Sunday, 20 July 2008 |
updated 1 minute ago
04:00 UAE time

YOUR DIRECTORY /

High stakes

by Andrew White on Friday, 02 May 2008

Tom Enders, CEO of Airbus.

Buffeted by rising costs, production delays and job cuts, it has been a tough few years for European aircraft manufacturer Airbus. However, CEO Tom Enders tells Andrew White that the planemaker is determined to confound the critics and put the difficulties of the past firmly behind it.

Airbus has had a turbulent time of late, but president and CEO Tom Enders is adamant that the European manufacturer is in a healthy state, and on target for solid growth throughout 2008 and beyond.

The Middle East has been a great growth region for us in recent years.

"We have to put things into perspective. We had a record year last year with more than 1300 new orders," he tells Arabian Business at the launch of the Middle East's first A380 spare parts and logistics centre in Dubai International Airport Free Zone.

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"Never has this happened before in the industry, hence we said in January that we would have significantly less orders this year, and then everybody said we were falling off the cliff," he sighs.

"We're still forecasting a considerable number of new orders this year, and we will deliver and build the aircraft, which means we are adding to our already tremendous backlog of something like 3400 aircraft."

Of that backlog, many planes will be headed directly to the Middle East. Regional airlines including Emirates, Etihad and Qatar Airways have been racking up Airbus orders at air shows around the world, while Emirates put in the largest aircraft order in aviation history at the Dubai Air Show last November.

Currently, Emirates has 70 Airbus A350s and 58 A380s on order - representing a total list price of over US$30bn.

"The region has been a great growth region for us in recent years, I think particularly because we have the right aircraft and the right products for the needs of the region," says Enders.

"Of course Emirates has ordered 58 A380s, but the current long-range generation - the A330s and A340s - are selling very well too."

Emirates should take delivery of its first A380 this summer, although reports last week suggested that Enders and his management team were still to confirm a final schedule for the production ramp-up.

The news comes as Airbus is in the middle of a restructuring plan that will cut 10,000 jobs over four years, and involves selling sites in France, Germany and Britain.

Airbus is not alone in its travails, nor is it the only manufacturer to face embarrassing - and costly - production delays. Just last week, Boeing announced a delay to its troubled 787 Dreamliner programme for the third time in six months.

The schedule has now been pushed back by 14 months, which will delay the airline's entry into service to the third quarter of 2009 - and Airbus is taking up the slack as carriers scramble to reconfigure their plans.

"The delay of the Dreamliner takes a lot of capacity, a lot of seats, out of the market that were scheduled to come online in 2008 and 2009," admits Enders.

Battle for the skies

Air shows proved to be a high-profile battleground for aircraft manufacturers in 2007, a year which saw some of the biggest orders in aviation history. And the battle is still ongoing between Airbus and Boeing, which have both been able to land their fair share of deals last year.

As oil prices hit the roof, regional airlines have become increasingly aware of additional costs. Therefore it's no surprise that the latest fuel-efficient engines of the Airbus A380 and the Boeing 787 Dreamliner have been popular buys at the Dubai and Paris air shows.

Due to the increasing inflow of tourists to the Middle East region, particularly the GCC, and the introduction of a number of low-cost carriers to the Gulf, airlines including Emirates, Etihad and Qatar Airways have been racking up aircraft orders at the shows like never before.

In June last year, Airbus scored victory over US rival Boeing on the opening day of the Paris Air Show, announcing deals worth US$45bn. On the other hand, Boeing pocketed orders worth only US$4.4bn at the event.

Airbus orders that summer included Qatar Airways purchase of 80 A350 jets and 27 Boeing 777 aircraft, worth US$16bn, while Emirates made an additional order for eight Airbus double-decker A380s at US$2.5bn.

Etihad Airways purchased 12 wide body Airbus aircraft and four A340s at the Paris Air Show, bringing the fleet to a total of 37 as of April 2008 and anticipating the arrival of seven aircraft by the end of the year. Saudi-based budget airline Nas Air ordered 20 more A320s to its growing fleet.

Boeing enjoyed excellent initial sales of its Dreamliner 787, but Airbus soon caught up with the US company, especially after the redesign of its A350 and another successful show at the Dubai Air Show last November, where Emirates Airline was the biggest spender.

Emirates splashed US$35bn on orders, the largest in aviation history. The Dubai carrier ordered 143 Airbus and Boeing aircraft, including 70 A380s and 12 Boeing 777s.

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