flydubai deciding on supplier for 50 narrow-body aircraft

flydubai, which operates an all-Boeing Co. (BA) fleet, said there's an “open race” Boeing and European rival Airbus SAS (EAD) to supply it with 50 narrow-body aircraft worth $5 billion at list prices, reports Bloomberg.

Chief executive officer Ghaith al-Ghaith said: “We will choose what’s best for us and what’s best could be a new type. Both aircraft appeal to us. The best decision is the one that costs us the least.”

Analyst Saj Ahmad commented on it: “"It's highly likely that flydubai will stick with the 737MAX family for its upcoming order, but it is wise also not to rule out the A320neo at this stage of the game.

“However, the reality is that as a low cost airline, for flydubai to swap fleets would not only cause inventory, operational and capital expenditure to rapidly rise and decimate its profits, the airline is unlikely to move away from the incumbent 737 that has served it so well since it launched operations four years ago.

“Ghaith Al-Ghaiths comments about purchasing the "one that costs them the least" is more of an inference to flydubai's cost base, not the sticker price or discounted price of the 737MAX or A320neo's. Add in the better availability of the 737MAX versus the sold out A320neo backlog, flydubai can ill afford to wait for Airbus to get them favourable delivery positions before 2020. flydubai simply cannot and won't wait that long.”

Ahmad adds: “You have to remember, there is a massive difference between a low cost airline and a low fare airline. Flydubai certainly has the edge in the GCC over its rivals in being the lowest costed airline to operate, thanks in large part to the higher dispatch rate and less AOG time of its 737-800 fleet compared to competitors using the A320 family - and that's a key driver why the 737MAX has the edge at flydubai.

“And with Dubai World Central Al Maktoum International Airport opening this fall, flydubai will no doubt be looking to augment its expansion by either splitting part of its operations there or moving there entirely from the current Dubai Airport. Al-Ghaith has been on record stating that he wants the airline to have a triple-digit-sized fleet - and a big 737MAX order is on the cards to support and maintain the explosive and relentless growth that the airline currently enjoys."