Emirates Fleet Rethink Could Mean Boeing Pain, Airbus Gain
Emirates Could Seek Airbus A350s Sooner If Boeing Delays Persist
(Bloomberg) --
As the man commanding the world’s largest international airline for almost two decades, Emirates President Tim Clark has perfected the act of playing arch-rivals Airbus SE and Boeing Co. off one another.
His tactics were on display again this weekend in Dubai, where the biennial air show is taking place on Emirates’s home turf. Clark, speaking in an interview, said he’s conducting a fleet “reset.” That, in turn, might amount to a shift away from Boeing, which the executive singled out as still having issues to resolve around the 777X wide-body, for which Emirates is the biggest buyer.
Clark might lack the take-no-prisoners bravado of Qatar Airways CEO Akbar Al Baker, who revels in the public shaming of Airbus and Boeing if he can raise the heat to get a better deal. But Emirates arguably has more clout than its regional rival because of its sheer size, having ordered 115 777X alone and running by far the largest fleet of Airbus A380 double-deckers.
The fleet rethink comes as Emirates and its units contemplate taking part in an anticipated flurry of listings on Dubai’s stock exchange, according to comments Monday from Chairman Sheikh Ahmed Bin Saeed Al Maktoum. Dubai announced plans this month to float 10 state companies as it seeks to catch up with neighboring Abu Dhabi and Saudi capital Riyadh on initial public offerings.
Clark is no stranger to making painful decisions at the expense of one airframe maker. In 2014, he axed a deal to buy 70 Airbus A350s, which constituted the single biggest order loss for the European planemaker at the time. He did eventually come back to buy 50 units, but the move left executives at Airbus in Toulouse under no illusion just how important it is to keep Clark on their side.
The machinations add to a delicate moment for Boeing. The U.S. planemaker is grappling with years of delays on the 777X, and Emirates could seek to accelerate handovers of the Airbus A350, Clark said Sunday at the Mideast expo. He indicated that the number of jets required and the split between the manufacturers is also under review.
Quality Product
“You can never say never,” he told Bloomberg Television. “There are issues still out there which Boeing has got to resolve. We also have aircraft from Airbus coming in. So we’ll have a look at all that and see how it best fits the network. In terms of mix and the absolute number that could all change.”
Airbus would be “open to discussions with Emirates and with Tim and the team,” Chief Executive Officer Guillaume Faury said Monday in an interview at the Dubai show. “We would like to be able to serve our customers, especially when they want planes earlier. It depends very much on the time-frame and what will be the request.”
Emirates was due to get its first 777X in June 2020, followed by A350s from 2023. But the Boeing jet has been delayed until late that year at least following a lengthier process of regulatory approval amid intensified scrutiny in the wake of the grounding of the firm’s 737 Max model following two fatal crashes.
Stan Deal, the chief executive of Boeing’s commercial division, said at the show that he met with Clark to discuss the status of the 777X program, and that the company is confident it can deliver the “high-quality product” that Emirates wants to see.
“We’ll jointly decide what the right delivery timing is for him,” Deal said.
Sales of wide-body aircraft have become scarcer in the pandemic after long-haul travel all but dried up. That’s made holding onto sales or even expanding the order book ever more important for Airbus and Boeing -- and has given Emirates a powerful bargaining chip.
The world’s biggest long-haul airline has already twice scaled back its 777X order, originally for 150 jets. It slimmed the commitment to 126 aircraft at the last Dubai expo in 2019, while purchasing 30 smaller 787 Dreamliners and 50 A350s, and later reduced it to 115.
A further downward adjustment would come as a blow to Boeing and the 777X, for which Emirates is the biggest customer, at a time when the future of inter-continental travel remains clouded by the Covid crisis.
Clark said the airline will hold talks with both manufacturers to determine where they stand on deliveries. While Boeing is struggling to get the 777X across the line, Airbus has slowed A350 output to just five planes a month.
“We’ll be looking at what the outcome is of the Boeing discussions we’re about to have to see how far they’ve got on,” the executive said. “We’re talking to Airbus about what the reality of the situation is and during the course of the next few days we’ll decide what we’re going to do.”
Freighters, Dreamliner
The Air Current aviation website reported Sunday that Emirates may order two 777F freighters from Boeing, a move that might also be part of the 777X order equation.
Another scenario might see another change in favor of the 787. Emirates Chief Operating Officer Adel Al Redha said last year that option was being considered, while people familiar with the matter said in February that one-third of the carrier’s 777X orders were vulnerable to such as swap.
Clark said Emirates could get the new 777 in 2024, though “it’s anybody’s guess” as to the actual timing.
“We’re not altogether sure they’re out of the woods,” he said. “It’s a question of the external input, the agencies that are involved around the build and certification of the aircraft that Boeing have got to make their peace with.”
©2021 Bloomberg L.P.