UAE May Take Out Aggravation On US Plane Orders

We don't want you to run our ports... but please still buy our aircraft. That's the mixed message the government of the United Arab Emirates is receiving, in the wake of the US ports debacle... and it may wind up costing Boeing some big bucks.

The Snohomish County Daily Herald reports the bungled deal has put a strain on the final stages of Boeing's efforts to sell approximately 50 of its upcoming 787 Dreamliners to Emirates, the Middle Eastern airline owned by the government of the United Arab Emirates.

The UAE government also owns DP World, the Dubai-based company that was originally planning to operate six US ports -- until Congress protested so vehemently, citing national security concerns, that the company pulled out of the deal despite having the support of the Bush administration.

"Listening to the nonsense being spouted in Congress, you'd expect the worst," said Teal Group analyst Richard Aboulafia. "They did reach a new low here," he added, saying US hostility over the ports deal amounted to "xenophobic grandstanding."

Aboulafia adds that the UAE may chose to take out its frustration over the ports deal on the American aerospace manufacturer. Boeing and its European archrival, Airbus, are competing for an approximately 50-plane deal with Emirates, with either the 787 or A350 (below) expected to get the nod.

Possible anti-American backlash could throw those orders to the Airbus column, which would mark the first A350 order from the rapidly-expanding Emirates. The airline is already a launch customer for the A380 -- and if Emirates choses the A350 over the 787, it could create a halo effect with other airlines still mulling over whether to order from Airbus.

The airline is already a big Boeing client, too -- with 46 777 orders worth about $7 billion after discounts. Emirates has also pushed Boeing to produce the larger 787-10 variant of the Dreamliner. What impact the port decision may have on that discussion has yet to be determined.

Emirates is expected to decide within the next three months on which next-generation jet it will choose. Before any deal can be finalized, however, it has to receive the blessing of the ruling families of the UAE -- who are reportedly "furious" with Congress over the ports deal.

That doesn't necessarily mean Boeing won't ultimately get the nod from the airline, though.

"Obviously Boeing is concerned, but they can be relaxed because the government of Dubai does not have a record of being vindictive," Emirates president Tim Clark told Bloomberg last week. "If I go to the sheiks and say I want to buy Boeing, they would never say, 'No, you can't buy American because of this.'"

The "ports issue has given the wrong impression of Dubai in America, as if it's the headquarters for al-Qaeda or something," Emirates spokesman Mike Simon added. "But that's totally not true. It's an oasis in the Middle East. We've got churches there and everything."

FMI: www.uae.org.ae, www.airbus.com, www.boeing.com