Etihad swaps out Dreamliners

Etihad has swapped orders for Boeing jets in a strategic move.

Etihad Airways has bought more Boeing 777 jets and cancelled several orders for the US maker's 787 Dreamliner orders.

The Abu Dhabi airline's decision is being seen as a strategic move to reduce its exposure to the delayed Dreamliner programme.

The changes should help it avoid the risk of further delays with the Dreamliner affecting its aim to open new routes.

Etihad has converted options and will buy three 777-300ERs, it said yesterday. The three aircraft cost US$852.3 million (Dh3.13 billion) before standard industry discounts.

At the same time, the airline also cut orders for four 787-9 Dreamliners, the all-new jet that is scheduled to be delivered later this year to its launch customer ANA of Japan, some three years behind schedule.

The four jets are worth $872.4m at list prices and the cancellations reduce Etihad's total orders of the Dreamliner to 31.

"Etihad has simply exercised its options," a spokeswoman for the airline said. "We are utilising option positions to take delivery of three B777s in 2013 and have adjusted our order for B787s accordingly."

The changes are essentially a swap between two aircraft types and should give the airline about the same amount of new capacity, Etihad said.

The Boeing 777 is a popular jet for long-haul, high-density routes and is used by the carrier on its flights to London, Manchester, Brisbane and, starting this summer, Chicago.

The airline was originally scheduled to receive its first Dreamliners in 2013, but this has been pushed back to the fourth quarter of 2014, said James Hogan, the chief executive.

The 777s will help "bridge the gap" caused by the Dreamliner delays, Mr Hogan said.

All airlines create detailed route expansion plans that stretch well into the future, said Steve Perry, the managing director of Standard Chartered Capital Markets, and aircraft delivery delays can seriously hamper those plans.

"If Boeing can't deliver the Dreamliner on the date that is expected, then switching to 777s make sense," Mr Perry said.

Etihad agreed to buy a total of 100 jets from Boeing and Airbus, and took options and purchase rights on another 105 aircraft through a multibillion-dollar order made at the 2008 Farnborough International Airshow. The orders were based on compound annual growth rates for the airline of 12.5 per cent. The forecasts were heavily influenced by tourism and economic growth projections in Abu Dhabi over the next two decades.

The 2008 orders included commitments for 10 777s and options on another 10, in addition to commitments for 35 787s and options for 25 more.

The options and purchase rights gave the airline "huge flexibility" if demand increased or key markets, such as south Asia, opened up to more foreign competition, the airline said.

The Middle East is one of the fastest-growing markets in the world for air travel and regional airlines are key customers of new jets from Boeing and Airbus.

But delays in aircraft delivery, as well as the global financial downturn, have led some leasing companies to curtail orders.

In 2009, LCAL of Dubai reduced its order for the 787 from 21 to five jets. Dubai Aerospace Enterprise, or DAE, has made major cuts to a 200-aircraft order from before the financial crisis.

Last week, it was reported the company cancelled plans for 12 Airbus A350 wide-bodied jets, and 18 narrow-bodied Airbus A320s, worth $4.5bn.

Last August, DAE was also reported to have cancelled 10 Boeing 777s, 15 Boeing 787s, and 25 additional Airbus jets.