Boe­ing lands sur­prise 787 deal

Emi­rates Air­lines con­tract worth $15.1B; Air­bus shut out


The news re­lease was printed, the me­dia in­vited, the first dig­ni­taries be­gan fil­ing into the room. Such was the scene Sun­day, the first day of the Dubai Air Show, when Air­bus SE had planned to un­veil a keenly awaited life­line for its A380 su­per jum­bos from the air­craft’s big­gest fan: Emi­rates Air­lines.

In­stead: noth­ing. In fact, worse than noth­ing. An ini­tial de­lay, not un­usual at such ma­jor sign­ing cer­e­monies, gave way to con­fu­sion. Bewil­der­ment turned to hu­mil­i­a­tion when a model air­craft was car­ried into the brief­ing room and the gray cloth cov­er­ing it slipped off — re­veal­ing the Boe­ing Co. logo on its tail.

Out of nowhere, the U.S. plane­maker sud­denly con­quered Room 6 on the up­per level of the main ex­hi­bi­tion hall, with its rep­re­sen­ta­tives tak­ing the stage. Air­bus of­fi­cials who dom­i­nated the room on ar­rival qui­etly slipped out dur­ing the news con­fer­ence as their ri­val landed a sting­ing blow: Emi­rates com­mit­ted to buy­ing $15.1 bil­lion of Boe­ing’s 787-10 Dream­lin­ers. That was sim­i­lar to the or­der value that Air­bus had planned.

It was a sur­prise twist in the air show’s first-day chore­og­ra­phy and one that marked twin set­backs for the European plane­maker. With scant de­mand from other air­lines for the dou­ble-decker A380, Air­bus is more de­pen­dent than ever on Emi­rates. Boe­ing’s Dream­liner pact added in­sult to in­jury since the Dubai-based car­rier had orig­i­nally or­dered 70 Air­bus A350 jet­lin­ers be­fore pulling out of the deal in 2014 to re­view its re­quire­ments.

“Boe­ing has scored an ab­so­lutely huge vic­tory here. You can’t play it down,” said Saj Ah­mad, an an­a­lyst at Strate­gicAero Re­search in Lon­don. “That all the talk was

about the A380 and noth­ing ma­te­ri­al­iz­ing for Air­bus was a bit of a damp­ener for the open­ing.”

Air­bus shares fell 0.4 per­cent at 83.36 eu­ros, about $93.07, as of 10:26 a.m. in Paris. The Franco-Ger­man plane­maker’s shares have climbed 33 per­cent this year, com­pared with Boe­ing’s 68 per­cent in­crease.

Emi­rates said it would buy 40 Dream­lin­ers. A sep­a­rate 787 or­der from Azer­bai­jan Air­lines, val­ued at $1.9 bil­lion, raised Boe­ing’s first-day tally to $17 bil­lion.

Even with the first-day set­back, Air­bus has a knack for stag­ing high-pro­file come­backs at ma­jor air shows. Air­bus and Emi­rates de­clined to com­ment on the back and forth of the ne­go­ti­a­tions. But Emi­rates Pres­i­dent Tim Clark made it clear that he wants

more than just dis­counts to buy more A380s.

“If we or­der any more, we want to make ab­so­lutely sure that the will is there con­trac­tu­ally to con­tinue the line for 10 to 15 years,” Clark said at the air show. Air­bus “would like to put more air­craft into us and ev­ery­one else, but their board may have a view that says ‘If you don’t sell any more, Emi­rates or no Emi­rates, we don’t want you to do it’, so we need to see some­thing from them which says ‘We will do this.’”

Emi­rates is set to or­der about 36 A380s, ac­cord­ing to peo­ple fa­mil­iar with the ne­go­ti­a­tions — a deal that would carry a list value of about $15.7 bil­lion and would push the or­der book for the giant jet­liner to more than 170.

Ear­lier this month, Emi­rates took de­liv­ery of the 100th A380, ce­ment­ing Emi­rates’ de facto sta­tus as the only buyer of Air­bus’s big­gest and most

ex­pen­sive air­craft.

The bi­en­nial Dubai expo is an im­por­tant venue for both man­u­fac­tur­ers to se­cure deals for their big­gest and most ex­pen­sive jet­lin­ers. Two years ago, or­ders slowed to just $4 bil­lion, com­pared with more than $170 bil­lion at the pre­vi­ous event, placed largely by the three ma­jor car­ri­ers in the re­gion: Emi­rates, Qatar Air­ways Ltd. and Eti­had Air­ways PJSC.

The mood was more up­beat at this year’s event, with Clark say­ing de­mand re­mains strong, even for the most ex­pen­sive seats.

Clark un­veiled a new first-class suite that will be fea­tured on its Boe­ing 777 mod­els and will be grad­u­ally rolled out across its en­tire fleet.

The air show is also a barom­e­ter for the re­gion’s eco­nomic re­silience af­ter slump­ing earn­ings at the ma­jor car­ri­ers and po­lit­i­cal shocks that in­clude Saudi Ara­bia’s

re­cent purge of bil­lion­aires and princes and a block­ade of Qatar.

Be­cause of the block­ade, Qatar Air is ab­sent from the event, which cuts out a pro­lific buyer of air­craft. Eti­had is re­trench­ing af­ter a strat­egy to buy stakes in ail­ing air­lines across the world back­fired and the chief ex­ec­u­tive of­fi­cer quit.


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