Daily Management Review

Emirate Orders A380s From Airbus For $16 Billion, Infuses Life To An Almost Dead Program


01/19/2018




A follow up order from Emirates has allowed Airbus to save its flagship A380 superjumbo from the brink of being struck out of the production list forever. It had been just days that the airplane maker had suggested that it would kill it off due to very little demand and this order infused a new lease of life into it.
 
In an announcement, the Dubai-based carrier said that it had signed an outline agreement with Airbus for the supply of 20 of the double-deckers and there is a clause to make purchase of 16 more. The potential list price is about $16 billion. Emirates is also the largest client for the A380. This is the first order for the jumbo jets of Airbus in over two years.
 
according to Airbus, it would be at least till 2019 that the production of the A380 would be extended due to the order. As recently as on Monday, the European plane maker had said that if there was no new sale soon, it would terminate the A380 project. citing its doubts about Airbus’ dedication to enhancing the place, a deal for an equal number of aircrafts as stopped by the same carrier near the end of last year.
 
“This new order underscores Airbus’s commitment to produce the A380 at least for another 10 years,” John Leahy, the Toulouse, France-based company’s outgoing sales chief, said in a statement. “I’m personally convinced more orders will follow Emirates’s example.”
 
Options for the engines of the new order is still be evaluated even as the new aircrafts are expected to be delivered starting 2020. The most recent order for 50 A380s by Emirates had engines supplied by Rolls-Royce Holdings Plc while the earlier 90 aircrafts had engines supplied by the Engine Alliance of General Electric Co.
 
The total number of A380s would reach 178 in case Emirates sticks to ordering the additional 1o more aircrafts and that would comprise half of the total orders of the crafts ever received globally. With a total of 101 superjumbos at present, Emirates plans to phase off a number of crafts of older models by the time the new A380s arrive.
 
It was just minutes before an official announcement that Emirates pulled out of the very same order in December at the Dubai air show which had left Airbus red faced. Leahy is set to step down next week and securing this order is therefore very significant for him.
 
The A380 has allowed the creation of an almost symbiotic relationship between the aircraft manufacturer and the middle eastern airline. While the superjumbo has been accorded public profile and recognition by Emirates which otherwise would have been difficult, the carrier has been benefitted by the 550-seat jet to ferry larger number of passengers through natural global crossroads – the Middle East and thus catch on to a significant proportion of global traffic. This air corridor would have otherwise remained in the aviation backwaters.
 
Anticipating that the global travel market would favor bigger planes in the near future because of the increased number of people and with runways becoming more crowded, Airbus has bene keep to keep alive its most prominent program – the A380.
 
(Source:www.bloomberg.com)






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