The Wall Street Journal
By Rory Jones And Doug Cameron
Updated Nov. 17, 2013 3:38 p.m. ET
DUBAI— Boeing Co. formally launched its 777X jetliner with record orders, part of jet-buying commitments at the Dubai Airshow valued at more than $150 billion for Boeing and rival Airbus that highlighted the growing ambition of Persian Gulf airlines.
The orders, announced Sunday at the air show's start, are part of the Gulf region's effort to become the world's dominant transit point for airline passengers and foster its own economic growth. Boeing unveiled deals for several models valued at more than $100 billion, based on list prices, with Emirates Airline, Abu Dhabi-based Etihad Airways, Qatar Airways and flydubai, a low-cost carrier founded by Dubai's government five years ago. That was double the haul of rival Airbus, a unit of European Aeronautic Defence & Space Co.
The 777X family, two long-range jets capable of handling about 350 to 400 passengers and costing about $350 million to $377 million at list prices, are Boeing's first planes designed in significant part for the needs of the Gulf carriers. Their powerful engines and extra-wide wings, for example, facilitate flying in the region's extreme heat, which makes taking off fully loaded more difficult.
Boeing announced it had received 259 orders and commitments for the plane, with a list value of $95 billion, which it said is the largest product launch in commercial-jetliner history. Emirates, Etihad, and Qatar accounted for 225 of those, with the other 34 from Deutsche Lufthansa AG, disclosed in September. The launch marks Boeing's formal commitment to build the jet, which it expects to start delivering around 2020.
"The response has been, quite frankly, overwhelming," Jim McNerney, Boeing's chief executive, told reporters after arriving by company jet at the event from Chicago. Later in the day, a sandstorm halted flying demonstrations at a show that underscored the shift in power of the global aviation business to the Middle East from the U.S. and Europe.
Emirates, Etihad and Qatar are using their geographical position at the crossroads of Europe, Asia and Africa to attract new passengers and win business from other carriers.
The three state-owned carriers are part of a broader push by their governments to diversify economies away from a dependence on energy exports by expanding advanced manufacturing industries and tourism.
A significant part of the Boeing deals for Emirates and Etihad is a joint venture with Mubadala, an Abu Dhabi government-owned conglomerate tasked with creating industries, diversifying the economy and creating jobs for Emiratis. The joint venture, in which Boeing is offering its technical expertise, is making advanced composite materials for jets in the United Arab Emirates as part of a broader push into the aerospace sector.
With Sunday's deals, Boeing is on track to end the year with net orders of more than 1,300 jets—approaching its record—if all those announced Sunday become firm orders. Airbus is expected to sell a similar number of planes. Those will add to backlogs that already account for about eight years of annual production at the two companies.
Both manufacturers are developing new long-range jets. A select group of carriers are ordering them early and in record numbers to secure early access to more-efficient aircraft. Airbus on Sunday also announced 50 orders for its A350, a 777X competitor that is scheduled to enter service in 2014.
Dubai remains the focus of the industry's transition. Its existing airport is set to overtake London Heathrow as the world's busiest international hub, and it has added a second, the new Dubai World Airport that is hosting this week's show.
Emirates, already the world's largest international carrier by capacity, signed deals for Boeing and Airbus jets with a list price of $99 billion, though it and other airlines usually secure large discounts. The Dubai flag carrier is already the world's largest Boeing 777 operator, and ordered 150 of the new 777X model valued at $76 billion.
"This will help Emirates meet its future need competitive with the latest and most efficient aircraft," Sheikh Ahmed bin Saeed Al Maktoum, the airline's chairman, said at a news conference at the show.
Emirates Airline also is buying an additional 50 Airbus A380s with a sticker price of $23 billion, a welcome fillip for the European company's struggling efforts to rejuvenate sales of the superjumbo in recent years.
Flydubai ordered 111 Boeing 737s valued at $11.4 billion to highlight how the Gulf is diversifying from a reliance on long-haul flights as economic growth stirs more local business.
Qatar Airways committed to buying 50 of the 777X jets valued at $19 billion, and Abu Dhabi's Etihad signed up for 25 of the planes as part of a $25 billion deal for various aircraft. Etihad also ordered an additional 30 787 Dreamliners, which will make it the largest operator of that aircraft.
Many of the orders, notably from Emirates, will replace older jets as carriers retire aircraft to boost the efficiency of their fleets, but all of the Gulf carriers are growing far faster than the global market, and taking share from rivals.
Emirates is about double the size of Qatar Airways, which is around double the size of Etihad, though the Abu Dhabi carrier—based less than 100 miles from Dubai—is closing the gap, boosting capacity by 15.4% between 2009 and 2014, according to consultant Oliver Wyman.
Qatar led the Gulf trio with growth of 16.9% over the same period while Emirates added 13.1%, both trailing the 17.6% growth rate of Turkish Airlines, which is exploiting its geographical position to similar effect.
The expansion of the Gulf carriers has upset some in the U.S. and European airline industry, who complain in part that their state backing gives them an unfair advantage.
Capt. Lee Moak, president of the Air Line Pilots Association, International, who attended the air show, reiterated a call for the elimination of low-interest financing by the U.S. Export-Import Bank for Boeing jets to the Middle Eastern airlines. "U.S. government policies should not disadvantage U.S. airlines while helping our foreign competitors," he said.
However, U.S. aerospace companies including Boeing contend existing government policies support thousands of domestic jobs.
—Jon Ostrower in Chicago contributed to this article.
Source: http://online.wsj.com
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