Dubai Could Scale Back Plane Orders

Dubai-based Emirates Airlines may be buying jets like crazy but the state-controlled Dubai Aerospace Enterprise's (DAE) order for 200 aircraft may be at risk. The Wall Street Journal reports that the $29 billion order, split evenly between Airbus and Boeing could become a casualty of Dubai's struggle to contain its massive debt. The orders could end up going to Emirates Airlines or flyDubai although the WSJ quotes a flyDubai spokeswoman for flyDubai as saying that the airline has no plans to increase its order.

In 2007 before the global recession began, Dubai Aerospace Enterprise's leasing division, DAE Capital ordered the 200 planes planning to rent them out to airlines. So far 10 of the planes have been delivered. But Dubai's picture has changed dramatically in the last few years due to the economy and the change in Dubai's real estate wealth and now DAE is having trouble making the installment payments. These payments can total tens of millions of dollars per plane, and neither Airbus nor Boeing will start assembling an ordered plane if a customer is unable to pay. Shown at right are Airbus Chief Operating Officer John Leahy, Airbus President and Chief Executive Officer Tom Enders, Dubai Aerospace Enterprise Capital CEO Bob Genise and DAE acting CEO George Mushahwar posing with an Airbus model plane at Farnborough Airshow in 2008 after DAE Capital signed an order for 100 Airbus aircraft.

Earlier this year Emirates Airlines announced that it has ordered 32 A380s from Airbus for $11.5 billion in addition to the previously ordered 58 A380s creating the world's largest fleet of the doubledecker aircraft. In the past two years Emirates has put 10 A380s into operation to serve eight destinations.The company had a record profit increase of 248 percent in the last fiscal year and has said it could hit $1 billion in profits this year.