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Abu Dhabi, UAESunday 16 December 2018

Airbus looks for lifeline in China post Emirates A380 setback

Airbus refusal to commit to A380 production time-frame led Emirates to Boeing at Dubai Air Show

Emirates is one of the airlines included in the TSA's emergency order. Courtesy Emirates
Emirates is one of the airlines included in the TSA's emergency order. Courtesy Emirates

Airbus hopes to secure China’s interest in A380 superjumbos this week, by proposing a deal that would revive demand for the world’s largest passenger jet, whose future is in jeopardy, and give a much-needed boost to protracted talks related to the double-decker jet with Dubai’s flag carrier Emirates.

“Emirates would like to see Airbus selling A380s anywhere, so if an A380 deal is done in China or elsewhere, Emirates will be happy and Airbus will be happy,” said a person familiar with the matter.

French president Emmanuel Macron arrived in Beijing on a trade mission on Monday, accompanied by 50 company executives including officials from the European plane manufacturer, among them its outgoing chief operating officer, Fabrice Brégier.

Emirates is the largest operator of A380s globally and has been pressing Airbus to sell more of the aircraft to ensure future production of the jet. The airline was expected to sign a preliminary order at the Dubai Air Show in November for as many as 36 new A380s, however the deal never materialised and the airline opted for 40 Boeing 787-10 Dreamliner jets. This week Toulouse-based Airbus is said to be offering China a production role on the A380 if Chinese airlines order the jet, according to a report by the Financial Times.

Such an agreement could throw the plane manufacturer a lifeline and provide leverage in its negotiations with buyers. Airbus declined to comment when contacted by The National.

China is forecast to displace the US as the world’s largest aviation market by 2022. It is expected to add 921 million new passengers to total 1.5 billion passengers by 2036, according to the International Air Transport Association (IATA). An agreement with China would be the first time Airbus has offered an industrial partnership on its A380 programme, and comes as the aircraft’s future hangs in doubt with no new orders for the jet or a secondary market for aircraft that have been retired or set to.

Emirates has 100 A380s in operation, with 42 more on order. It has been pressing Airbus to commit to the future of the double-decker aircraft by guaranteeing a 10-year production line.

Following the Dubai Air Show, Emirates chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum told The National discussions were still ongoing. However, an order from China would relieve pressure on Airbus, which has not sold the jet in more than two years.

Emirates declined to comment on talks with China, but the airline’s president Tim Clark told The National last July he wished Airbus would market the plane more aggressively across the world. “Our recommendation to them most strongly is to try and get out and sell it to carriers who ordinarily would have been interested in something like this,” he said.

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Industry insiders said any A380 order would be good news for Airbus, and for Emirates as a potential customer of a new order.

“No airline wants the responsibility of being the only one ‘propping up’ an aircraft production programme, but another operator order, for example in China, could be sizeable enough for Airbus to prove to Emirates that the A380 is here to stay,” said aviation analyst Alex Macheras.

“Airbus is actively looking for new A380 customers, with many sales campaigns targeting mass-market areas such as China," he added. "With nothing resulting from Emirates, Airbus’ approach must continue to be worldwide, with the aim of striking a deal with less commitment to the 10-year promise Emirates would like.”

However, Richard Aboulafia, vice-president, analysis at Teal Group, described the industrial partnership offer as “bizarre” and said it would not happen.

“As far as air market development goes, China is the anti-Dubai. The country is trying to directly link its many large cities to the outside world, and doesn’t want colossal hub-and-spoke networks out of Beijing or Shanghai. The A350 is a great plane for this, not the A380,” he said.

Airbus is reportedly hoping to clinch a deal to sell 100 other aircraft – a mix of single and twin aisle planes – to China during the visit. It is also proposing to increase production at its Tianjin final assembly line, where it produces four A320 single-aisle aircraft a month.

“This move to entice China may be geared more towards the A330 completion centre there and the A320 line,” said Saj Ahmad, chief analyst at StrategicAero Research. “Chinese airlines have never sought the A380 and are unlikely to start buying the ageing machine now.”

Disappointment over a failed deal with Emirates is unlikely to have been the main driver of the offer to China, he added. “Airbus has long since sought to push the A380 in China, despite airline reluctance to buy it.”