Dubai Air­show: Boe­ing and Air­bus fight for or­ders

The National - News - - FRONT PAGE - DEENA KAMEL

The Dubai Air­show opens to­day against a back­drop of Boe­ing’s on­go­ing 737 Max ground­ing, in­dus­try woes and a slow global econ­omy – though Gulf de­fence man­u­fac­tur­ing ca­pa­bil­i­ties and fu­ture tech­nol­ogy are ex­pected to be the fo­cus.

The bi­en­nial civil and mil­i­tary expo run­ning from Novem­ber 17 to 21, pre­vi­ously the stage for record-set­ting mega-deals, is set this year against weak de­mand from re­gional air­lines re­think­ing fleet and growth strate­gies while sup­pli­ers are grap­pling with jet delivery de­lays and en­gine glitches, ex­perts say.

This year’s air show will com­par­a­tively “likely be smaller, due to on­go­ing trans­for­ma­tion of large air­lines in the re­gion, the Boe­ing saga and the re­li­a­bil­ity is­sues with Rolls-Royce en­gines”, said Dio­ge­nis Pa­pi­omytis, Frost and Sullivan’s global pro­gramme di­rec­tor for com­mer­cial aviation. “Boe­ing will need to pro­duce a clear road map, not only for the Max but also wide-body air­craft, a sup­port pro­gramme for re-en­try into ser­vice and for new Max de­liv­er­ies.”

Aviation ex­ec­u­tives de­scend­ing on Dubai this week at the top in­dus­try event will be watch­ing Boe­ing’s ef­forts to re­as­sure air­lines, pilots and, ul­ti­mately trav­ellers, of the em­bat­tled jet’s safety. The now eight-month global ban on the Max fol­low­ing two deadly crashes shook the in­dus­try, dented Boe­ing’s earn­ings, hurt air­lines’ op­er­a­tions and prof­itabil­ity and raised ques­tions on jet cer­ti­fi­ca­tion pro­ce­dures.

The US plane maker is head­ing to the Dubai Air­show with the in­ten­tion of talk­ing to cus­tomers about the 737 Max’s re­turn to ser­vice, Ih­sanne Mounir, Boe­ing’s vice pres­i­dent of com­mer­cial sales and mar­ket­ing, said in Seat­tle last month.

Fly­dubai, the UAE’s only Max op­er­a­tor and the sec­ond-big­gest Max cus­tomer af­ter South­west Air­lines in the US, said its fleet shrank to 2014-lev­els af­ter the ground­ing and is in talks with Air­bus for a po­ten­tial or­der of the com­pet­ing A320­Neo model.

Boe­ing’s shares surged ear­lier this month as in­vestors cheered an im­mi­nent up­turn in events when the com­pany said it ex­pects FAA cer­ti­fi­ca­tion of the Max this quar­ter and com­mer­cial ser­vice to re­sume in Jan­uary.

Mr Mounir said the com­pany is in “ad­vanced” talks with air­lines for new 737 pur­chases fol­low­ing the vote of con­fi­dence by Bri­tish Air­ways owner IAG that in­tends to buy 200 of the sin­gle-aisle jets.

“I think it will be hard for Boe­ing to win new or­ders at the show given where the Max is in its re-cer­ti­fi­ca­tion process. Boe­ing will fo­cus on re­as­sur­ing ex­ist­ing cus­tomers, es­pe­cially Fly­Dubai that has 237 Maxes on or­der and 14 in stor­age,” said Ge­orge Fer­gu­son, se­nior aerospace an­a­lyst at Bloomberg In­tel­li­gence. “Most new cus­tomers prob­a­bly need to see the Max fly and cus­tomer ac­cep­tance be­fore or­der­ing.”

The Dubai Air­show will test de­mand for over­all air­craft or­ders as weak­en­ing global growth has taken its toll on the aviation in­dus­try.

Re­gional gi­ants Emi­rates and Eti­had Air­ways are re­think­ing their plane re­quire­ments and route net­works amid chal­lenges to their “su­per-hub” model. They are shift­ing to­wards “right-siz­ing” their fleet af­ter grab­bing head­lines with mam­moth wide-body or­ders in the past 10 years. The de­mand for more jets has been hurt by lower oil prices, un­cer­tainty from the US-China trade dis­pute, geopo­lit­i­cal ten­sions and a de­te­ri­o­rat­ing global econ­omy. The in­dus­try con­tin­ues to wit­ness flag­ging air cargo vol­umes and slug­gish pas­sen­ger de­mand as a re­sult of a chal­leng­ing macroe­co­nomic back­drop.

“The Gulf car­ri­ers face big chal­lenges, now that the days of spec­tac­u­lar growth rates are in the past. The chal­lenge now is to right-size the fleet, to fo­cus on prof­itable pre­mium pas­sen­gers, and new, thin­ner routes,” said Richard Aboulafia, aerospace an­a­lyst at Teal Group.

Shar­jah’s bud­get air­line Air Ara­bia is widely ex­pected to place an or­der for 100 nar­row-body planes, most likely with Air­bus, for growth and re­place­ment in its fleet as well as a new deal with Eti­had to start a low-cost air­line in Abu Dhabi.

Emi­rates, which typ­i­cally makes head­lines at its lo­cal air show, still needs to sign off on a fi­nal or­der for Air­bus A350 and A330 Neo jets. Also pend­ing is a $15 bil­lion (Dh55bn) com­mit­ment for 40 Boe­ing 787 Dream­lin­ers and a pos­si­ble reshuf­fle in an or­der for the de­layed 777X.

Emi­rates pres­i­dent Tim Clark has re­peat­edly ex­pressed his grow­ing frus­tra­tion with plane man­u­fac­tur­ers and en­gine mak­ers over de­layed de­liv­er­ies, warn­ing them that he will refuse de­liv­er­ies that don’t meet re­li­a­bil­ity ex­pec­ta­tions.

Aside from com­mer­cial deals, the Ara­bian Gulf’s de­fence man­u­fac­tur­ing sec­tor is also ex­pected to come to the fore­front as re­gional gov­ern­ments boost ef­forts to di­ver­sify their economies away from oil and de­velop lo­cal mil­i­tary in­dus­tries. The UAE ear­lier this month an­nounced the cre­ation of Edge, a new de­fence con­glom­er­ate for de­vel­op­ing ad­vanced tech­nol­ogy for weapons sys­tems, cy­ber pro­tec­tion and elec­tronic war­fare.

A ma­jor fo­cus at the air show will be com­pa­nies show­cas­ing tech­nol­ogy re­shap­ing the fu­ture of flight and trans­porta­tion.


Dubai Air­show runs from to­day un­til Thurs­day

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