DUBAI – Middle East airlines will need to spend hundreds of billions of dollars on thousands of new aircraft over the next 20 years to meet above average demand for air travel and cargo, the world’s two largest aircraft manufacturers said on Monday.

Airbus and Boeing said there is tremendous growth potential in the region and forecast recovery is just round the corner, sentiments echoed by airlines.

“The recovery begins here,” John Leahy, Airbus chief operating officer for customers, told a press conference on the sidelines of the Dubai Airshow.

The Middle East aviation industry has been the one bright spot in the gloomy world picture, witnessing double-digit growth in passenger traffic for much of the year as regional carriers aggressively expand fleets and routes.

The figures, though, are a far cry from the near 20 percent growth seen at the end of 2007 and early 2008.

Boeing said it expects Middle East passenger traffic to grow at an average rate of 4.9 percent annually over next two decades.

“Next year will be a year of recovery, and in 2011 airlines will return to profitability,” Randy Tinseth, Boeing’s commercial airplane marketing vice president, said at the airshow.

AIRCRAFT DEMAND

Boeing projected Middle East airlines will need 1,710 new aircraft valued at around $300 billion over the next 20 years, with roughly 57 percent of demand for wide-body aircraft and 40 percent of demand for single-aisle aircraft.

“Middle East carriers are well positioned to meet those growth requirements with the fleet capacity they have in the form of unfilled orders or backlog,” Tinseth said.

Airbus, meanwhile, forecast carriers will require 1,418 new passenger aircraft worth $243 billion over the next two decades, with 60 percent of demand for wide body and “very large” aircraft such as its A380 and 40 percent of demand for single-aisle aircraft.

Both plane makers have spent much of the Dubai Airshow talking up the relative strength of the Middle East, home to many of their biggest customers, as they look to build closer ties with the oil-rich region.

“Clearly it (the Gulf) is a key region for us,” Louis Gallois, CEO of Airbus parent EADS, said on Sunday.

The huge forecast demand, however, was not evident at the show. This year has seen scant orders for commercial aircraft, with only Airbus scoring minor victories with a $3 billion order from Ethiopian Airlines and a $700 million order from Yemenia Airways.

This is in sharp contrast to plane orders approaching $40 billion on the first day of the airshow in 2007, the last time the expo was held, which went on to top $100 billion over the full five days.

“The last airshow in 2007 was absolutely a year about orders, and this year is more about working with our customers,” said Tinseth.

AIRLINES BULLISH

Middle East airlines also indicated better times are ahead, with both Emirates and Etihad Airways bullish on profitability going forward.

“I think we should do better than what we were expecting … double what we saw in the first six months, about 2 billion dirhams ($544.5 million) in profit,” Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum told reporters.

Emirates posted a 165 percent rise in first half profits earlier this month, driven by lower costs. Revenues, though, fell 13.5 percent during the period.

Sheikh Ahmed also said the airline is in talks with Boeing and Airbus to buy “tens of planes” as it in prepares for the global recovery.

Etihad CEO James Hogan said his airline is committed achieving profitability in 2011, albeit a year later than originally planned, and that it is on target to achieve revenues of $3 billion this year.

Hogan also announced plans to invest $750 million as the airline “takes the next steps” in its development.

The International Air Transport Association (IATA) in September cut the amount regional airline are expected to lose this year to $500 million, down from its previous projection of $1.5 billion, as they continue to capture long-haul market share.

The improved Middle East outlook contrasts sharply with the IATA’s international outlook, with the industry body forecasting airline losses will widen to $11 billion from $9 billion due to weaker revenues and high oil prices escalating operating costs.

(With input from Zawya Dow Jones and Reuters)

Source: business.maktoob.com