LONDON — According to reports from Reuters, both Airbus and Boeing are in the process of preparing themselves for a significant level of order disruption from Middle Eastern giant, Etihad Airways.
The Abu Dhabi-based carrier has just posted a $2 billion loss following the insolvencies of both Air Berlin and Alitalia—two airlines that were part of significant investments made by the Emirati group.
As a result of this hefty loss, Etihad is pressing ahead with a company-wide review.
What’s in store?
Etihad currently holds a strong backlog of 160 Airbus and Boeing planes. The carrier might be looking at options of either swapping models, delaying deliveries or potentially making outright cancellations.
With Etihad declining to comment, international media has turned to Boeing and Airbus for insight. Boeing said that it was citing policy to “not comment on delivery schedules nor any discussions with customers.” Airbus has not released a comment as of yet.
Planemakers risk order disruption as Etihad reviews strategy https://t.co/Vh4hmlKwdt
— Reuters Top News (@Reuters) May 6, 2018
Etihad has 88 Airbus and 78 Boeing jets on order, valued at over $10-15 billion at list prices.
These orders came from secure deals made around five years ago at prospective airshows such as Paris and Farnborough.
This potential order disruption might hinder Boeing’s and Airbus’s Dreamliner and A350 production lines. Out of the 88 Airbus planes Etihad has ordered, 62 of them are A350s. On the Boeing side, out of the 78 aircraft ordered, 52 are 787 Dreamliners.
These orders were placed at a time when the likes of Emirates and Qatar Airways were aggressively expanding in the market and adding new destinations at a significantly fast rate.
As Etihad tried to keep up the pace and remain competitive in the Middle East, things might have gotten out of hand.
Etihad not only purchased a myriad of planes, they also got their hands on several airlines that held a not-so-promising future—an approach ultimately failed when Alitalia and Air Berlin both went into administration.
The outlook for Etihad is not as clear as its management would like. However, the likelihood of seeing this airline go out of business is very low, as it’s backed up by a wealthy government which holds its reputation as a primary asset.