Emirates Tentatively Orders More A380s & Potentially Saves The Aircraft


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The Airbus A380 was supposed to be the aircraft to solve the problems of overcrowded airports and the inability of airports to keep up with passenger numbers (think London Heathrow) but, for one reason or another, aircraft sales have never really taken off (no pun intended).

Comparatively speaking not that many airlines have ordered the A380 (and a number who did showed signs of buyer’s remorse) and major carriers have overwhelmingly chosen to operate smaller, more efficient aircraft (like the A350 and the Dreamliners) rather than investing in the whale-jet.

In truth the aircraft’s future has never really been on a stable footing.

Emirates is by far and away the largest operator of A380 aircraft in the world and its fleet is now home to an incredible 101 of the aircraft. Quite simply it has almost single handedly been keeping the A380 in production….until recently.

Image courtesy of Airbus

Recently Emirates has been making noises to indicate that it’s not happy with the current offering from Airbus (the airline would like to see the aircraft fitted with new and considerably more efficient engines) while Airbus has been suggesting that Emirates’ requests are uneconomical to bring to fruition.

Things have been coming to a head for some time and Emirates has been making noises indicating that it may drop the A380 if it can’t come to an agreement with Airbus.

Airbus, for its part, hasn’t been shy in admitting that if Emirates didn’t sign up to more A380 orders the aircraft would almost certainly go out of production – just 3 days ago Airbus’ sales director was quoted as saying “If we can’t work out a deal with Emirates, there is no choice but to shut down the programme“.

Things weren’t looking great for the world’s largest passenger aircraft….until today.

New Airbus A380 Order From Emirates

Emirates and Airbus have announced that they have agreed a deal for the airline to purchase up to 36 further A380 aircraft (Emirates already has 41 A380s on backorder) with deliveries set to start in 2020.

Image courtesy of Airbus

In aircraft-deal-speak, Emirates has signed a “memorandum of understanding” for 20 firm orders and 16 options so the reality is that there isn’t actually a legal contract in place yet (MoU’s are not legally binding)….but it does show serious intent and Emirates’ commitment to the A380.

John Leahy, Airbus’ sales director, is quoted as saying:

I would like to thank Emirates, HH Sheikh Ahmed, Tim Clark and Adel Al-Redha for their continued support of the A380

This aircraft has contributed enormously to Emirates’ growth and success since 2008 and we are delighted that it will continue to do so. This new order underscores Airbus’ commitment to produce the A380 at least for another ten years. I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s.

In turn, the chairman and chief executive of Emirates Airline and Group is quoted as saying:

We’ve made no secret of the fact that the A380 has been a success for Emirates. Our customers love it, and we’ve been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix.

Some of the new A380s we’ve just ordered will be used as fleet replacements. This order will provide stability to the A380 production line. We will continue to work closely with Airbus to further enhance the aircraft and onboard product, so as to offer our passengers the best possible experience. The beauty of this aircraft is that the technology and real estate on board gives us plenty of room to do something different with the interiors.

The headline numbers that are being bandied about talk about a list price (for the whole order) of $16bn…but it’s unlikely Emirates is paying anything close to that.

Image courtesy of Airbus

Aircraft list prices are like the rack rates you often see on the back of hotel room doors – they’re indicative of the maximum price that can be charged but it’s a rate that is almost never paid.

Most airlines pay somewhere between 50% and 70% of the list price (depending on their clout and the size of the order) and, in this case, considering just how much clout Emirates has I doubt the airline has agreed to pay even 50% of list price.

Thoughts

I can’t say that the A380 is my favorite aircraft to fly on but I’m pleased to see that it’s not going away just yet.

Considering how reliant Emirates is on the A380 it was always unlikely that an agreement wouldn’t be reached….but there was definitely some evidence of brinksmanship at work during the negotiations with Airbus.

I suspect that both sides had to make concessions to get this deal signed (no bad thing) but it looks as if, baring anything unexpected, the future of the A380 is safe for a few more years.