Analysts: Boeing’s Dubai Dreamliner deal has Airbus taking it on the chin

From surprising to devastating, analysts and aerospace observers had plenty of words to describe the fallout for Airbus in the wake of Emirates airline’s decision to buy 40 of Boeing Co.’s 787-10 Dreamliners on Sunday’s opening day of the Dubai Airshow.

And as the second day drew to a close, Airbus had taken another hit with a production demand that appeared to kill any hopes for a sale of the French aerospace giant’s A380 super jumbo jet before the event wraps up on Thursday.

“There is no other way to view this order but as a huge victory for Boeing and a repudiation of Airbus’ product strategy …,” analyst Uresh Sheth said of the 787-10 order on his “All Things 787” website.

Sheth said “it appears that Emirates is banking its future on Boeing products” based on its purchase of the North Charleston-made 787-10s and a previous deal to buy 150 777X wide-bodies.

Scott Hamilton, editor of aerospace website Leeham News and Comment, called the Emirates deal “a stinging defeat for Airbus.”

And Dhierin Bechai of AeroAnalysis termed it “a major blow.”

The 40-plane Emirates purchase is worth $15.1 billion at list prices, although airlines typically negotiate discounts. The deal also includes unspecified equipment and options to buy another 60 Dreamliners. Emirates joins the Middle East’s other big carriers, Etihad and Qatar Airways, as those in the region that will have Dreamliners in their fleets.

The Middle East is a potentially lucrative market for Boeing, which released analysis Monday that shows the region will need 3,350 new planes — roughly half of them wide-bodies like the Dreamliner — worth about $730 billion over the next 20 years.

“Traffic growth in the Middle East is expected to grow at 5.6 percent annually during the next 20 years,” Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, said in a statement.

“The fact that 85 percent of the world’s population lives within an eight-hour flight of the Arabian Gulf, coupled with robust business models and investment in infrastructure, allows carriers in the Middle East to channel traffic through their hubs and offer one-stop service between many cities,” Tinseth said.

While no major orders were announced during the biennial airshow’s second day, the Dubai government said it wants Airbus to guarantee production of the A380 for at least another decade before state-owned Emirates will commit to buying the plane.

Reuters reported that Airbus might be willing to meet those conditions, but the manufacturer has been scaling back production of the slow-selling, 500-plus passenger jet. There are just 51 firm orders for the A380 and Airbus plans to cut production to eight planes per year by 2019.

“The reality is that the demands from Emirates to keep the A380 production open for 10 years is something they know Airbus can’t do,” said Saj Ahmad, chief analyst for London-based StrategicAero Reseach.

Hamilton said an order from Emirates would help keep the program alive, but “Emirates is currently the only significant customer for the A380” as airlines are looking to smaller aircraft that can more efficiently fly long-haul routes.

Airbus thought it had an Emirates order wrapped up as the airshow began, according to a Bloomberg report. But as dignitaries waited in a briefing room for an announcement that was at first delayed and then cancelled, someone brought in a model aircraft.

According to Bloomberg, “the gray cloth covering it slipped off — revealing the Boeing Co. logo on its tail.”

It was downhill for Airbus from that point on.

Ahmad called it “a huge hammer blow (that) underscores Airbus’ dithering wide-body strategy.”

For Boeing, however, it’s “an important step that once again will benefit the mix of the bigger Dreamliner variants” in orders going forward, Bechai said.

“And it significantly increases Boeing’s chances for follow-up orders with Emirates in a growing market,” he said.

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