Airbus said Emirates canceled its entire order for A350 aircraft valued at $16 billion, hurting its efforts to break Boeing's dominance for wide-body aircraft that are the backbone of Emirates' fleet.
Emirates, the biggest buyer of Airbus A380 superjumbos, will drop 50 A350-900 airliners and 20 of the larger -1000, Airbus said Wednesday. Emirates announced the deal in 2007, and the airliners were due for delivery from 2019, shortly before Boeing's new 777X, of which the Emirates is the biggest buyer.
The surprise decision comes as the A350 program remains just months away from commercial entry. Emirates, the world's largest airline by international traffic, reviewed its fleet requirements after it topped up its order book for the larger A380 just last year, adding 50 more superjumbos to become by far the aircraft's largest operator. The Dubai-based carrier also bought the new 777X, which competes with the A350.
"The A350 is a good aircraft, its' a clean ship, it's cutting edge, but I don't think the delivery schedule of the A350 fits in line with Emirates' growth capabilities at this moment," said Mark Martin, chief executive officer of Dubai- based Martin Consulting.
Airbus dropped 3.5 percent so far this year, after almost doubling in value last year. Rolls-Royce Holdings, which makes the engines for the aircraft, declined as mich as 3 percent in London, where the company is based.
Emirates President Tim Clark, who is equally loyal to Boeing and Airbus, had long been a critic particularly of the A350-1000, saying the aircraft didn't meet his specifications.
Smaller regional rivals Qatar Airways and Etihad Airways had also bemoaned the airliner, with Etihad at one stage dropping its order, only to come back last year for more.
The A350-900 typically seats 315 passengers, while the -1000 version can fit about 369 travelers. Airbus says the aircraft's use of weight-saving materials and swept wings help save fuel, typically the single-biggest expense for airlines.
At the Dubai Air Show last year, Emirates said it would buy 150 Boeing 777X valued at $76 billion to modernise its existing wide-body fleet. Emirates is the biggest customer for the 777, a twin-engine model that boasts the world's biggest powerplant and is one of the company's bestsellers.
Rolls-Royce is the sole engine provider for the A350, and the company said Wednesday that Emirates' decision to drop its order will cut its order book by 2.6 billion pounds ($4.36 billion). Emirates doesn't use Rolls-Royce powerplants on its fleet of A380s, opting instead for the alternative Engine Alliance model that's made by General Electric and United Technologies' Pratt & Whitney.
Rolls-Royce said it's confident the delivery slots dropped by Emirates will be taken up by other carriers, saying it is "disappointed" with the decision to drop the A350s.
Airbus and Boeing are the only manufacturers of wide-body aircraft, a market that's more lucrative than the single-aisle segment because aircraft are more expensive. Customers have purchased more wide-body twin-engine airliners that are more efficient than the larger superjumbos, with both Airbus and Boeing struggling to win more customers for their largest jets.
"Airbus is very confident in its A350 XWB program," the Toulouse, France-based manufacturer said in the release. "Half a year before entry into service, the A350 XWB order book stands at a healthy 742 firm orders."
The A350 will enter commercial service with Qatar, which remains the biggest buyer of the twin-engine jet that's largely made of light composite materials. The airliner comes in three sizes and competes both with the Boeing 777 and the smaller 787 Dreamliner. Airbus has won by far the most orders for the mid- sized version.
While the development of the A350 has been free of major glitches for at least a year -- an increasingly rare occurrence for aircraft programs -- Airbus has struggled to keep the momentum particularly for the smallest variant, with customers dropping purchases to move to bigger planes. The A350-1000 staged a comeback about two years ago after an order dearth, as customers preferred Boeing's popular 777 wide-body.
"The 777 is now increasingly becoming the mainstay fleet of Emirates," said Martin. "In fact, if you look at how they deploy the 777, the 777 is flying to almost all their key destinations."