Thursday, May 17, 2018

The Huge Dubai Mystery Deal For Single Aisle

Reuters broke a story in the last 48 hours. Boeing and Airbus are in talks bidding for up to 400 Single Aisle aircraft which Identifies the A-320 Neo and the 737 Max family of aircraft. It's not a winner takes all customer award but a mix coming from both mega aircraft builders. The battle is for who gets the most orders in this latest battle round. With it comes bragging rights.

This latest battle may trend the market towards who becomes the winner going forward. The Airbus offering has beat Boeing's own single-aisle offering of NG's and Max. However, in 2018, Boeing is making headway against Airbus in the bidding wars from customers in both the wide body and single-aisle category. Since this is pre-Farnborough airshow talk, I would expect the order announcements will occur during this airshow, the month of July 2018.

It would be a biased opinion to even predict an outcome. However, the price factor will play an important decider for this deal as both makers offer a very good product possibly for different reasons. The airplane efficiency is almost a push depending upon how you read the data or whom you believe is telling the correct story. The third point is what airplane best fits a Dubai business plan using maintenance numbers and commonality positions. This broad sweeping potential order will cover both makers where the stronger balance of orders will go with factors from efficiency and commonality from the airline building its fleet. No airline name was actually mentioned only just the deal-making is occurring with Dubai Aerospace Enterprise (DAE), a leasing company. Which supplies aircraft to Middle East customers. Currently, its fleet is about a 50-50 split between Boeing and Airbus.

DAE 2017 Fleet Report

A DAE deal is driven by what its customers want and future market projections in its region as DAE may want a build-up of backlog orders anticipating future orders. If Boeing does secure a big lead with this order, DAE sees a future demand for the Max over the NEO. If it remains a 50-50 split then status quo remains what its customers want. The unit price will drive this big deal demand. Predicting who wins is a wait and see processing. Perhaps there is an underlying factor not yet measured such as DAE has a leasing customer who wants its fleet from a certain maker.