Airbus, Boeing sign $5bn Gulf supply deals

Airbus and Boeing signed deals to buy some $5bn of parts and materials from Abu Dhabi yesterday, in a sign Gulf states are seeking a reciprocal boost to their economies from the huge orders they have placed with the planemakers.

Gulf airlines, led by Dubai’s Emirates and Abu Dhabi’s Etihad, struck plane deals worth almost $150bn – or more, including options – on the first day of the Dubai Airshow on Sunday.

The buying spree underscored a shift in power in the aviation industry, as oil-rich, fast-growing economies of the Gulf take advantage of their strategic position between East and West to draw more travellers from hubs in Europe and Asia.

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While the orders are a big boost to Airbus and Boeing, the world’s dominant civil aircraft manufacturers, suppliers in Europe and the United States are worried they will suffer from the growing globalisation of the aircraft supply chain, in which Gulf firms are playing a part. Airbus agreed a new deal yesterday with Abu Dhabi’s state investment fund Mubadala to expand their partnership “for further composite and metallic aerostructure production in the United Arab Emirates, in addition to procurement of composite raw materials, worth $2.5bn”, Mubadala said.

Separately, Boeing said it had also signed a new deal with Mubadala for Abu Dhabi to supply as much as $2.5bn in advanced composites and machine metals to the US planemaker.

In addition, Boeing said it had reached an agreement with Abu Dhabi’s Tawazun Precision Industries, a state-owned manufacturing company, to set up a facility in the United Arab Emirates for producing aerospace parts.

The facility will be up and running by 2016 and will produce parts for other aircraft manufacturers as well as Boeing, the two parties said, without disclosing financial details.

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Airbus shares jumped more than 3 per cent yesterday following Sunday’s slew of orders, which boost its A380 – the world’s biggest passenger jet, which had been struggling for orders. Boeing’s orders boost its new version of the 777 jet.

The hub cities in the Gulf – Dubai, Abu Dhabi and Doha – are spending billions on infrastructure in a bid to attract travellers and diversify their oil-based revenues, at a time when faltering Western economies are struggling to invest.

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