Last Updated: July
14. 2008 11:52PM UAE / July 14. 2008 7:52PM GMT
FARNBOROUGH
// Bucking the gloomy mood of the global airline
industry, Etihad Airways placed one of the
largest aircraft orders in the history of civil
aviation yesterday – up to 205 aircraft in the
next two decades for a list price of US$43
billion (Dh157.94bn).
The order included both of the major airframe
manufacturers, Boeing and Airbus, and spanned
all three aircraft categories – narrow bodies,
mid-sized and extra-large carriers. With it,
Etihad has shrugged off the prevailing market
pessimism over high fuel prices and the credit
crisis and issued a clear roadmap of its next
two decades of growth.
The fleet expansion will see Etihad rise from an
obscure startup, in November 2003, to one of the
largest airlines in the world.
The airline is betting on the continued growth
of the Abu Dhabi economy to draw in new
travellers, particularly tourists, in addition
to flying to many new destinations in India and
the Middle East, which are gradually opening as
governments liberalise their airspaces.
“With these orders we’ll be able to build up our
frequencies to the cities we serve from four
times a week to daily, and from 10 times a week
to double-daily,” said James Hogan, the
airline’s chief executive. “We also will be able
to reach secondary markets in Europe plus cities
in the US, Australia, Korea and Japan.”
The Etihad order included a commitment with
Airbus for 55 aircraft, comprising 20
narrow-bodied A320s, 25 of the mid-sized A350s,
and 10 of the double-decker A380 Superjumbos.
The A350s will feature engines by Rolls-Royce in
a deal worth $2.1bn at list prices.
Etihad also secured options and purchase rights
on 55 more planes with Airbus, including 10 more
A380s. This will allow it to expedite the
purchase of the additional planes when it sees
higher demand. The value of the Airbus order was
roughly $23 bn, even though bulk aircraft
purchases are typically sold with discounts to
the list price.
Etihad also ordered 45 aircraft from Boeing,
placing commitments for 35 of the new 787
Dreamliners, plus 10 777-300ERs, an aircraft
already in use by Etihad for long-haul flights
to Asia. GE has been selected as the engine
supplier for the 777s.
Etihad secured options and rights to purchase
another 50 Boeing planes. The entire Boeing
aircraft order is valued at roughly $20bn at
list prices.
While 25 airlines have gone bust in the past six
months, Gulf airlines are thriving.
Gulf countries were first viewed as refuelling
stops for European airlines on long-haul
flights, but regional carriers have gradually
leveraged their geographical position straddling
Europe and Asia, which has enabled them to catch
up, and even supersede, their international
competitors.
Emirates is by far the largest of the Gulf
airlines, but it is being challenged by Qatar
Airways, Etihad and also Gulf Air, which is
restructuring itself after several missteps.
Budget carriers have also flourished, and a new
start-up, FlyDubai, plans to launch next year.
The growth of the region’s airlines has led to
the collective purchase of hundreds of new
aircraft and the extension of route networks
across six continents.
But they are also competing against each other,
and analysts say this may be part of what is
fuelling their growth plans.
“Etihad doesn’t want to be left trailing behind
Emirates and Qatar Airways if its growth
projections are accurate, and certainly won’t
want to give crippled Gulf Air – which is
starting to regroup its forces – even the
slightest chance of creeping back up the ranks,”
said David Kaminski-Morrow, the editor of Air
Transport Intelligence.
Richard Aboulafia, an aviation analyst with the
Teal Group, said: “The object is to leverage oil
wealth and good geography to build a strong
national airline. To a certain extent, this
reflects a bit of commercial rivalry between
Dubai and Abu Dhabi.”
Some analysts worry that record oil prices could
damage Etihad’s longer-term aspirations.
Already, it has hinted that it may be forced to
postpone its break-even target date to beyond
2010.
Diogenis Papiomytis, a consultant with Frost and
Sullivan, said Etihad had hedged fuel at 75 per
cent last year and 70 per cent this year, but
only 40 per cent next year. “If prices remain at
current levels or rise, this will have a huge
impact on their costs and operations,” he said.
Mr Hogan said the fleet expansion would satisfy
the airline’s needs until 2030. The date is an
important one for Abu Dhabi, also being the year
that the emirate completes a 25-year
revitalisation campaign. Etihad has a mandate to
help fuel the emirate’s economic growth.
The aircraft types ordered yesterday will allow
Etihad to offer commercial service to nearly any
destination on earth. The short-haul A320s from
Airbus will be used as feeder planes throughout
the Middle East and Indian subcontinent to
deliver passengers onto its long-haul routes
departing from Abu Dhabi, which will be serviced
largely by the Airbus A350s and Boeing 787s and
777s.
The A380s, which can seat up to 600 passengers,
will be used on long-haul, trunk routes to
slot-constrained airports, such as London
Heathrow.
The orders will be delivered over a nine-year
period beginning in 2011, and reflect a
multi-phase growth that takes into account
arrival dates for new aircraft types under
development. For its immediate needs, Etihad
chose the workhorses of the airline industry,
the Airbus A320 and the wide-bodied, twin-engined
Boeing 777, which will start being delivered in
three years.
Aircraft with higher fuel efficiencies and lower
operating costs will be phased in as they are
developed, such as the 787 from Boeing in 2014,
and the mid-sized Airbus A350 in 2017.
Much of Etihad’s current fleet, such as its
A330s and A340s, will be phased out in the next
decade.
FARNBOROUGH
// Bucking the gloomy mood of the global airline
industry, Etihad Airways placed one of the
largest aircraft orders in the history of civil
aviation yesterday – up to 205 aircraft in the
next two decades for a list price of US$43
billion (Dh157.94bn). 
