Boeing sees flat ME sales, but eyes long term growth

While sales in the Middle East aviation market region will be flat over the next few years, a top Boeing exec said on Sunday he believed the region would continue to have good growth prospects in the long term.

“If you look at the Middle East from a traffic standpoint it has grown about 12 percent a year over the last five years and it is one we think will continue to grow,” Jim Albaugh, president and CEO of commercial airplanes, said at a roundtable discussion today.

“If you contrast that to the rest of the world it has grown faster than the rest of the world and is one that will continue to have very good growth prospects,” he added.

When asked by Arabian Business why the Middle East would continue to defy global trends Albaugh said he believed the strong economy in the region and its location at the crossroads of between Europe and Asia were the determining factors.

“This is a very important market for us,” he added, while also forecasting that “over the next 20 years there could be as much as 1,700 airplanes” in the region.

In the short term, Albaugh said he believes “next year’s sales will be fairly flat…. [and] are going to be off for several years”.

However he added that “the good news is that we have a very solid backlog and a backlog that will serve us well as we go forward”.

Boeing has had 100 airplanes “cancelled or moved around”. Albaugh said this was “part of the business” and “with the economic conditions we have we will be fine from a production standpoint but we won’t see any huge orders like what we had over the last several years”.

The Middle East makes up about 25 percent of Boeing's backlog and about 19 to 20 percent of its revenue. However Albaugh said he does not see the region being immune from the global economic slowdown and that orders in the region will slow “dramatically over the next several years”.

“A lot of your customers who haven’t been able to cover the cost of capital [are] being very careful about how they enter the market again,” he added.

In relation to Emirates, Albaugh said it had been “a great customer of ours for 777s” and added that “we are going to have some great dialogue with Emirates here at the Airshow about our future plans for the airplane”.

Boeing has a backlog worth $144 billion for the delayed 787 model, of which Qatar Airways has ordered 30, Dubai Aerospace Enterprise has ordered 15, Gulf Air has ordered 24 and Etihad Airways has signed up for 35.

“We have sold a lot of 787 around the world, in excess of 800 airplanes, which is a good backlog for an airplane that hasn’t been delivered yet. Because it’s late we have disappointed some customers but we will continue to work with those customers,” Albaugh said.

However he forecast enthusiastically that the 787 would be on display at the Dubai Airshow in two years.