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Fast-growing airline Emirates orders 50 more Boeing 777s in record $18 billion deal
DUBAI, United Arab Emirates (AP) ' Dubai's fast-growing airline Emirates kicked off the Middle East's biggest airshow Sunday with an order for a whopping 50 Boeing 777s, marking the U.S. aircraft maker's biggest-ever single order in dollar terms.
Emirates and Boeing Co. valued the unexpectedly large deal for an extended-range version of the 777-300 at $18 billion ' the total by list price ' though the carrier is unlikely to pay that much for the planes. Airlines typically negotiate big discounts, especially when buying in bulk.
Emirates has an option to buy another 20 777s as part of the order. Doing so would push the deal's value to $26 billion.
The deal further establishes Emirates as Boeing's best customer for the twin-engine 777, a workhorse of the carrier's long-haul fleet.
Emirates already has 95 777s in service and had another 40 already on the order books. That means it now has nearly as many of the twin-aisle planes on order as it operates.
"This order further establishes our long-standing commitment to Boeing and to the 777 aircraft," Emirates Chairman and CEO Sheik Ahmed bin Saeed Al Maktoum said in announcing the deal.
"The 777 has really served Emirates very well in terms of the seat cost, especially when we see that the fuel price today is very high," he added.
Emirates earlier this month posted a profit of $225 million for the first half of its fiscal year. That was a 76 percent decline from its earnings during the same period a year earlier, a drop it linked in part to soaring fuel prices.
Although the Gulf airlines are the among the world's most ambitious in expanding their fleets and routes, a deal the size of the Emirates contract had not been expected at the airshow, which began Sunday. It and rivals such as Abu Dhabi-based Etihad and Qatar Airways have a massive backlog of planes already on order.
Chicago-based Boeing Co. said the deal is the largest single aircraft order in dollar terms in its history.
"It sustains a lot of jobs in the United States ' several thousand," said Jim Albaugh, president and CEO of Boeing Commercial Airplanes.
Boeing currently churns out seven 777s per month and expects to raise production levels to 8.3 of the planes a month soon, Albaugh said.
Emirates is by far the Middle East's largest carrier and has over 160 aircraft in service. It is owned by the government of Dubai, which is recovering from a debt-fueled financial crisis that came to a head two years ago.
Its young fleet also includes Airbus A330s, A340s and the double-decker A380.
Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum, attended Sunday's signing ceremony, underscoring the central role the carrier plays in the city-state's trade- and tourism-dependent economy. Emirates' CEO is the ruler's uncle.
Emirates plans to pay for its additional 777s using a variety of financing options, including U.S. government-backed export credits, Sheik Ahmed said. He said the company doesn't expect to have problems securing credit and has financing for existing plane deliveries lined up through next August.
Among the nearly 240 planes Emirates has on order are 70 Airbus A350s, a new long-range jet designed to compete against Boeing's recently introduced 787 Dreamliner.
Airbus parent company EADS NV last week took a 200 million euro ($273 million) charge to its third-quarter earnings because of a new delay in the launch of the A350. The European planemaker now expects the A350 will enter service during the first half of 2014, up to six months later than previously forecast.
Sheik Ahmed said Emirates' decision to double down on the 777 "has nothing to do with the delays on the A350," however.
"It's part of the Emirates expansion. We always find new markets," he said.