Airbus delays deliveries of A380 planes to Emirates

Bloomberg

Airbus Group SE’s struggles with its A380 superjumbo jet are deepening as the planemaker delays deliveries of a dozen aircraft over the next two years to Emirates, the double-decker’s biggest customer. To make up for the financial drag from the tardier handovers, Airbus will accelerate cost cuts, according to an e-mailed company statement.
The delay stems from an agreement between Emirates and engine supplier Rolls-Royce Holdings Plc, the manufacturer said. Handovers of six A380s apiece that were originally planned for 2017 and 2018 will be shifted to a year later following a subsequent agreement with Emirates and Airbus, the planemaker said, adding it still plans to deliver about 12 A380s per year as of 2018.
Emirates and Rolls-Royce reached a settlement earlier in December over the airline’s A380 engine performance and maintenance concerns, after the carrier had revealed technical shortcomings a few weeks
earlier. The delays compound Airbus’s efforts to turn around the fortunes of the A380, the world’s largest commercial jetliner, which lists for $433 million before the discounts customary in the industry.
Airbus shares fell as much as 0.8 percent and were trading down 0.5 percent at 62.62 euros as of 9:37 a.m. in Paris. That pared the stock’s gain this year to 1 percent, valuing the Toulouse, France-based manufacturer at 48.4 billion euros ($50.6 billion). Rolls-Royce dropped 1.1 percent in London to 673 pence, for a market value of 12.4 billion pounds ($15.2 billion). State-owned Emirates isn’t traded.

Bad Year
The announcement caps a year of negative news for Airbus’s flagship model. An order for A380s from Iran never materialized when that country announced purchases from Airbus in mid-December, meaning the company hasn’t received any advance contracts on the model this year. As a consequence of slack demand, Airbus cut its delivery target for the A380 in July. US competitor Boeing Co. is also having trouble selling its competing 747-8.
Emirates is by far the biggest buyer and operator of the A380, with orders for more than 140 of the plane.
The Dubai-based carrier switched to Rolls-Royce engines for its latest batch of A380s, after relying on General Electric Co.’s Engine Alliance joint venture with Pratt & Whitney for the four powerplants that propel the airliner.
Winning Emirates as a customer for its Trent 900 engine to power the A380 was a major commercial victory for Rolls-Royce when it was announced in 2015, and the contract for a total of 50 aircraft remains the largest in the history of the UK’s prime manufacturer.
In November, Emirates President Tim Clark revealed that feedback on the powerplants indicates “technical issues” that needed to be resolved before the first plane was handed over to Emirates.
That delivery will take place this week, according to the engine maker and the airline on Wednesday. Rolls-Royce said in an e-mailed response to questions that it will “continue to work with Airbus and Emirates to meet their requirements.”