The future of European aerospace giant Airbus is up in the air once again. Earlier this year, the company revealed some troubling news. Airbus had commenced negotiations with Emirates airlines over an order of up to 36 A380 aircraft in a deal worth approximately $16 billion. Airbus explained that were this deal to fail, the company would have to shut down operations.
Now, the company’s future is looking gloomier than ever.
Airbus will live or die by Emirates’ decision
According to a report by Bloomberg, talks between Emirates and Airbus have stalled.
This is due to negotiations between Emirates and the A380’s engine supplier Rolls-Royce failing to amount to anything solid. Emirates is not pleased with the fuel burn of Rolls-Royce’s engines, nor their price.
“The companies have missed a deadline to select the engines, possibly delaying first delivery in 2020 – and even threatening the deal outright,” Bloomberg noted.
“It’s evident that the Rolls Royce engines that currently power part of Emirates’ A380 fleet aren’t performing to expectations with respect to fuel burn,” Saj Ahmad, Chief Analyst at StrategicAero Research told AMEinfo. “There could be other factors hindering optimum operation too such as component degradation being faster due to the hotter climate in Dubai.”
According to Gulf News, Emirates switched to Rolls-Royce engines for the A380 a few years ago, having previously used a joint venture of General Electric and Pratt and Whitney named the Engine Alliance.
Should matters fall out between Emirates and Rolls-Royce, the Emirati airline could revert back to Engine Alliance motors.
Yet, Ahmad believes we should wait and see how things unfold.
“It’s premature to suggest Emirates will cancel this order just yet because it’s still working through the finer details with Rolls Royce assuming that they are the supplier chosen,” he said.
He reiterates the harsh reality Airbus themselves spoke of: “If Emirates even defers this order – the financial and industrial havoc it would create for Airbus would be immense. With only six airplanes a year to be built from 2020, the program is already the biggest loss-making project in aviation history – the death knell for the A380 is readily apparent and any cancellation now by Emirates would seal the fate of this aging and increasingly obsolete airplane.”
According to Gulf News, Emirates has announced that it will be canceling 28% of its flights in 2019 ahead of the runway repairs scheduled at international Dubai Airport (DXB). This means the company is likely to haggle much more fiercely with Rolls-Royce, ahead of the reduced revenue that awaits in the coming year.