Emirates Trims Boeing Order Plan as It Curbs Global Ambition
The 787 deal involves 10 jets fewer than an outline agreement dating to 2017.
(Bloomberg) -- Emirates scaled back a commitment to buy billions of dollars of Boeing Co. wide-body jets, completing a recalibration of ambitious plans that has also seen it slash orders for Airbus SE planes.
The world’s biggest long-haul airline will now take 30 Boeing 787s worth $8.8 billion at list prices, together with 126 larger 777Xs, Chairman Sheikh Ahmed Bin Saeed Al Maktoum announced Wednesday at the Dubai Airshow.
That’s 40 planes fewer than originally planned, including six older 777s converted to the new version, and follows the slimming down of orders with Airbus by a net 20 jets earlier this week. Based on the most recent published list prices, the jettisoned commitments were worth about $24 billion.
Emirates had held back on finalizing long-standing purchases -- the 787 deal dated to 2017 and the 777X contract to 2014 -- as it reviewed long-term fleet needs in light of an end to production of the A380 superjumbo. The Dubai-based company is also grappling with a slowing Gulf economy and concerns about the performance of some new plane models.
“We’ve been looking at the 787 for a very long time,” Emirates President Tim Clark said at the air show. “We want to get the plane into the network as soon as possible.”
Uncertainty
The shrinking of the carrier’s commitments means Boeing and Airbus have together lost out on a potential 60 orders. At the same time, the manufacturers will be relieved to end the lingering uncertainty around blockbuster deals from an airline that’s helped drive wide-body plane production for years.
Emirates had already cut its backlog for the A380 double-decker by 39 planes in February after Airbus and engine provider Rolls-Royce Holdings Plc declined to commit to a major upgrade. The move kicked off a sweeping fleet review, with the superjumbo ceding its role as the linchpin of a strategy that made Dubai the leading hub for flights around the globe. Airbus announced at the time that A380 production would end in 2021.
For Airbus, the Dubai event also saw a $14 billion, 120-aircraft order for its A320neo narrow-body from Air Arabia. Boeing recorded more limited success at the expo, though it managed to secure outline sales of its stricken 737 Max model, grounded in March after two fatal crashes in five months.
Emirates switched from its original plan to buy the 787-10 to the smaller 787-9 version of the Dreamliner, which costs $5 million less, with deliveries commencing in 2023 rather than 2022. Operating a medium-sized plane will open up city pairs with more modest passenger flows and allow the carrier to build frequencies on existing routes, Sheikh Ahmed said.
GE Favored
While Clark said Emirates hasn’t yet decided on an engine-maker for the 787s, the carrier is leaning toward turbines from General Electric Co. rather than Rolls-Royce, according to people familiar with the matter, who asked not to be named discussing private negotiations. Emirates declined to comment. GE said it looks forward to talking with Emirates about powering the planes.
The 777X deal was reduced from 150 to 120 jets but topped up to 126 aircraft through the conversion of outstanding orders for six current-generation 777-300ERs to the upgraded model, which comes with new GE engines and composite wings to improve efficiency.
Talks with Boeing on the timing of 777 deliveries will take place in the next few weeks, with the variants also to be decided, Emirates said. The model’s first test flight has been held up by engine issues though Clark said it’s expected in a few months.
--With assistance from Will Davies.
To contact the reporters on this story: Layan Odeh in Dubai at lodeh3@bloomberg.net;Siddharth Philip in London at sphilip3@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, ;Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Tara Patel
©2019 Bloomberg L.P.