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Dubai firm axes Airbus orders in crisis fallout | ASHARQ AL-AWSAT English Archive 2005 -2017
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PARIS/DUBAI, (Reuters) – A troubled Dubai leasing firm has cancelled all its remaining Airbus orders worth $5.8 billion, it emerged on Thursday, as the after-shocks of the financial crisis dampened celebrations of record new jet sales.

The clearout by DAE Capital failed to spook investors in Airbus parent EADS , which is well ahead of Boeing this year, but delivered a blow to Dubai at a time when the emirate is touting its recovery from a crippling 2009 debt crisis.

It also raises questions over the fate of about $9 billion in unfilled orders by the same leasing company from Boeing , which is due to update its order book later on Thursday.

DAE Capital has 56 unfilled orders from Boeing including 15 of its newest freighters based on the 747-8 stretch jumbo, according to the U.S. company’s website.

Officials at DAE Capital, whose chief executive Robert Genise resigned on June 30, were not available for comment.

An Airbus spokesman confirmed the cancellations, which emerged in a monthly order snapshot dominated by strong sales of its A320neo passenger jet at last month’s Paris Air Show.

Airbus sold a total of 777 aircraft in the first half, or 640 after accounting for cancellations such as the 45 remaining orders for A320 and A350 jetliners withdrawn by DAE Capital.

According to the most recent available data, Boeing won 210 gross orders and 151 net orders between Jan. 1 and June 28.

Fresh demand has been dominated by orders for fuel-saving narrowbody jets from India and Asia to dampen oil costs, but planemakers are still managing backlogs left vulnerable in some cases by the abrupt end of a previous ordering boom in 2008.

DAE had already cancelled Airbus orders worth $4.7 billion as well as a slew of Boeing orders in March and entered negotiations with both planemakers about the rest of its orders.

French brokerage Oddo said investors were prepared for the cancellations. Shares in Franco-German-led EADS fell 0.3 percent to 23.32 euros in a slightly higher European market.


Dubai Aerospace Enterprise was formed in 2006 in a collaboration between several Dubai names including sovereign wealth arm Investment Corporation of Dubai, developer Emaar and state-linked DIFC Investments.

The company ordered more than 200 aircraft during the market heyday in 2007 but its ambitions fizzled out as the global financial crisis engulfed Dubai. It was reported last year to have ceded some of its orders to Dubai-based airline Emirates.

“The shareholders in DAE are government entities and each of them own at minor stake. So there is not a single entity that is championing for DAE and this may be a reason why it is marginalised,” said Khuram Maqsood, former director at a Dubai investment fund.

“The cancellations had to do with the liquidity issues DAE is facing, and in general, Dubai is facing. The cancellations are just a symptom of the ground reality.”

Still, a June bond issue by the Gulf Arab emirate came hard on the heels of a highly successful bond launch by flagship carrier Emirates — the largest buyer for the Airbus A380 — boosting Dubai’s case that the worst was behind it.

The total of 777 first-half aircraft orders at Airbus includes 180 planes sold to India’s IndiGo and 200 to Malaysian budget carrier AirAsia — two deals that set volume records on successive days at last month’s upbeat air show.

They do not however include 88 A320 jets sold to China on June 28 amid tensions with Europe over emissions trading rules.

“Some details still need to be finalised,” an Airbus spokesman said.

Airbus delivered 258 aircraft including 10 A380 superjumbos between January and June.