Business Deals

Airbus Books Bittersweet $16 Billion Deal With Emirates

Deal is less than an earlier promise by the Mideast carrier to buy $21 billion worth of Airbus planes

Airbus SE secured a $16 billion order for its A350 wide-body jets from Emirates Airline, a significant commitment for one of its biggest jets but less than an earlier promise by the Mideast carrier to buy $21 billion worth of Airbus planes.

In February, Emirates sealed a looser agreement to buy a higher number of jets to replace orders for the A380, the superjumbo jet that Airbus said that month it would stop making in 2021. Emirates was the plane’s biggest buyer by far, and it has formed the basis for the carrier’s strategy based on long-haul jets and mega hubs.

At the Dubai Air Show on Monday, Emirates said it would now take 50 A350s instead of its initial plan for 40 A350s and 30 A330neos. The Neo, a re-engined version of an earlier model, is Airbus’s most recent addition to its wide-body offering. Airbus has struggled though to drum up a significant backlog for the plane, a rival to Boeing Co.’s 787 Dreamliner.

Still, the deal is an important win for Airbus at a time when demand for wide-body aircraft is slowing. Airbus has already walked back plans to raise production rates for its A350. Boeing has cut production of its 787, citing trade tensions and a lack of demand from China.

In a separate blow to the U.S. manufacturer, Abu Dhabi’s Etihad Airways said earlier Monday that it was planning to take 20 fewer aircraft from Boeing than it had counted on. Etihad has been through its own strategy overhaul and fleet review after suffering losses in the past three years amid oil-price volatility, bad investments and increased competition.

Etihad Chief Executive Tony Douglas said the carrier plans to have a fleet of only 51 787s by 2023, from 36 now. Etihad previously canceled the majority of its own backlog for Airbus’s A350s and deferred deliveries of the remainder.

Source: Dow Jones Newswires

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