November 5, 2008 / 12:49 PM / 10 years ago

Dubai low-cost carrier in delay talks with Boeing

DUBAI (Reuters) - Low cost airline FlyDubai is talking to Boeing (BA.N) about aircraft delivery after delays due to a strike at the U.S. planemaker’s factories, but still aims to begin operating in the second quarter, its chief executive said on Wednesday.

Chief Executive Officer of FlyDubai Ghaith al-Ghaith speaks during the Reuters Middle East Investment Summit in Dubai November 5, 2008. REUTERS/Ahmed Jadallah

“Now the Boeing strike is over — our first aircraft was supposed to be delivered by April, and we were going to begin about two weeks after — we’re talking to Boeing to understand the delay,” Ghaith al-Ghaith told the Reuters Middle East Investment Summit.

Boeing resolved a 58-day machinists’ strike on Saturday that had halted work on planes at the firm’s Seattle-area plants.

The government-owned budget carrier ordered 54 Boeing single-aisle 737 aircraft in a deal worth around $4 billion in November. It ordered 50 of the planes from Boeing and four from leasing company Babcock & Brown BNB.AX.

The airline, which state-owned Emirates airline EMAIR.UL said it would help set up, had planned for five airplanes to be delivered in the first financial year.

FlyDubai plans to still launch operations by the second quarter of 2009 and target a “handful” of destinations in its first year as it taps growing demand for travel in the region, Ghaith said.

“As far as we are concerned, we’re planning to start the airline as we had intended,” Ghaith said.

“There’s definitely a pent (up) demand in this part of the world,” he said adding FlyDubai would look at a catchment area of four hours with focus on India, Pakistan, Eastern Europe and Africa.

“We have a study that says there are about 70 destinations where we believe there is sufficient business in our five-year plan,” Ghaith said, declining to give further details about planned destinations.

The new carrier is the fifth in the region that is low-cost and will compete with Sharjah, United Arab Emirates-based Air Arabia AIRA.DU and Kuwait’s Jazeera Airways (JAZK.KW), which also operates out of Dubai.

“We haven’t really seen the light as far as open skies is concerned, but we believe the tide is changing, there will be more openings as far as the air politics is concerned,” Ghaith said.

Gulf Arab airlines have been buying billions of dollars worth of aircraft, banking on their geographical position amidst Europe, East Asia and Africa to trumpet the region as a hub for international passenger traffic.

Airlines have also benefited from a more than 50 percent decline in oil prices since it hit an all-time high of $147 in July.

“When we planned our business plan, we had oil over $100. We believe the reduction in the base price will be very good for our business,” Ghaith said.

Additional reporting by Thomas Atkins, Jason Benham and Amran Abocar; Editing by Hans Peters

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