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Wed 24 Jan 2007 09:22 PM

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$15bn Emirates order up in the air

The Dubai-based airline is dangling an order for 100 long-range aircraft in front of Airbus and Boeing.

Emirates airline is dangling an order for 100 mid-size, long-range aircraft in front of Airbus and Boeing, in a $15 billion winner-takes-all deal.

Maurice Flanagan, Emirates Vice-Chairman, told Reuters on the sidelines of the World Economic Forum in Davos, that a decision would be made in the next few months on which aircraft to buy, and said that it was highly unlikely that the order would be split between Airbus and Boeing.

"I wouldn't exclude 100 per cent the possibility of getting from both but it's unlikely. The probability is that 100 we order will be one or the other. [We will decide] in the next few months probably," he said.

Aviation analysts believe the massive new deal for long-range aircraft is certain to put pressure on Airbus to reach a generous agreement with Emirates over compensation for the long-delayed A380 aircraft.

Emirates is the largest customer for the double-decker super jumbos, with 43 of the $300 million aircraft on order.

However, Flanagan denied that the two agreements were linked. "We want to make those separate. We want to make sure there is no muddying the water between the cost of 100 [planes] and the compensation," he said.

The value of compensation being demanded by Emirates remains secret, but Flanagan did hint that he is pushing for substantial damages.

"There is no way we can plug the capacity gap or the profitability gap. The hit has been quite strong in terms of revenue, profitability, in terms of network," said Flanagan. "We think they [other airlines such as Singapore Airlines] settled too early. We think in the next 2-3 months we should be clear to reach settlement and accept compensation," Flanagan said.

Emirates was originally meant to begin taking the planes in April 2006 but now will not see its first until August 2008.

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