Emirates abandons huge plane order, hitting Airbus shares

June 11, 2014
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Airbus said that the cancellation followed an order placed by Emirates at the Dubai air show in November for an extra 50 A380 superjumbo planes/FILE
Airbus said that the cancellation followed an order placed by Emirates at the Dubai air show in November for an extra 50 A380 superjumbo planes/FILE

TOULOUSE, Jun 11 – Emirates airline delivered a huge blow to European aerospace group Airbus on Wednesday, cancelling an order for 70 new-generation A350 airliners – a deal that analysts estimate to be worth about a tenth of the aircraft maker’s 2014 orders.

The long-distance aircraft, due to go into service this year, is the Airbus flagship project of the moment to compete with the Boeing 787 which has been flying since 2011.

The size of the cancellation is the biggest-ever by a prestigious customer for a civil airliner.

Airbus said that the cancellation followed an order placed by Emirates at the Dubai air show in November for an extra 50 A380 superjumbo planes.

The cancellation decision was made following “on-going discussions with the airline in light of their fleet requirement review”, Airbus said.

The deal was said to be worth $16.5 billion (12 billion euros) when it was announced in 2007, but Airbus said that customers were already interested in taking up the cancelled aircraft.

The sudden announcement by Emirates, a powerful player in the expanding Gulf airline industry, sent Airbus Group shares down 5.5 percent to 11.22 euros.

And in London, aero-engine maker Rolls-Royce warned that the decision would cut the value of its order book by 2.6 billion pounds (3.2 billion euros, $4.3 billion).

The cancellation “amounts to eleven percent of orders which Airbus expects to take in 2014,” said analyst Christophe Menard at brokers KeplerChevreux.

The airliner business accounts for the main part of activities by Airbus Group, formerly EADS, and the head of its sales division John Leahy said: “It’s not good news commercially but it has no impact financially.”

Opening an innovation show by Airbus at its headquarters in Toulouse, Leahy, who has played a major role in the rise of Airbus over the years, said that he had time to find other customers for the cancelled planes which were due to be delivered from 2019.

He had only just heard of the cancellation, he said, so the decision was not a direct counter-balance to the order placed in Dubai.

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