A380: Going, Going – Almost Gone

Is the lifeline deal for the A380 superjumbo between Airbus and Emirates on the brink? That is ever since Bloomberg put out a story on November 4, stating that the deal “has reached an impasse amid drawn-out talks involving the engines”.

The agency quoted insiders who believe that if the deal is cancelled then the A380 production could well end.

The deal, a $16 billion agreement for as many as 36 additional double-decker aircraft (20 firm and 16 options) was finalised only in February this year. Emirates, the A380’s only major customer, came to the rescue in late January-February, signing the lifesaving deal after months of negotiations. The Gulf behemoth accounts for over 50 per cent of the order book, having switched to Rolls-Royce as its engine provider a few years ago after using a joint venture between General Electric(GE) and Pratt & Whitney on the first order of the aircraft.

At that time there were assurances that Rolls-Royce would work to reengine the powerplant and provide improved performances. Apparently there are now glitches on price and fuel burn that Emirates believes is critical considering that the engine has not met its specified targets in its present avatar. That is Emirates view.

Both Emirates and Airbus have missed a deadline to finalise the engines, possibly delaying first delivery in 2020 – and even putting the entire order in peril.