. Since then, they have gone back to the drawing board and quickly fixed their issues.”

Dubai-owned Emirates airline placed an $18 billion order with Boeing on Nov. 13 for 50 of its 777 aircraft.

Boeing predicted that airlines in the Middle East would need 2,520 airplanes worth $450 billion by 2030, while its European rival Airbus said it saw demand for 1,920 aircraft worth $347 billion in the same period.
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