Dubai Airshow marks the start of the upturn for airlines, but none of them are ready to spend quite yet

Both Airbus and Boeing are predicting that airlines are on their way out of the long downturn, but the Dubai Airshow is proving that they are waiting for the pace of recovery to pick up before making any big moves.

US-based Boeing forecast a global recovery in passenger traffic in 2010 and a return to profitability for carr-iers in 2011 while 2012 should see an increase in demand for aircraft.

“Robust growth in the Middle East as well as China, India and other emerging markets with dynamic populations and growing incomes will lead toward a more balanced airplane demand worldwide,” Boeing said in a statement yesterday.

Meanwhile, Airbus chief operating officer John Leahy told Bloomberg newswire that airlines had stopped pushing back deliveries.

“Everybody is talking about new orders, there is nobody talking about delays and cancellations,” he said. “Six months or nine months ago, people were talking about delaying aircraft, talking about cancelling aircrafts. At this juncture we see the market improving, not deteriorating.”

The aviation industry has been reeling under the impact of the global financial crisis, with travel demand falling since autumn 2008.

However, Middle East carriers have so far bucked the trend, registering steady growth “driven primarily by market share gains on long-haul routes via Middle Eastern hubs”, according to the International Air Transport Association (IATA).

“We see tremendous growth for the Middle East region,” Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, said on the sidelines of the show.

“Middle East carriers are well-positioned to meet those growth requirements with the fleet capacity they have in form of unfilled orders, or backlog,” he said, predicting, however, that the region’s carriers will need “1,710 new airplanes at $300 billion over the next 20 years”.

Orders for these new planes are unlikely to take place at the show, however, as big spenders such as Emirates Airline hold back from new deals.

Emirates is discussing new plane orders with Boeing and Airbus that could number in the “tens of planes”, its chairman said yesterday, but added that there would be no deal yet.

The Arab world’s largest airline already has orders worth $55 billion with the two manufacturers.

“We are in discussions... there won’t be anything at the air show [but]we are talking to Boeing and Airbus,” Sheikh Ahmed bin Saeed Al Makt-oum said.
“It would be in the tens of planes. It could be A330s, 777s.”

At the show in 2007, Airbus signed a $31 billion contract with Emirates and Boeing won $6.1 billion in orders from Qatar Airways.

Contracts this year have been much slower, with Ethiopian Airlines placing an order of widebody planes with Airbus worth $2.8 billion on Sunday and Yemenia Airlines agreeing to purchase ten Airbus A320 units valued at $700 million yesterday.

In fact, many announcements from carriers do not include new deals at all. Low cost carrier flydubai said yesterday it had secured $160 million in aircraft financing - to cover two planes it had already received. Also yesterday, Etihad Airways said it would be announcing $750 million in investments this week, including a $200 million overhaul order with International Aero Engines, a consortium led by Rolls-Royce and Pratt and Whitney.

Similarly, aircraft leasing companies are saving their market moves until the pace of recovery has picked up.

Dubai aviation leasing firm DAE Capital, which has about $27 billion worth of aircraft orders from Airbus and Boeing, said it will wait until mid-2010 for rates to recover before marketing its aircraft.

Not over yet
In a further sign that the aviation industry is not quite out of the woods, EADS, parent company of Airbus, reported switching into a quarterly loss yesterday and said it could not forecast operating profit because of persistent problems with its spearhead projects.

The group, which is pulling through the crisis as well as restructuring arising from delays in construction of its superjumbo jet the A380, said that difficulties with this programme and with its military transport aircraft the A400M, still weighed on the group.

EADS said that in the third quarter of this year it made a net loss of $130 million from a net profit of about $1 billion in the same period of last year.

The last loss was in 2007 as the group reeled from the discovery that its management and manufacturing structures were outdated.

EADS said that exchange rate factors had helped depress the outcome in the quarter, saying that the weakness of the dollar, in which most of its sales are negotiated, continued to pose a threat to performance.

But it held to its target of taking 300 overall orders for Airbus aircraft this year, even though the market remained “difficult”.

The number of aircraft delivered this year should total about 490, more than a record of 483 aircraft delivered last year, the group said.

Despite the downturn, the show must go on...
At the Dubai Airshow yesterday, French Air Force pilot Christophe Delbos was watching the other pilots intently.

He is writing a PhD on ‘cross-cultural cockpits’ - studying how crew from different countries talk to each other in the cockpit. He waves his arms, passionate in his belief that understanding each other’s culture can lead to safer flights.

“An American co-pilot will tell the pilot if anything is wrong. In some other cultures, people are reluctant to speak up to a superior, which can cause problems,” he said.

He is fascinated by UAE airline companies, where a cockpit usually has people from different cultures. “It’s so, so interesting to see all these people from around the world here. You don’t see cockpits like that in other countries,” he says.  

His brother Bruno works in the finance section of European aircraft manufacturer Airbus.

“I’m here on holiday, but, working in the aviation industry, I have to see this show,” he said.

There was tight security yesterday, as US military personnel showed off their Black Hawk helicopters and wandered around the exhibits to see the latest in military firepower.

Lieutenant Colonel Bert Vergez came all the way from Alabama “to show off our capabilities” with US helicopters, while also hoping to take in some of the flavour of Dubai.

His wife is looking forward to getting out of the city and seeing some camels and desert.

“That’s the part of Dubai I really want to see, once we’re done with the show,” she said.

Sara Dekiche is a Dubai-based Algerian hired to show off the high-tech Airbus exhibit.

Unfortunately, the gadgetry broke down, leaving technicians scrambling in the company’s cinema, which was designed to look like the futuristic inside of an Airbus.

“It’s just a minor setback, we will be back soon,” she said. “The show has been amazing. We’re expecting to see some real business in the next few days.”