Airbus Wins $31 Billion Aircraft Order From Emirates

By Massoud A. Derhally and Andrea Rothman

Nov. 11 (Bloomberg) -- Airbus SAS, the world's largest manufacturer of commercial planes, won an order from Emirates for aircraft valued at as much as $31 billion, including 70 A350 airliners and 11 double-decker A380s.

Emirates, the biggest Arab airline, placed a firm order for 70 A350s and took options for 50 more, Chairman Sheikh Ahmed bin Saeed al-Maktoum said today at the Dubai Air Show. The carrier bought about $34.3 billion in aircraft today, including a purchase from Boeing Co., the No. 2 planemaker, worth about one-tenth of the Airbus order.

The Airbus deal is a boost for the 300-seat A350, the planemaker's challenger to Boeing's 787, which is cheaper and due to enter service five years ahead of the Airbus model. The A350 was delayed because Airbus redesigned the plane several times to meet demands from airlines. The A380 order gives Dubai-based Emirates a backlog of 58, making it the largest customer for the superjumbo.

``It's a tremendous win for the A350,'' said Nick Cunningham, an analyst with Evolution Securities in London. ``It validates the program and is exactly what it needs to get it off the ground.''

With the Emirates order booked today, Airbus has 266 firm contracts for the A350 and 98 commitments. The A350 order from Emirates, including options, is valued at $27.6 billion at list prices, and the A380s are worth $3.5 billion. List prices do not take into account discounts usually given for large purchases.

``The 350 was the most suitable aircraft for our type of mission,'' al-Maktoum said at a press conference. Asked why Emirates chose Airbus over Boeing, airline President Tim Clark said: ``The 787-9 wasn't suitable for us and the 787-10 wasn't available to us.'' Emirates is willing to talk to Boeing when the 787-10 is available, he said.

Boeing `Too Fragile'

Boeing's 787 program is ``too fragile at the moment,'' Cunningham said. The 787 Dreamliner model is due at the end of next year, six months later than planned. Boeing had 710 orders for the plane as of mid-October, the company's most successful sales effort for a new model.

Boeing hasn't formally offered the 787-10, a longer-range and bigger version of its 787-9. Boeing Commercial Airplanes President Scott Carson conceded that Boeing lost the Emirates order.

``Obviously Boeing would like to win every venture we're involved in,'' he said. ``We didn't have the airplane they wanted at this time.''

Emirates 777s

Chicago-based Boeing, the second-largest planemaker, won an order for 12 of its 777 aircraft valued at $3.2 billion from Emirates, the carrier also announced today. Emirates ordered the 777-300ER model, which has a list price of about $250 million.

Boeing also won a $6.1 billion order today for 30 of its 787 Dreamliner planes and five freighter 777s from Qatar Airways, the largest customer for Airbus's A350. The carrier took an option to buy 30 more 787s.

Airbus also sold A320s today valued at $2 billion to National Air Services, the first budget carrier in Saudi Arabia. NAS bought 20 planes and took options for 18 more.

Clark said last month that Boeing needed to increase the thrust available for the 787-10 before Emirates would consider an offer. The General Electric Co. GENX engine offered 75,000 pounds of thrust and Emirates wants 83,000, Clark said at the time.

Rolls-Royce Group Plc, the second-largest aircraft-engine maker after GE, would be able to offer the increased thrust, Chief Executive Officer John Rose said in an interview today.

Rolls-Royce

The Emirates order for A350s may be worth as much as $8.4 billion to London-based Rolls-Royce, which offers the only engine now available on the Airbus plane, Rose said in a statement.

Emirates started in 1985 with two leased planes and now has 110 aircraft including freighters. It had 112 planes on order as of Oct. 24. The airline has added destinations in China and India, betting that economic growth in Asia's two most populous countries will spur demand for travel.

``Many in the aviation community believe they've gone too far, and committing to an operation of that size is definitely a gamble,'' said Richard Pinkham, an analyst at the Centre for Asia Pacific Aviation in Singapore. ``But aviation experts have been leveling the same charge for years and thus far, at least, Emirates has continued to prove them wrong.''

