Etihad sets stage for $50B of jet deals from Gulf

Abu Dhabi’s 10.8 billion dirham ($2.9 billion) airport terminal will be operational in July 2017 and will serve Etihad and its partners.

DUBAI/NEW YORK: Etihad Airways is close to placing an order that could kick off a $50 billion jet-buying spree from the Gulf as the region’s carriers flex their muscles in an industry hit by weak margins and high fuel prices.

Taking advantage of deep pockets and a geographically strategic position between East and West, Gulf airlines are expanding rapidly and diverting long-haul traffic from airlines in Europe, the United States and parts of Asia.

Abu Dhabi airline Etihad is expected to buy dozens of Boeing jets, including the revamped 777X minijumbo and a repeat order for its 787 Dreamliner, sources familiar with the matter said Monday.

The deal could be worth $18 billion at list prices and comes as Etihad prepares to celebrate the 10th anniversary of its maiden flight on Nov. 12, highlighting the Middle East’s emergence as a fast-growing global travel hub.

If confirmed, Etihad’s order could pre-empt a widely expected blockbuster deal for 100 or more 777X jets from rival Emirates, which has said it might announce a large order when it hosts the Dubai Airshow next month.

The deals are still under negotiation and could change in size and timing, said the sources, who spoke on condition of anonymity because they were not authorized to speak publicly. Boeing’s European rival Airbus is also competing for the business.

Together with an order from Germany’s Lufthansa in September, the latest business is likely to ramp up competition between plane makers by allowing Boeing to formally launch the new version of its long-range 777X twin-engine jetliner.

Airbus has punctured Boeing’s traditional dominance of the market for big twin-engine jets with its new A350-1000 and scored a historic breakthrough in Japan this month.

Two people familiar with the matter said that Etihad was looking to buy 25 to 30 of the revamped 777X. And in a vote of confidence for Boeing’s Dreamliner, which has suffered a series of technical problems, Etihad may also increase its order for the lightweight jet by up to 30 aircraft, one of the sources said.

Etihad, which has 41 Dreamliners on order, declined comment.

Boeing said interest was “high” for the revamped 777X but declined to comment on negotiations and had not yet made a formal decision on whether it would build the new aircraft.

Dubai’s home carrier Emirates has said it was considering what many in the industry expect to be a huge order for Boeing 777X jets at the Nov. 17-21 Dubai Airshow.

Emirates president Tim Clark was quoted last month as saying that much work needed to be done to finalize commercial terms and that the company would not go ahead with any deal until it was ready, but industry sources say speculation is rife that the deal could be worth as much as $52 billion.

“The much bigger news would be a nonlaunch [of the 777X in Dubai] or a launch with tepid numbers,” said Richard Aboulafia, analyst at Virginia-based Teal Group, referring to expectations of a formal launch of the 777X at the Dubai show.

“Since Boeing has been carefully designing the 777X to meet their [Emirates airline] needs, anything less than a 70-100 aircraft firm order would raise questions. And a nonorder would be a disaster for Boeing.”

The nearest competitor to the 406-seat Boeing 777X is the 350-seat Airbus A350-1000, the largest member of the newest family being developed by the European company.

Boeing’s archrival was due to provide an update on the carbon-composite jet Monday.

Qatar Airways, another big Boeing customer with an order of 30 Dreamliners, has expressed interest in the 777X but is viewed as the most cautious of the Gulf’s big three.

In other business, budget carrier flydubai, which is fast expanding its routes, is expected to place a $5 billion order for 50 narrow-body jets at the Dubai show and is looking at Boeing’s 737 MAX and the Airbus A320neo.

Saudi Arabian Airways and Kuwait Airways, which put on hold plans to buy 25 new aircraft from Airbus in September, will also look to finalize a deal in Dubai next month.

A version of this article appeared in the print edition of The Daily Star on October 22, 2013, on page 6.




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