Emirates set to upturn its whole order book, Walsh nags Airbus over the A380

The news that Emirates is likely to dump their A380 order because of a failure to reach agreement with Rolls Royce over engine supply, has opened up a whole list of potential outcomes.

Emirates purchase of A380’s was dependent on Airbus and the Airline persuading Rolls Royce to repeat it’s generous lease and servicing deal, which Rolls Royce has refused to do having lost money on the original agreement.

Couple that to Emirates own capacity and cost issues and it’s now actively looking at up to 20 777-9’s but the cost of that will be no 787-10’s.

The deal to ditch A380’s will also mean it needs to find smaller capacity aircraft and it prefers the idea of the A350, which ever fickle Emirates has already cancelled once, ditching 75 orders.

Airbus woes over the A380 – which by all accounts is considered a financial liability by Airbus accountants, was made worse yesterday. Willy Walsh, Chairman of IAG accused Airbus of stupidly over pricing the A380. Walsh was keen to obtain more for British Airways but declared the price to high, walking away from a deal he clearly wanted, thinking Airbus would cave, they didn’t.

He continues to claim that the A380 needs a drastic price cut, but that’s not really viable if Airbus sell it at a loss. Walsh just seems to want to press Airbus into something it can’t do because he wants another 6 aircraft. Airlines need to appreciate that manufacturing is too long term to manage the ever changing whims of airline executives.

What happens if the A380 dies? Lifespans for those in service will equal the A346. 15 years for most, but one or two airlines like BA will keep them on until they become financially unviable – and BA bought theirs so they’ll want a return which could take 30 years. Leased aircraft won’t last so long.

Values will plummet as Emirates first leased aircraft begin to be returned in 2020 and spares will become less of a problem as the unwanted used stockpile grows.

AirFrance is already halving it’s A380 fleet – disposing of the leased aircraft over the next few years. Qantas is already dithering over its own long term commitment to the type. Malaysian couldn’t find anyone to take theirs on so find novel ways to use them, and 2 ex-Singapore leases aircraft are already being broken up.

The future of this engineering marvel hangs on a thread.