Emirates Cancels Airbus A350 Order -- Update

By Robert Wall 

Airbus Group NV said Wednesday that Emirates Airline has canceled an order for 70 A350 long-range jets.

Emirates won't take 50 A350-900s, the model currently in flight testing, and 20 larger A350-1000s, Airbus said in a statement.

The deal has a combined value of $21.6 billion at current list prices. When the order was placed in 2007 it had a list price value of $16 billion, though plane makers typically offer particularly large discounts to launch customers.

"The contract which we signed in 2007 for 70 A350 aircraft has lapsed. We are reviewing our fleet requirements," a spokesman for Emirates said.

Emirates President Tim Clark had said previously the A350 would likely be a good airplane for many airlines, though it would only have a niche role in his fleet.

Emirates, the largest airline by international traffic, is the biggest buyer of Boeing Co. 777s and Airbus A380 superjumbos. The airline in November agreed to boost its A380 order commitment to 140 jets.

Airbus had booked 812 A350 orders through May, including the deal from Emirates. Emirates was the second-largest customer for the A350 along with Singapore Airlines. Only Qatar Airways Ltd., the lead customer for the plane, has bought more. Qatar, which is buying 80 A350s, is due to receive its first this year.

Emirates planes were due for delivery from 2019, giving Airbus time to fill the plane. Demand for the A350 has been strong so prices the Toulouse-based plane maker can get from a new buyer may be higher than the amount Emirates committed to pay.

The canceled order also impacts engine maker Rolls-Royce Holdings PLC, which said Wednesday its order book would fall by about 3.5% or GBP2.6 billion ($4.4 billion) as a result of the Emirates news.

"While disappointed with this decision, we are confident that the delivery slots which start towards the end of this decade vacated by Emirates will be taken up by other airlines," the company said in a statement.

"Demand for the Airbus A350 remains strong, with more than 700 aircraft and 1,400 Trent XWB engines already sold," it added.

Rory Jones and Rory Gallivan contributed to this article.

Write to Robert Wall at [e-mail]

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