Airbus Group SE’s struggles with its A380 superjumbo are deepening as the planemaker delays deliveries of a dozen aircraft over the next two years to Emirates, the double-decker’s biggest customer.
The delay stems from an agreement between Emirates and engine supplier Rolls-Royce Holdings Plc, Airbus said late Tuesday, adding that it will accelerate cost cuts at the unit to make up for the financial drag. Handovers of six A380s apiece that were originally planned for 2017 and 2018 will be shifted to a year later following a subsequent accord with Emirates and Airbus, the planemaker said, adding it still plans to deliver about 12 A380s per year as of 2018.
Emirates and Rolls-Royce reached a settlement in early December over the airline’s A380 engine performance and maintenance concerns, after the carrier revealed technical shortcomings a few weeks earlier. The delays compound Airbus’s efforts to turn around the fortunes of the A380, the world’s largest commercial jetliner, which lists for USD433 million before the discounts customary in the industry.
Airbus shares fell 0.3 percent to 62.74 euros as of 12:03 p.m. in Paris. That pared the stock’s gain this year to 1.2 percent, valuing the Toulouse, France-based manufacturer at 48.5 billion euros ($50.6 billion). Rolls-Royce declined 0.3 percent in London to 679 pence, for a market value of 12.5 billion pounds ($15.3 billion). State-owned Emirates isn’t traded.
The delays cap a year of negative news for Airbus’s flagship model. An order for A380s from Iran never materialized when that country announced purchases from Airbus in mid-December, meaning the company hasn’t received any advance contracts on the model this year. As a consequence of slack demand, Airbus cut its delivery target for the A380 in July. U.S. competitor Boeing Co. is also having trouble selling its competing 747-8.
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Emirates is by far the biggest buyer and operator of the A380, with orders for more than 140 of the plane, configured for 489 to 615 seats. The carrier, also the world’s biggest long-haul airline, is set to take delivery of its first Rolls-Royce-powered version of the jetliner on Wednesday, almost four weeks later than planned. A further two aircraft will be delivered this week, a spokeswoman for Emirates said by e-mail. The carrier will continue to take delivery of A380s as well as Boeing 777s in 2017 and 2018, she said, declining to provide a breakdown.
The Dubai-based carrier switched to Rolls-Royce engines for its latest batch of A380s after relying on General Electric Co.’s Engine Alliance joint venture with Pratt & Whitney for its first 90 orders, the last of which will be delivered early next year. Deena Kamel Yousef, Benjamin Katz, Bloomberg
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