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Hot interest in Mideast for 7E7 stretch version

By David Bowermaster
Seattle Times aerospace reporter

John Hogan

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But in another part of the world, Boeing is actively courting several wealthy Middle Eastern airlines that have conveyed strong interest in the all-new jet.

Most notably, Qatar Airways is in detailed talks with Boeing on a potential order of 7E7s, an airline source close to the negotiations said yesterday.

But the carrier is keenly interested in the stretch version of the wide-bodied jet, rather than the smaller version Boeing is now marketing. Qatar will not close a deal until Boeing firms up that plane's design and production schedule.

Boeing has said the stretch 7E7-9 would have about 257 seats in a three-class configuration, 40 more seats than the baseline version. Both planes would fly up to 8,500 nautical miles.

Boeing also has said the 7E7-9 would not enter service until sometime between 2010 and 2012, two to four years after the baseline 7E7-8.

Emirates Current fleet: 66 Boeing and Airbus jets Planes on order: 78 jets worth $26 billion, including 45 Airbus A380s and 26 777-300ERs 2003-04 revenues: $3.6 billion, up 37% 2003-04 profit: $429 million, up 74% Qatar Airways Current fleet: 39 Airbus jets Planes on order: 25 Airbus jets worth $7.6 billion, including two A380s, plus options for 17 more 2003 revenues: NA 2003 profit: NA Etihad Airways Current fleet: 3 Airbus jets Planes on order: NA 2003 revenues: NA 2003 profits: NA Source: Airlines, Seattle Times reporting

"The (order) decision will be made when we know about the -9," the airline source said. "We need to see what (Boeing) thinks is a -9. There are a lot of people tugging at what that plane should be."

Qatar Airways, up to now an Airbus-only customer, hopes to see specifics from Boeing before the Farnborough Air Show opens near London on July 19, the source said.

Doug Groseclose, Boeing's vice president of sales for the Middle East and Africa, said Boeing is emphasizing the 7E7-8 in its talks with Qatar and other airlines in the region.

"When or if Boeing decides to build the stretch airplane, we could sell that plane in that part of the world. But right now our focus is strictly on the -8," he said.

He said Dubai-based Emirates, a Qatar competitor that also is most interested in the stretch jet, could initially order baseline 7E7s but might be given substitution rights to allow it to trade up to the larger model if and when it becomes available.

Qatar's interest is one reason the Mideast has become a top priority for Boeing's 7E7 sales and marketing team led by John Feren. Emirates, one of the fastest-growing carriers in the world, has expressed interest in the larger 7E7 for its rapidly extending route network.

"The basic 7E7 is rather small for our future requirements, and we'd like greater range, too," said David Snelling, an Emirates spokesman. "As ANA has already placed a launch order for the basic model, as we're taking 26 Boeing 777-300ERs, and as we have total orders valued at $26 billion, we have no immediate plans for 7E7s."

Emirates inaugurated service to the United States yesterday when it flew its first nonstop commercial flight between Dubai and New York City. The carrier already serves dozens of cities in Europe and Asia, and its profits mushroomed 74 percent to $429 million in the 12-month period ended March 31.

Abu Dhabi-based Etihad Airways is on Boeing's mind, too. Launched in 2003 with major support from the government of the United Arab Emirates, Etihad has big dreams of joining Emirates and Qatar among the world's airline elite.

Groseclose says there's a good chance Etihad will purchase 7E7s for mid- and long-haul routes.

Old Middle East friends also offer future promise. Gulf Air ordered its first Boeing jets in 1976. Its current fleet of 34 jets includes several aging wide-bodied 767s and Airbus A340s that are prime candidates for replacement by the 7E7.

"When you look at regions of the world that continue to grow, that is one that is doing very, very well," Groseclose said.

Anyone who's spent the past year watching wars in Iraq and Afghanistan, and violence in Saudi Arabia and Israel, might be perplexed by Groseclose's assessment.

The nations of Qatar, Bahrain, Oman and the United Arab Emirates, on the northeast tip of the Arabian Peninsula, remain prosperous oceans of calm despite the tumult engulfing the rest of the region, thanks to their small populations and large reserves of oil and natural gas.

They also remain vibrant markets for airplanes and air travel. The region's airlines are adding jets at amazing speeds, but air travel into and through the region is growing at equal speeds.

John Hogan, director of North American operations for Qatar Airways, said Qatar's passenger loads in the year ended March 31 were up 35 percent over the previous year.

Most of those passengers were traveling to the region from Europe and Asia, he said.

"The growth is there," he said.

The government of Qatar is encouraging the growth with a new Doha International Airport.

The $2.5 billion first phase will be finished in 2008, with capacity for 12 million passengers per year. When the airport is complete in 2015, it will have 80 gates handling 50 million passengers, putting it on par with Dallas-Fort Worth International Airport.

Emirates is a few years ahead of Qatar on the growth curve.

Dubai International Airport handled 18 million passengers in 2003, up 13 percent from 2002, making it the second-fastest-growing airport in the world.

It is in the middle of a $4.1 billion expansion that will increase capacity to 60 million passengers by 2006.

Many of those passengers are expected to be tourists. The government of Dubai is spending huge sums to turn the region into a vacation mecca.

One of the most audacious plans is "Dubailand," an amusement park that eventually be twice the size of Walt Disney World in Orlando, Fla.

Such projects seem fanciful against the Mideast's turmoil. But Riyaz Peermohammed, Emirates treasurer, noted at a recent conference that the airline has posted a profit every year since it was founded in 1985. He said traffic continues to rise because Dubai is a convenient transfer point for people traveling between Europe and the Middle East.

Hogan, of Qatar Airways, said he often plays the role of geography teacher as Qatar's lead representative in the U.S., explaining where the tiny country is and why its day-to-day life is so calm.

But that is not slowing the carrier down. Qatar will begin flying to the U.S. by the end of 2005, Hogan said, and he says getting a new airplane manufacturer in the company's fold will only help its prospects.

"We're getting to the point in our growth where we have to look at diversifying our manufacturing base," Hogan said. "I think (the 7E7) is probably the next logical step in diversifying our fleet."

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com.

Copyright © 2004 The Seattle Times Company

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