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Boeing`s Record Emirates Deal

Boeing Co.’s biggest-ever civil jet order solidifies the U.S. manufacturer’s lead in the market for wide-body planes and helps hold at bay Airbus SAS’s attempt to encroach on its dominance with the A350 airliner.


Boeing signed an agreement with Emirates yesterday at the Dubai Air show for 50 777-300ER jets, and an option for 20 more, in a deal valued at $26 billion. The accord extends their relationship in the wide-body market, with Emirates operating more than 90 of the 777s for the industry’s biggest such fleet.

The U.S. planemaker’s win at the show coincides with Airbus saying last week that deliveries will be later than planned for its A350-900. The delay comes four months after Airbus said it would push back the debut of the largest A350, the A350-1000, which competes directly with the 777-300ER, to add more thrust after customers demanded more payload and range.


“It’s early days for the A350, but they will need to take Emirates’ views into their design work as Boeing has had to do for the 777 if they want to be confident of large future orders from the carrier,” said John Strickland, a director at U.K.

aviation advisory firm JLS Consulting Ltd.


Emirates President Tim Clark has been critical of Airbus’s design improvements on the A350-1000, saying the plane is heavy and risks falling short of performance requirements. Airbus now plans to introduce the jet, which will be made of composite materials, in 2017. The first model, the A350-900, is slated for the first half of 2014, Airbus said last week. That’s as much as six months later than the previous date.

18-Month Delay

Airbus says its revamped A350-1000 design, whose planned entry into service has been postponed by 18 months, will be 25 percent more fuel efficient and can carry 4.5 tons of additional weight. The aircraft will seat about 350 people, compared with about 365 on the 777 that Emirates is buying.


Emirates said yesterday it will take delivery of the latest 777s starting in 2015. Chicago-based Boeing said it has worked closely with the Middle East carrier to adapt the program to customer needs.

Emirates is also the biggest buyer of the Airbus A380 double-decker jumbo, having ordered 90. The carrier has turned itself into the world’s leading airline by international traffic, using its location in Dubai as a global hub.

Ambitious Plans

“We have an ambitious and strategic plan to continue growing our international network and especially increasing our long-haul, non-stop routes,” Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum said.


The 777 is Boeing’s most profitable program, and the company is increasing monthly production to keep pace with demand. Boeing said the accord with Emirates contributed to the best year yet for the 777, surpassing 2005’s record 154 orders.


Boeing is boosting output of the twin-engine 777 by 19 percent during the next 1 1/2 years, to 8.3 a month, largely by streamlining production processes. The company is preparing to start assembling wings for the 1,000th jet, which is to be completed in February and delivered to Emirates in March.


“The 777-300ER is a plane that’s in demand,” said Jim Albaugh, the head of Boeing’s commercial-jet subsidiary. “I can tell you we’re talking to a half dozen other customers right now.”


The 777 entered service in 1995, and was the company’s most advanced aircraft until last month’s commercial debut of the 787 Dreamliner. The 777-300ER variant has become the most popular type and is powered solely by General Electric Co.’s GE90 engines. GE, the largest maker of jet engines, puts the order value for the engines at about $6 billion.

A350 Commitment

Emirates said yesterday that it remained committed to the A350. Toulouse, France-based Airbus has won 373 orders for the

A350-900 model, 119 for the smaller A350-800 and 75 for the A350-1000. Emirates has 70 orders pending for the plane, of which 20 are for the largest type. The airline will also study if it needs more A380s, of which it now has 17 in service, out of the 90 units ordered.


Airbus has managed to fight back on past programs and offer an alternative that became a hit with airlines. Its A320 family of single-aisle jets, the first in commercial service with advanced fly-by-wire control technologies previously only used in the military, is popular on short- and mid-haul routes.

The superjumbo A380, with 525 seats, is a passenger magnet with major intercontinental carriers such as Singapore Airlines Ltd. and Emirates. That has made extending the life of the iconic 747 jumbo harder for Boeing, which has won only Deutsche Lufthansa AG and Korean Air Lines Co. so far among major global airlines on the latest variant.

Conversely, Airbus’s four-engine A340 proved an unsuccessful competitor to the Boeing 747 and 777 because it used too much fuel, and Airbus said last week that it’s ending the program after less than two decades.


“Emirates looks set to stay the biggest 777 customer, which shows that the A350-1000 still needs work before it convinces 777 customers that there’s an attractive replacement coming,” said Richard Aboulafia, vice president of consultant Teal Group in Fairfax, Virginia.

Source: Bloomberg