Airbus faces tricky hurdles over A380 Emirates Bargain that is stalled

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Airbus faces tricky Barriers over stalled A380 Emirates deal

Airbus and Emirates declined comment.

After the airline placed new orders with Boeing pride may yet work in favour of a bargain within the A380, which is the only route into business with Emirates for the time of Airbus.

Keeping engine manufacturers is challenging due to the lack of an A380 market.

A day after Airbus’s hopes were dashed, airline president Tim Clark publicly delivered a message from Dubai’s government saying it wanted a guarantee from Airbus that it would keep producing the A380 for 10 years, before the state-owned carrier would agree to putting a new order.
The news was broken by two officials that were Emirates to Airbus CEO Tom Enders and his chief John Leahy that the $16 billion deal that was widely expected would not be signed leaving uncertainty.

“There’s a worrying breakdown of the relationship between Airbus and Emirates,” said a person familiar with the discussions.

For Emirates, the issue runs deeper than simply buying an aircraft from Airbus.
“That’s a fairly big ask right now. It all comes down to money,” a person near the consortium said.

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But in another accident of time, the first A380 to carry passengers, in 2007, was being mothballed in France just as Airbus was trying to cling on to an Emirates bargain at last week’s show, after just 10 years in service with Singapore Airlines.
Enders emailed Clark calling the ultimatum unhelpful, two people said.

That sets a worrying precedent for providers of Emirates, which usually works planes for 12 years and around 20 of whose A380s may depart the fleet to make way for new purchases.
“They’ve got to be able to say that when they left, the A380 was still being built.”

The Airbus board will nevertheless need to think hard before giving Dubai the guarantee it needs, which goes beyond the scope of a normal contract for planes that are specific.

But to win the bargain it gave fuel-consumption that was ambitious goals and Emirates signalled that the cards could be shuffled again to the order. “If we ordered more, we might consider talking to both sides,” Clark said.

The stumble in atmosphere show that was slick highlights issues over time and trust that may complicate a bargain between Airbus and Emirates, people said.

“This (Airbus) management took the decision to launch the A380 so killing it today would make them look foolish,” a senior air show delegate stated.
“Airbus was confident of getting a bargain,” a Gulf source added. “But Dubai does not want to be taken for granted.”

“If you’re the only customer your fear is that the manufacturer will lose interest and that becomes a signal to providers to make support a lower priority,” a person close to the matter said. “Then you end up unsure who is supporting what.”
Engine makers make money on spares and services within the life of an engine which is years.

On the Emirates side, top executive Clark – though full of dismissing talk of retirement and energy at 67 – is likely to hand over the baton at a certain stage, and it’s uncertain how other supervisors that are dedicated are into the flagship.
While Pratt & Whitney is consumed with fixing delays on smaller engines GE is involved in a major rethink of strategy and would like to be selective about investments.

The question mark hangs over the engines.
The block came so swiftly that Airbus PR executives who were set up for a service that was double-signing a hundred yards off found themselves awkwardly among the audience as Boeing walked off with the only Emirates order.

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(This version of the story removes extraneous words from ninth paragraph)

Many in the industry say as Leahy is due to retire in January Airbus appears directionless, earlier this year the guardian of the Emirates relationship, Habib Fekih, did so and doubts grow over if Enders will procure a new CEO mandate . Meanwhile Airbus decision-making have severely clogged.
“I would think a revitalisation of the line would bring the big players together and say what can we all do to make this work … such as propulsion,” Clark said.
Air show delegates stated if a deal is to be done Emirates and Airbus must resolve problems of visibility.
One of the most successful and closest relations in aviation is looking bruised and throws up new complications for Airbus just as it struggles to keep business as usual at a time when it faces French compliance probes and British.
Emirates considers an Airbus guarantee within this programme’s life could break the logjam and generate new orders.
Airlines deal directly with providers, from landing gears to entertainment systems and tyres. Each takes its cue.

“Nobody knows who will be in charge of the other side afterwards, which will not help,” said a person familiar with the matter.
Faced with the possibility that any engines may have only half their life that is budgeted, engine makers may charge more for them up-front or more in service contracts that are hourly.
Reporting by Alexander Cornwell and Tim Hepher; Editing by Pravin Char

Released at Sun, 19 Nov 2017 18:39:08 +0000
“It is not something any company can easily do, particularly on something dragging down the most important thing,” the same person said.

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