Jet Deals Fall at Dubai Air Show
Concern about slowing aircraft sales has risen in recent months
DUBAI—The Dubai Air Show kicked off Sunday without the usual flurry of deals at a time aerospace investors have grown nervous that an extended period of bumper plane sales may be coming to an end.
Boeing Co. and Airbus Group SE have enjoyed a record run of order bookings for their single-aisle and widebody jets. Order intake this year has slowed, though, with Boeing still more than 200 deals short of its full-year target.
Two years ago, the first day of the event saw $162 billion in jetliner orders as Boeing secured deals for its new 777X long-range twin-widebody and Emirates Airline placed a blockbuster order for 50 Airbus A380 superjumbos. No deals were announced on the opening day of this year’s gathering, a rarity for major gatherings of the aerospace industry.
Concerns about the resilience of aircraft sales increased last month when Delta Air Lines Inc. Chief Executive Richard Anderson warned of an oversupply of jets. “We’re seeing a huge bubble in excess widebody airplanes around the world,” he told analysts.
Prices for used Boeing 777-200 long-haul planes that are about a decade old are as low as $10 million, and prices to rent older Airbus A330 widebodies also remain depressed.
“Prices are going to get lower,” Mr. Anderson said.
Plane makers dispute the gloomy outlook. Order cancellations are running at a low level, said Fabrice Brégier, who heads Airbus’s planemaking unit, adding that the company has already secured 900 new plane contracts this year, outpacing planned deliveries for 2015.
“Not only is there no bubble, but the market requires more aircraft,” Mr. Brégier said in an interview.
He shrugged off the lack of orders in Dubai, saying: “All the Middle East carriers ordered their widebody fleets two years ago.”
It is a view echoed by rival Boeing. “We see a robust market out there,” said John Wojick, Boeing Commercial Airplanes sales chief. Still, he said, Boeing had “work to do” to meet its 2015 objectives.
Any recent dampening of order bookings for the company’s 787 Dreamliner is because production is sold out through 2019, he said, not because of lack of demand.
Analysts also worry that the prolonged slump in oil prices could weigh on demand for new planes as airlines opt to keep older, less efficient models in service. British Airways parent International Consolidated Airlines Group last week said it may keep some of its 747 jumbo jets flying longer.
Mr. Wojick said low crude prices were a double-edged sword. While it could drive airlines to operate older planes for longer, it also made airlines financially more resilient and able to invest in new aircraft.
Mr. Brégier credited low oil prices with helping Airbus to sell some of its older-design aircraft, which are also more readily available.
The two companies share a bullish long-term outlook. Boeing sees the need for more than 8,800 new widebody planes over the next 20 years. Airbus puts the figure at 9,700 long-range aircraft deliveries over that period.
Nevertheless, both plane makers have had to curtail output on some models.
Boeing has signaled it may have to trim production of the 777 to seven planes a month, down from the 8.3 aircraft it currently builds. A decision on whether to scale back could come next year as the world’s largest plane maker works on introducing a new version of the aircraft model in 2020.
Airbus is cutting back on building A330 widebodies.
Emirates Airline, the world’s largest by international traffic, isn't currently buying planes. The carrier is looking to place a big order for Airbus or Boeing widebodies, but is still evaluating the models, the airline’s president Tim Clark said at the show.
An Emirates order for more A380 superjumbos also hasn't materialized because Airbus hasn't committed to building the upgraded variant the carrier wants. Mr. Clark has long championed the upgrade, dubbed the A380neo, and is urging Airbus to “get on with it.” Emirates could buy as many as 200 A380neo jetliners, if Airbus builds them.
Mr. Brégier said the Toulouse-based company was continuing to study the upgrade, but was in no rush to launch a development program that would require additional investment. The priority, he said, is building the current version of the A380, which has a list price of $428 million, more cheaply and garnering more deals.
Mr. Brégier signaled a new operator could place an order for A380 planes later this year.