Emirates Airline's order for 50 Boeing 777 aircraft is a statement of the airline's intent to become the world's leading carrier, despite the challenging economic headwinds.
Emirates in record deal for Boeing 777s
Emirates Airline yesterday booked an US$18 billion (Dh66.1bn) order for 50 Boeing 777 aircraft, a statement of the airline's intent to become the world's leading carrier, despite the challenging economic headwinds.
The booking, the biggest order in the US plane maker's 95-year history, also includes an option for a further 20 of the long-haul jetliners, valued at $8bn.
"This record-breaking dollar value order is another milestone for Emirates and affirms our strategy to expand as a world leading carrier, connecting the world to Dubai and beyond," said Sheikh Ahmed bin Saeed Al Maktoum, the chairman and chief executive of Emirates Airline. He was speaking at a press conference on the sidelines of the first day of Dubai Airshow.
The deal cements Emirates's commitment to building the Middle East as an aviation link between East and West, drawing traffic away from European and Asian carriers.
The bumper order comes at a time when the outlook for global airlines is uncertain. Many carriers are steeling themselves for reduced full-year profits - or even losses this year and next - because of the cooling global economy.
The Dubai carrier's order adds to what is already the world's largest fleet of 777s, with 95 in service. With another 40 777s already on its order books, yesterday's booking brings the total to 90 more of the jetliners. Emirates expects to receive the first batch of the new aircraft from 2015.
With less financing being offered by European banks as a result of the euro-zone debt crisis, Emirates faces a funding challenge to pay for the new planes.
Sheikh Ahmed said it planned to use a variety of financing for its latest order including operating leases, US and EU export credit, commercial asset-backed debt, as well as Islamic financing.
There would be "no issue" with financing, he said. Financing for all future aircraft up until August was already in place.
Boeing plans to hire several hundred more staff at its factory in Washington state to meet the increase in production created by the new order. It will need to raise output from its existing production of seven 777s per month to 8.3, said Jim Albaugh, the president and chief executive of Boeing Commercial Airplanes.
"This is an extremely proud moment for us as it not only underscores Emirates' ongoing confidence in the 777 but also makes this the single largest order in dollar value in Boeing's history," he said.
The deal dominated the first day of the air show and represents an early boost for the plane maker against Airbus, its European competitor.
But with other regional airlines including Qatar Airways still to announce orders, Airbus may yet secure bookings.
"We are fully confident that this [the Middle East] is a growing area for us," said Louis Gallois, the chief executive of EADS, Airbus's Franco-German parent company. "Around 13 per cent of our turnover is in this area."
EADS last week pushed back delivery of its A350 carbon-fibre jetliner by six months to the first half of 2014. Emirates Airline, Etihad Airways and Qatar Airways have 65 orders for the jet.
Mr Gallois said it had discussed the delays with concerned customers. "With a programme as complex as the A350 we want to avoid what happened with the A380," he said.
Emirates Airline reported a 76 drop in net profits earlier this month in the first half of its financial year to Dh827 million as a result of rising fuel costs.
The airline's fuel costs have risen 43 per cent this year. Like its global rivals, the carrier has also had to contend with the fallout from the Japanese earthquake, tsunami and nuclear disaster and the Arab Spring this year.
"Last year was exceptional," said Sheikh Ahmed. "We didn't have the issue in the Middle East or Japan but when we look at the seat [load factor] we are just less than 1 per cent so far this year."
In another development at the show yesterday, Quest Helicoptersplanned to sell the first helicopters manufactured in the UAE in about three years, Mike Creed, the director of commercial and strategic planning at Quest Helicopters, said in an interview with Bloomberg News. He told the news wire he aimed to sign up customers at the air show.
It also emerged that Eurofighter, a European arms consortium, was in preliminary talks to supply its Typhoon fighter to the UAE as France is also seeking to sell its Rafale jet to the country, Zawya Dow Jones reported.