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HomeMiddle EastHigh hopes: Boeing's Bernie Dunn

High hopes: Boeing's Bernie Dunn

Bernie Dunn

Bernie Dunn may have retired from the US Army but he remains on a mission in the Middle East.

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The Boeing regional president hit a bullseye on December 11 when his team secured an $8 billion deal with Iran Air in the airline’s first plane contract since 1979.

The world’s largest aerospace manufacturer beat out its French rival, Airbus, by 11 days. Though Airbus then secured 20 more planes than Boeing, with 100 compared to 80.

Dunn, who says the Boeing deal started and finished in Dubai, is effectively working to make the famous American cliché ‘if it ain’t Boeing, I ain’t going’ a reality in the Middle East.

With that in mind, the company’s most recent report on future projections in the aviation industry predicts the Middle East will need 3,310 new airplanes worth $770bn over the next 20 years.

The region takes the prime slot in Boeing’s global commercial airplane business – the UAE is the third biggest buyer of Boeing planes, followed by Turkey (fourth) and Qatar (seventh).

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The Middle East has one of the world’s fastest growing aviation sectors and requires 3,310 new aircraft valued at $770bn over 20 years, says Boeing.

One in every five Boeing 777s currently being manufactured is scheduled to land in the Middle East, with Dubai’s Emirates Airline the largest single Boeing customer.

Historically, UAE airlines have ordered more than 600 Boeing aircraft since 1997, including purchases and leases, and have another 560 confirmed bookings.

“Our orders are holding firm. We are very happy about that,” says Dunn, Boeing’s president for Middle East, North Africa and Turkey (MENAT).

He maintains the view despite Boeing announcing plans to cut production of its twin-aisle 777 jetliner to five a month in August 2017, from 8.3 a month in December last year.

“The production cut will not affect the delivery schedule in the region. We will, of course, fulfil our backlog with our regional customers,” Dunn assures.

The fluent-Arabic speaker has spent three decades living and working in the Middle East, including as US Army attaché to Saudi Arabia, Jordan and Syria (separately). He joined Boeing in 2012, taking up his current role spanning North Africa, the Middle East and Turkey in May 2015, and adding Iran after sanctions were lifted in January 2016.

“This is something new for Boeing. We never approached this region with such a broad perspective,” Dunn reveals. “It has allowed us to integrate our efforts across a vast region. We are actually finding opportunities that we didn’t have before and we are turning over rocks that hadn’t been turned over for years.”

The company is investing in fuel-efficient airplanes to meet rapid fleet expansion in the region.

Though Boeing has primarily focused on the aviation industry heavyweights the UAE and Qatar, the company is now actively seeking opportunities in other regional markets.

“We now have a continuous focus on every market in the region, and as a result of that we are not missing anything in any market,” Dunn says.

He describes the Iran Air deal – worth $16.6bn before a substantial discount was offered – “important” but adds that there are still “a couple of contingencies” to work through.

“We are quite confident they will be sorted through and finalised.”

The sale includes 50 twin-jet, narrow-body 737 planes, and 30 long-range, wide-body 777 aircraft. The first airplanes are scheduled for delivery in 2018, with the entire order being fulfilled over 10 years.

Dunn says despite two years of low oil prices – which, while they have helped to lower airlines’ costs, have hit the broader Middle East economy, slowing demand growth – and regional uncertainties, Boeing has kept its aircraft projections steady.

It expects the new aircraft requirements will also fuel the need for an additional 55,000 pilots, 66,000 technicians and 92,000 cabin crew.

“We have not changed our [forecast],” Dunn says.

Boeing is pursuing opportunities in regional markets outside the Gulf, including Turkey and Iran.

“We are still looking to ‘very’ good things out here in the region. The region is important for us – both from the defence and commercial side.”

Last year, Boeing struck a $10.1bn deal for defence aircraft with Kuwait and a defence contract with Qatar worth $21.1bn. However, the planemaker remains far “more” bullish on the commercial segment.

“If you look at the world, more people are moving into the middle class. They have more disposable income and can fly more than ever before. And that trend just continues,” Dunn says.

Each of the six Gulf Cooperation Council member states are investing billions of dollars in building world-class aviation infrastructure. Dubai has announced $15.8bn worth of investment to expand its two airports, while Abu Dhabi is spending $2.9bn on its new airport terminal complex, Saudi Arabia plans to upgrade more than 20 airport facilities, and Oman, Qatar and Kuwait have announced mega airport expansion projects.

“An investment in the commercial aviation industry is an investment in your own economy,” Dunn argues.

In the UAE, Boeing has tied up with Strata Manufacturing and Tawazun Precision Industries, boosting local manufacturing and creating high-skilled jobs.

In April 2012, Boeing and Mubadala, an Abu Dhabi-based investment and development company, signed a 10-year contract for Strata Manufacturing to produce composite parts (such as vertical fins) for Boeing 777s and 787s.

