Boeing 777-300ER landing at Perth (Commons)

The opening day of the Dubai Air Show on Sunday in the United Arab Emirates saw Emirates placing the single largest commercial aircraft order (in dollar value) in history. The deal made with Boeing consists of a firm order for 50 Boeing 777-300ER worth about US$ 18 Billion at list price along with options for another 20 aircraft worth an additional US$ 8 Billion. Attending the agreements’ signing ceremony on Sunday, November 13th 2011 included Emirates Chairman Sheikh Ahmed Bin Saeed Al-Maktoum, Boeing Commercial Airplanes CEO Jim Albaugh and General Electric CEO David Joyce.

The deal highlights the Dubai-based carrier need to further continue growing its global route network while expanding and continuously modernizing its fleet. On November 3rd, Emirates announced better than expected financial results for the first half of its current fiscal year (the six month following March 31st 2011). The 18% increase in passenger revenue generated a net profit of US$ 225 million. With a current destination network integrating 115 destinations in 67 countries to its hub in Dubai, the carrier has achieved a remarkable 20% annual average revenue growth throughout 23 years of profitability in a tumultuous industry. Accordingly Its fleet has grown spectacularly from 60 aircraft in 2004 to 162 today. The Boeing 777-300ER With 95 Boeing 777 currently flying with the carrier, Emirates has grown into the world’s largest operator of the type, surpassing the likes of Singapore Airlines, Air France and British Airwyas. The 95 Boeing 777 it flies are composed primarily of Boeing 777-300ER now numbering 61 aircraft. The rest of the 777 fleet consists of 3 Boeing 777-200, 6 Boeing 777-200ER, 10 Boeing 777-200LR, 12 Boeing 777-300 and 3 Boeing 777-LRF. The proportion of aircraft owned by Emirates: Of these 95 aircraft, 48 have been purchased directly from the manufacturer Boeing while the remaining 45 aircraft are on operating leases from the likes of International Lease and Finance Corp., BOC Aviation (Bank Of China, formerly Singapore Aircraft Leasing Companies SALE), Mauritius-based Veling, General Electric Capital Aviation Services, Ireland-based Pembroke, Noor Islamic Bank of the United Arab Emirates, HSH Nordbank AG, Doric Asset Finance (Germany) and Dubai Aerospace Enterprises. Emirates previous orders history with Boeing prior to Sunday’s deal consisted of 89 total aircraft with 70 Boeing 777 aircraft comprising 3 Boeing 777-200 (ordered June 4th 1992), 6 Boeing 777-200ER (4 ordered June 4th 1992, 2 more ordered August 21st 1997), 10 Boeing 777-200LR (ordered November 21st 2005) and 70 Boeing 777-300ER ordered at various points between July 2004 and particularly on July 16th 2010 when a massive deal for 30 777-300ER was finalized during the Farnborough Air Show. Of the 777-300ER component, 29 aircraft have already been delivered including 7 this year alone notably 2 during October.  Combining the 31 Boeing 777-300ER backlog from previous years orders to the latest 50 firm orders means that no less than 81 new aircraft will reach the fleet at an average delivery pace of at least 7-9 aircraft per year. Once options are exercised there may be as many as 140 Boeing 777-300ER flying in Emirates colors when the decade ends. Characteristically, Emirate will introduce new planes at a very brisk pace. This fiscal year alone (from March 31st 2011 to March 31st 2012), Emirates will see 23 brand new aircraft reach its fleet, a greater proportion of which being 777-300ER and Airbus A380.

A Global Fleet built around the -300ER

After growing its fleet from 60 aircraft in 2004 to 162 today, Emirates is looking to escalate further its route network in destinations and in number of direct flights offered. This year alone it has introduced service to Baghdad, Geneva and Copenhagen integrating 115 destinations to 67 countries. In 2012 again newer long haul routes to Rio De Janeiro, Buenos Aires, Harare, Lusaka, Dallas, Seattle and Dublin will be implemented. The carrier’ plans to operate 90 Airbus A380 Super Jumbo gives a good impression of the scale of operations to evolve at the Dubai hub. To date 17 A380 have been delivered. We previously analyzed that these aircraft have been configured in a 489-passengers Ultra Long Range version and 517-passengers Long Range version. The 777-300ER as optimized to accommodate 360 passengers in 8 First Class, 42 Business Class and 310 Economy seats will become the workhorse of the carrier operating most higher frequency direct services to/from Dubai global hub. The 777-300ER 7,930 nautical miles (14,685 km) range carrying 360 passengers makes it ideally suited for each of the new routes planned for 2012. In that critical role, the 777-300ER brings proven, low-risk, stable operational record second to none. Emirates expects that when available, the 70 Airbus A350 on order will be able to replicate similar capabilities at yet lowered operating costs.

 This latest order confirms a trend we highlighted in a previous post; that improved economic outlook last year will allow carriers to order more of the highly reputable 777-300ER aircraft. The ‘lost decade’ of 2000-2010 (in revenues) is now giving way to the widespread necessity to rejuvenate fleets still dominated by aging 747-400 and earlier Boeing 777-200 and Airbus 340-200/300. Boeing shows it is capitalizing on the trend. Net orders for the 777-300ER this year reached 182, surpassing the 2005 high mark of 154. General Electric is also looking favorably at the additional business opportunities offered thanks to the highly reliable and efficient GE90-115B turbofan that powers the 777-300ER.

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