Boeing Sees Gulf Interest In 737 MAX

November 13, 2011

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Boeing is talking to Oman Air and budget carrier flydubai as potential customers for its revamped 737 MAX jet, company executives said on Saturday.

Speaking on the eve of the Dubai Air Show, Boeing officials said demand in the Middle East remained robust despite unease over the economy as airlines seek to reduce operating costs by buying fuel-efficient aircraft.

"We are talking to flydubai and Oman Air about the 737 MAX. We have had a lot of detailed discussions with flydubai, which is part of the normal process of getting a customer's input into development," Marty Bentrott, senior vice-president for international sales, told a news conference.

Boeing is fitting its best-selling 737 medium-haul jet with new engines to reduce fuel consumption and compete with a hot-selling version of the competing Airbus model called the A320neo.

It is also showing off its new 787 Dreamliner for the first time at the biennial show after the fuel-saving jet went into service in Japan last month.

Boeing said Qatar Airways, whose chief executive Akbar Al Baker said a year ago the project had "failed" due to a three-year production delay, would get its first 787 in mid-2012.

Oman Air could also clarify an order for 787s at the air show. The sultanate's flag carrier last year signed a draft deal to acquire six 787s by leasing them through Kuwait's Alafco but has been seeking compensation for the delays.

"They may come out with something in the next few days," Bentrott said, speaking of Oman's interest in the 787.

Aviation International News reported that Oman Air was set to announce a 787 decision in Dubai.

Demand from the Gulf has helped to power Boeing and Airbus production to record levels even as developed markets weather serious economic problems.

"It's a critical market for us. Most airlines have 35-40 percent in fuel-related operating costs, and lots of older aircraft need to be replaced when operating costs rise," said Bentrott.

TEST OF RESILIENCE

The air show is seen as likely to produce a slew of orders but will test the resilience of expanding Gulf carriers to Europe's debt crisis and to slowing global economic growth.

"European banks have tended to be sources of funding for commercial aircraft, and we'll have to see if the euro zone problems change that position. We're looking at alternatives such as Islamic finance, Japanese financing and Exim bank," said Bentrott.

He predicted that the airshow would be relatively muted. Orders at the event fell steeply in 2009, coming in at USD$14 billion, compared with USD$155 billion in 2007.

"We won't see as big an order activity as we have seen historically," he said.

(Reuters)