US DOT grants Hainan Airlines application for Beijing-Chicago service
19th July 2012
What a great 48 hours at the Dubai air show it has been – The Qatar Airways deal – the centrepiece of the Dubai Air Show for Airbus – has been on and off more times than I am able to report, with Al Barker, CEO of Qatar Airways playing Airbus off against Boeing – the difference being that this time it has all spilled out into the open. The A320neo order (first reported here two weeks ago along with the ACG order that was also announced today) was all but cancelled late yesterday but then today, after the Qatar Boeing 777F order (details below), Marwan Lahoud strategy chief of EADS stepped-in to settle the dispute and get the order signed.
Al Barker spent the day doing u-turns in his bid to get some cash back from Airbus to make them pay for the additional A350 delays announced last week. When at the final hour of the show today Al Barker finally signed on the dotted line with John Leahy of Airbus. “Bloody lawyers” was the reason given by Al Barker for the impasse, earlier in the day at the Boeing order announcement he stated that “price is not an issue, the issue is with the aircraft” when asked about the Airbus order that had been delayed/cancelled. “Airbus is still learning to make airplanes,” he went on to say – something that went down like lead balloon with management at the EADS chalet who immediately swung into action to save their show from a raft of terrible headlines. So Qatar Airways has finally placed a firm order for 50 A320neos and five A380s. Qatar has selected the P&W1100G-JM engine to power its A320neo order. This engine choice, made right up against the main aircraft order, shows just how long ago this order was finalised within the offices of Qatar Airways before this week’s haggling took place. Poor P&W must have spent the past 48 hours sweating heavily in their chalet as the fate of their order hung in the balance.
“Today’s order is very important for Airbus,” said Al Baker – but how important is it? How many A350s has Al Barker now got free of charge or indeed how many of the aircraft ordered today are carrying huge price reductions?
Al Barker has played Airbus off very well yet again. Poor John Leahy must dread the Dubai Air Show. This time when Airbus stuck to their guns Al Barker went public and got nasty………..Don’t mess with him and certainly do not ever play him at cards is the message.
But again are all these aircraft on order going to be financed?
Aviation finance is under huge pressure. Why finance aircraft and shipping when you can put what capital the bank has left into far safer investment such as London and Hong Kong property? But investors are starting to learn that aircraft assets have performed as well if not better than other “safer” investment such as property. That said, there is a lot of pressure on all the banks, especially in Europe, to favour such safer investments, which in turn is leading to a scramble by airlines to get rated quickly. However, many airlines will not be in a position to get rated and others have obvious fiscal problems. Even Qatar Airways will find the going very hard. We know this as Emirates are having to resort to many different funding methods on aircraft deliveries. No wonder then that Brian Jeffery is in the lead for an Aviation 100 CFO of the Year Award at the moment.