Oman Air CEO Mulls Follow-On Order for Boeing Dreamliner

Oman Air is examining a follow-on order for Boeing Co. (BA)’s beleaguered 787 Dreamliner that would allow the Gulf carrier to increase European frequencies, Chief Executive Officer Wayne Pearce said.

The Muscat-based company is also looking at adding Boeing 737 short-haul aircraft to beef up existing routes to India and within the Middle East as part of a move to extend the overall fleet to 50 planes from the 42 in service or due for delivery.

Pearce’s plans amounts to a vote of confidence in the 787, which hasn’t won an order since being grounded on Jan. 16 with battery faults. The purchases, likely to be confirmed in the next few months, would be in addition to six 737-800s and six Dreamliners due to arrive starting late next year and from 2015.

“You need a bigger fleet to get the critical mass,” Pearce, CEO for almost 15 months, said in an interview. “With a bigger magnitude you get better profitability, and we’re in an ideal part of the world with plenty of opportunity to keep growing.”

Oman Air now operates seven Airbus SAS (EAD) A330 wide-bodies, 17 737s and six regional aircraft. A further A330 purchase remains an alternative to adding more Dreamliners, the carrier said.

Bigger Version

Oman’s current 787 order is sufficiently far down the line for the battery glitches -- still under investigation seven weeks after plane was taken out of service -- not to be an issue. An additional purchase would allow the carrier to add more flights to cities such as London, according to Pearce.

Photographer: Gabriela Maj/Bloomberg

Oman Air Chief Executive Officer Wayne Pearce said, “You need a bigger fleet to get the critical mass. With a bigger magnitude you get better profitability, and we’re in an ideal part of the world with plenty of opportunity to keep growing.” Close

Oman Air Chief Executive Officer Wayne Pearce said, “You need a bigger fleet to get the... Read More

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Photographer: Gabriela Maj/Bloomberg

Oman Air Chief Executive Officer Wayne Pearce said, “You need a bigger fleet to get the critical mass. With a bigger magnitude you get better profitability, and we’re in an ideal part of the world with plenty of opportunity to keep growing.”

With the existing commitment being for the 787-8 launch variant, which will fit alongside Oman Air’s four similarly- sized A330-200s, the carrier is exploring the larger -9 option, which the CEO said would complement its three A330-300s.

A total of about 50 aircraft is probably “the magic number” for Oman Air, as determined in a study of its 10-year fleet requirement by aviation consultants Seabury, Pearce said.

The addition of two leased 737-800s to serve routes to the Indian subcontinent, taking the number in the fleet to 15, was an early result of the study, the CEO said in London.

Oman Air serves 10 destinations in India, four of them twice a day, and following a bilateral accord has rights to offer eight more weekly frequencies, six to a new destination, Goa, and one each on existing routes to Jaipur and Bangalore.

Tourism Growth

A 737 order would be drawn from the current “Classic” range, since the re-engined 737 Max won’t be available in the required timescale, he said. The planes would most likely be - 800 variants, though there’s a case for the -900, which offers more seats with little loss of range. Two -700s now in the fleet will probably be phased out as part of any new commitment.

Oman has no interest in bigger aircraft, such as Airbus’s pending A350, the A380 superjumbo or Boeing’s 777, which are too large for its purposes, the CEO said in the interview yesterday.

It’s also likely to stick with four Embraer SA (EMBR3) E-175 regional jets and two ATR 42 turboprops for local flights to increasingly popular tourist destinations including Khasab in the north and Salalah in the south, which has a monsoon climate.

Oman Air is mulling further orders after boosting passenger revenue 24 percent last year, when it accelerated a strategy of increasing frequencies on existing routes and added just two new destinations, Tehran in Iran and a domestic service to Jaaluni.

Code-Shares Close

Full-year earnings will be published at the end of this month, with the carrier having targeted a reduced loss. Its load factor, or average seat occupancy, reached 77 percent, versus 72 percent in 2011, and Pearce is targeting 80 percent for 2012.

The carrier operates daily flights to London, six services a week to Frankfurt and four to Milan, Munich, Paris and Zurich.

Oman Air is also close to signing four more code-share deals, allowing it sell tickets on flights operated by other carriers, to add to the four it has already agreed, Pearce said.

The accords, which should be rolled out over the next few months, will improve connectivity in the wider region and won’t involve carriers in Europe or the U.S., though tie-ups there remain a longer-term aim, he said.

Under Pearce, Oman has begun code-sharing with Qatar Airways Ltd., the second-biggest Gulf carrier, on flights between Muscat and Doha, and has agreed to do so with Royal Jordanian Airlines. (RJAL) It also has older agreements with Emirates, the world’s biggest airline on international routes, for flights to Dubai and with Malaysian Airline System Bhd. (MAS)

The next phase of cooperation may see Oman Air code-sharing beyond the hubs of its partners, though the carrier has no interest in joining a global alliance for now, Pearce said.

To contact the reporter on this story: Chris Jasper in London at cjasper@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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