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Thu 5 Mar 2015 10:01 AM

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Gulf will see a drop off in plane orders in 2015, says Boeing exec

US planemaker forecast that the region won't see the "same magnitude" of record-breaking sales seen in recent years

Gulf will see a drop off in plane orders in 2015, says Boeing exec
(Getty Images)

The
Gulf region will not see a repeat of the massive aircraft orders witnessed last
year for the foreseeable future, US manufacturer Boeing has conceded.

Airlines
from the Gulf ordered 216 aircraft from Boeing in 2014, with the bulk of it
made up of 150 777X aircraft ordered by Dubai’s Emirates in July. That followed
153 orders in 2013.

However,
Marty Bentrott (pictured below), vice president of sales for the Middle East, Russia and Central
Asia at Boeing Commercial Airplanes, said the order book for 2015 would not be
as impressive.

“We
sold a lot of airplanes here last year, over 200 airplanes into the region. I
don’t think you are going to see those kinds of quantities in terms of new
orders in 2015… there are a lot of factors that will come into play,” he told
Arabian Business in an interview in Dubai.

The
lower forecast comes despite the biannual Dubai Airshow scheduled for November,
this year. Dubai Airshow 2013 registered $206.1 billion worth of sales. The
record-breaking deals from Etihad Airways, Emirates Airline, flydubai and Qatar
Airways included Emirates’ $99 billion order from Boeing and Airbus, dubbed the
largest-ever aircraft order in civil aviation.

“I
think they will have orders, but I don’t think you will have the same magnitude
as you did at the last Dubai Airshow, Bentrott predicted. “There will be some
select opportunities but big orders for near-term deliveries, I don’t see
that.”

One
potential sale up for grabs is the replacement of the 70 A350 aircraft Emirates
canceled with Airbus last year, and which is currently being renegotiated.

Emirates
previously said it had cancelled the A350 order after Airbus changed the
plane’s specifications, but said it would look closely at how the aircraft
performs once it starts flying.

“They
[Emirates] cancelled their A350s last year and they have been talking about
doing a replacement for that previous commitment, so that is maybe 70
airplanes. [Also] Qatar and Akbar [Al Baker, CEO of Qatar Airways] is always in
the market looking for opportunities,” Bentrott said of the orders Boeing was
targeting for 2015.

Emirates
president Tim Clark told Reuters the carrier would need new widebody planes
from 2019, although it could also keep older planes in service for longer. He
added by that time the A350 would be in competition with Boeing’s 787-10 jet,
which is due to enter service in 2018.

Bentrott
said he believed the slump in oil prices, which fell almost 50 percent in 2014 and is currently hovering around the $60 a barrel mark, was
not a factor in the reduced number of sales likely from the Gulf.

“I
haven’t sensed that at all and we haven’t had any fall-off relative to backlog
or demand as a result of the change in oil prices today.”

One
socio-political issue that may impact Boeing’s sales, is the increasingly
bitter war of words developing between major US and Gulf carriers.

Delta
Air Lines, United Airlines and American Airlines have asked the White House to
look into the financial statements of the three big Gulf carriers, which they
accuse of receiving more than $40 billion in subsidies from their governments
since 2004.

The
big US players have called on Washington to renegotiate or cancel the open
skies agreements it has with the UAE and Qatari governments.

"Boeing
supports a commercial-aviation industry based on open and fair competition, and
open skies has long been a key factor in this, benefiting both US and
international airlines," Boeing spokesman Jim Proulx said in an emailed
statement in February, and later adding that it was reluctant to jump directly
into the feud between some of its biggest airline customers.

“I
would just say that it is a known fact that our customers acquire airplanes to
be able to serve the global market and if for some reason the dynamics of that
global marketplace changes, whether it be open skies or something else, demand
for products could change with it,” Bentrott said.

“We
at Boeing believe open skies is important, important to the industry, important
to the world economically and we believe it is important to the consumer and we
will have to see how all this debate plays out. We do believe in fair
competition.”

Emirates
group chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum also
addressed the link between airspace access and plane orders during a speech at
the Dubai Airshow in 2013.

Speaking
about constraints the Dubai carrier faced in Europe and North America,
particularly in Canada, he lashed out at countries that block international
airlines' expansion by limiting landing rights.

"We
are buying a product from their countries... Why would we buy something when
they will not allow us (to increase landing capacity)? Then they can take the
aircraft back. But I don't think something like this will happen. I always look
at the future as positive and I think we'll be able to fly to more and more
airports," he said.

“As
a salesman for the Boeing Company I don’t control the outcome,” Bentrott said
when asked if he was worried whether the current arguments over subsidies and
open skies could lead to Gulf carriers being reluctant to buy US-made planes.

“I
hope that, in the end, the US government will come to the right conclusion
about the value of open skies to the United States because with open skies you
are not just talking about the carriers from this part of the world, you are
talking about carriers from around the world. It brings people from around the
world to the US. It creates jobs, it creates opportunities for people to then
travel to those countries and, for us, the Boeing Company, if the demand is
there for our aircraft, to sell them and create a lot of jobs in the US which
is good for the US economy,” he added.

A
report published by the US-UAE Business Council in 2013 showed the open skies
agreement between the US and the UAE had provided more than $16 billion in
benefits to the US economy via direct and indirect spending, created more than
100,000 jobs and contributed more than $1.6 billion in tax revenue.

Aircraft
orders from the UAE carriers to US-based aeroplane manufacturer Boeing totalled
$37 billion at list prices and over time would support more than 200,000
high-paying US manufacturing jobs, with an additional 30,000 US jobs related to
aircraft exports to the UAE, the report also said.

The
increased number of travellers arriving from the UAE into the US also had
generated nearly $6 billion in domestic tourism economic activity and helped
create an additional 2,000 airport jobs at US gateways.

“The
UAE is the largest export market for US goods and services in the region,
generating a US trade surplus of more than $20 billion in 2013 alone. There
clearly is a lot at stake in the US-UAE commercial relationship,” US-UAE
Business Council president Danny Sebright said.

Despite the short-term lull in orders, Boeing's Current Market Outlook, which was published in the summer of 2014, forecast that airlines in the Middle East will take delivery of around 2,950 new aircraft over the next 20 years.

 

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procan 4 years ago

Open skies will change, try and keep up Boeing .There will be new buyers for you as the Business Model changes . Human Rights, Unions, the laws of North America must be respected.