Dubai Airshow: defence spending boosts order books

Visitors look at an Emirates airline"s Airbus A380 dislayed at the Dubai Airshow Image copyright AFP

An absence of big civil aircraft orders on the second day of the Dubai Airshow has underlined a slowdown in the rate of which airlines are buying planes.

Defence deals were again the main focus, although Emirates Airline signed a $16bn (£10.6bn) deal for GE Aviation to maintain aircraft engines.

The previous Dubai show, in 2013, notched up a record $206bn in orders for passenger aircraft.

But after a spending spree over recent years, airlines have reined in orders.

A $1.27bn contract from the United Arab Emirates for an upgraded Saab radar surveillance system for new aircraft reflected a shift in focus at the show.

Additionally, Lockheed Martin won a $262.8m contract from the US Air Force to service some of Saudi Arabia's fighter jets, and Embraer Defense & Security said Lebanon would buy six Super Tucano aircraft for basic missions and training.

The worsening security situation in the Middle East has led to several states increasing their defence spending, despite falling oil prices meaning a cut in revenues.

Saudi Arabia and the UAE have been involved in the war in Yemen against the country's Shiite Houthi rebels and are part of the US-led coalition bombing against the Islamic State group in Syria and Iraq.

Image copyright AFP
Image caption Embraer Defense & Security said Lebanon would buy six Super Tucano aircraft

At the last Dubai Airshow, Emirates Airline, Eithad, and Qatar Airways led the way in ordering a record number of aircraft.

And with the production lines of planemakers Boeing and Airbus booked for years to come, it was no surprise that the Gulf's big three carriers "paused for breath", said Richard Aboulafia, vice president at US aerospace consultancy Teal Group.

Many airlines are ordering for delivery so far down the line that future economic and political uncertainties simply cannot be anticipated, he said.

Qatar Airways chief executive Akbar al-Baker, whose company placed orders worth $19bn at the last Dubai show, said his airline did not need to make another major aircraft purchase.

'Replacement strategy'

He told Associated Press: "Buying airplanes is not buying groceries in a supermarket. We have to order at one time, long-term, and this is exactly what we did two years ago and now we don't have any more need."

India's Jet Airways has announced the purchase of 75 Boeing 737 Max aircraft, worth around $8.25bn at list price, although airlines typically get discounts for large orders.

"The announcement marks the largest order in Jet Airways' history and supports the airline's replacement strategy," the airline said in a statement.

But the biggest deal of the day came from Emirates, whose $16bn services contract with GE Aviation for engine maintenance and repair will last 12 years.

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