Emirates leaves Airbus waiting as it announces Boeing deal
Deal for 40 787-10 jets comes as talks over order for 36 A380s stall at last minute
Boeing scored a coup over rival Airbus at the Dubai air show on Sunday by clinching a multibillion-dollar aircraft sale to Emirates Airline, while a widely-anticipated deal destined to rescue the European aircraft maker’s struggling superjumbo jet stalled at the last minute.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of the Emirates group, said the airline would buy 40 787-10 widebody aircraft from Boeing in a deal valued at $15bn based on the catalogue price of the jets and related equipment.
However, Emirates will have paid significantly less than the $12bn list price, which is for the 40 jets alone minus related equipment, with significant discounts regularly offered for large orders.
While the deal marks a victory for the US aircraft maker, which triumphed over Airbus’s rival A350 mid-size jet offer, it also cast a shadow over the European group’s mooted sale of at least 36 A380s to Emirates, also at an estimated value of $15bn.
Airbus executives had gathered at the show expecting to unveil a deal for the A380, but only the Boeing announcement went ahead.
People with knowledge of the A380 discussions said Emirates appeared to have presented new demands on Sunday after an all-night negotiating session. However, they were still hopeful a deal could be struck as the two sides continued talking.
If the Emirates order materialises, it would keep the world’s largest passenger jet in production for a further decade. Without it, there will be questions over the future of the programme.
The A380 has not won a new customer for close to two years and Airbus has slashed production from 15 jets this year to eight a year by 2019 in an attempt to keep it alive until new orders can be won.
Making matters worse, some of the earliest A380s are beginning to be handed back to leasing companies, which are also struggling to find customers.
Although the superjumbo is popular with passengers, many airlines are concerned they will struggle to fill an aircraft capable of carrying more than 600 passengers. They have also been deterred by suggestions that Airbus could be forced to halt production.
Emirates, which has 100 A380s in its fleet and another 42 on order, is the world’s biggest operator of the aircraft and accounts for more than half of the 319 orders placed so far.
The future of the superjumbo is as important to the Gulf airline, which has based its business model on carrying large volumes of passengers through its Dubai hub.
However, the decision to acquire a new batch is taking longer than expected with Emirates president Sir Tim Clark pushing for substantial improvements to an aircraft originally designed in the 1990s.
Emirates’ decision to shun Airbus’s A350 in favour of the largest variant in Boeing’s Dreamliner family was seen by some in the industry as Emirates’ attempt to put pressure on the European aircraft group to be more responsive. “They wanted to punish Airbus a little,” said one person close to the Gulf carrier.
It is also seen as a sign that the carrier remains confident about growth despite recent turmoil in the region and a sharp downturn in traffic last year sparked by low oil prices and a US ban on electronic devices.
Emirates reported in May its first decline in annual profits for five years, although earlier this month it showed signs of a recovery with the number of passengers up 4 per cent.
Sheikh Al Maktoum said the acquisition of the 787-10 “speaks to our confidence in the future of aviation in the UAE and the region”.