Farnborough, United Kingdom: US aerospace giant Boeing on Monday fired the first shot in an orders battle with European rival Airbus at Farnborough airshow, clinching a $13.5-billion deal for 100 MAX planes from Delta Airlines in a huge vote of confidence for the crisis-hit jet.
The deal marks a huge turnaround for the MAX jet which had suffered two deadly crashes in 2018 and 2019.
Outgoing British Prime Minister Boris Johnson meanwhile opened the prestigious five-day event as the aviation sector plots its recovery from heavy COVID-19 fallout.
US carrier Delta lodged its first ever order for medium-haul MAX aircraft, with options for 30 more of the fuel-efficient planes as it seeks to replace its aging fleet and cut damaging emissions.
Boeing revealed also that Japanese airline ANA had agreed to purchase 20 of its smaller MAX 8 jets — worth $2.4 billion — plus two 777-8 freight planes.
“The Boeing 737-10 will be an important addition to Delta’s fleet as we shape a more sustainable future for air travel, with an elevated customer experience, improved fuel efficiency, and best-in-class performance,” said Delta chief executive Ed Bastian.
The news comes as airlines worldwide seek to replace aging fleets with fuel-efficient planes that emit less carbon dioxide.
The first visitors to Farnborough, southwest of London, were meanwhile hit by scorching temperatures amid Europe’s ongoing heatwave.
Defense aerospace companies are also expected to emerge as big winners, with Russia’s invasion of Ukraine boosting spending on nations’ armed forces.
Russian companies have been banned from Farnborough due to the war.
The event coincides with fast-moving political turmoil in Britain after Johnson’s recent announcement that he is stepping down as Conservative party leader, sparking a fractious contest to replace him also as prime minister.
“This government believes in aviation and its power to bring jobs and growth to the entire country,” Johnson said Monday as the event opened.
“After three years in the cockpit... I am now handing over the controls seamlessly to someone else. I don’t know who,” he added, sparking laughter from delegates.
Johnson also said that the government was “investing massively in defense.”
This year’s event — one of the world’s largest civilian and defense shows — is the first global aviation get-together since the Paris airshow in 2019, before COVID-19 hit.
Farnborough was canceled in 2020 as the Covid health crisis grounded aircraft and ravaged the sector.
Global air traffic is gradually recovering and in May reached more than two-thirds of its pre-pandemic level, according to the International Air Transport Association.
That recovery has however faced headwinds from rocketing inflation fueled by historically high energy prices and higher wages, while staff shortages constrain airports and spark flight cancelations.
Boeing wins $13.5bn MAX jets deal as Farnborough opens
Boeing wins $13.5bn MAX jets deal as Farnborough opens
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
