News / Economy

$100 Billion Boeing Bonanza to Dominate Dubai Airshow

Reuters
— Boeing looks set to dominate next week's Dubai Airshow with more than $100 billion of deals as it aims to launch its latest long-haul jet with up to 250 potential orders from as many as five airlines, industry sources said.

The U.S. planemaker is pressing ahead with the launch of its 777X mini-jumbo despite uncertainty over where it will be made, with workers at the existing 777 plant outside Seattle holding a ballot over a new employment contract on Wednesday.

Bulging civil and military bank balances in the Gulf remain a magnet for Western aerospace executives as they seek to tap thriving demand for jetliners and combat aircraft that offer some respite from defense cuts at home.

A widely expected potential order for as many as 150 of the new 777X passenger jets from Dubai flag carrier Emirates could come close to matching the $62 billion of deals amassed at the last Dubai show two years ago.

“Dubai's success is related to its airlines. It's a global hub now and Dubai did this by buying planes and constantly renewing its fleet,” said John Sfakianakis, chief investment strategist at Riyadh-based asset management firm Masic. “Abu Dhabi, Qatar and Saudi Arabia are also investing billions in aviation to be able to connect to the world. These states have to continue to invest if they want to expand.”

After playing cat and mouse with rival Airbus in the market for big twin-engined jets, industry sources say that Boeing is expected to launch the 777X on Sunday with the record Emirates deal and 25 jets for Abu Dhabi's Etihad.

Depending on final negotiations, which historically provide some last-minute drama at such shows, Boeing also could announce orders for dozens of 777X jets from Qatar Airways and Hong Kong's Cathay Pacific during the Middle East's largest business event, which runs from Nov. 17 to 21.

The 777X launch is expected to include confirmation of a tentative 34-plane order from Germany's Lufthansa.

Whether Boeing can reach around 250 launch orders depends partly on uncertainty over whether it can close a potential deal for around 20 777X with Cathay, but the new plane is heading for a haul of above 200 orders, according to industry experts.

Spur for growth

Leading Gulf airlines have made Boeing's long-distance 777 warhorse and other big jets a spur for growth as they redraw the world's aviation and logistics map around the Gulf.

The revamped 777X is the largest twinjet yet designed and will come in two versions, seating 350 to 406 people. It is Boeing's response to the Airbus A350-1000, which will seat 350 in three classes or about 380 people in two classes.

Boeing has had to overcome disagreement among potential buyers over the design of the 777X, with Gulf airlines pushing for high capacity with the stamina of four-engined jets. But a person familiar with the design said it may suffer restrictions on payload for the longest trips from the Gulf.

The U.S. company hopes the airshow will also mark a turning point for the 787 Dreamliner after its temporary grounding this year because of melting batteries. Industry sources expect orders to top 1,000 in Dubai as Etihad buys a further 30, while Airbus is in negotiations to sell competing models of its A350.

The latest medium-haul aircraft will also be in focus as Flydubai places a $7.8 billion order for 75 of the revamped Boeing 737 MAX and Airbus negotiates to sell A320neos to airlines that may include Etihad, industry sources said.

A380 seeks lift

Qatar Airways, which has complained about the reliability of its 787s, has said it may buy more Airbus A330s.

But Airbus, which outsold Boeing in the first nine months of the year, will be looking to end a dearth of orders this year for its A380, the world's largest airliner.

Doric Lease Corp aims to firm up an order for 20 of the superjumbos “soon”, its top executive told Reuters last month.

The European company co-operates closely with the largest A380 customer Emirates, which has consistently said it could buy up to 30 more of the aircraft once it unlocks extra capacity in its network to handle the double-decker jets.

Next week's show will fill an area the size of the U.S. Pentagon at the new Dubai World Central airport, where airline bosses will rub shoulders with arms merchants and royalty.

Western defense companies have long viewed the Middle East as among the world's most lucrative markets but are facing unfamiliar challenges as divisions grow between Washington and Gulf allies over Iran nuclear talks set to resume on Nov 20.

“The political situation with Iran is so fluid that today's friends and allies may be tomorrow's distant partners,” said Theodore Karasik, research director at Dubai think-tank INEGMA.

The United Arab Emirates is moving closer to a long-awaited decision on whether to buy up to 60 UK-backed Eurofighter Typhoons or French Rafale fighters. It is also expected to buy 25 Lockheed Martin F-16 fighters, sources familiar with the deal told Reuters.

“These countries may be in disagreement with the U.S. over Iran, Syria and other issues, but their military relationship remains strong,” said Karasik.

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