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Abu Dhabi, UAEFriday 22 June 2018

In relief for Airbus, Emirates saves A380 with new $16 billion order 

Order confirms commitment to superjumbo programme after lengthy negotiations

After lengthy negotiations Emirates ordered 36 additional Airbus A380 aircraft worth US$16 billion guaranteeing the production of the superjumbo for the Toulouse-based manufacturer.
After lengthy negotiations Emirates ordered 36 additional Airbus A380 aircraft worth US$16 billion guaranteeing the production of the superjumbo for the Toulouse-based manufacturer.

*Emirates, the world’s largest operator of wide-body aircraft, signed a US$16 billion (Dh58.7bn) deal with Airbus for 36 additional A380 aircraft, ending speculation about the future of the troubled superjumbo programme.

The agreement is for 20 firm orders and 16 options. The Dubai-based airline is evaluating GE and Rolls-Royce engine options for the orders.

"This deal reflects Emirates’ confidence in shaping the future, and its commitment to advancing Dubai’s vision to grow further as a world-class destination and aviation hub,” said Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, in a statement. "Emirates truly represents Dubai’s spirit of growth, innovation and resilience. It also epitomises the city’s increasing role in connecting the world in terms of people, capital and information flows."

Toulouse-based Airbus was unable to lock in an agreement with Emirates to buy additional superjumbo A380s at the Dubai Airshow last November. Instead, the Dubai-based carrier opted to buy 40 Boeing Dreamliner 787-10 jets in a deal valued at $15.1 billion.

Emirates, which has invested billions of dollars to establish a transportation hub in Dubai, has demanded Airbus commit to a production timeline of at least a decade due to a lack of traction from other carriers for the aircraft and the absence of a secondary market for the jet.

The first double-decker to go into operation in 2007 as part of Singapore Airlines’ fleet was retired in June of last year and is destined for the scrapyard if it does not find a new operator. Airbus had not been able to sell an A380 in over two years and had conceded on Monday they may have to shut down the programme if the deal with Emirates fell through.

The plane manufacturer's shares rose as much as 3.1 per cent on the announcement of the agreement with Emirates. "This new order underscores Airbus’ commitment to produce the A380 at least for another ten years," said John Leahy, Airbus Commercial Aircraft's outgoing chief operating officer.

"I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s,” added Leahy, who passes the reigns to his successor Eric Schulz from Rolls-Royce on January 25.

The new order brings Emirates’ commitment to the A380 programme to 178 aircraft, worth over $60 billion. Emirates has 101 A380s in operation. The additional A380s will be delivered to Emirates from 2020 onwards.

"We’ve made no secret of the fact that the A380 has been a success for Emirates. Our customers love it, and we’ve been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix," said Sheikh Ahmed bin Saeed Al Maktoum, Emirates chairman and chief executive.

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“Some of the new A380s we’ve just ordered will be used as fleet replacements. This order will provide stability to the A380 production line. We will continue to work closely with Airbus to further enhance the aircraft and onboard product.”

Saj Ahmad, chief analyst at StrategicAero Research, said "Emirates would have been offered very favourable terms from Airbus," in order to secure the deal. "It's Airbus that has always been reliant on Emirates. Emirates was always in the driving seat to formulate a deal that it benefited from – not Airbus."

Emirates operates a mixed fleet of 269 wide-bodied aircraft that fly to 157 destinations globally.