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Will Boeing’s $100 billion potential orders dominate Dubai air show?

Nov. 14, 2013, Dubai, U.A.E. - 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 close to 250 potential orders from five airlines, industry sources said.


November 14, 2013
By Reuters

The U.S. plane maker 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 defence 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 could also 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 November 17 to 21.

 

The 777X launch will also include confirmation of a tentative 34-plane order from Germany’ Lufthansa.

 

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.

 

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
defence 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,” Karasik said.