Emirates hands Airbus A380 superjumbo lifeline with $16B order
NANTES, France (Reuters) - Emirates announced a deal for up to 36 Airbus A380 aircraft on Thursday worth as much as $16 billion at list prices, saving the world's biggest passenger jet from death row and securing its future for at least another decade.
The European planemaker said Emirates had placed a provisional order for 20 of the double-decker superjumbos, with an option for 16 more. Deliveries are due to start in 2020.
The agreement hands a lifeline to the slow-selling aircraft, in service for just 10 years, and rescues one of Europe's most visible industrial symbols overseas.
Airbus shares rose more than 3 percent after the announcement to touch a record high of 92.56 euros.
The deal ends months of tough-fought negotiations. Talks between Airbus and Emirates about a fresh A380 order broke down at the last minute at the Dubai Airshow in November, when the Gulf carrier placed an order for 40 smaller Boeing
Earlier this week, Airbus confirmed a Reuters report that the A380's future lay with Emirates, saying it would have "no choice" but to close production if the Emirates deal fell through despite interest in smaller orders from others.
Emirates and Airbus both said the deal would bring stability to the A380 production line.
"This new order underscores Airbus' commitment to produce the A380 at least for another ten years," Airbus sales chief John Leahy said in a statement. "I'm personally convinced more orders will follow Emirates' example and that this great aircraft will be built well into the 2030s."
Emirates has built much of its network and brand around the 544-seat A380 superjumbo but is also the world's largest operator of twin-engined Boeing 777s which carry up to 400 people in their newest version now in development.
Emirates' A380 fleet operates both Engine Alliance and Rolls-Royce engines. The airline said it was evaluating its engine options for the latest order. Engine Alliance is co-owned by General Electric (NYSE:GE) and Pratt & Whitney (NYSE:UTX).
The agreement calls for Emirates to take six aircraft a year for a decade as Airbus looks for other A380 business, filling a gap in planned production, a person familiar with the deal said.
Analysts say Airbus was unlikely to break even on the A380 at such production levels, but that the losses would not make a big impact on the company's accounts, which are dominated by sales of smaller jets worth tens of billions of dollars a year.
Emirates is by far the largest operator of the A380 with 101 in service today and a backlog 41 superjumbos on order before Thursday's announcement.
The last order by another airline for the A380 was in 2015 when Japan's ANA booked three.
Sales of the A380 have fallen short of initial expectations, as airlines flocked to smaller and cheaper models that offer more flexibility. But Airbus believes the jet still has a future as air traffic rises and airports become ever more congested.
(Reporting by Tim Hepher; Writing by Richard Lough; Editing by Mark Potter)