Ethiopian Airlines: Long-term benefits of Dreamliner fleet outweigh delay related inconvenience

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Following in the footsteps of other international carriers, after they sought compensation for delayed Dreamliners (787) orders, Ethiopian Airlines is rumoured to order Boeing 777 aircraft, which burns less fuel and costs much less in maintenance, to its traditional fleet. However, it is widely believed that replacing the 787 oders with B777s would not prove as cost effective as thought due to a much greater fuel efficiency from the B787 as well as a more competitive seating capacity.

This piece of information comes after several international carriers revealed their intention to place orders for new aicraft from either Boeing or Airbus following issues related to Boeing 787 delays. The official launching of Boeing 787 or Dreamliner, a long-haul aircraft which replaces the 757 and 767 whose initial launching was set for September, 2007, has now been postponed to the first quarter 2010.

Sources close to Ethiopian Airlines have revealed that the national carrier is expected to place an order for Boeing 777 aircraft, but official sources have indicated that the airline has not reached any decisions yet. The 787 construction programme was officially launched on 2004. The launching of the 787 has undergone no less than five delays.

Inasmuch as the delays caused has prompted many airlines to cancel their orders, bring standing orders to only 850, the waiting line is still very long. According to the Wall Street Journal, orders hit a highest point at 900. It should be noted that the All Nippon Airlines which is first on the waiting list placed an initial order for some 50 aircraft in April, 2004. Ethiopian Airlines on the other hand ordered ten 787 Dreamliners oin February, 2005.

Girma Wake, CEO of Ethiopian Airlines, confirmed the order a few weeks ago when he told Reuters that the airline will take all ten of the Dreamliners it has ordered, and may buy more planes as it enjoys medium-term growth of 20 per cent in revenues and passengers. Indeed, the airline is reported to have made an astonishing $78 million in profits, a 53 percent growth against the last Ethiopian fiscal year, at a time when the aviation industry has been hard hit by the global economic downturn.

Albeit the CEO’s confirmation of the order, Boeing has only recently announced completion of the intermediate gauntlet phase of testing on the first 787 Dreamliner, which as expected is facing further delays. Analysts have indicated that the Ethiopian order which is due July 2010 risks further delays, however, long-term benefits of a 787 fleet outweigh the delay related inconvenience.

Although the delays have led some airlines to cancel their orders, the promise of cost effectiveness and environmental friendliness of the new planes serve as strong arguments. Boeing has said that “It is expected that advances in engine technology will contribute as much as 8 percent of the increased efficiency of the new airplane, representing a nearly two-generation jump in technology for the middle of the market.”

This could explain why Boeing has recently put all talks of delay related compensations on hold. According to industry officials, until its actual delivery schedule is clear, Boeing will not negotiate compensations.

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