Emirates saves struggling Airbus with A380 deal

  • 19/01/2018

Emirates has announced a deal for up to 36 Airbus A380 aircraft on Thursday worth as much as US$16 billion at list prices, saving the world's biggest passenger jet from death row and securing its future for at least another decade.

The European plane maker said Emirates had placed a provisional order for 20 of the double-decker superjumbos, with an option for 16 more. Deliveries are due to start in 2020.

The agreement hands a lifeline to the slow-selling aircraft, in service for just 10 years, and rescues one of Europe's most visible industrial symbols overseas.

Airbus shares rose more than 3 percent after the announcement to touch a record high.

The deal ends months of tough-fought negotiations. Talks between Airbus and Emirates about a fresh A380 order broke down at the last minute at the Dubai Airshow in November, when the Gulf carrier placed an order for 40 smaller Boeing 787s.

Earlier this week, Airbus confirmed a Reuters report that the A380's future lay with Emirates, saying it would have "no choice" but to close production if the Emirates deal fell through despite interest in smaller orders from others.

Emirates and Airbus both said the deal would bring stability to the A380 production line.

Emirates has built much of its network and brand around the 544-seat A380 superjumbo but is also the world's largest operator of twin-engined Boeing 777s which carry up to 400 people in their newest version now in development.

Emirates' A380 fleet operates both Engine Alliance and Rolls-Royce engines. The airline said it was evaluating its engine options for the latest order. Engine Alliance is co-owned by General Electric and Pratt & Whitney.

The agreement calls for Emirates to take six aircraft a year for a decade as Airbus looks for other A380 business, filling a gap in planned production, a person familiar with the deal said.

Analysts say Airbus was unlikely to break even on the A380 at such production levels, but that the losses would not make a big impact on the company's accounts, which are dominated by sales of smaller jets worth tens of billions of dollars a year.