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Boeing and Airbus Pin Hopes on Middle East
Middle East airlines will lead the global aviation industry out of its worst downturn in years, the world’s top plane makers said Monday on the second day of a Dubai Airshow that produced few orders.
“The Middle East is still the hub of aviation growth,” Airbus Chief Executive Tom Enders said at the show, held at Dubai International Airport.
Randy Tinseth, commercial-marketing vice president for Boeing Co., echoed the bullish mood, saying “we see tremendous growth for the Middle East.”
Plane makers, under pressure in Europe and the U.S., hope that oil prices above $70 a barrel will help the region’s mostly state-owned airlines continue expanding as their international rivals get hammered by the global economic downturn.
In recent years, carriers from the Middle East, whose buying power swelled with oil revenue, have dominated annual air shows in Dubai, Farnborough and Le Bourget, placing huge aircraft orders with Boeing and Airbus. But the Dubai Airshow delivered few big-ticket orders on its second day despite the hopeful words of executives from Boeing and Airbus, the world’s largest plane makers.
Boeing expects Mideast passenger-jet demand to total 1,710 new planes valued at about $300 billion over the next 20 years, while Airbus, a wholly owned unit of European Aeronautic Defence & Space Co., said the region will need 1,418 passenger aircraft worth $243 billion over the same period.
Mr. Tinseth said Chicago-based Boeing expects Mideast passenger traffic to grow at an average rate of 4.9% annually for the next 20 years. Boeing also expects that it and Airbus will deliver 150 freighters to Middle East carriers over the next 20 years.
Airbus, meanwhile, said that by 2028, the region’s passenger fleet will almost triple to 1681 from 586 aircraft at the start of the year, including newer models that will replace aging aircraft. “The recovery begins here,” said John Leahy, Airbus’s chief operating officer for customers.
Airbus parent EADS earlier Monday said it swung to a third-quarter net loss, hit by the strength of the euro and cost increases, and as the economic downturn and the crisis in the airline industry forced Airbus unit to lower prices for its jets. It also warned that it is being hurt by problems with both its Airbus A380 super-jumbo program and the A400M military-transporter program.
The commercial-jet, helicopter and defense company posted a net loss of €87 million ($129.8 million), compared with a net profit of €679 million a year earlier. Revenue declined 1.8% to €9.53 billion from €9.70 billion.
EADS has been hit hard by the economic downturn, which has eroded airlines’ finances. Although there is a risk that future aircraft deliveries may be imperiled, EADS said it sees signs that its business environment is starting to turn.
Globally, passenger demand as tracked by the International Air Transport Association has risen 5% from its low point of March 2009, but the recovery has stalled, and it remains 6% below the peak level of early 2008. The two plane makers’ customers are also being hit by the return to a rising oil price.
Airbus Monday signed a deal with Yemenia Airways for 10 A320 aircraft in a deal valued at $700 million at list prices.
Emirates Airline, the Middle East’s largest carrier, also said it is in talks with Boeing and Airbus for “tens” of new aircraft orders.
The carrier’s chairman, Sheik Ahmed bin Saeed Al Maktoum, told reporters at a roundtable event on the sidelines of the show that although it wouldn’t make any order announcements at the event, which ends Thursday, it is looking at Airbus A330s and Boeing 777s.
Stefania Bianchi, Nour Malas, and Alex Delmar-Morgan
Wall Street Journal