Emirates president Tim Clark expects the first of the company's 205 Boeing 777X aircraft to enter service by 2026, extending delays on the programme, after the wide-body aircraft attains full certification at the end of 2025.
Boeing will face heightened regulatory scrutiny of its new wide-body jet and must ensure it gets it right, Mr Clark told reporters on the sidelines of the Farnborough Airshow in England on Monday.
“The [US] FAA [Federal Aviation Administration] will be doubly rigorous, in my view, on everything, probably rightly so, and Boeing beating themselves to make sure that they get it absolutely right. Nobody should be rushed, and any remediation work that needs to be done should be done openly, transparently. And whatever time it takes to get everything sorted that comes up in the flight test programme, get that done.
“I don't reckon [the plane] will be certified fully until the end of 2025 [and] in service for the likes of us … in 2026.”
The plane will become crucial to Emirates' wide-body fleet. The airline has built its fleet on the Boeing 777 and Airbus A380s, but the 777X is long delayed and Airbus has ceased production of the A380.
As a result, the airline had to retrofit many of its planes to extend their lifespans.
The 777X is the industry's biggest twin-engined plane, with about 400 seats, but its entry into service has been pushed back by five years because of problems including certification delays.
Boeing started certification flight testing of the 777-9 this month with US aviation regulators on board. The FAA authorised certification flights to begin, the first of which occurred on July 12 from Paine Field in Seattle.
On Monday, Korean Air announced its intention to buy 20 of Boeing's 777-9s to reach high-demand markets in Europe and North America, as well as popular regional routes within Asia, the plane maker said during the Farnborough event.
Mr Clark said Boeing has two problems to tackle on its 777X programme. The first is to get the plane certified and enter into commercial service, with strong performance on the engines and the supply chain.
The second issue is to step up the production rate from three aircraft a month in 2026 to five a month by 2028, in order to clear a backlog of more than 400 of the 777Xs, he said.
“The first task is get it out of the door. The second task is … how are you going to build it in the contracted timelines?”
At the Dubai Airshow in November 2023, Emirates ordered 55 additional Boeing 777-9s and 35 777-8s, bringing the airline's total 777X orders to 205.
The Dubai-based airline comprises less than half of Boeing's 481 firm orders for the 777X wide-body.
“We will not take kindly to be pushed back by people who are coming in later in the programme … so that adds another layer of complexity for the people in Seattle,” Mr Clark said, referring to Korean Air's planned 777X deliveries starting in 2028.
Due to delays in 777X deliveries, Emirates was forced into expensive redesigns of its cabin interiors.
“We've completely rejigged our interior in the 777-9,” Mr Clark said, explaining that the cabin's technology and look were becoming outdated.
“We've had to junk it all: the IFE, the economy seats, the premium economy seats have all been trashed and we start again.”
The delays also forced an expansion of its retrofit programme to include more aircraft, raising the total cost to $3 billion, Mr Clark said. The airline said in August 2022 that the programme had cost $2 billion.
In a visit to Boeing's Renton factory in Seattle last week, Mr Clark said he was “pleased to see that Boeing's management had moved their offices into the factories, so they're actually looking at their planes rather than sitting in Chicago”.
On Sunday, Boeing's chief of commercial jets said the company has disappointed its customers but that it is making transformational and systemic changes based on feedback from its employees, airlines and regulators.
Stephanie Pope also said some customers had been led through Boeing's Renton factory to understand the actions being taken to address quality and safety issues, and that the factory floor had been opened for their inspection.
At the first day of the Farnborough show, Boeing won several aircraft sales at the aviation industry’s biggest event of the year, led by the Korean Air Lines deal.
The US plane maker's tally on Monday totalled 78 planes, including 56 firm orders and 22 options, with customers including Japan Airlines, Luxembourg’s Luxair and Florida cargo firm National Airlines.
Its European rival Airbus signed a deal for 20 A330s wide-bodies.
Engine testing
Emirates plans to test General Electric's GE9X, the engine that powers the 777X, in Dubai during the summer of 2025, according to Mr Clark.
“In the summer of next year, we bring one of the aeroplanes across to Dubai, take it up to max take-off weight … and then stress-test the engine,” he said.
The benchmark for the test will be maximum take-off at 42°C and pressure altitude of 600 feet, which are “fairly challenging conditions … but it really works the engine to its maximum,” he said.
Emirates has also ordered the Airbus A350-900, but Mr Clark has expressed dissatisfaction with the Rolls-Royce XWB engines that power the larger A350-1000 because he says they need too much maintenance in the hot and sandy climate in which Emirates operates.
Rolls-Royce has committed to investing more than £1 billion ($1.3 billion) to upgrade the engines, seeking to improve their performance and durability.
“We’re always happy to hear anything that they can demonstrate that works, that gets us closer,” Mr Clark said.
He said he is meeting with Rolls-Royce on Tuesday.
“The action is what we need to see,” Mr Clark added.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”