Weak dollar may help Boeing win more orders from Gulf

DUBAI — The US dollar's eroding value against the euro will be a key factor for most global airlines, particularly Gulf-based carriers, in deciding on aircraft — Boeing or Airbus — to meet their new aircraft requirements worth several billion dollars.

By Issac John (Deputy Business Editor)

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Published: Mon 30 Jul 2007, 9:03 AM

Last updated: Sat 4 Apr 2015, 10:23 PM

For most Gulf countries, which have their currencies linked to the dollar, while a weak US currency will not make purchases of Boeing aircraft from the US manufacturer any cheaper, it will certainly make orders of European Airbus airliners more expensive.

For Boeing, which unveiled the Boeing 787 Dreamliner recently, the currency advantage could not have come at a better time when it is pitting its first new passenger jet in 13 years against Airbus A350. Recently, the 13-nation currency, euro, posted record gains against the dollar at $1.38.

According to aviation analysts, the steady slide of the greenback against euro is poised to tilt the balance in favour of Boeing's new-era aircraft, especially in the case of several leading Gulf carriers, including Emirates, Qatar Airways, Saudia and Etihad, all prospective buyers with combined requirements currently assessed at more than $40 billion for mid-sized planes.

Elsewhere in the world, the weakening dollar continued to fuel demand for Boeing aircraft while the US company posted a better-than-expected second quarter profit of $1.1 billion as it ramped up delivery of commercial planes and defence sales remained strong. With strong overseas sales to airlines in China, India and the Middle East, Boeing exceeded expectations with a 14 per cent jump in revenues to $17 billion, almost $1 billion above forecasts. This sales surge was helped by the success of its new 787 Dreamliner, which has already clocked up more than 700 orders without even leaving the ground. According to the official, that is the highest number of commercial aircraft sold in aviation history by a company before the plane begins its operation. An airline company in Japan was the first to purchase the aircraft as it bought 50 planes from Boeing in 2004, three years before its official launch in July 8.

While Emirates airline will have to decide soon on placing orders for more than 100 mid-sized aircraft worth $24 billion, Abu Dhabi based Etihad plans to invite both aircraft makers next year to compete for sales contracts for single- and twin-aisle aircraft. Etihad Chief Executive James Hogan said the carrier was looking at aircraft including Airbus A350 and Boeing's 787 as the Abu Dhabi airline seeks to expand its network in the Middle East and to nations including India. He also aid the airline might need a narrow-body aircraft for a planned regional expansion and a wide-body aircraft for more long-haul routes.

"With the steady appreciation of Euro making Airbus aircraft costlier, Emirates, which has to choose between Boeing 787 Dreamliner or A350 XWB to replace its existing Airbus A330 and Boeing 777 aircraft by 2012-2013, will have to opt for the US brand given its cost advantage vis a vis the European plane,' an aviation analyst aid.

Saudi Arabian Airlines (Saudia) is reportedly in talks with Boeing to buy 787 Dreamliner which is scheduled to make its debut in 2008 and is already sold out through 2011.

Riyadh-based Arab News. quoted Boeing Saudi Arabia President Ahmed Jazzar as saying "So far four Arab airlines have purchased the new aircraft and we are in discussions with Saudi Arabian Airlines." The four Arab airlines were named as Qatar Airways, Emirates, Etihad, and Royal Jordanian.

"Due to the large demand on the aircraft, airlines who purchase it today might not receive it before 2015," Jazzar said. The Boeing Dreamliner 787's list prince is $160 million.

Qatar Airways, which operates an all-Airbus fleet, also placed an order for its new long-haul 787 Dreamliner aircraft recently. “I can confirm that Qatar Airways is a customer of the 787 Dreamliner,” Sami Lahoud, Boeing’s Communications Director for the Middle East and Africa, said. Sources in the aviation industry said that the order amounts to 30 jets. They referred to an order of the same number which is listed on Boeing’s website for an unidentified customer.

At the Paris Air Show in June, Qatar Airways announced an order for three Airbus A380 superjumbo airliners and confirmed an order for 80 mid-sized A350 aircraft. The deal for 80 of the A350XWBs announced on Monday replaced a 2005 agreement for 60 planes. Worth $16 billion at list prices, the order makes Qatar Airways the largest customer for the aircraft.

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