Jetmakers end Dubai rollercoaster with big orders pending | Reuters
DUBAI (Reuters) - It started with a deal that never was and ended with the mother of all air show announcements - this week’s Dubai Airshow saw little in the way of firm new business, but reminded observers the rivalry between two global giants is as fierce as ever. Visitors are seen during the Dubai Airshow in Dubai, UAE November 13, 2017
DUBAI (Reuters) - It started with a deal that never was and ended with the mother of all air show announcements - this week’s Dubai Airshow saw little in the way of firm new business, but reminded observers the rivalry between two global giants is as fierce as ever. Visitors are seen during the Dubai Airshow in Dubai, UAE November 13, 2017. REUTERS/Satish KumarAs stragglers placed a handful of orders, delegates said the show would be remembered for the collapse of an anticipated Airbus deal to sell A380 superjumbos to Emirates and hunger for smaller jets including a record deal for 430 Airbus A320s. A Boeing 787 deal with Emirates also shook up the battle for widebody orders. All that barely moved the needle in this year’s order race, where Boeing leads, as most deals are not final. But the two rivals left Dubai with over 700 provisional orders for the bread-and-butter, narrowbody models on which their futures mainly depend. “It’s the aviation equivalent of pile it high and sell it cheap,” said Rob Morris, global consultancy head at Ascend Flightglobal. “This is where they generate their cash.” Boeing notched up 33 firm orders and Airbus disclosed an order for 45 jets to China’s CDB Leasing. If all 674 preliminary air show deals turn into solid business, Airbus’ 35 percent share of the market it shares with Boeing will rise to 48 percent. But both seemingly have enough business in hand to make it a tense end-year countdown. “It’s nothing new to see very large orders. However, the devil is in the detail,” said Aengus Kelly, chief executive of AerCap (AER.N), the world’s largest leasing company. “How many of them will be firm and when will the delivery dates actually occur? Some of them could be a decade away,” he added after signing a series of deals with Egyptair. VOLUME GAME On Wednesday, U.S. investor Bill Franke pulled together a cohort of airlines in which he has stakes to announce a preliminary wholesale deal for 430 Airbus jets, achieving what one awed financier called a “masterstroke” of low prices. Boeing bagged an Emirates order for 175 of its 737s. Visitors tour an Airbus A380 of Emirates during the Dubai Airshow in Dubai, United Arab Emirates November 13, 2017. REUTERS/Satish KumarThat worries some analysts who say planemakers are waging a futile battle, having already sold out for the next 8 years. Several noted it was the last show before retirement for Airbus sales boss John Leahy, fighting to get back on even terms with Boeing after a bruising start to the event. “Maybe it was John Leahy’s last hurrah to get one last deal out there; but what a way to go out,” Morris said. Airbus Chief Executive Tom Enders, who left Dubai without an A380 order after taking ultimate control of Airbus sales this year, is also keen for good news after his position was weakened by negative press over his handling of Airbus compliance probes. Slideshow (2 Images)Others said Airbus had merely demonstrated the pricing power of planemakers for their best-selling models and underpinned its production plans in a part of the business where the number of jets being produced is critical. Without such volume, planemakers often struggle to recover their high fixed costs, despite other cost-saving plans. Dubai saw an unexpectedly lively chapter of this contest, carried out under the shadow of Gulf tensions and political turmoil in Saudi Arabia which thinned visible attendance. Unlike the Gulf kingdom, which some analysts say has resumed a “swing producer” role to underpin oil prices by tightening production, insiders say Boeing has determined it will not be the one to absorb aircraft market shocks in any future downturn. It lost significant share to Airbus by cutting production after 9/11, just as Airbus was growing rapidly. It lost ground again in 2010 when Airbus launched a revised model that sparked huge orders, forcing Boeing to follow suit. Now, a new Boeing management is ahead of Airbus on orders since the start of the year, and neither company is ready to back down on record production plans. Though the industry anticipates growth in demand, analysts say that could cause disruption for others. “When demand goes down as it inevitably will, ... something else must give on the supply side. Either more planes retire earlier or more get stored or airlines reduce utilisation, or probably a mix of all three,” Morris said.
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