Published: Fri, January 19, 2018
Money | By Armando Alvarado

Emirates throws Airbus A380 a lifeline with $21 billion deal

Emirates throws Airbus A380 a lifeline with $21 billion deal

Emirates Airline has broken the Airbus A380 order drought with a Memorandum of Understanding (MoU) to purchase up to 36 of the world's largest passenger aircraft.

Emirates chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum said the order "will provide stability to the A380 production line".

"This new order underscores Airbus' commitment to produce the A380 at least for another ten years", Leahy said.

John Leahy, Airbus's outgoing head of sales, said on Bloomberg Television Friday that he was confident the European planemaker would secure one more A380 order this year.

"We've made no secret of the fact that the A380 has been a success for Emirates", he said in a statement.

"We've been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix", Sheikh Ahmed said. It has invited the two engine makers to compete for the new A380 order, two industry sources said. Together with the airline's 101-strong A380 fleet and its current order backlog for 41 aircraft, this new order brings Emirates' commitment to the A380 programme to 178 aircraft, worth over US$ 60 billion.

Negotiations between Airbus and Emirates had broken down at the last minute at the Dubai Airshow in November, when the Middle East carrier placed an order for 40 smaller 787 aircraft made by Airbus's USA rival Boeing. Until then, however, Airbus needs a base of at least six A380 orders per year to break even on the program.

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"Some of the new A380s we've just ordered will be used as fleet replacements". Airbus delivered just 15 of the planes last year, and aims to deliver 12 more this year.

Days later, Airbus revealed an enormous 430-jet, $50 billion order from private equity firm Indigo Partners, which will distribute the planes among its low-priced airlines.

Emirates' fleet relies exclusively on the Airbus 380 and the Boeing 777 for its flights."We've made no secret of the fact that the A380 has been a success for Emirates", the airline's chairman and chief executive Sheikh Ahmed bin Saeed Al-Maktoum said.

"If we can not work out a deal with Emirates, I think there is no choice but to shut down the program", sales chief John Leahy told reporters on Monday.

"It's positive news for both sides", said airline analyst John Strickland of JLS Consulting.

"It is not a guarantee of financial success for the programme but buys Airbus time to go out and secure additional orders from other airlines", he said.

Dubai's main airport, where Emirates is based, is among the busiest in the world with more than 80 million travellers passing through in 2016.

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