Emirates President Tim Clark urged Airbus SE to make firm commitments on the future of its A380 airliner, demanding certainty before placing a follow-up order that production will continue until all aircraft are delivered.
“It’s their call,” Clark, speaking to journalists at the Dubai Air Show, said of Airbus and the future of the manufacturer’s flagship product. “It’s really for them and really for the ownership of the airline that it will not have a problem on its hands in the future."
The future of the A380 has become a dominant talking point at this year’s aviation expo in Dubai, after Airbus failed to clinch a widely expected deal on the first day of the event. Airbus and Emirates are closely linked on the A380, with the Gulf carrier relying on the aircraft to fuel its global growth ambitions, and Airbus needing Emirates’ continued backing as the de-facto only buyer of the plane.
Emirates has taken delivery of 100 A380 aircraft and has a total order book of 142 units. Clark said this week that he could accommodate more, but with no other notable buyer on the horizon, Airbus’s long-term commitment to the aircraft has become an issue. The manufacturer has cut back output of the double decker to adapt the production line to slowing demand, raising concern that it might outright end the program prematurely to cuts its losses.
Still Hopeful
Still, Clark said he remains confident that Airbus is able to make a guarantee to honor any deal with a new Emirates order, opening a path to securing follow-on accords from other carriers.
“They believe there is a future of the airplane, we know that, and that over time they’ll be able to sell more of these aircraft to other airlines,” Clark said.
Burying the A380 program after little over a decade would mark a drastic step for Airbus that Emirates will want to help avoid because it would greatly diminish the value of its existing fleet. Already the A380 is struggling to establish a second-hand market, with the first units coming off their active tour of duty without an obvious new owner in sight. One aircraft, formerly operated by Singapore Airlines, will be parked at a French regional airport for the time being, awaiting a new operator -- or possibly even the scrapyard for parts.
With about two days left of the Dubai show, time is running out for Airbus to reach an accord with Emirates. The venue has previously been the site of major deals between aircraft manufacturers and the big Middle East carriers, though order activity this year is more muted as Qatar Airways is banned from the event and Etihad Airways retrenches.
Advantage Boeing
The European planemaker suffered an embarrassing defeat on Sunday (November 12) when a double-decker order was expected to materialize. Instead, Emirates announced an accord with Boeing Co. for 40 787 Dreamliners that had been competing with Airbus’s A350 wide-body. Clark said he was approached by Airbus earlier this month about a higher-density configuration of the plane, but that the offer had come too late to change his mind. The 67-year-old executive said he wouldn’t discount a future order for the jet in the next few years.
The carrier is also assessing the viability of Boeing’s so-called new-mid market jet for either Emirates or its low-cost arm FlyDubai. That plane still in the design phase as Boeing works to establish whether the market for that size aircraft -- between a narrow or wide-body -- would be supported by the cost to produce the program at the price that customers would be willing to pay.
Sheikh Ahmed bin Saeed Al Maktoum is currently exploring the viability of greater partnerships between FlyDubai and Emirates, including the possibility of a merger between the two airlines of which he’s chairman at both, Clark said. That co-operation could include the low-cost carrier operating some A380s, a factor that has opened another wrinkle in the stand-off with Airbus.
“I have always believed that these two carriers working together makes a whole lot of sense,” Clark said, adding that there is “a real drive” by Sheikh Ahmed and the owners of the carrier to closely coordinate Emirates and FlyDubai’s operations. “As we eliminate the overlap routes, so to speak, and the carriers work together as one it kicks in enormous, enormous commercial power.”
Succession Plans
Clark, who has led the Gulf giant for more than a decade, said there are as many as 10 internal candidates he’d trust to manage the airline when he ultimately decides to retire.
“If I was to step out tomorrow, just say for any reason, would the business carry on as effectively as it has? Yes, I believe it would,” he said. “Succession is in good shape, the carrier is in competent hands.”
News by Bloomberg, edited by Hospitality Ireland
