How the Emirates A380 deal fell apart at Dubai

During my career I’ve found that the biggest decisions that affect thousands of people can be made in a split second and without anyone really fully grasping what it is they’re doing.

This is one of those moments. It also says something about who decides what at Emirates, but if you’ve ever worked with an Arab company you won’t be surprised that even the most senior foreigners employed by that company, are often bypassed by near-senior managers who have a relationship with local royalty.

By all accounts the A380 announcement was actually, physically about to happen, Airbus seniors had arrived, everything was ready for the press conference.

The day before, during what appears to have been nothing more than an unscheduled chat on the opening day of the Dubai show, Emirates head of engineering (and widely expected to replace Tim Clarke eventually) bumped into the Emir of Dubai’s uncle, one of the Maktoum family with responsibility for Emirates at a government level.

Apparently, and nobody will deny nor confirm it, this was near the Rolls Royce stand.

It seems the conversation came up about the immediate A380 order. One allegedly said he was unhappy with the deal because the 2015 order which saw the airline switch to Rolls from GE, wasn’t being continued because Rolls saw the terms as excessively generous and weren’t willing to repeat them.

The subject of keeping the A380 production line open appears to have come up on several occasions but Airbus thought it mostly dealt with, working in the basis that ‘you order the aircraft and we’ll keep making them’.

Emirates wanted more. They wanted a ten to 15 year commitment and a rolling programme of improvements to the aircraft that they effectively determined. They also wanted Airbus to buy back purchased (as opposed to leased), aircraft as they came out of service – thus dumping on Airbus the problem of selling them used.

Airbus could give no such guarantee without the orders to back it up. Even then the idea of rolling improvements wasn’t one they wanted to agree too. Emirates had already made it clear they didn’t want the A380Plus concept revealed at Paris.

At the A380 announcement the next day everyone is waiting to go to the venue and a senior Emirates official walks over to the Airbus leadership and says its off.

Tim Clarke allegedly seemed embarrassed but calm. It appears, allegedly, that right there in the room, Sheikh Maktoum and other Emirates managers decided to call it off there and then until they got what they wanted.

Apparently, though nobody will verify it publicly, when asked what happens now by Fabrice Bregier of Airbus, Tim Clarke said “I don’t know, ask them”, as he nods to the Emirates managers and Sheikh Maktoum.

One person who won’t have been happy was John Leahy who’d put his retirement on hold for two years to the end of 2017, to see the deal through and was expected to finalise this and other orders as his departing finale.

What embarrassed Airbus was the reveal of the 787-10 order which had been known was under consideration, but nobody knew it had gone to the point of a public announcement. Emirates were to do both but the question this really raises are as follows:

1) Is Tim Clarke on his way out?

2) Are Emirates finally starting to see past the A380?

3) Do Airbus really want the A380 project to wind down and fade away?

If nobody is prepared to compromise while remembering that Airbus have to make money on each aircraft or there’s no point in being in business, the A380’s days are starkly numbered.

At least Boeing have the freighter to fall back on for the 748, the last passenger versions were delivered to Korean a while ago. Airbus don’t have that option. When it goes it goes.

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