Airbus makes big splash at Air Show

The company kicked off the show by signing a deal with Emirates Airlines that is considered to be the largest single order in civil aviation history. The agreement, which could be worth as much as $31bn, consists of firm orders for 70 A350s (with options for 50 more) and 11 superjumbo A380s.

The purchase makes Emirates by far the world's largest A380 customer with 58 units.
The following day, Airbus announced a $13.7bn deal with Dubai Aerospace Enterprise, which agreed to purchase 70 A320s and 30 A350s.

In yet another billion dollar deal, the European plane maker announced a $3.5 billion order from Sharjah-based Air Arabia for 34 A320 aircraft (which includes an option for 15 more).

To keep the momentum going, Airbus also announced that it had sold 10 A350s to Yemenia, 22 A320s to Saudi Arabian Airlines, and two Airbus A318 Elites to Al Jaber Group.

Finally, as icing on the cake, Saudi Billionaire Prince Walid bin Talal formally announced that he had become the first private buyer of Airbus' double-decker A380. No purchase price was disclosed for the Prince's new 'flying palace,' but Airbus did say the customised plane would exceed the aircraft's list price of $320m.

A Blow to Boeing

Analysts said that Emirates' orders of the A350s are a setback for Boeing's new 787 jetliners, which are a direct challenger to Airbus' 300-seater aircraft.

The airline was quite clear about why it chose Airbus over Boeing, said Nick Cunningham, an analyst with Evolution Securities in London. 'The 787-9 wasn't suitable for their needs, and the 787-10 wasn't available. The only aircraft that was available in that class was the 777, but that plane is too old for Emirates. The A-350 now has the market to itself,' he said.

Did huge discounts play a role in Airbus's offer to Emirates? 'We can't really know from the outside what sorts of concessions were made. The price of the order is only one part of it. In reality there are a number of concessions that can be made in such a large transaction,' Cunningham said. Ultimately, it really came down to whether Boeing could offer a competitive plane in the time frame needed, and they couldn't, he said.

Does Airbus' success at the Dubai Air Show mean that it has clinched the title as 2007 sales champ? 'Airbus had a great Air Show. But it is still too early to tell. There were a lot of big orders that came through in the last two months of last year, so we have to wait and see.'

For its part, Boeing said it was pleased with the number of orders that it announced at the Dubai Air Show. Ken Mercer, a spokesman for the company, said Boeing's backlog is at record levels and is truly growing.

When asked about whether Boeing will edge out Airbus for 2007 sales, he said the company does not forecast its orders, so he cannot predict an outcome. He said Boeing's primary focus is on serving its customers, not on where it stands compared with Airbus.

Mercer offered no reason why Emirates chose the A350 rather than the 787, saying it would be best to ask the airline directly.

Airbus CEO Thomas Enders pointed out that even with record deliveries and orders, the plane maker faces challenges dealing with a weaker dollar. He said the company has most of its costs in euros and gets paid in the US currency, the international denomination for aircraft purchases.

Record Year for Airbus

John Leahy, Chief Operating Officer of Airbus, said 2007 will be a record year for the aircraft manufacturer, which has 1,122 orders already on its books, beating the previous record of 1,111 orders received in 2005. Orders had stood at 1,021 at the end of October but increased sharply during the Dubai air show.

He said the recent flurry of orders is partly due to the backlog of aircraft orders. 'Companies know if they don't place their orders now, they won't get the delivery early enough to meet their needs,' he noted.

Airbus believes it is successful in the region because it is offering the right type of planes for the market. 'Our long range aircraft, the A-380 and the A-350, can fly 8,200 nautical miles, reaching 6.2 billion people, or 95 per cent of the world's population, nonstop from Dubai. That is why the largest number of A-380s ever ordered in the world is going to Emirates,' Leahy said.

The Middle East region has ordered 700 Airbus planes, which represents about nine per cent of the total orders that have been received by the company. Currently, 300 Airbus aircraft are in service in the region, representing six percent of all aircraft that have been delivered worldwide.

Leahy expects Dubai to continue to explode as a regional hub. 'Ten years ago, Dubai was ranked number 28 in terms of major airport hubs. In 2007, it had up moved to 10, and it will be in the middle of the top 10 in two years,' he said.