x Abu Dhabi, UAEFriday 21 July 2017

Airbus wins $9bn order as Boeing takes flak

Airbus forecasts Asia will need some 11,000 aircraft worth more than $1.8 trillion over the next 20 years.

The low cost carrier VietJetAir signed a deal yesterday to buy more than 90 Airbus jets worth about US$9.1 billion at sticker prices.

VietJetAir’s A320 deal is the only major purchase announced so far at the Singapore Airshow although other agreements may be announced in coming days.

The budget carrier and Airbus had a preliminary agreement last year but it wasn’t included in Airbus’s order book for 2013.

The deal includes confirmed orders for 63 of the single aisle A320 jets and 30 options to purchase. VietJetAir will also lease another eight A320s.

The airline, which flies to dozens of destinations within Vietnam and a handful of overseas routes, said the A320 would help it lower operating costs.

Airbus spent most of its first press conference at Asia’s biggest aerospace and defence show stressing the importance of Asia to its business. Asian airlines are expanding aggressively due to strong economic growth.

“The message is clear. This is where the action will be,” said Fabrice Brégier, the president and chief executive of Airbus.

The company forecasts the region will need some 11,000 aircraft worth more than $1.8 trillion over the next 20 years.

The European company’s projections are lower than its rival Boeing, which is expecting Asia’s airlines to buy 12,820 aircraft worth $1.9tn.

Airbus said increasing demand for travel from bigger middle classes in countries such as China, the world’s second largest economy, will drive growth for its jets. It expects China to replace the United States as the biggest domestic travel market within 20 years.

“In the passenger market, the fleet of aircraft operated by Asia-Pacific carriers is expected to more than double in the next 20 years, from 4,960 aircraft today to over 12,130 jets, based on higher than average annual traffic growth of 5.8 per cent and replacement of nearly 3,770 aircraft in service today,” said John Leahy, the Airbus commercial chief operating officer.

In a major blow for the French plane maker’s biggest rival yesterday, Boeing said Air India is dissatisfied with the performance of its 787 Dreamliner, joining other carriers including Norwegian Air Shuttle in slamming the manufacturer for repeated faults on its marquee jet.

“Yes, they are not happy with the reliability portion, neither are we,” Dinesh Keskar, a senior vice president at the Chicago-based Boeing, said at the Singapore show yesterday.

“Over the last few months, we understood which are the components that were causing issues, which software needs to be upgraded.”

Air India, which has not reported an annual profit since 2007, and low-cost airliner Norwegian Air built their growth plans around the composite-material airliner and its promise of more fuel-efficient operation.

Air India, which has ordered 27 of the jets, diverted one of its 787s to Kuala Lumpur this month as a precaution after a software fault on a flight to New Delhi from Melbourne.

Also yesterday in Singapore, the Indonesian flag carrier Garuda Indonesia said it would develop a new hub in Bintan island, off Singapore, to augment its domestic network in one of the world’s fastest-growing airline markets.

Garuda is partnering the Singapore-listed Gallant Venture to build the infrastructure for the 177-hectare site in Bintan, it said at the show.

This will include a new airport and runway, which will be dedicated to Garuda’s operations. The carrier will also have a new maintenance centre in Bintan.

“This new operation will help strengthen Garuda’s network development, with a potential to connect East Indonesia and West Indonesia, and become the meeting point for our international flights to Europe and the Far East,” the Garuda president Emirsyah Satar said yesterday.

Bintan will become the airline’s fourth hub in Indonesia after the capital Jakarta, Denpasar in Bali, and Makassar in Sulawesi.