How the 'Iran Threat' Is Being Used to Spur Weapons Profits
November 14, 2011 Al Jazeera & The Montreal Gazette & The Dubai Airshow
Aviation professionals are hoping that this week's Dubai Air Show will help kick start the struggling industry. Plagued by high oil prices and declining demand, airlines across the globe are finding it hard to stay afloat. Meanwhile, heightened worry about Iran's nuclear intent could spur defence orders at the show. Arms makers from the United States, Europe and Russia will be displaying their latest weapons.
Dubai Airshow Brings
Billions in Business Deals Kamahl Santamaria / Al Jazeera
DUBAI (November 13, 2011) -- Aviation professionals are hoping that this week's Dubai Air Show will help kick start the struggling industry. Plagued by high oil prices, a declining demand in Europe and a lack of new talent, airlines across the globe are finding it hard to stay afloat. However, insiders hope that Dubai's recent order of 50 Boeing 777 jets, at a cost of $26 billion, is a sign that the situation is changing course.
DUBAI (November 11, 2011) -- Gulf airlines and lessors could splash out more than $20 billion on Airbus and Boeing jets at next week's Dubai air show, underscoring the region's role as the industry's chief paymaster amid Europe's worsening sovereign debt crisis.
Emirates is in talks for a hefty order of at least 30 and possibly as many as 50 Boeing 777 long-range aircraft worth $8.5 billion to $14.5 billion and Qatar Airways is expected to place a $6.5-billion order for 50 fuel-saving A320neo jets and five A380s from Airbus, industry sources said.
Heightened worry about Iran's nuclear intent after a UN agency said it had worked to design nuclear bombs could spur defence orders at the show. Arms makers from the United States, Europe and Russia will be displaying their latest weapons.
The last air show two years ago was muted by Dubai's own crisis, but the city state is recovering after a bailout from neighbouring Abu Dhabi. Burned by its reliance on property and the financial sector, Dubai is focusing on becoming a transport and logistics hub.
"We absolutely expect the Gulf airlines to continue on the expansion trail -- they are very into having a young fleet and are determined to be superconnectors who try to hoover up traffic flows on a global basis," said Stephen Furlong, transport analyst at Davy Research in Dublin.
"While in other parts of the world you have things like the EU emission scheme and nighttime flying bans, in the Gulf, the governments and the airlines are joined at the hip -- the governments are totally in line with the growth plans."
Orders will probably include dozens of new sales for Airbus's revamped A320neo short-haul jet, which has enabled the European plane maker to pass Boeing in the order race this year. But the EADS subsidiary will also be under pressure to explain delays in the A350 passenger jet directly to Gulf customers whose support is crucial for Europe's answer to Boeing's carbon-composite 787 Dreamliner to succeed.
Chief among those is Qatar Airways chief executive Akbar Al Baker, who regularly blasts Airbus and Boeing over design decisions and delays and has abruptly cancelled air show deals.
EURO ZONE THREAT?
Emirates and Qatar Airways have 370 planes to be delivered over the next few years, but the euro zone debt crisis could mean some orders being cancelled or put on hold.
Financing is increasingly an issue as the industry's traditional backers -- European lenders and particularly French banks -- have become more risk averse and are shying away from new deals. Emirates CEO Tim Clark told Reuters recently the airline was looking at the Islamic finance market to fund aircraft deliveries.
That said, the shakeout in Europe may bring advantages of cost for Gulf carriers. Daniel Broby, chief investment officer at Silk Invest, said Gulf airlines could snap up bargain deals as the world waits for Europe to resolve its debt crisis and ease doubts over growth.
"The advantage of buying at the air show at this stage in the cycle is that they are bound to secure good prices, because there will be little demand from Europe or the United States."
Airlines placed around $14 billion in orders at the last biennial show in 2009, sharply down from $155 billion in 2007.
The show, its tarmac bristling with the latest warplanes, missiles and defences, will also serve as a pressure gauge for regional tensions as the European Union considers new sanctions against Iran following an IAEA report which suggested Iran is seeking nuclear weapons.
The United States and Israel have refused to rule out any option to prevent Iran from acquiring a nuclear arsenal.
Iran denies trying to build atom bombs and its supreme leader, Ayatollah Ali Khamenei, said any U.S. or Israeli attack on its sites would be met with "iron fists."
"The fear of Iran is the main driver of armament in the region," said Riad Kahwaji, analyst at Institute for Near East and Gulf Military Analysis.
Although U.S. fighter jets are traditionally an important part of the show and its aerial displays, the business end of the show is likely to feature a publicity battle between the Eurofighter Typhoon and the Rafale as they face off in an $11-billion contest for 127 aircraft in India.
The show is the first industry gathering since the Libyan conflict ended and both manufacturers will be keen to play up the performance of their combat jets in the NATO operation.
Analysts will be also be listening for any news about talks between the UAE and France over the purchase of 60 Rafale jets, estimated at $10 billion.
Others to watch are UAE early warning system orders -- with Boeing, Northrop Grumman and Swedish aerospace group Saab likely to be in competition -- and purchases by Qatar, which is modernizing its air force.
Welcome to the next edition of the Dubai Airshow, taking place from 13 to 17 November 2011 in
the Gulf city of Dubai.
Every two years the aerospace industry's leading companies and decision makers gather for the Dubai Airshow -- an event dedicated to connecting buyers and sellers alike. From first time exhibitors to those who have been with us since the very start, we are committed to delivering a show that enables all participants to maximize the return on their investment.
Opportunities strike when you're in the right place, at the right time, which is why it's important to be at the Dubai Airshow. Commercial concerns are now reviewing their fleets and planning for a future, which will see air travel recover, as the world economy improves over the coming years.
And nowhere more so than in the Middle East, where GDP growth of 4.3 percent is outstripping the global average. IATA expects Middle Eastern carriers to post a profit of $100 million, a percentage of which will surely be used for investment in new aircraft as this new decade unfolds.
Defence spending in the Middle East is forecast to exceed $100 billion by 2014 and shopping lists for this procurement programme will undoubtedly be evident at the air show, which will feature the latest military aircraft and associated hardware.
The UAE is also reviving its fortunes and its capital, Abu Dhabi, is investing heavily in aerospace, particularly in Al Ain, where it is transforming the oasis city into the aerospace centre of the Middle East, attracting big players in the industry.
Further up the highway, Dubai's involvement in the aerospace industry, spearheaded by the Dubai Airshow, has seen steady growth over the past 20 years. The latest edition of the Dubai Airshow, in November 2009, drew 890 exhibitors from 47 countries and almost 53,000 industry professionals from 138 countries, an 18 per cent rise in attendance from the previous show.
We expect that growth to continue with even more exhibitors and visitors at the 12th running of the event, as confidence returns to the aerospace industry, and we hope to see you there!
Key Figures (2009)
52,978 Trade Visitors
890 Exhibitors from 47 Countries
130 Aircraft on the Static Park
511 Delegation Representatives
78 Aircraft Sold
1,389 International & Regional Media
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