Boeing and Airbus Get a Boost From Airlines in Middle East and Asia

Nov. 18, 2011
'The legacy carriers in the U.S. and Europe made a small recovery, and now they are just treading water.'

Two record orders for Boeing aircraft from Dubai and Indonesia underscore a shift in the global market to quickly growing Asian and cash-rich Middle East carriers.

Boeing in recent days scored its largest-ever deals -- an order from Emirates airline for 50 long-range 777-300ERs worth $18 billion on Sunday, and 230 737 models for Indonesia's Lion Air worth $21.7 billion in a deal announced Thursday.

Both were surprises: Emirates because of the size compared with its small home market, and Lion Air because the private Indonesian carrier flies domestic and Southeast Asia routes, and is not an international name.

But both tell a story about the direction of the market for aircraft makers, especially Chicago-based Boeing and its European rival Airbus, said Richard Aboulafia, an industry expert at the Teal Group.

"This industry is sort of split," he told AFP.

"The super connectors in the Middle East are still booming, Asia is still booming. But the legacy carriers in the U.S. and Europe made a small recovery, and now they are just treading water."

Boeing spokesman Wilson Chow said the sale underscores the strength of the aviation market in the fast-growing Asia-Pacific region.
"According to our outlook, Asia-Pacific is one of our fastest-growing markets areas," Chow told AFP. "We're expecting a 7% growth of traffic per year for the next 20 years."

Aboulafia said demand in the Middle East -- including Qatar Airways's order announced this week for 50 Airbus A320neo aircraft and 10 A380s -- reflects factors other than traffic.

The orders were all from the oil-rich Gulf, where airports are often key connection and transit junctions for long-distance fliers. Local carriers want to grab a share of those passengers.

"The Middle East carriers, they're making money and buying planes and taking market share from the other carriers -- Air France, KLM, Lufthansa, British Airways, Qantas -- you name it," said Aboulafia.

"There is a small traffic growth, but not to fill these kinds of orders."

The clear beneficiary, of course, is the aircraft manufacturing industry.

"From a production standpoint, we're the only one planet that didn't get a downturn," Aboulafia said.

Yet the industry remains so competitive that both Airbus and Boeing still fight ferociously for orders, and discounts on large-scale orders like those of this week could be huge.

"When you walk in with your needs for the next 10 years, you're going to get a better deal, you get guaranteed production and a better discount," Aboulafia said.
Qatar Airways's performance at the Dubai Airshow this week underscored that buyers still have a lot of leverage.

The carrier's chief, Akbar al-Baker, cancelled a commercial announcement with Airbus on Tuesday, and went instead to a joint conference with Boeing, where he said the European manufacturer is "still learning how to make airplanes."

A few hours later, he turned up all smiles for a joint briefing with Airbus, finally announcing the order of 50 A320neo jets and the 10 superjumbo A380s.

Copyright Agence France-Presse, 2011

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