Persian Gulf carriers including Abu Dhabi's Etihad, Qatar Airways and Emirates are among the biggest customers for Airbus and Boeing as the airlines build the region into a hub for tourism and transit flights between Europe, Asia and Africa. Airbus, based in Toulouse, France, is a division of European Aeronautic, Defense & Space Co.

Airbus Crisis

Airbus, struggling to end a financial crisis sparked by delays that put the double-decker A380 two years behind schedule, announced a reorganization Feb. 28 that includes 10,000 job cuts over four years and a move to find partners for six plants.

The 555-seat A380 overtook Boeing's 747 as the world's largest airliner after entering service with Singapore Airlines Ltd. last month. British Airways Plc said in September it will buy 12 A380 superjumbos valued at $4.3 billion.

Arab airlines are expected to increase their combined fleet almost two-thirds to 900 aircraft by 2015 from 550 in 2006, according to the Arab Air Carriers Organization.

Clark, the Emirates president, said the airline may consider issuing bonds to raise money for purchases, but that this wouldn't take place before 2009.

To contact the reporters on this story: Massoud A. Derhally in Dubai, United Arab Emirates at mderhally@bloomberg.net ; Andrea Rothman in Toulouse, France, at aerothman@bloomberg.net .

Last Updated: November 11, 2007 09:52 EST

November 13, 2007 - 6:10AM

Saudi billionaire Prince Alwaleed bin Talal has become the first person to buy the ultimate status symbol - his own A380 superjumbo.

Planemaker Airbus named the Saudi royal, whose interests span hotels and banking to the operator of Disneyland Paris, as the mystery buyer of a VIP version dubbed the Flying Palace.

The buyer's identity had been secret for months but was unveiled to coincide with the Dubai air show today.

The price of the deal was not disclosed. Russian billionaire Roman Abramovich recently denied buying the plane, which costs over $US300 million to ordinary airlines.

Prince Alwaleed confirmed the order despite seeing $US2.5 billion wiped off his personal fortune in the past month due to a slide in the shares of US banking group Citigroup.

Prince Alwaleed owns around 95 per cent of Kingdom, which in turn owns 3.6 percent of the U.S. banking giant, reeling from subprime mortgage losses and the global credit crisis.

He is the world's 13th richest person, according to Forbes magazine, and Citigroup's largest individual shareholder.

He already owns a Boeing 747-400, the newest type of the original jumbo jet currently in service.

The Airbus superjumbo has been hit by production delays but entered service with Singapore Airlines last month.

It can seat 525 passengers in three classes or more than 800 in an all-economy layout, by using less space between seats.

Leg room will not be a problem on the Flying Palace, which has 551 square metres of floor space - enough to hold the ballroom of London's Savoy Hotel, which Alwaleed owns.

The A380 can be fitted with cocktail bars, casinos, showers and sleeping quarters for first class passengers on ordinary airlines. But for the super-rich, the sky is the limit.

"It would depend very much on what sort of cabin interior the purchaser wanted," an Airbus official said this year. "On our VIP jets we offer the option to include whatever they want."

Aviation experts say it is only a matter of time before big spenders like Chelsea soccer club owner Abramovich are courted by Airbus and rival Boeing.

Sales of private jets are booming amid security concerns.

Boeing has three VIP clients who have bought five of its latest giant, the 747-8 Intercontinental which is due to enter service with airlines in 2010, a Boeing spokesman said.

A nephew of King Abdullah, Prince Alwaleed began investing after graduating from California's Menlo College in 1979.

A year later, he received a $US300,000 loan from Saudi American Bank, now known as Samba, which was run by Citicorp, according to his biography.

The prince invested $US590 million in Citicorp in 1991 at a time when the bank needed cash as it struggled with Latin American loan losses and a collapse in US real-estate prices. That stake is now worth about $US6 billion.

Kingdom had $US24 billion in assets at the end of 2006.

Reuters