November 14, 2011 / 12:38 AM / 6 years ago

Dubai speed machine defies slowdown

4 Min Read

DUBAI (Reuters) - Boeing (BA.N) savoured an order worth at least $18 billion for 50 wide-body 777 jetliners from host airline Emirates as the Dubai Air Show entered a second day beating the drum for growth despite widespread economic gloom.

The largest single order by value in Boeing's history boosted the Middle East's largest industry event and pushed talk of global recession to the sidelines -- though analysts said getting aircraft financing was proving an increasing challenge.

Qatar Airways looked set to step in with a possible Boeing order on Monday and was expected to give its final verdict on a long-awaited Airbus order that sources said would include A380 superjumbos on Tuesday, but talks appeared to be continuing.

Sources familiar with the matter said Abu Dhabi's Etihad Airways was ready to buy an extra 12 Boeings including 10 787 Dreamliners and two more 777s, but may not announce at the show.

The Gulf's big three are buying wide-body aircraft to serve Asia and the United States and redraw the world's transport and logistics map with the Gulf at the center, thanks to its ability to reach most of the world's population in one long-haul hop.

Kuwaiti lessor Alafco plans to boost an order for 30 Airbus EAD.PA A320neo passenger aircraft, probably on Monday.

The battle to redirect flows of people and cargo via the Gulf has provoked sharp exchanges with airlines in Europe. Emirates hit back at charges that it is flooding the market by pointing to European superjumbos flying into Dubai.

Emirates is the largest customer for the 525-seat Airbus EAD.PA A380 superjumbo with 90 of the world's largest airliner on order and there have been signs it might buy even more.

"The three big Gulf airlines are attacking other people's traffic. They are converting oil wealth into an aviation market position," said aerospace analyst Richard Aboulafia of Virginia-based consultancy Teal Group.

Gulf airlines say they simply operate a better service.

Speed Machines

Airline chiefs played down the risk of contagion from Europe's debt crisis, but the head of Boeing's commercial division said it was a "watch item" and Brazil's Embraer trimmed a forecast for business jet deliveries due to the downturn.

Emirates said it had adequate financing in place for 2012 and planned a mix of funding options for the latest 777 order, including Islamic finance.

Record sales of the Boeing 777 capped by the Emirates announcement, attended by the ruler of Dubai, could force Airbus to do another rework of its future A350, Aboulafia said.

Few if any A350 orders are expected at the show, but sales chief John Leahy said he felt under no pressure to drum up new sales for the aircraft, whose development has been delayed.

Sunday's opening day brought a raucous display of speed and power across the southern Gulf as rival Typhoon and Rafale fighter jets screamed over Dubai and the airline-sponsored Formula One circuit rolled into neighbouring Abu Dhabi.

A potential $11 billion order for French jets was thrown into doubt when the four-nation consortium that builds the Typhoon said it had been invited to give a sales pitch to military officials of the United Arab Emirates.

The combat jet is supplied by Eurofighter partners Britain, Germany, Italy and Spain.

France is anxious to win its first Rafale export order but analysts said it was unclear whether the UAE request signaled a change in requirements or was merely a tactic to put pressure on manufacturer Dassault Aviation (AVMD.PA) over Rafale prices.

"They are sending Dassault a signal, that much is certain," an aerospace industry executive said.

France said it remained in what Defense Minister Gerard Longuet called a late stage of talks with the UAE on the Rafale.

Analysts say rising geopolitical tensions surrounding Iran in past weeks could lead to a spike in defense orders.

Additional reporting by Nadia Saleem, Praveen Menon, Editing by Diane Craft

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