“It was a landmark contract, and we are looking very much forward to that,” Dunn says.

The Middle East needs 55,000 new pilots.

The deal will also see Emirati engineers trained at Boeing’s Salt Lake City plant in Utah, US, to gain first-hand knowledge in manufacturing of the vertical fin.

“They will come back and teach their own workforces on how it is done,” he says, not ruling out the possibility of the Abu Dhabi company building parts for the 777X – the largest and most efficient twin-engine jet in the world.

The three UAE carriers – Emirates, Etihad Airways, and FlyDubai – are among Boeing’s major regional clients, having provided them with its largest commercial aviation order for 777X aircraft at the 2013 Dubai Airshow. The strong investment has given the airlines input to the aircraft’s final design.

“The UAE is a very strong market for the 777, and it is only going to get stronger as 777X comes online, around 2020,” Dunn says.

“They [UAE airlines] love that airplane… they wanted it go farther, carry more people, do more things and that required a re-design of the existing aircraft [787].”

While Dubai International Airport built a terminal dedicated to the world’s biggest aircraft, the A380, Dunn says to avoid Airbus’ lacklustre sales of the oversized A380s, Boeing adopted technology from its fighter aircraft for the 777X wings.

“We did not want to do what Airbus did and have to reconfigure airports with their A380s. We wanted to use the existing airport infrastructure and the existing box to park in at the fingers [dock],” he says.

“When you build a fighter airplane for use on an aircraft carrier, you fold the wings to get it down to the hanger below. The same technology has allowed us to easily figure out how to flip the wings for the 777X.”

Emirates is the world’s largest single Boeing customer, ordering 16 Boeing 777-300ERs in 2016.

As biofuels gain more traction across the globe, Boeing tied up with Etihad, Masdar Institute of Science and Technology, and jet fuel company Takreer in 2016 to launch a research facility in Masdar City, Abu Dhabi, to cultivate plants that could produce renewable jet fuel.

The Salicornia plant, which grows in the coastal waters of the Gulf region, is believed to contain more oil per volume than petroleum.

“For that reason, we are on the cutting edge of this sort of research because our industry is moving in that direction. And Abu Dhabi is a major node for us in regards to our research and development,” Dunn says.

Dunn is reserved on when the biofuel may be used on a commercial jet but says Etihad will be the test airline.

The European Union also wants to increase the share of sustainable low carbon fuels in its aviation sector to 40 percent by 2050, while the International Air Transport Association plans to achieve carbon-neutral growth from 2020, and a 50 percent CO2 emissions reduction by 2050.

At the Dubai Airshow in 2015, Boeing inked an agreement with Dubai Aviation City to establish its Middle East headquarters in Dubai South’s aviation district. A year later, the company says it is still “committed” to its plan.

“We will move at the right moment and that moment is calibrated against the movement of Flydubai and Emirates to Dubai South,” Dunn says. “So when our customers move, we will move with them. We want to remain aligned and close to them.”

However, Boeing will continue to maintain its presence at Dubai Airport Freezone.

“We are not going to abandon our customer set here. We are going to do this in a systematic way so it allows us to have business continuity with our customers.”

Boeing agreed to sell 80 planes to Iran’s national carrier in the first deal of its kind since 1979.

The UAE General Civil Aviation Authority says in its 2017-2021 strategy report that the future will include solar powered aircraft, passenger-carrying drones and flying cars, but Dunn suggests pilotless planes could already be used.

“The technology already exists. It is just people really don’t want to fly in a plane that has no pilot. But it can be done right now,” he says.

Boeing has a contract with the US government to convert F16 fighter planes into target drones, which can take-off and land by remote control.

But while Hyperloop becomes the buzz word across the globe, which involves people whizzing through gigantic pipes in pods at extremely high speeds, Dunn says airlines are focused on conducting “classic” air travel economically rather than speeding up flight.

“They [airlines] want it to be done more economically, with much of it driven by high fuel cost,” Dunn says.

“If you notice today, commercial aviation does not travel any faster than it did with a Boeing 707 back in 1960, but it travels much more efficiently. You carry more people, you go farther, and you do it at less cost. That’s what our customers are seeking.”

Boeing assembles its aircraft in the US.

While reports suggest Airbus is gaining ground in the Middle East, Dunn is unmoved by the headwinds.

“We are competing very effectively with them. We dominate in this region in the wide body sector, and we are doing quite well in the single-aisle sector,” he says.

Dunn is confident his experience in the region and ability to speak the local language is creating business opportunities for the American planemaker.

“You know the folks in this part of the world so much appreciate that you have taken the time to learn their language and culture. It allows you to open doors [and] develop relationships, and that helps a lot,” he says.

A jet research hub is planned in Masdar City.

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