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3 Months : From Oct 2019 to Jan 2020
By Benjamin Katz and Doug Cameron
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 20, 2019).
DUBAI -- Boeing Co. has secured more deals for its grounded 737 MAX, a timely endorsement as the plane maker seeks regulatory approval for returning the aircraft to service.
The MAX deals, happening at the biennial Dubai Air Show, broke a five-month order drought for the plane, which has been grounded world-wide since March following its second fatal crash.
Kazakhstan's Air Astana agreed on Tuesday to buy 30 MAX jets, and an undisclosed customer signed up for another 20. 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 before customary discounts. "And three customers voting for the MAX, we'll take it any day. We're very happy with that."
Boeing has revived a planned sale of wide-body 787 Dreamliners to Dubai's Emirates Airline, the world's biggest operator of long-haul jets, according to people familiar with the matter. Boeing also announced the sale of three 787 Dreamliners to Ghana.
The Chicago-based manufacturer still trails rival Airbus SE in orders this year. The European company won three-quarters of the 300 orders and commitments announced so far at the Dubai show, including a scaled-back deal with Emirates.
"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."
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 this year as airlines face a multiyear wait for deliveries from backed-up production lines and wrestle with the slowdown in passenger and cargo traffic.
Previous Dubai Air Shows have sported 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 their 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 for Boeing at a time when it 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 monthlong rally for its shares.
The stock fell 0.7% on Tuesday, but is 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, so far avoiding any public criticism from customers over the MAX, analysts say.
The revived Emirates deal for 787 Dreamliners relates to an agreement to buy 40 of the twin-aisle jets worth $15 billion at list prices. Announced at the Dubai Air Show in 2017, it had since lapsed.
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 and possibly for the smaller 787-9 variant.
Separately this week, Emirates placed an order for 50 Airbus A350s, a large jet that competes with the 787. The airline hasn't yet affirmed 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 warned Boeing that the number of 777X jets it takes depends on the availability of the aircraft, which is more than a year late because of engine issues. 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 said.
Write to Benjamin Katz at firstname.lastname@example.org and Doug Cameron at email@example.com
(END) Dow Jones Newswires
November 20, 2019 02:47 ET (07:47 GMT)
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