Middle Eastern carriers place orders worth tens of billions of dollars

Stay informed with free updates

Simply sign up to the Airlines myFT Digest — delivered directly to your inbox.

Middle Eastern airlines have placed orders worth tens of billions of dollars for more than 100 aircraft on the opening day of the Dubai air show, underscoring the rebound in the aviation industry even as regional tensions run high. 

Emirates, the local carrier, placed an order for 90 of Boeing’s coming 777X aircraft, the world’s largest twin-engined jet, valued at $52bn at list prices. Its low-cost sister airline, Flydubai, followed up with a list price order of $11bn for 30 Boeing 787-9 Dreamliners, the first widebody aircraft in its fleet. The US plane maker also picked up a commitment from Royal Jordanian for its 787 wide-body.

The flood of orders comes despite concerns over a fall in demand for air travel in the region due to the conflict between Israel and Hamas. 

Bookings for flights to the Middle East fell in the three weeks following the Hamas attacks on Israel, dropping from 13 per cent above 2019 levels to 13 per cent below, according to industry data provider ForwardKeys.

Sales for flights from the region fell 10 percentage points.

Yet demand for the industry’s biggest jets is soaring after a prolonged downturn following the coronavirus pandemic, which severely dented long-haul travel. 

Much of the demand is expected to be driven by Middle Eastern airlines over the next two decades. Boeing is forecasting that wide-body aeroplanes for long-haul travel will make up 45 per cent of deliveries to the region over the next 20 years — the highest regional percentage worldwide — as it expands into an international transit hub. 

The US group projects delivery of 3,025 new commercial aircraft in the Middle East by 2042, including 1,350 wide-bodies. 

“The big Gulf carriers continue to believe strongly in the superconnector model and therefore anticipate some growth,” said Edmond Rose, an aviation consultant who works in the region.

“If you believe there is going to be growth in air travel because of global economic expansion then those Gulf carriers are still going to be well placed to pick up some of that.”

Middle Eastern airlines are forecast to grow over the next two years, and reach 115 per cent of pre-pandemic capacity by 2025, a stronger recovery than any other region, according to the International Air Transport Association, a trade body. 

Regional profitability is forecast at $9.41 net profit per passenger this year, in line with the US and more than double that of European carriers.

Beyond the Middle East, Boeing won an order for 90 of its narrow-body 737 Max jets from Turkey’s SunExpress, while European rival Airbus reached an agreement in principle with Turkish Airline for what it said was a “significant commercial aircraft order”, understood to be for as many as 355 jets. 

Airbus also agreed a follow-on order for 30 of its A220-300s single-aisle jets with Latvian carrier airBaltic.

Industry analysts said they expected more orders to come at Dubai this week as airlines jostle to lock in delivery slots from both Boeing and Airbus. 

Airlines are having to replace older aircraft in their fleets as well as place orders to support future growth, said Stuart Hatcher, chief economist at consultancy IBA, who predicted significant deals at the show.

Order backlogs for the two plane makers are at record highs, totalling more than 13,900 aircraft to the end of October, according to data from Cirium, the aviation consultancy. 

“I am not sure where the [manufacturers] are finding slots for these and I suspect there is a significant amount of slot double booking going on as [they] gamble on some customers seeking to rearrange delivery slots, perhaps in 2026 and later,” said Rob Morris, head of Cirium’s consultancy business Ascend. 

Additional reporting by Claire Bushey in Chicago