Airbus Ends Order Dearth at Dubai Show With $2.7 Billion Deal
(Bloomberg) -- Airbus SE has finally overcome its drought in Dubai.
On the third day of the Dubai Air Show, the planemaker signed a memorandum of understanding valued at $2.7 billion for 25 of its A320neo airliners from Kuwaiti carrier Wataniya Airways. Wataniya resumed operations from the Gulf state in July after going bust in 2011 with a fleet of just two A320 aircraft.
Airbus has come under pressure to regain ground on arch-rival Boeing Co. at the show after a widely expected deal for about 36 A380 aircraft from Emirates failed to materialize on the first day and there were no other orders to announce on the following day. Compounding its woes, the Dubai-based giant instead placed an order for 40 of Boeing’s 787 Dreamliners.
Airbus is working to turn around its fortunes during the remainder of the show, according to people familiar with the negotiations. Among prospective orders are accords with EgyptAir Airlines Co. for A320neo single-aisle aircraft, as well as a deal with Dubai-based discount carrier FlyDubai, which is negotiating for as many as 175 narrow-body planes, said the people, who asked not to be identified as talks are private and an agreement may change or get delayed.
The European planemaker remains confident it can bring home the order for additional A380 super-jumbos from Emirates. Boeing isn’t done with deals yet, either. Among the transactions in its pipeline is a deal to place about half a dozen 787 Dreamliners with EgyptAir, according to people familiar with the talks. Representatives for Airbus, Boeing and the airlines involved declined to comment.
Air shows are forums that bring together manufacturers and customers and offer a prime opportunity to close deals that have been brewing in the background for weeks or months. Airbus in particular has used the events for bragging rights, tallying its overall haul at the end of each show and comparing its wins with those of Boeing.
Before the Wataniya deal, Airbus found itself in the unusual situation of not having a single buyer after two days, with just two days left to avoid its biggest commercial humiliation in years. The company typically excels at air shows, having perfected the art of the aircraft deal under longtime sales chief John Leahy, who relishes clinching last-minute accords and counting up gains at the expense of Boeing. With Leahy set to step down in coming months, that carefully honed choreography is facing an uncertain future.
The changing fortunes were on display on the opening day of the event Sunday, when Airbus had planned to make its debut with the A380 order. Instead, Boeing stole the limelight with a $15.1 billion deal from Emirates for its 787 Dreamliner, followed shortly thereafter with a follow-up accord with Azerbaijan Airlines.
Boeing extended its run on Tuesday, winning a follow-up order from Ethiopian Airlines for additional 777 freighter models. Bombardier Inc. also announced a deal for its C Series from EgyptAir. Wataniya, based in Kuwait, serves destinations including Beirut or Baku in Azerbaijan with its two aircraft
When asked what was behind the hold-up with an Airbus order, Emirates President Tim Clark said Airbus needs to show greater commitment to the A380, whose future has been thrown into doubt as the order book for the giant aircraft dries up.
This year’s air show has lacked the urgency of previous years, when Emirates and its Gulf rivals Qatar Airways and Etihad Airways PJCS worked up an order frenzy on opening day. Qatar is barred from this year’s expo amid a diplomatic dispute with some of its Arab neighbors, while Etihad is undergoing a dramatic overhaul of its management and strategy after its alliance of partner airlines around the globe imploded.
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