Emirates, the world’s largest airline and biggest operator of wide-body aircraft, agreed to buy 40 Boeing Dreamliner 787-10 jets in a deal valued at a total of US$15.1 billion at average list prices before discount.
"It has always been Emirates' strategy to invest in the most advanced and efficient aircraft, and today's orders reflect that," said Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of the airline. "Today's announcement also speaks to our confidence in the future of aviation in the UAE and the region."
Emirates is the largest operator of Boeing 777 aircraft as well as A380s. The airline has 165 Boeing 777s in its fleet with an additional 164 on firm order, which include 150 next generation 777x aircraft. Emirates also has 100 A380s in operation, with 42 more on order.
Middle East airlines will spend about $600bn on new aircraft in the next 20 years, amid projections that the fleet size of the regions' carriers will more than double to 3,320 aircraft in the period, according to Airbus. The region's carriers will require around 2,590 new aircraft by 2036: 520 to replace older planes and 2,070 to cater to forecast growth, the manufacturer predicted. This projection in demand includes 1,080 twin-aisle aircraft, the same number of single-aisle aircraft, and 430 very large planes.
Passenger traffic to and from the Middle East is forecast to grow 5.9 per cent until 2036, beating the world average of 4.4 per cent, according to Airbus projections. The region is forecast to experience the fastest growth rate in the world behind Africa, which is projected to grow by 5.9 per cent to 400 million passengers by 2036, according to the International Air Transport Association (IATA).
"Essentially the 787s allow Emirates to mix its operations," said Saj Ahmad, chief analyst - StrategicAero Research. "It can configure the jets densely so that they can be deployed regionally, or instead flown long haul with slightly less capacity. Plus, it makes a great fit for flydubai, who only have 737s. They can work with Emirates to use the 787-10s on routes where they can't offer additional capacity."
In an August 1 interview with The National, Sheikh Ahmed said the airline was deciding between Airbus' A350 and Boeing's 787. The airline had weighed a similar decision between the two models in the run-up to the Dubai Air Show in 2007, when Emirates placed a $31bn order that included 70 A350s rather than the 787. Since then, it rolled back on its commitment to the A350 following a review of its fleet requirements and in 2014 cancelled its order for the 70 A350 – valued at $16bn.
The order today is a blow to Toulouse-based Airbus, which has been trying to sell more of its A350 model and has not had an orders for its superjumbo A380, dubbed the flying palace, in more than two years.
Emirates, like most airlines, conducts a review of its fleet as it looks to retire planes and introduce new models in line with its business objectives. Those decisions are influenced by yields and margins, which have been under pressure as a result of a downturn in the travel industry amid terrorist attacks in Europe and a more competitive operating environment where low-cost carriers are sending narrow-body planes on long-haul routes.
"We were comparing two apples. We looked at different options for maintenance and so on and came to the agreement," Sheikh Ahmed said today. "We always look at what we need according to demand."
Emirates’ agreement includes conversion rights to switch the aircraft to 787-9s. The carrier will begin taking delivery of the 787-10s in 2022. The aircraft will be delivered in a mix of two and three-cabin class configurations, potentially seating between 240 and 330 passengers.
Changing market dynamics, uncertainty in the global economy, fuel efficiency advantages of the composite 787 make it more attractive to carriers than other models such as Airbus' A350.
The cross-crew benefits of 777-787 dual rated pilots helps Emirates contain costs.
"Given that the 787-10 has the lowest cost of operation, even against all A350 variants, it really was a no-brainer that Emirates would select the 787 family. If anything, this order is small - there are more 787 orders coming," said Mr Ahmad.
Boeing Commercial Airplanes President and CEO Kevin McAllister said Emirates' decision to buy the Dreamliner "will sustain many jobs in the United States." The new order will create and support over 78,000 additional jobs in US aerospace manufacturing, according to a joint statement from Boeing and Emirates.
Last week, Emirates reported a 111 per cent surge in its half-year net profit to Dh1.7bn, on the back of serving more passengers, efficiencies and a fluctuating US dollar. The carrier's performance was a marked improvement from last year's annual results when profits plunged 82 per cent.