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Wed 11 Jun 2014 10:36 AM

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Emirates cancels order for 70 A350 jets, says Airbus

The deal was worth around $16bn at 2007 list prices - or close to $22bn based on the current catalogue

Emirates cancels order for 70 A350 jets, says Airbus
Image is for illustrative purposes only

Europe's Airbus lost a major order on Wednesday
when Dubai's Emirates airline cancelled its entire purchase of 70 Airbus A350
jets, dealing an unexpected blow to the planemaker and engine maker
Rolls-Royce.

The decision cuts the order book for the European
company's newest jet, which is due to enter service in around six months' time,
by around 10 percent.

Airbus said it followed a "fleet requirement
review" as Emirates shifts towards the large A380 superjumbo, for which it
is the biggest customer.

Emirates was among the first buyers for the A350
rival model to Boeing's 787 Dreamliner when it placed the order for 50 A350-900
and 20 A350-1000 jets in 2007.

The deal was worth around $16bn at 2007 list
prices - or close to $22bn based on the current catalogue - although
launch customers typically negotiate discounts.

Emirates was due to start taking deliveries of the
A350 in 2019. The first A350 is due to be delivered to Qatar Airways in the
fourth quarter of this year.

"We are confident that we will sell the
(production) slots in the coming months," an Airbus spokesman said.
"There's no impact on the programme as deliveries were scheduled to start
at the end of the decade."

Airbus shares were down 3.3 percent in early trading in
Frankfurt, with the news expected to cast a shadow over two days of briefings
for the media at Airbus' headquarters in Toulouse on Wednesday and Thursday.

Emirates has been pushing for Airbus to upgrade the
A380 superjumbo with a more efficient engine, after increasing its total orders
for the world's biggest passenger jet by 50 in November to 140 planes.

The carrier's chief executive, Tim Clark, said
earlier this month that a revamped A380 could have a 10-12 percent performance
improvement and that "we are hoping to move on that pretty soon".

Emirates is also in the process of firming up an
order for 150 of Boeing's latest jetliner, the 777X mini-jumbo, of which
Emirates has ordered 150 worth $76bn at list prices.

Asked about the A350 order cancellation on
Wednesday, an Emirates spokesman said: "The contract which we signed in
2007 for 70 A350 aircraft has lapsed. We are reviewing our fleet
requirements."

Airbus said in a statement that it remained
"very confident" in the A350 programme and that it expected the A350
order book to grow in 2014.

Britain's Rolls-Royce, which is the sole engine
maker for the A350, said the Emirates decision would result in a 2.6 billion
pound ($4.4 billion) hit to its order book.

"While disappointed with this decision, we are
confident that the delivery slots which start towards the end of this decade
vacated by Emirates will be taken up by other airlines," Rolls-Royce said
in a statement.

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Ronald 6 years ago

You can be almost 100 percent sure that this was no surprise to the denizens of Toulouse, who trousered another massive order for the A380 in November. With Emirates betting the farm on the super-jumbo and the eventual replacement B777 Airbus has reason to take one on the chin over the A350, but it won't cost them a dime and they will probably sell those production slots more profitably anyway. It is R-R that must be drowning its sorrows, unless they have an engine upgrade ready to fly.

chalky6766 6 years ago

Given RRs dominance in the market I shouldn't think they will be to worried...:)

Dawood Parkar 6 years ago

The total order book for A380s for all other airlines combined doesn't match the Emirates order for superjumbo. The airline's management must be confident as to why they have placed their almost entire faith in A380s. However, it doesn't make business sense to rely on one product as situation in the aviation industry could alter drastically over the years which will mean airlines have to adapt to those condition.