By Benjamin Katz and Doug Cameron
DUBAI -- Boeing Co. secured deals Tuesday for its grounded 737
MAX, a timely endorsement as the plane maker seeks regulatory
approval for returning the aircraft to service.
The MAX deals came at the biennial Dubai Air Show and broke a
five-month order drought for the plane, which has been grounded
world-wide since its second fatal crash, in March. Kazakhstan's Air
Astana agreed to buy 30 MAX jets, and an undisclosed customer
signed up for another 20, according to a person familiar with the
transaction. Those deals added to the 10 planes bought Monday by
Turkey's SunExpress, an existing customer that has yet to receive
any of the 32 planes already on order.
"I believe this is momentum. Thus far we're restoring
confidence," Stan Deal, Boeing's commercial airplanes chief, said
after announcing the Air Astana deal, which is valued at $3.6
billion at list price but before customary discounts. "And three
customers voting for the MAX, we'll take it any day. We're very
happy with that."
Boeing has also managed to revive a planned sale of wide-body
787 Dreamliners to Dubai's Emirates Airline, the world's biggest
operator of long-haul jets, which could be announced this week,
according to people familiar with the matter. It also announced the
sale of three 787 Dreamliners to Ghana.
The Chicago-based manufacturer still faces challenges. Rival
Airbus SE won three-quarters of the 300 orders and commitments
announced so far at the show, including a scaled-back deal with
The deals come as some industry leaders express concern about
faltering growth in global airline traffic.
"Next year will remain tough," said Tim Clark, the president of
Emirates, citing a range of global economic pressures including
Brexit, the U.S.-China trade war and unrest in Hong Kong. "My view
is that by 2021 we will be through it."
Both plane makers had struggled to secure new deals in 2019 as
airlines face a multiyear wait for deliveries from backed-up
production lines and wrestle with the slowdown in passenger and
"Orders are coming back, suddenly, and they're mainly going to
Airbus," said Richard Aboulafia, an aerospace analyst at Teal Group
Corp. "But what matters is airline traffic, and it stinks."
Previous Dubai Air Shows have hosted some of the largest-ever
plane orders as airlines like Emirates spent tens of billions of
dollars on new jets, only for intensifying competition and global
trade concerns to slow traffic growth.
Passenger traffic had been growing an annual rate of 7% over the
past five years but has now fallen below 4%, with the Middle East
the worst-performing region. That has cut into airline profits and
led some carriers to scale back expansion plans.
Boeing and Airbus continue to battle for deals. But analysts
view any MAX commitments as particularly critical at a time when
Boeing is trying to keep customers from abandoning the jet.
"The order is relatively modest versus a MAX backlog of 4,525
aircraft, but does represent a vote of confidence," said Sheila
Kahyaoglu, an analyst at Jefferies.
Boeing has said no orders have been canceled as a direct result
of the MAX grounding, but its backlog had shrunk by about 200
planes this year because of airline bankruptcies and carriers
swapping into other types, lured by discounts.
The company still expects the plane to be recertified by the end
of the year, at least in the U.S., and the absence of negative news
in Dubai has helped continue a month-long rally in the stock.
Boeing shares were down about 0.6% in afternoon trading on
Tuesday, but are up about 11% over the past month.
Mr. Deal, recently appointed to head Boeing's commercial
airplane arm, has led the company's presence at the show, and
analysts said it has benefited from so far avoiding any public
criticism from customers over the MAX.
The revived deal for 787 Dreamliners relates to an agreement
worth $15 billion at list prices for Emirates to buy 40 of the
twin-aisle jets, which was announced at the Dubai Air Show in 2017,
Boeing has recently struggled with lackluster demand for the
787, amid a dearth of orders from China, and headwinds generally
for the market for big planes. The revived deal could be announced
as soon as this week, according to people familiar with the matter,
though they said it would likely involve fewer planes, potentially
the smaller 787-9 variant.
Separately this week, Emirates placed an order for 50 Airbus
A350s, another large jet that competes with the 787. It hasn't yet
agreed, though, on a preliminary commitment to buy the European
plane maker's A330neo, which also competes with the 787.
Emirates also has an existing order for 150 of Boeing's new
777X, a jetliner that is larger than the 787. Mr. Clark also issued
a warning to Boeing saying that the number of 777X jets it takes
depends on when the aircraft -- which is more than a year late
because of engine issues -- will be available. Emirates could
instead place an order for the Airbus A350-1000 to keep to its
current fleet plan until the upgraded Boeing plane is ready, he
Write to Benjamin Katz at email@example.com and Doug Cameron at
(END) Dow Jones Newswires
November 19, 2019 15:49 ET (20:49 GMT)
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