Airbus seeks to break Emirates jet order impasse
Reuters
Published Nov 15, 2023 09:03
Updated Nov 15, 2023 17:46
By Tim Hepher, Alexander Cornwell and Pesha Magid
DUBAI (Reuters) -Airbus sought a compromise to try to unblock dozens of A350 orders from Dubai's Emirates late on Wednesday, buoyed by a deal for 11 of the most popular version of the jet with Ethiopian Airlines, industry sources said.
Dubai Airshow talks to rescue a delayed order for long-haul jets, potentially switching to the A350-900 version, looked set to drag into Thursday amid the fallout from a clash with Rolls-Royce (LON:RR) over engine performance on the larger A350-1000.
Emirates and its suppliers had no immediate comment.
The sources said there was no guarantee of a deal before the show ends on Friday.
Backroom engine negotiations that are often said to drive big-ticket airplane orders at the industry's marquee events have been grabbing headlines this week, after a public spat between the Dubai carrier and Rolls-Royce.
Emirates Airline President Tim Clark warned Airbus and Rolls-Royce on Tuesday that increased engine downtime in harsh Gulf conditions - as well as higher prices for servicing - stood in the way of an order for between 35 and 50 A350-1000 jets.
Rolls-Royce said it was taking steps to improve durability of Trent XWB-97 jet engines that power the A350-1000, but rejected Clark's suggestion that the engines were "defective".
As buggies shuttled executives between Rolls-Royce, Airbus and Emirates chalets in fading light on Wednesday, sources said differences were narrowing. One said the parties were "close" but not enough to pull off a turnaround on Wednesday.
One possible compromise, they said, could involve Emirates making a further purchase of A350-900s while Rolls-Royce studies ways of improving engine durability on the larger A350-1000.
Clark on Tuesday described the A350-900, the most widely sold version of the long-haul family, as a "very good airplane".
Emirates has already ordered 50 A350-900s, the first of which is due to arrive in mid-2024.
Airbus won a top-up order for 11 of the same model from Ethiopian Airlines on Wednesday after a delay that delegates also linked to engine pricing talks with Rolls-Royce.
Engines have become a pressing topic as airlines juggle fuel savings from the latest engines against the rising cost of keeping them maintained and flying over 20 years of service.
Airlines are increasingly buying jets at the same time as negotiating complex engine maintenance deals that sit less comfortably with the traditional quick-fire of air show announcements.
Emirates and Airbus had been close to finalising a deal on Tuesday but it later fell apart, sources said, without saying why agreement could not be reached at that stage.
"One minute it's on, then it's off," one delegate said.
Get The App
ENGINE GUARANTEES
UAE President Sheikh Mohamed bin Zayed Al Nahyan on Wednesday visited the show, where he was seen briefly meeting executives from Lockheed Martin (NYSE:LMT) and Saab.
An Emirates A350 order would help rebalance the show after Boeing (NYSE:BA) and engine maker GE dominated the opening with a $50 billion order including 90 777X jets on Monday.
However it is not in the same category as the larger 400-seat 777X.
One industry source cautioned that a fallback A350-900 order risked sending a signal that Airbus did not have an effective 777X competitor in all climates, since the A350-1000 is widely seen as underpowered for harsh Gulf conditions.
Rolls said on Tuesday it was operating well in more moderate conditions away from the heat and sand ingestion of the Gulf.
Sources said previous hiccups in air show negotiations over deals such as an Emirates purchase of Airbus A380s in 2017 needed months of further detailed talks.
The A350-900 uses a different variant of engine from the A350-1000 and has not faced simliar criticism over durability.
Boeing has won the majority of order announcements this week. Emirates on Monday placed a $52 billion order for 90 new 777X and five additional 787s, while sister airline flyDubai placed its first ever wide-body order for 30 787s.
Ethiopian Airlines ordered 20 737 MAX jets, nearly five years after the fatal 2019 MAX aircraft crash that led to the grounding of the global fleet. It also ordered 11 Dreamliners.
Airbus secured an ordered for 10 A350-900s from EgyptAir, while AirBaltic said it was buying 30 A220-300 jets.
Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum hinted at the path to an agreement with Rolls-Royce.
"When we feel that we have a good deal, we will sign," he said, Abu Dhabi-based newspaper The National reported.
"I need guarantees on when, at what price and the maintenance cost per hour. That would solve it," he added.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.