Boeing 777X delays may affect Dubai-based Emirates’ fleet plans: president

An employee signs a poster before a ceremony that signaled the beginning of production of the first Boeing 777X aircraft at the company’s factory in Everett, Washington in this October 23, 2017 file photo. (AFP)
Updated 18 October 2019

Boeing 777X delays may affect Dubai-based Emirates’ fleet plans: president

  • Emirates has 150 of the 350-400-seat model on order, of which eight were originally slated for delivery next year
  • Boeing suspended load testing on its new 777X in September, when media reports said a cargo door failed a ground test

LONDON: Delivery delays to Boeing’s 777X jetliner are holding back Emirates’ growth and could partially affect the Gulf carrier’s broader fleet requirements, airline President Tim Clark said on Thursday.
Dubai-based Emirates has 150 of the 350-400-seat model on order, of which eight were originally slated for delivery next year, and has yet to firm up orders for 40 of Boeing’s mid-size 787 jets.
The world’s largest operator of long-haul aircraft is also in talks to complete an order for 70 Airbus jets, with both sets of negotiations in focus ahead of the Dubai Airshow in November.
Boeing suspended load testing on its new 777X in September, when media reports said a cargo door failed a ground test. There have also been issues with its General Electric GE9X engine, the largest ever produced for an airliner.
The plane was originally due to enter service with Emirates in June 2020. In an interview, Clark said Emirates no longer expects to receive the first 777X before “April or the second quarter” of 2021.
“That has conditioned everything else,” he told Reuters on the sidelines of the Airlines 2050 conference in London.
“First of all, I want to know when the thing’s going to come,” he said. “Our fleet plans are very much driven by when these aircraft are going to be delivered to us.”
The airline’s capacity growth is being held back by the delivery delays and will resume only “when I get some visibility on all this,” Clark said.
A Boeing spokesman said the US manufacturer was working through its “disciplined development process” to prepare the 777-9 for its first flight and delivery to launch customers.
In September, Boeing Chief Executive Dennis Muilenburg said it was “working toward entry into service (of the 777X) by the end of 2020,” subject to the availability of engines.
There has been speculation that Emirates could defer or reduce 777X orders, or else downgrade some to the smaller 787.
Clark told the Seattle Times in June that Emirates was discussing a combination of 777Xs and 787s that may preserve overall numbers but substitute some jets and defer others.
Planemakers already face pressure over late deliveries of smaller aircraft, with Boeing’s 737 MAX grounded following two accidents and Airbus’s A320neo hit by industrial delays. But the November air show is expected to test airlines’ leverage in negotiations for some of the industry’s biggest jets.
While Boeing tries to finalize its 787 deal, Airbus will be hoping to complete an order for 40 similar-sized A330neo and 30 A350 jets which Emirates tentatively ordered in February when Airbus decided to halt production of its flagship A380.
Asked about the status of new Airbus orders, Clark stressed the importance of keeping costly assets working reliably.
“You’ve probably heard me say in the industry, I want aircraft that will give me 99.9 percent dispatch reliability from day one. Until they can contract for that, we’re not going to take them.”
An Airbus spokeswoman said the A330 family has a dispatch reliability — or the proportion of departures without technical problems — of 99.4 percent, with the A350 already at 99.9 percent.
Clark said the aerospace industry had “over-promised” in recent years, placing jets in the market before they had the technical maturity to deal reliably with hot Gulf conditions.
“The engines in particular have got to be able to do that, and I’m not quite sure they are there yet.”
He also said Emirates would begin flying to Mexico City as planned on Dec. 9, despite a successful challenge by Delta Air Lines’ partner Aeromexico against a bilateral government pact underpinning the new route.
“This is Aeromexico and Delta making life difficult for us,” Clark said. “There will be a legal wrangling going on, but as far as I’m concerned, we’re going to fly.”
Delta referred queries to Aeromexico which had no immediate comment.


Automakers expect Trump will delay decision on imposing EU, Japan tariffs

Updated 14 min 50 sec ago

Automakers expect Trump will delay decision on imposing EU, Japan tariffs

  • Foreign companies are eager to highlight US investments to try to dissuade US president

Major automakers think US President Donald Trump will again this week push back a self-imposed deadline on whether to put up to 25 percent tariffs on national security grounds on imported cars and parts from the EU and Japan amid an ongoing trade war with China, five auto officials told Reuters.

The anticipated delay — expected to be announced later this week — comes as foreign automakers are eager to highlight US investments to try to dissuade Trump from using tariffs that they argue could cost US jobs.

US Commerce Secretary Wilbur Ross said earlier this month tariffs may not be necessary. EU officials expect Trump to announce a six-month delay when he faces a self-imposed deadline this week. Trump in May delayed a decision on tariffs by up to 180 days as he ordered US Trade Representative Robert Lighthizer to pursue negotiations.

Lighthizer’s office recently asked many foreign automakers to provide a tally of investments they have made in the US, several auto industry officials told Reuters.

The White House and Lighthizer’s office declined to comment.

FASTFACTS

• US is considering 25 percent tariffs on national security grounds on imported cars and parts from the EU and Japan.

• President Donald Trump in May delayed a decision on tariffs by up to 180 days as he ordered US Trade Representative Robert Lighthizer to pursue negotiations.

On Wednesday, Tennessee Gov. Bill Lee, a Republican ally of Trump’s, plans to attend a groundbreaking at Volkswagen AG’s Chattanooga assembly plant where they will mark the beginning of an $800 million expansion to build electric vehicles and add 1,000 jobs. The high-profile event will also include remarks from Germany’s ambassador to the US.

VW announced the plan to begin producing EVs by 2022 in Tennessee in January.

Daimler AG said in late 2017 it planned to invest $1 billion to expand its manufacturing footprint around Tuscaloosa, Alabama, creating more than 600 jobs. Tariffs on Japan seem even less likely than the EU, experts say.

Japanese automakers and suppliers have announced billions of dollars in investments, most notably a $1.6 billion joint venture plant in Alabama by Toyota Motor Corp and Mazda Motor Corp.

Trump and Japanese Prime Minister Shinzo Abe signed a limited trade deal in September cutting tariffs on US farm goods, Japanese machine tools and other products.

Although the agreement does not cover trade in autos, Abe said in September he had received reassurance from Trump that the US would not impose auto tariffs on national security grounds. Lighthizer said the two countries would tackle cars in negotiations expected to start next April.

Stefan Mair, member of the executive board of the BDI German industry association, said a deal to permanently remove the threat of tariffs was needed. “The investments that are not being made are costing us the growth of tomorrow, even in sectors that are seemingly not affected,” he said.

Germany’s merchandise trade surplus with the US — $69 billion in 2018 — remains a sore point with the Trump administration as does Japan’s $67.6 billion
US trade surplus last year — with two-thirds of that in the auto sector.