x Abu Dhabi, UAETuesday 23 January 2018

Dubai Airshow makes aviation history with Dh735 billion in deals

Also on day one of the Dubai Airshow Etihad Airways, Emirates Airline and flydubai all announce big orders for hundreds of new aircraft to serve the UAE.

James Hogan, Etihad’s chief executive, sits between Ray Conner, left, Boeing’s chief for commercial airplanes, and David Joyce, the chief of GE Aviation, at the signing of the aircraft and engine deal at the Dubai Airshow. Jaime Puebla / The National
James Hogan, Etihad’s chief executive, sits between Ray Conner, left, Boeing’s chief for commercial airplanes, and David Joyce, the chief of GE Aviation, at the signing of the aircraft and engine deal at the Dubai Airshow. Jaime Puebla / The National

A regional European airline will fly the Etihad Airways brand to 21 destinations around the continent after the Abu Dhabi-based carrier took a 33.3 per cent stake in Switzerland’s Darwin Airline.

“We now have seven equity alliance partners reaching across the world and a business strategy that has seen us create the world’s leading airline,” said James Hogan, the president and chief executive of Etihad. “We have achieved all of this while reaching sustainable profitability.”

Etihad did not say what the stake cost.

The carrier owns stakes in Air Seychelles, Air Berlin, Virgin Australia, Air Serbia and Ireland’s Aer Lingus. It is also expected to close a deal for a 24 per cent stake in India’s Jet Airways before the end of the year. “It’s been an interesting day. We have announced 199 aircraft, 294 engines … positioning Etihad Airways for the next decade of growth,” said Mr Hogan at the Dubai Airshow yesterday.

Etihad also ordered 56 new Boeing wide-body aircraft, with options and purchase rights for a further 26, the carrier announced in a press conference at the show. The deal included 25 next-generation Boeing 777X aircraft, 17 of which are 777-9X and eight 777-8X aircraft. It also ordered a further 30 Boeing 787-10 Dreamliners, making it the biggest customer for the American jet, as well as ordering one Boeing 777-200 freighter.

Etihad placed orders with Airbus, too, for 87 aircraft – 50 Airbus A350 XWB and 36 Airbus A320neo family aircraft, in addition to one Airbus A330-200F freighter – plus options for a further 30 freighters, to support the global expansion of its operations. “The aircraft will be used by Etihad Airways to launch flights to new destinations, add capacity in existing markets and progressively replace existing, less-efficient aircraft,” said Mr Hogan.

The total value of the combined deals is more than US$67 billion, the airline said. Deliveries would start in 2018.

The new aircraft will be powered by 127 GE Aviation, 115 Rolls-Royce and 52 CFM engines.

“Etihad has a different game plan than the other two Gulf carriers in building an equity alliance,” said Daniel Tsang of Aspire Aviation, an aviation research firm. “While today’s order for 30 787-10 Dreamliners and 25 777Xs is a big one, it does have significant flexibility in its growth plan. Not only could they be used to grow organically, they could also replace its existing fleet to ensure it retains one of the youngest fleets in the world.

“Moreover, it would not be surprising to see Etihad ordering aircraft for its equity partners’ use, which would have significant cost synergies in procurement cost – airframe, engines, maintenance and seats contracts,” Mr Tsang added.

Etihad’s aggressive buying falls into its 2020 plan to have more than 160 aircraft and nine fleet types that include 10 Airbus A380s and 41 Boeing 787 Dreamliners.

The carrier also aims to fly 25 million passengers per year and reach 120 passenger and cargo destinations, 90 per cent of which will be daily.

In 2014, Etihad expects to have both the Airbus A380 superjumbo and Boeing 787 Dreamliner serving its long-haul and ultra long-haul destinations.

Etihad also said that it would launch daily non-stop flights to Zurich, Switzerland, from June 1.

Meanwhile, Emirates Airline ordered $99bn worth of aircraft – the 777X from Boeing and the A380 superjumbo from its European rival Airbus. While its sister airline flydubai weighed in with a $11.4bn order for 111 Boeing 737s and 738s.

Tim Clark, the president of Emirates said the airline would use a mixture of bonds, loans and other means to finance the purchase of the aircraft.

“We have all sorts of financing tools in our treasury that include bank financing, bonds, trade financing, but bonds will have a bigger chunk going forward,” said Mr Clark.

It may issue bonds next year to help to raise $4.5bn for 21 new plane deliveries in the financial year that starts in April 2014, an Emirates executive said in September.

Emirates has sold two bonds this year – a $1bn sukuk in March and a $750 million bond in January.

Last week, flydubai secured a $228m loan from regional and international banks to finance the purchase of six planes from Boeing. The loan is structured as a finance lease with quarterly loan repayments over a 10 to 12-year term.

business@thenational.ae