Gulf Airlines Set for $50 Billion Jet Deals

Reuters30.10.2013 Aviation & Space
Gulf Airlines Set for $50 Billion Jet Deals

Gulf Airlines Set for $50 Billion Jet Deals

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Etihad Airways is close to placing an order that could kick off a $50 billion jet-buying spree from the Gulf as the region's carriers flex their muscles in an industry hit by weak margins and high fuel prices.

Taking advantage of deep pockets and a geographically strategic position between East and West, Gulf airlines are expanding rapidly and diverting long-haul traffic from airlines in Europe, the US and parts of Asia.

Abu Dhabi-based airline Etihad is expected to buy dozens of Boeing Co jets, including the revamped 777X mini-jumbo and a repeat order for its 787 Dreamliner, sources familiar with the matter said.

The deal could be worth $18 billion at list prices and comes as Etihad prepares to celebrate the 10th anniversary of its maiden flight on Nov 12, highlighting the Middle East's emergence as a fast-growing global travel hub.

If confirmed, Etihad's order could pre-empt a widely expected blockbuster deal for 100 or more 777X jets from rival Emirates Airline, which has said it may announce a large order when it hosts the Dubai Airshow next month.

The deals are still under negotiation and could change in size and timing, said the sources, who spoke on condition of anonymity because they are not authorized to speak publicly. Boeing's European rival, Airbus, is also competing for the business.

Together with an order from Germany's Lufthansa in September, the latest business is likely to ramp up competition between planemakers by allowing Boeing formally to launch the new version of its long-range 777X twin-engine jetliner.

Airbus has punctured Boeing's traditional dominance of the market for big twin-engine jets with its new A350-1000 and scored a historic breakthrough in Japan this month.

Two people familiar with the matter said that Etihad is looking to buy 25 to 30 of the revamped 777X. And in a vote of confidence for Boeing's Dreamliner, which has suffered a series of technical problems, Etihad is also considering increasing its order for the lightweight 787 Dreamliner by up to 30 aircraft, the sources said.

Etihad, which has 41 Dreamliners on order, declined comment.

Boeing said interest was “high” for the revamped 406-seat 777X but declined to comment on negotiations and has yet to make a formal decision on whether it will build the new aircraft.

Dubai's home carrier, Emirates, has said it is considering what many in the industry expect to be a huge order for Boeing 777X jets at the Dubai Airshow to be held on 17-21 November 2013.

Emirates President Tim Clark was quoted last month as saying that much work needed to be done to finalize commercial terms and that the airline would not go ahead with any deal until it was ready, but industry sources say that speculation is rife that the deal could be worth as much as $32 billion.

Boeing has been carefully timing the launch of the 777X, saying it will start building only when the design is right and airlines have placed sufficient orders.

But airlines want the jet to arrive by the end of the decade to replace aging 777s, and Emirates in particular has been clamoring for it for more than a year.

In contrast to the years-long wait for the 777X, Airbus is highlighting the availability and reliability of the A330. It also will try to land orders for its new A350 and its A380 superjumbo. Emirates is the biggest customer for both, and has said it wants to buy more.

Airbus' nearest competitor the 777X is the 350-seat Airbus A350-1000, the largest member of the newest family being developed by the European company.

Airbus said that flight trials for the A350 are going well and that it will stick to its target of delivering the first of the lightweight jets in the second half of 2014.

State-backed Gulf airlines are famous for making a splash with big orders, often at the Dubai Airshow. In 2011, Emirates placed an $18 billion order at the biannual show, the largest single order in Boeing's history.

Qatar Airways, another big Boeing customer with an order of 30 Dreamliners, has expressed little interest in the 777X and is viewed as the most cautious of the Gulf's big three.

Budget carrier flydubai, which is fast expanding its routes, also is expected to place a $5 billion order for 50 narrow-body jets at the Dubai show and is looking both at Boeing's 737 MAX and the Airbus A320neo.

Saudi Arabian Airways and Kuwait Airways, which put on hold plans to buy 25 new aircraft from Airbus in September, will also look to finalize a deal in Dubai next month.


Source: Reuters



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