After Airbus Order Blitz in Paris, Boeing Arrives in Dubai Ready To Retake Control
It’s no mirage, and no longer a dream. The long-delayed Boeing 787 Dreamliner has finally made its Middle East debut here at the Dubai Air Show, just as rival Airbus has announced roughly a six-month delay in the development of the A350XWB. Indeed, a kind of reversal of fortunes seems at work here in the desert, as Airbus assumes the role of answering for program delays while Boeing can concentrate on making a splash with likely order announcements from the likes of Emirates Airline for 777s.
For its part, Airbus looks ready to snag a significant orders of its own from Qatar for at least five A380s and as many as 50 A320neos, along with another deal from lessor ALAFCO for more of the re-engined narrowbodies.
Still, with Airbus’s recent announcement that it had “terminated” production of the long beleaguered A340 and its now well documented problem with the A350, the appearance here of the 787, a flydubai 737-800 with a new Sky interior and a Qatar Airways 777-200 on static display marks something of shift for Boeing, whose relationship with Qatar, in particular, had suffered through some rocky patches over past years.
Yesterday during a roundtable discussion with journalists here in Dubai, Boeing Commercial Airplanes CEO Jim Albaugh expressed optimism about the region in general, notwithstanding the complications presented by the so-called Arab Spring. He did acknowledge, however, the possibility of “contagion” from the looming financial crisis in Europe.
A region known for its hunger for big commercial airplanes, the Middle East will continue to generate considerable demand for Boeing’s 777, which this year has drawn orders for 132 examples and for which Albaugh said the company has entered contract talks with “half a dozen” airlines.
On the prospects of a new, so-called 777X, Albaugh reiterated the need to wait first for Airbus’s definition of an A350-1000. If the Airbus product enters the market some time around 2018, Boeing would react soon afterward.
Albaugh said the company’s $273 billion backlog “sounds great” to Wall Street, but “it’s hard to tell customers to stand in line” for as many eight years for an aircraft. “If we get to 10 [Dreamliners] per month, we’ve got to take a hard look at 11 and then 12,” said Albaugh. “Burning the backlog” for virtually all its models stands as one of the company’s biggest challenges, he said, despite warnings by some analysts of market saturation and overproduction.
Despite his keen interest in moderating the company’s backlogs, Albaugh said the company made a decision “about six or nine months ago” to boost Boeing Capital’s market exposure, primarily because the company’s customers have expressed a desire for more financial support. Not long ago the company had made a strategic decision to draw down its exposure to aircraft financing. However, “I wasn’t here then,” said Albaugh.
Here yesterday, Boeing was particularly bullish about the prospects for the new re-engined version of the 737 narrowbody known as the 737 MAX. Now holding commitments for some 700 of the CFM Leap-1B-powered airplanes, Albaugh predicted that Boeing would “pretty much” equal the Airbus A320neo’s backlog within six months or so. To date Airbus holds firm orders for 1,100 A320neos, and total commitments for 1,300.
So far, said Albaugh, none of the 737 MAX customers hail from this region, “but we’re talking,” he said. Two of the carriers with which Boeing has discussed the new narrowbody are Oman Air and low-cost carrier flydubai.
Albaugh insisted that Airbus’s A320neo did not drive the decision to re-engine the 737. Although, he said, as an engineer, he would have liked to have seen Boeing introduce an all-new airplane, the timing simply didn’t work. Customers wanted a more efficient airplane “now,” he said. Boeing couldn’t run the risk of alienating them with more delays and fall victim to a production system ill-equipped to produce as many as 60 composite airplanes a month.
The Boeing boss also said the company has entered “detailed discussions” with two or three prospective customers for the 747-8. Asked if he would gauge the progress of the work under way on the airplane’s flight management computer and whether or not the FMC influenced the most recent delay of the Intercontinental passenger model from this year’s fourth quarter to next year’s first quarter, he responded simply, “No and no.”