Expected good news from Abu Dhabi may be the saving grace for captains attending the Farnborough Air Show this week.
Abu Dhabi on the runway
FARNBOROUGH // Expected good news from Abu Dhabi may be the saving grace for captains of the aviation industry attending the Farnborough Air Show this week. Multiple announcements in the next few days are expected from the emirate's aerospace firms. Taken together, they could mark the unveiling to the world of Abu Dhabi's overarching aviation growth strategy. Etihad Airways is widely expected to make the year's largest aircraft order at the show, for between 50 and 100 aeroplanes. The Abu Dhabi airline is among several state-backed, cash-rich Gulf carriers that have thrived by diverting traffic from European and Asian carriers through their hubs in the Gulf.
The airline's expansion is being planned in line with the Abu Dhabi Plan 2030 roadmap, with the expectation that Etihad will also play a vital role in making the emirate a "global capital". In line with the development goals, Abu Dhabi Airports Company (Adac) will build new airports throughout the emirate, while also investing in airports abroad. Adac's biggest endeavour is the US$6.8 billion (Dh24.98bn) expansion project at Abu Dhabi International Airport, where it will build a new Midfield Terminal and create a free zone to build an ecosystem of aviation service firms and suppliers.
Similarly, Abu Dhabi Aircraft Technologies (Adat), the airport maintenance firm, is investing in new facilities in Abu Dhabi while eyeing expansion opportunities abroad. Both Adac and Adat are expected to make major announcements this week. Adat is a subsidiary of Mubadala, the sovereign wealth fund worth an estimated $10bn, which has also sent a delegation to Farnborough. Abu Dhabi's big debut comes amid a backdrop of unparalleled concern about the industry's ability to withstand the massive impact of record fuel prices and the credit crisis. As the price of crude oil continues its record breaking ascent, estimates for industry-wide losses have also been rising.
American carriers alone could lose between $7.2bn and $13bn if oil prices continue to climb, reports the Air Transport Association, a trade body representing American carriers. Conditions have also worsened in India, where carriers are now forecast to post a $2bn loss this year. Sir Richard Branson, the owner of the British carrier, Virgin Atlantic, warned of "spectacular casualties" in the next 12 months among airlines. "One of the big American carriers will almost definitely go," he said on Saturday.
As a result, this year's Farnborough is likely to fall well short of matching last year's $70bn in new orders at the Paris Air Show, or the $100bn registered at the Dubai Air Show in November. "Farnborough will struggle to carry the same 'party atmosphere' that has been present at air shows over the past two years," said David Kaminski Morrow, the editor of Air Transport Intelligence. The British air show is one of the largest in the world, with more than 300,000 people expected to attend, including 1,500 military and civil aviation exhibitors from 35 countries. Last year, Airbus and Boeing took in a combined 2,754 orders.
As well as Etihad, Qatar Airways has also scheduled a press conference with Airbus today, signalling it will announce a significant order. FlyDubai, the new Dubai budget airline due to launch next year, will also be watched closely this week for any aircraft orders. As airlines consider deferring or cancelling their orders given the extreme conditions that have already caused the downfall of 25 of them this year, Boeing and Airbus are hoping that Gulf and Asian carriers will accelerate their delivery schedules.
The latest models which, incidentally, offer the best operating costs - the mid-size 787 from Boeing and the double-decker A380 from Airbus - have both suffered nearly two-year delays that have battered the two companies. Boeing's share price hit a three-year low last week, while EADS, the parent company of Airbus, is embroiled in an insider trading scandal over the selling of Airbus shares prior to announcing major A380 delays.