Helping customers secure finance

Dubai: Last month's Dubai Airshow resulted in 211 orders worth $20.5 billion (Dh75.3 billion) for French plane manufacturer Airbus. The news reflects the robust appetite among Middle East carriers.

Airbus' man in the region — Habib Fekih — says he is hungry for more.

The 60-year-old president of Airbus Middle East and Airbus Corporate Jets says the Toulouse-based planemaker has exceeded its order target of 1,500 planes for this year due to the strong orders it won in Dubai.

In an exclusive interview with Gulf News he discusses the strong role that the Middle East plays in Airbus' future growth strategy.

GULF NEWS: What's your target for 2011 orders? And how much do you see the Middle East accounting for of that?

Habib Fekih: We projected bagging orders for 1,500 planes for this year. But if you count what we did during the Dubai Airshow, we have already exceeded our target for the year. It may be that we will close this year at above our target number.

As for this region's contribution, if we take only firm orders, it accounts for around eight per cent of that. Please don't forget that the Middle East as a region only represents 5.3 per cent of the total air traffic in the world. And we have eight per cent share of the total order book, it means we have a bigger portion than the region's importance in terms of worldwide traffic.

How does that translate into Airbus' revenue share out of the Middle East?

If we take the global revenue in terms of Airbus' backlog, this region accounts for approximately 19 per cent. That's because we have a lot of wide body aircraft on order from the Middle East carriers.

So what really happened with Qatar Airways during the Dubai Airshow?

I will give you just a simple example. You go to a car dealer to buy a car. You love a particular car and decide to buy it after you've got the price and everything. You then go to the showroom and at the last minute you say you need ‘that' option — it could be a GPS or whatever. Or it could be the opposite — perhaps the car was supposed to come equipped with ‘that' thing but it wasn't as there could have been a misunderstanding. And you can have a debate on this at the last minute. But that doesn't mean you hate the car, or the relations are bad. It just means that you'd like to have that option at the best price. It's all a part of negotiations.

What happened with Airbus and Qatar Airways at the airshow was that for the first time perhaps, this negotiation was transparent.

But was the problem big enough to warrant a comment like "Airbus is still learning how to make airplanes" from the Qatar Airways chief?

I return the question. If it was big enough, then how come he signed the contract? It's all a part of negotiations. We love Qatar Airways and Mr Akbar Al Baker [its CEO] is a good partner. Between friends, comments like such are acceptable.

European banks have been asked to take a 50 per cent cut on Greek debt, which means their capability to finance aircraft is now going to be limited. How do you see that impacting planemakers?

We are not immune to the European crisis. But so far, despite the crisis, we see that the aircraft orders are continuing.

It means that people are not afraid to place orders, and of course, these orders will be delivered only after a few years.

However, we understand that this could limit their ability to finance aircraft. But so far we are aware that our customers have been able to find solutions to finance [aircraft deliveries] at acceptable condition. And we are delivering all the aircraft planned for 2011. So far, so good.

In 2012, we have a good visibility of all aircraft to be delivered up to May. To be honest, we are monitoring the situation and we are looking for different options like ECA (export credit agencies) financing, Islamic financing, investment funds, contributions and so on. There are a lot of options which have not been tapped sufficiently by the aviation industry to finance aircraft acquisition.

Is Airbus in any way helping customer secure financing for aircraft?

Airbus has never failed to help customers find solutions. Up to now, the classic [financing] schemes are working. We make them work in the sense we lobby on behalf of our customers, we go to see banks and institutions ourselves as Airbus to convince them and explain the interest they have.

Honestly, aircraft are not considered a very risky business, as you know, the traffic growth is there despite all the crises.

And it's not just the traffic, but the fleet is also growing. When you imagine that fleet is set to double in the next 15 years then you can understand that the banks are not much concerned about the residual value of the aircraft because there will be demand for the aircraft. Therefore, financing an aircraft is financing a good asset with limited risk. Banks are less reluctant to finance an aircraft than maybe to finance other projects.

And then, we have a team at Airbus that deals specifically in aircraft financing, which is working day and night to ensure that all aircraft sold by us — and which are due for delivery — are financed promptly and correctly.

So have any of your customers approached Airbus for financing?

No. They haven't approached us for financing as such, but to help with lobbying some credit agencies and banks, which we did. And we succeeded.

Emirates has repeatedly expressed intentions to buy up to a total of 120, or even more, Airbus A380s. Have talks between Airbus and Emirates already been initiated for the same?

This is a discussion we have had with Emirates. They have constraints about the airport — the [A380] gates and so on. And so we wait for them to come to us one day when they have the visibility on that plan. If it's just an extension of the existing contracts then it'd be an easy discussion for them and for us.

How do you see the latest delay to the A350 programme impacting Airbus order book in this region?

The delay is very simple. Months ago, we told our launch customer of the six months delay in the programme. There was no negative reaction. And you have to notice that we preferred to do it [announce the delay] quite early, whereas our competitor preferred to do it when they were close to the delivery. We informed of the delay even before the aircraft is manufactured, well in advance, to be on the safe side and to be transparent with our customers.

However, the delay has not affected us so far. We have had discussions with all our customers and it's all good so far.

But doesn't the A350 delay become Boeing's gain as a lot of A350 customers could consider Boeing planes to fill in the void?

To put things in perspective, Boeing was supposed to deliver the 787 in 2008 and we were supposed to deliver the first A350 in 2013. Now, Boeing delivered one aircraft [787] in 2011 and we are now supposed to deliver our first one [A350] in early 2014.

We had before a lag of five years. Now the difference is approximately two years. Boeing actually had a five year lead initially where it could have built and flown hundreds of 787s before we got into service with our A350.

What's the update on the A350-1000 version?

It's developing. We delayed it to be able to upgrade the engine and a lot of other things, and it will be available as from 2017. We are currently upgrading it to give it more range, more payload, and make it a more efficient aircraft. We will have a very good aircraft once completed — it would be one of our best successes.

What kind of orders and commitments do you have for Airbus A320neos?

With the Dubai Airshow, Airbus has bagged 1,420 orders and commitments worldwide for its A320neo aircraft type in less than a year of its launch. In the Middle East alone, we have 100 firm orders for this plane. We expect more orders from the region next year for this aircraft type. We are already talking to potential customers.

What is Airbus' market share in the Middle East at present compared to Boeing?

Airbus holds a 60 per cent market share in this region.

Life and times: Industry veteran

The president of Airbus Middle East since June 2006, Habib Fekih was also appointed as president of Airbus Corporate Jets last month. With more than 30 years of aviation experience — 25 of them at Airbus — Tunisia-born Fekih is a veteran in his field and has played a major role in developing and expanding the regional aviation industry.

He began his professional career in 1976 with Tunis Air, where he held various positions over a period of ten years, and joined Airbus in May 1986 as sales director for North Africa, becoming Middle East sales vice-president two years later.

Fekih graduated from the Ecole Nationale Superieure des Telecommunications in Paris, and then obtained a degree in Avionics from the Ecole Nationale Superieure de L'Aeronautique et de L'Espace in Toulouse.