Emirates, a small but increasingly influential airline, has jet maker Boeing Co. jockeying with rival Airbus SAS for a multibillion-dollar deal.
Sheikh Ahmed Bin Saeed Al Maktoum, chairman of Dubai-based Emirates, is on a shopping spree for the industry’s newest planes. He recently spent two days in Seattle, where Chicago-based Boeing builds most of its jets. He arrived there after a two-day stay in Toulouse, France — the headquarters of rival Airbus.
The sheikh is likely pitting the companies against each other on a hunt for the best price. But industry watchers are wondering if the recent rejection of the Dubai ports deal may lead Emirates — or other Arab companies — to spend their billions outside the U.S.
After Emirates lobbied Boeing for two years to build an extended version of its much-awaited 787 Dreamliner, Boeing finally gave in earlier this year and agreed it would most likely build a longer model that could seat about 300 passengers instead of the original 230. The airplane isn’t officially for sale yet, however.
To get a sense of Emirates’ buying power, the company’s decision to order 42 Boeing 777 jets last November was Boeing’s largest single order for the 777, according to spokesman Brian Walker. Emirates is scheduled to get one 777 delivered every month for the next five years.
At list prices, the deal would be worth up to $9.7 billion.
Now Emirates is on the fence about the Dreamliner. In a recent interview, Sheikh Ahmed said Emirates is still reviewing the 787 and its main competitor, Airbus’ A350 model.
“Whenever you have to order aircraft — especially when you are talking about a big order — you need all the time to make sure you are taking the right decision,” he said.
Although Sheikh Ahmed has said otherwise, the political backdrop may color Emirates’ decision.
Last month, citing concerns over foreign terrorism, Congress voted to block a deal in which a Dubai company, DP World, would have taken over management of some U.S. ports as part of its $6.8 billion purchase of Britain’s P&O. The Emirates chairman deflected the concern — but openly expressed disappointment over the scuttled deal.
“All other things being equal, this is one favor they don’t have to repay to the U.S.,” said Cowen & Co. analyst Cai von Rumohr. “All other things being equal, it’s hard to see this not being a plus for Airbus.”
Boeing and Airbus are in a race to lock down orders from the market’s big spenders. A U.S. industry crippled by high operating costs and soaring fuel prices has made profitable carriers such as Emirates and Singapore Airlines — which is also in the market for new planes — among the most sought-after clients.
That has given them the clout to pressure Boeing and Airbus into designing planes that meet their specifications, as well as negotiating hefty discounts on big orders.
“If one gets Emirates, the other guy will give even more blood to the get the other,” said von Rumohr. “Both Emirates and Singapore know they are really important to these guys.”
Boeing’s stretch version of the Dreamliner, the 787-10, is a direct result of that clout. Boeing has said it won’t build it without a launch customer, whether Emirates or another airline.
Under pressure from Singapore Airlines the International Lease Finance Co., Airbus has already redesigned a new wing, tail and cockpit for the A350 but stopped short of reworking the fuselage. In remarks released Tuesday, CEO Gustav Humbert said the company had given itself until the summer to decide on any changes to the A350.
So far, Boeing has logged 350 firm orders for its 787 family of planes, with delivery of the first model scheduled for 2008. Airbus, which introduced its competitor A350 series later, has 100 jets on firm order, with the first slated for delivery in 2010.