Emirates to decide by year end on Boeing or Airbus multibillion dollar order, says Sheikh Ahmed

Emirates, the largest operator of wide-body aircraft globally, will decide by year end on a multibillion dollar order in which the airline will pick between Boeing's Dreamliner 787 model or Airbus' competing A350, the carrier's chairman said.

"Until now we have not taken a decision on which plane model," Sheikh Ahmed bin Saeed Al Maktoum said in an interview with The National. "It's still under study. After we've done our review we'll make an announcement by end of the year."

The decision between the two aircraft models reignites a fierce battle that played out in the run-up to the Dubai Air Show in 2007 when Emirates placed a US$31 billion order that included 70 A350s rather than the 787. Since then it has rolled back on its commitment to the A350 following a review of its fleet requirements.

Emirates, like most airlines, conducts a review of its fleet as it looks to retire planes and introduce new models in line with its business objectives. Those decisions are influenced by yields and margins, which have come under pressure as a result of a downturn in the travel industry amid terrorist attacks in Europe and a more competitive operating environment where low-cost carriers are deploying narrow-body planes on long-haul routes.

In June, Bloomberg reported that Emirates was in talks to buy 20 A380s in a deal worth about $8.7bn, according to list prices before discount. An order of 20 Boeing 787 Dreamliner planes is valued at about $5.4bn according to list prices, while an order for 20 Airbus A350s is worth about $6.3bn.

Both Sheikh Ahmed and the Emirates president Tim Clark have declined to provide further details about the size of any future aircraft order. However, Boeing's order book, as of July 4, lists an order for 30 787 planes from unidentified customer(s), at a value of $8.1bn.  

In 2014, Emirates cancelled its order for the 70 A350 – valued at $16bn – which makes the chances of a repeat order potentially unlikely. Moreover, the expanded partnership agreement Emirates announced with the low-cost carrier flydubai last month will pave the way for greater network integration and crossover of passengers out of their joint hub at Dubai International Airport.

The flydubai low-cost model, which relies on single-aisle planes, allows penetration and connectivity of markets that complement the wide grid of Emirates. The closer integration means promoting a seamless form of co-operation between the two companies that either does not currently exist or is fragmented.  

"The 787 is the favourite as it stands," said Will Horton, senior analyst at the Centre for Aviation (Capa). "A 787 order could possibly be made in conjunction with flydubai's 737 fleet if any amendments are needed."

In an interview with The National last month Mr Clark said the carrier was also eyeing Boeing's 777X, which comes into operation in 2020 and complements Emirates' fleet of 777-200 and 777-300 aircraft. Choosing the 787 would also match the carrier's firm order for 150 777XS and the additional 50 options for the plane that will replace the fleet of 777-300ERs and 777-200LRs.

Changing market dynamics and uncertainty in the global economy, make it likely Emirates may well lean towards the 787 because of its fuel efficiency advantages, which is an issue of contention between the carrier and the Toulouse-based Airbus when it comes to the A380.

"Given their need to focus on premium traffic and serve more markets, they might need to order the new planes this year," said Richard Aboulafia, an aviation analyst with the Virgina-based Teal Group. "The 787 would work well with their 777/777X fleet strategy.  The two families complement each other nicely."  

Saj Ahmad, chief analyst for London-based Strategic Aero Research believes the 787 is "right sized"  for Emirates.

"With the 777-8 and 777-9 due to enter the fleet from the turn of the decade, there is no need for the A350, particularly when the 777X family can replace the likes of the A380, which the A350 cannot – and the 787 family can operate beneath 777X in markets where capacity can be better reigned in," Mr Ahmad said. "The economics of either the 787-9 or 787-10 makes it far more compelling because both are significantly light than competing A350s and return far better fuel burn, which in turn lowers operating costs." 

The Dubai Airshow takes place from November 12-16 this year. Plane manufacturers compete to secure aircraft orders around the event.