By ADAM SCHRECK - AP Business Writer - Associated Press
Monday, November 16, 2009
DUBAI, United Arab Emirates (AP) — Airbus on Monday got its second aircraft order at the Dubai Airshow with an agreement to sell 10 A320 planes to Yemen, while its U.S. rival Boeing Co. managed to cut a Mideast deal of its own even though it has yet to score a plane order at the region's top aviation meet.
The Chicago-based Boeing said it signed an agreement with Abu Dhabi's state investment vehicle Mubadala Development Co. to collaborate on multiple projects designed to help the UAE's largest sheikdom build an aerospace industry as it seeks to diversify its economy beyond the oil patch.
Homaid al-Shemmari, Mubadala's associate director for business development, said in an interview with The Associated Press the agreement could involve joint projects ranging from an aerospace museum and training programs to the production of composite aircraft parts in the emirate.
"Boeing is committed to help Mubadala and Abu Dhabi's ambitions of creating this aerospace industry," he said. "They're going to be helping us develop our engineering capabilities."
No financial terms were released, though al-Shemmari said the deal did not signal plans by Mubadala to deepen its investment in U.S. manufacturing by taking an equity stake in Boeing.
Abu Dhabi controls nearly all of the oil reserves found in the UAE, one of OPEC's top five producers and a key U.S. ally in the region.
Mubadala, one of many funds Abu Dhabi uses to invest its oil wealth, last year unveiled an $8 billion joint venture with General Electric Co., and is on its way to making good on a promise to become one of GE's top ten shareholders.
Boeing's deal with Abu Dhabi is not the sheikdom's first foray into the aerospace industry. Mubadala inked a deal with Airbus parent EADS to produce and supply parts for Airbus at the U.K.'s Farnborough International Airshow last year.
"It is a win-win situation," al-Shemmari said. "We want to make sure that there is a model of partnership for us here in the UAE that will entice Boeing and Airbus and the rest of the aerospace industry to say 'Abu Dhabi and the UAE are the right partners for us.'"
Airbus said a memorandum of understanding it signed with Yemen's national carrier Yemenia on Monday was worth $700 million at list prices. Airlines typically negotiate bulk discounts, however, especially in tough economic times.
A day earlier, Toulouse, France-based Airbus finalized a $3 billion deal with Ethiopian Airlines for 12 A350 XWB aircraft that had been agreed earlier in the year under a similar memorandum — effectively a promise to buy.
Airbus officials said the company only adds requests to its order books once those promise agreements are finalized.
The two deals reflect an emphasis on smaller carriers and more modest orders at this year's Dubai show as the global economic downturn squeezes the industry.
Many analysts expect deals announced at the weeklong event to fall well below the record-breaking $155 billion in orders that were struck during the last show two years ago.
Yemenia plans to use its A320s to expand service on routes to the Middle East, Africa, India and Europe.
The San'a-based airline, which has a spotty safety record, is eager to upgrade its aging fleet. In June, a Yemenia Airbus 310 passenger jet with 153 people on board crashed as it tried to land during heavy wind on the island nation of Comoros.
The airline's existing fleet includes two Airbus A330-200s and three A310s. It placed an order for ten Airbus A350 XWB at the last Dubai Airshow in 2007.
Meanwhile, the head of Emirates airline told reporters the carrier is in talks with Boeing and Airbus for additional planes, though it's unclear whether any deal will be announced at this week's show.
Sheik Ahmed bin Saeed Al Maktoum said Emirates is considering new purchases of Boeings 777s and Airbus A330s. He did not give details on the size of the possible orders but said it could be "tens" of aircraft.
Emirates already operates the world's biggest 777 fleet.