June 24, 2007

Arab Nations Snub Boeing, Spend $32 Billion on Airbus in Paris

Airbus SAS, the world's largest maker of commercial aircraft, won orders and commitments valued at $32 billion from Arab customers at the 2007 Paris Air Show, as Middle Eastern carriers snubbed rival U.S. supplier Boeing Co.

Airbus got firm contracts from airlines or leasing companies based in Arab countries for aircraft valued at $24.7 billion and commitments for planes with a value of $7.3 billion at the show last week. Boeing's only Middle Eastern contract during the show was an agreement to advise Abu Dhabi and Dubai, in the United Arab Emirates, on developing their aerospace industries.

Persian Gulf airlines including Etihad, Qatar Airways and Emirates have been among the top customers for Toulouse, France- based Airbus and Boeing as the region's governments set up hubs for tourism and transit flights between Europe, Asia and Africa.

A redesign of the planned 250- to 350-seat A350 model helped Airbus beat Chicago-based Boeing in orders at the Paris show.

``With the A350XWB, they finally have a legitimate competitor in the size range and it's generating the appropriate level of interest,'' Richard Pinkham, an analyst at the Centre for Asia Pacific Aviation in Singapore, said by phone. ``They are coming back, just as everybody, including Boeing, knew they eventually would.''

Arab airlines are expected to increase their combined fleet by almost two-thirds to 900 aircraft by 2015 from 550 planes in 2006, according to the Arab Air Carriers Organization.

``It is unprecedented that in such a short period of time so much large-plane acquisition has been undertaken in a single small region,'' Pinkham said. ``It's a continuation of the trend whereby the Gulf carriers continue to add incredible amounts of capacity into their sparsely populated region.''

Kuwait Aviation

Airbus also won orders from Kuwait's Aviation Lease & Finance Co. for 12 A350s and seven A320s, valued at a total of $2.9 billion at list prices. That brought the total value of orders from the region since the Paris show started on June 18 to $32 billion.

Airbus won a commitment from Emirates, the largest Arab airline, to buy eight A380s valued at $2.55 billion. A final purchase would take Emirates' total order for the double-decker plane to 55.

The airline plans to buy 100 mid-sized, long-range planes and will choose between the Airbus A350 and Boeing's competing 787 as early as the Dubai Air Show in November, Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum said in an interview at the Paris air show.

The average list price for the 250- to 350-seat A350 is $229 million, while the 787 costs $158.3 million. Catalog prices don't take account of discounts airlines get for larger orders.

Transport Hub

Dubai's government has earmarked more than $82 billion for investment in the emirate's aviation and aerospace industry as part of plan to create a transport hub for the region.

Airbus also won a $17 billion order from Qatar Airways for 80 A350 XWB airliners in the first major commitment to the new 250- to 350-seat model. The Doha, Qatar-based airline's order includes 20 A350-800 airliners, 40 A350-900s and 20 A350-1000s, and deliveries will begin in 2013, the year the model starts commercial service.

The A350 will enter fleets five years after Boeing's competing 787 begins commercial service. Qatar Airways also ordered three A380 superjumbos increasing the total number of ordered double-deckers to seven.

Etihad Airways, the national carrier of the U.A.E., ordered 12 Airbus SAS planes, including four A340-600s, five A330 passenger models and three A330-200 freighters, valued at $2.2 billion at list prices.

Airport Capacity

Etihad will receive the aircraft between 2008 and 2011, increasing its fleet to 42 planes, and will meanwhile defer delivery of four 555-seat Airbus A380s by four years to 2013, Chief Executive Officer James Hogan said.

Abu Dhabi, the owner of about 90 percent of the U.A.E.'s oil wealth, is spending $6.8 billion to more than double its airport's capacity to 20 million passengers a year and set up Etihad in 2003 to compete with Emirates.

Jazeera Airways, a Kuwait-based low-cost carrier, ordered 30 Airbus A320s valued at $2.1 billion as part of a plan to double the fleet and offer flights beyond the Middle East. The company operates five 150-seat Airbus A320s and has six more on order.

National Air Services, a Saudi Arabian private aircraft operator with a fleet of more than 47 aircraft, pledged to buy 20 A320-series airliners valued at about $1.5 billion at list prices.

Dassault Aviation

The planes will be used by the company's low-cost carrier NAS Air, based in Riyadh, Saudi Arabia. National Air also ordered 20 Falcon 2000 LX corporate jets for more than $500 million from Dassault Aviation SA at the show.

Libyan Airlines, the national carrier of the North African country, pledged to buy 15 planes from Airbus SAS that include seven A320s, four A330-200s, and four A350s with a value of $2 billion.

Airbus won a firm order from Libyan carrier Afriqiyah Airways for five A320 planes and a commitment for six A350 XWBs. The firm order is valued at $360 million and the pledge at $1.2 billion.

Nouvelair, a Tunisian carrier, signed a firm order for two A320s. The engine choice hasn't yet been made. The list price for the order is $146 million.

To contact the reporter on this story: Massoud A. Derhally in Dubai, United Arab Emirates at mderhally@bloomberg.net.

By Massoud A. Derhally
Source: Bloomberg.com

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