Boeing order at risk if US steps back from Open Skies, says Emirates president

Emirates' record $76bn order for Boeing 777s hinges on Open Skies remaining the same, according to Sir Tim Clark
Emirates president Sir Tim Clark has hinted that rescinding the landmark 1999 Open Skies agreement between the UAE and the US could lead to an adjustment or a cancellation of the 150 Boeing aircraft ordered at the 2013 Dubai Airshow.
By Shayan Shakeel
Sun 25 Feb 2018 02:36 PM

Emirates president Sir Tim Clark has hinted that rescinding the landmark 1999 Open Skies agreement between the UAE and the US could lead to an adjustment or a cancellation of the 150 Boeing aircraft ordered at the 2013 Dubai Airshow.

Clark’s comments came during an interview with Business Insider, and referenced its pending deliveries for 150 next-generation Boeing 777s ordered for a record $76 billion.

Any cancellation or alteration of the order would also impact Emirates’ $16 billion order for 300 GE9x engines from US manufacturer GE Aviation.

When asked what would happen if the Open Skies agreement were to be revoked, Clark said, “For one thing, I certainly won't need those 150 planes.”

The three big US carriers, American, Delta, and United Airlines have been lobbying the US government to penalise Middle Eastern carriers, especially Emirates, on the allegation that their growth has been fuelled by over $50 billion in government subsidies.

Clark has been vocal in his outrage against the allegations made by the US airlines.

In an interview with Arabian Business at the 2017 Dubai Airshow in November, he called the arguments made by them, “spurious, to the nth degree.”

“They know we are not [subsided]. They know that. All of them know. We interact at industry level, at financial services level, they share the same debt providers. Everyone will tell them that Emirates hasn’t received any subsidies in any way shape or form,” he said.

“I wish I had a consolidated industry like they do, 220 million travelling on three big carriers and two other ones. Only a fool would not make money on that,” said Clark. “But half of them were in Chapter 11 not too long ago, and some of them twice. If that wasn’t a subsidy, then I’ll eat my hand.”

Clark has repeatedly pointed at Emirates’ financial statements as evidence the airline willingly discloses to refute any argument that the company accepts state subsidies.

"The government of Dubai, which owns Emirates, doesn't have to publish anything. But we publish everything to the sixth decimal place and we're audited," he told Business Insider.

Emirates president Sir Tim Clark

The Open Skies agreement was signed between the US and the United Arab Emirates in 1999 and Clark said that the only condition attached to the agreement were that there would be no domestic flights by the UAE’s airlines within the United States.

“Did they prescribe no state-owned aircraft? Did they prescribe no semi-state owned aircraft? Did they prescribe that your labour had to be paid a minimum of this? Did they prescribe that your stakeholders in the aviation field had to be this? No, it wasn't. None of that was there," he said in the interview.

Stepping back from the Open Skies agreement would only cause problems for the US aviation industry, added Clark, because of the number of other airlines across the world, including in France and China, in which local governments have large stakes.

If the US were to take action against Emirates, then it would “a Pandora's Box of headaches because effectively you have to change everything,” Clark said

'Sense will prevail'

Some analysts don’t expect the conversation over Open Skies resulting in the possibility of the Boeing order being cancelled.

"Neither party would seriously consider abandoning the orders already placed," said Saj Ahmad, chief analyst at StrategicAero Research.

“The fact is, that they [Emirates] have nothing else to replace them [the 777Xs] with. The A350s aren’t up to the job and in any case, EK (Emirates) was instrumental in developing the 777X specifically for their mission requirements,” he said.

“Additionally, the US government knows that Emirates secures hundreds of thousands of Boeing, GE and other connected aerospace supply chain jobs. They will not jeopardise the US-UAE Open Skies treaty to placate a few US airlines that do not even serve Dubai.”

Clark also echoed similar sentiment to Arabian Business in November, saying “We honestly believe that sense will prevail.”

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Last Updated: Sun 25 Feb 2018 02:44 PM GST

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