Emirates Is Burdened With Previous Aircraft Orders, Tries To Renegotiate With Boeing

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Emirates still maintains a large fleet and has been continuously ordering new planes over the last few years which has now become a little bit of a problem for the carrier as demand has pretty much evaporated.

The airline is now in negotiations with The Boeing Company to make substantial changes to their previous orders, seeking to change from the 777X to the 787 Dreamliner.

The Coronavirus pandemic has affected airlines worldwide and caused passenger traffic to dwindle down as much as 97% during the worst times across all carriers, many of while took the painful decision to either temporarily or permanently retire the A380.

Now Emirates is reconsidering their fleet strategy for the future and decided to go for smaller, more efficient aircraft and their primary focus is on the Boeing 787 Dreamliner. The problem at this point is that Emirates has previously ordered the larger, more expensive 777X from Boeing they now want to get out of.

As Bloomberg reported the two companies are now negotiating the terms of how to swap some of the 777X orders to the Dreamliner.

Emirates has decided on its preferred mix of new Boeing Co. wide-body planes, with the focus likely to be on smaller aircraft rather than jumbo jets following a slump in demand amid the Covid-19 pandemic.

The Dubai-based carrier has been pushing to to swap more of Boeing’s behemoth 777X jets — of which it has ordered 115 — for 787 Dreamliners. Emirates has finalized its position on the composition of the intake, Chief Operating Officer Adel Al Redha said in an interview Thursday, declining to provide details.

Negotiations are ongoing, including on the timing of the plane deliveries, Al Redha said. Emirates prefers to take the smaller Dreamliner sooner rather than later as it “offers better seat capacity” at a time when demand for international travel is flagging, he said. Boeing wants to hand over the larger 777X first, the COO said, in line with an agreement made before the coronavirus tore up the plans of airlines around the world.

“I think Boeing would prefer to deliver the 777s before 787 because that is a new program for them,” Al Redha said. The Chicago-based planemaker declined to comment. …

Emirates was supposed to take delivery of three A380s in June, but the carrier agreed with Airbus to delay these until later this year, the COO said. The 777X’s commercial debut was originally set for 2020 but has been postponed to 2022 as the manufacturer faces regulatory scrutiny and uncertain demand. Emirates is scheduled to take the delivery of the first of 30 787s in 2023.

This is a case of mixed issues because on one hand Boeing isn’t able to deliver on time because of yet more technical issues with one of their products and the B777X is at least two years behind schedule.

On the other hand Emirates doesn’t even want the planes anymore and the collision of these two positions might work out in the airlines favor. I’m not familiar with the details in the purchasing agreement and if there is a situation that would allow Emirates to walk away from the order entirely if something goes wrong with the program.

Swapping the 777X against the Dreamliner might be the best outcome for Boeing, at least they don’t lose the customer to Airbus.

You can find more details about all Emirates orders on Boeing’s own website (see here).

On 17 November 2013 Emirates announced an order for 150 777Xs, in the process breaking a record for the single largest order for a new airplane from Emirates and the single largest airplane order ever in the world.

Conclusion

Boeing has lots of challenges as it is. The 737 Max has been an unmitigated disaster for the company and the 747 program is dead in the water as there are no more customers for the aircraft.

Airbus has similar problems as the A380 program is pretty much at the end of the line, signaling the age of four engine aircraft is really over and the skies are soon to be taken over by efficient twin engine passenger planes.

Emirates focus on the Dreamliner vs the larger B777X clearly shows what the airline is expecting in the future and so far they have been smart about their fleet planning. That being said Emirates and Dubai will continue to rely on hub traffic and to be profitable they can only operate with efficient aircraft that transport the maximum amount of passengers at the lowest operational cost.

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