Boeing Co. (BA) arrives at the Dubai Air show tomorrow on the tailwind of its 787 Dreamliner finally in service, gaining a boost of confidence after rival Airbus SAS dominated their most recent duel four months ago in Paris.
The 787 began flying with All Nippon Airways Co. last month to end more than three years of delays. Airbus won’t have a new plane until 2014’s first half, with yesterday’s six-month postponement for the entry into service of the A350-900. It also ended production of the unsuccessful A340 long-haul model.
Dubai’s event is usually geared toward wide-body jets, the dominant fleet type at Middle East carriers such as Emirates and a category where Boeing leads. Airbus’s upgraded A320neo single- aisle jet won 667 orders and commitments at the Paris show in June, as Boeing pondered how to respond to the fastest-selling aircraft in aviation history.
“In June, Airbus was soaring and Boeing was in the dumps,” said Wolfgang Demisch, a partner at aerospace financial consultant Demisch Associates LLC in New York. “Now Boeing is doing well and Airbus is taking its lumps.”
The challenge for both planemakers will be getting their new jets to customers on time, Demisch said. With backlogs stretching for years, “what they need now is production success and delivery success, and both of them have shown that that’s very difficult to achieve,” he said.
MAX Versus Neo
Since Paris, Boeing has countered the A320neo with the 737 MAX, a version of its top-selling model to be fitted with new engines. Chicago-based Boeing is targeting 2017 for first delivery of the MAX, for which the company reports more than 600 commitments in four months.
The A320neo is due to enter service first, at the end of 2015, and may garner contracts with carriers including Qatar Airways Ltd. in Dubai. It has collected more than 1,000 firm orders since being introduced in December.
Wide-body planes such as Boeing’s 777 and 787 Dreamliner and the A330 and future A350 from Toulouse, France-based Airbus are workhorses in the Middle East industry.
Emirates, Qatar Airways and Etihad are using bases in Dubai, Doha and Abu Dhabi as intercontinental hubs to win passengers from incumbents such as Air France-KLM (AF) Group and Deutsche Lufthansa AG. (LHA) Qatar is the first customer to get the A350, which will also be made of composite materials.
Carriers in the region account for less than 8 percent of global traffic, according to the International Air Transport Association trade group. At the same time, their outstanding orders are valued at $82.7 billion, or a quarter of all Airbus and Boeing twin-aisle planes, according to consultant Teal Group in Fairfax, Virginia.
Including single-aisle planes and the A380 and 747 jumbo jets, Gulf carriers comprise a fifth of the world’s backlog, Teal Group estimates.
Etihad, the state-owned carrier from Abu Dhabi, has 63 planes, three times as many as five years ago. Emirates is the biggest customer for the Boeing 777, which seats about 350 people, with 94 in its fleet and 42 on order. Its 90 orders for the A380 are the most of any airline, and are 40 percent of the total. Emirates’ fivefold jump in passengers in the past decade outstrips the global industry’s annual growth of 5 percent.
“There’s capital, there’s geographic uniqueness and there’s share-gain aspirations among carriers that has them increasing their fleets at a fast pace, and ordering lots of wide-bodies,” said Carter Copeland, an analyst at Barclays Capital in New York.
Biggest Show Yet
Copeland said 90 percent of the orders from Middle East carriers exceed the size of the airlines’ fleets. That compares with a figure globally that’s closer to 30 percent, underscoring the aggressive expansion plans of the Middle East companies, which have 672 aircraft in their backlog, he said.
This year’s Dubai show, which starts on Nov. 13, will be the biggest yet in the region, drawing 1,000 exhibitors and 55,000 trade visitors. Boeing’s Dreamliner, the company’s first new jet since the 777 in 1995, will make its regional debut, and Airbus’s A330-300 will be on display. Boeing commercial jet chief Jim Albaugh kicks off tomorrow with a roundtable meeting.
Airbus has sought to erode Boeing’s wide-body dominance with the twin-engine A330, of which more than 800 are flying today. The company said yesterday that it ended production of the four-engine A340 model after a two-year order drought. Boeing, by contrast, has won 132 orders for the 777 in 2011’s first 10 months and is boosting output.
In Paris, Airbus pushed back introduction of the A350’s smaller and larger variants, with the bigger A350-1000 getting more thrust to compete with Boeing jets. Emirates President Tim Clark and Qatar Chief Executive Officer Akbar Al Baker have questioned whether Airbus and engine supplier Rolls-Royce Group Plc should do more, and that criticism may resurface in Dubai.
Airbus parent European Aerospace Defence & Space Co. surged 20 percent this year before today in Paris trading, whilst Boeing stock is little changed in New York. EADS’s advance is the biggest in France’s benchmark CAC-40 index.
While air shows traditionally help wrap up orders in the works for weeks and months, Dubai may be more subdued as airlines digest purchases from the past two European events -- Paris this year and Farnborough, England, in 2010.
Among possible transactions next week are the addition of 777s to the Emirates fleet, and Qatar committing to an A320neo order that failed to materialize in time for Paris.
“Airbus does expect to announce some new deals,” said John Leahy, the planemaker’s sales chief. Larry Loftis, Boeing’s 777 program manager, said “it wouldn’t surprise me” to see orders for the plane in Dubai.
Both planemakers are studying further output increases as they work through record order books. Airbus plans to deliver 520 to 530 aircraft this year, including about 25 double-decker A380s, while Boeing forecasts 485 to 495 shipments. Airbus also may extend a streak of annual-orders victories dating to 2003.
Boeing CEO Jim McNerney said Oct. 26 that the 787 is sold out through 2019 and that the planemaker doesn’t expect to add to that backlog until “we get spaces in the production skyline.” The company has about 800 orders for the 787, its fastest-selling jet yet, and said Nov. 9 that 2011 orders may set a record for the 777, its most profitable aircraft.
“Boeing has done really well so far on wide-bodies, and I don’t expect that trend to change,” said Rob Stallard, an analyst at RBC Capital in New York. “Often Airbus wins the show, but in the year-end stats, the two are much closer.”