Emirates Seeks to Scrap Last Five A380 Orders in Final Blow to Jet
Emirates Seeks to Scrap Last 5 A380 Orders in Final Blow to Jet
(Bloomberg) --
Gulf airline Emirates is seeking to cancel five of its last eight A380 deliveries, with manufacturer Airbus SE pushing back because the planes are already in assembly, according to people familiar with the situation.
Dubai-based Emirates plans to take three more of the double-deckers before the end of its fiscal year next March, but doesn’t want the remaining five, according to the people, who asked not to be named as the talks are private. Airbus is proposing a deferral of deliveries or payments, the people said.
Emirates said it remains “in regular dialog with Airbus” regarding fleet requirements and doesn’t comment on commercial discussions. Airbus declined to comment, saying talks with customers are confidential.
The coronavirus outbreak has plunged airlines worldwide into crisis, with Emirates especially exposed to any long-term slump after building its business model around the world’s biggest passenger plane. The carrier has a fleet of 115 A380s and had planned to operate them through the end of the decade.
Walking away from A380 contracts without an agreement would come at a cost for Emirates, triggering penalties of up to 257 million dirhams ($70 million) per plane, according to the company’s annual report.
Three of the final A380s are already built, according to planespotter websites, while wings and fuselage sections for the remaining planes are at the final assembly plant in Toulouse after being shipped in February. The jets, together with one for Japan’s All Nippon Airways, are the final ones in a program that’s due to be wound by the end of next year.
Emirates is already looking at accelerating the retirement of a chunk of its existing A380 fleet, Bloomberg reported Sunday. That could see it stand down as many as 65 aircraft earlier than scheduled, according to one of the people.
The world’s largest long-haul carrier plans to eliminate as many as 30,000 jobs or 30% of the workforce, Bloomberg has reported, the deepest cuts yet in an airline industry forced into near-hibernation by the Covid-19 pandemic.
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