Sunday, November 8, 2015

Airbus Shrugs-Emirates Shops Boutique: Its Dubai

The big stories are huge in stature. Emirates wants 200 A380-NEOs from Airbus where they can't spend the money developing a boutique order just for Emirates. No one else is seriously interested in the A380 NEO at this time. The super Jumbo fad has faded even with another "NEO" label slapped around in the Airbus R&D hallway.

Dubai has become a real world air show. The oil well hole in the desert region has become the real show stopper. Golden Oil prices have fallen worldwide. Rational heads prevail at both ends of the market system. Airbus won't front billions of dollars (or Euros) for the NEO label added on the A380 program. Emirates has itchy fingers in its bank vaults. The solution to this dilemma, is simple. Have Emirates invest $20 Billion into Airbus stock specifically for the A380 NEO program, and then turn around ordering 200 A380 NEO's by writing an extremely huge check for its order. That's what Airbus is talking about, otherwise forgetta-bout-it!

The real world has caught up with Dubai. The money graph has dipped low in 2015. The backlog graph has swung to a peak in the same time frame. The Dubai show, once again is about assurances given in private rooms around the venue. Making plans and making planes is the discussion for all the industry players. The ordering no longer holds center stage for this year's meet and greet. The show is about how Boeing is planning for a Tweener-Twin that is not an official wide body nor is it a single aisle, hence the nickname, "Tweener-Twin". Airbus went with the A321 single aisle route answering the 757 gap.

Airbus and Emirates are at a loggerhead over its monster Jumbo. Airbus knows the A380 sales are flat, and has little airport appeal compared to the Airport compliant 787 family. Two 787's can land five minutes apart from two different parts of the world holding a combined 500 passengers. They can unload at two different parts of a large terminal minimizing the congestion created as compared with the double decker A380. Airports are fussy about airport expansions for only one type of aircraft such as the A380. Airbus wishes for an order for 32 classic A380 and not an order for 200 NEO in spite of Tim Clark's (Emirates) admonitions they would order 200 A380 NEO's.

So goes the Dubai meet and greet, 2015. Many other players wander the event on company travel expense accounts. Many other aviation suppliers show its wares to the tens of thousands people on some kind of professional junket. However, the deals were made over the phone, computer or skype before the show. Now participants meet in secure rooms away from the crowd with the intent of forming a show announcement later. During the four day show, later is in hours, not months. The deal was committed long before the show and now it's party time after signatures.

Any Air Show is about networking and forming relationships. It's about seeing everything better than what two years ago were presented. Dubai, Farnborough, and Paris are part Comic-Con, flybys, and showing off. Airbus Leahy is a showoff. Boeing's Randy Tinseth reminds me of a showman, coming from the Ed Sullivan era. Randy is straightforward and makes the case from facts derived out of statistics and does not exaggerate. Leahy, on the other tells what everyone wants to hear. When Boeing beats Airbus on a head to head competition it's from customer's careful considerations.

All in all, this 2015 Dubai show is about relationships, because the ordering portion is a separate issue from any Airshow. A perfect storm if you consider ordering a convergence of need, money and timing opportunity, and then orders come to the show and completes its purpose.