Capital gain

Qatar Airways’ Houston route has been deferred over fears the Boeing strike could delay aircraft deliveries.

As companies across the globe are feeling the squeeze, the Middle East is one of the few safe havens left in the aviation world.

Top finance executives for Boeing's aircraft financing unit, Boeing Capital, say the region remains virtually unaffected by the recent credit crisis, while many international companies are suffering the effects of the global financial downturn.

As Aviation Business went to press, Boeing released its quarterly figures, reporting a 7% drop in its revenues, but the Chicago-based corporation is unperturbed by its latest losses.

According to Capital's executives, its coffers are well stocked to carry Boeing through the economic turbulence and despite share prices plummeting, the company's third quarter deliveries rose by 35 aircraft, confirming reports that demand for aircraft in the Middle East remains high.

The plane giant not only remains confident that it can meet its current orders, but is also sure it will receive new orders from emerging Middle East airlines, particularly in the ‘budget' sector.

It is not all smooth sailing however. The first of Qatar Airways' Boeing 777-200 long range aircraft was to be used on its new Houston route and expected to be delivered this month, ahead of the scheduled launch in December.

But due to uncertainty over future aircraft deliveries arising from an ongoing labour strike and supplier production issues affecting Boeing, Qatar Airways has decided to defer the launch of its Houston route to March 30, 2009.

Qatar Airways has also ordered 60 new 787-8 aircraft, (30 of which are optional) and Boeing says it is continuing to make progress. However, with the strike expected to last until at least November, there remains the risk of final deliveries being delayed further.

So far in 2008, the company has had two cancellations and about 80 deferrals. In light of this, Boeing Capital has increased its focus on improving productivity and accelerating cost reductions.

So long as the labour strike continues, Boeing must continue to have its financial safety net in place. In the mean time it can be safe in the knowledge that the Middle East and the opportunities it presents could make the year ahead a wealthier one for, not just Boeing, but all airlines that choose to operate route services to and from the region.

As Boeing explains, now is the time to rise to the challenge and actively fix the supply chain.

Donna Richardson is the editor of Aviation Business.

RELATED LINKS: Money talks

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