Tuesday, November 14, 2017

Emirates rejects A380plus concept as order negotiations continue

Emirates Airline is rejecting the proposed Airbus A380plus concept in spite of its plans to continue ordering more of the largest commercial aircraft.

“We would rather they just offered us the continuation of the line,” Emirates president Tim Clark said at the Dubai Air Show. “I have never been a big fan [of the A380plus].” Key features of the proposed upgrade include the removal of the large forward staircase and an 11-abreast cabin in the economy section, both of which Emirates will not take. Emirates is also not insisting on a commitment by Airbus to eventually re-engine the A380 as a prerequisite for a new order.

Both parties planned to announce a major deal at air show this week, but the process was derailed over what guarantees for the continuation of the program could be given. Industry sources said it was still possible, but not very likely, a deal could come through this week.

“The undertakings Airbus will have to make are that the line will continue for 10-15 years and that a further commitment [by Emirates] would not be at risk,” Clark said. The government of Dubai needed absolute certainty that Airbus will continue building the A380 for that timeframe before it commits to a further order.

Dubai-based Emirates currently operates 100 A380s and has 42 more on firm order. Clark did not say how many additional aircraft the airline may buy; some reports suggested the number could be similar to Emirates’ current order backlog for the type.

Airbus’ total A380 backlog now stands at 100 aircraft, but most of the non-Emirates orders are no longer expected to materialize. Airbus is reducing output to 12 aircraft a year in 2018 and eight in 2019. The manufacturer wants to keep production at seven or eight aircraft per year for several years until demand for the type from other airlines picks up and the rate could be increased. Airbus has made a profit on a recurring cost base at a rate of 15 aircraft per year and is trying to drive breakeven down further. However, it is acknowledging that production will be loss-making at eight per year.

“The ownership [of Emirates] is well aware of the dearth of orders,” Clark said. Airbus wants Emirates to take delivery of aircraft across the entire timeline of guaranteed production years. Depending on the size of the order Emirates will place, that would leave Airbus having to fill open production slots each year over an extended period of time. Clark, however, argued that the current Emirates order makes sure “the program is sustained until the middle of the next decade anyway.”

Should Emirates go ahead with an additional order, it would talk to both engine manufacturers—the Engine Alliance and Rolls-Royce—about equipping the aircraft. The remaining 42 aircraft on firm order are powered by Rolls-Royce Trent 900 engines as are 10 of the 100 in service.

According to Clark, Boeing’s proposed new midsize aircraft could be an option for both Emirates and Flydubai. In Emirates’ case, it could be used to increase frequencies on existing routes or for new markets. “But it is not yet at a stage where it is offerable,” he said.

The 40 Boeing 787-10s Emirates ordered earlier this week are “perfect for 7-8.5 hour missions.” Emirates plans to fly them in a 280-seat, three-class layout. The airline also considered the A350-900, but was not happy with some aspects of the interior configuration. Only in early November Airbus showed a new layout with the rear pressure bulkhead moved aft by 2.5 ft. Clark complained to Airbus that the design should have been on the table earlier because it could have changed the picture completely. But by that time the commitment to Boeing had already been made.

Clark predicted that enhanced cooperation between Emirates and flydubai will generate up to 10 million incremental passengers for Emirates per year. He dismissed the idea that Emirates may be better off focusing on smaller widebodies than the A380 such as the Boeing 777-9. “If you start compressing, the hub implodes.” But using a large and growing fleet of A380s “creates huge flows across the network.”

(Jens Flottau - ATWOnline News)

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