ANALYSIS: Why XWB isn’t extra enough for Emirates

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Emirates’ decision to terminate its A350 XWB contract with Airbus as part of the A380 mega-order signed last year at the Dubai air show is not a major surprise. But could the loss of such a high-profile customer – not to mention some $13 billion-worth of business at list prices – have longer-term repercussions for the programme?

The Dubai carrier, which earlier today cancelled its orders for 50 A350-900s and 20 A350-1000s, has been lukewarm towards the widebody twinjet ever since Airbus revamped the design three years ago. Airline chief Tim Clark told Flightglobal last year that friction over the move by Airbus lay not with the aircraft but changes that had taken place “without our consent”.

Although the smaller A350-900 accounted for the bulk of Emirates’ order, Clark had at one point indicated an interest in swapping them out for the bigger model. Shortly after the revisions had been unveiled around the time of the 2011 Paris air show, Clark expressed to Flightglobal his frustration that the changes were implemented without any dialogue: “If they had talked to me, I would have said: ‘[The improvement is] not good enough’.”

He added: “On paper, the old -1000 was hugely economical – it was a 777-300 classic replacement. That’s why I talked about converting my -900 orders.”

Clark was also unhappy about revisions made to the A350-1000’s Rolls-Royce Trent XWB engine which had an impact on commonality. The revised engine incorporates a new core to cater for higher-thrust requirements of the heavier A350-1000.

“I had 70 aircraft with the same engine. I don’t have that anymore,” he said.

A major factor in Emirates’ long-term fleet planning has been the arrival of the General Electric GE9X-powered Boeing 777X, which offers greater capacity and range than the A350-1000. The airline placed commitments for up to 200 777-9X aircraft at last year’s Dubai air show, at the same time as it signed for another 50 A380s.

Ahead of the Dubai show announcements, Clark hinted to Flightglobal that Emirates could switch out its Airbus widebody orders, saying: “Quite honestly, I’m more interested in more A380s than the A350, because of the way our route network is growing.”

However, at the show he denied that the A350 order had been traded as part of the A380 deal, and said he saw no conflict in operating the A350-1000 and 777X alongside the A380, “because we’re creatures of size and scale”.

Chris Seymour, head of market analysis at Flightglobal’s Ascend consultancy arm, says the move reflects the strength of Emirates’ growth: “The A350 is now too small for their future needs. It will be an A380 and 777-9X carrier in the 2020s.”

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Seymour does not expect the move to have any lasting impact on A350 sales fortunes: “It is not good news for Airbus, but the slots are not in the first five years and demand in this sector is so strong going forward.

“I can’t see it affecting other customers’ opinion of the type at this stage – it is yet to enter service so no-one knows exactly what its in-service performance and experience will be.”

Airbus’s chief operating officer for customers John Leahy says the Emirates move will not have a lasting financial impact, and that enquiries have already been taken from potential customers about the A350 slots left open by the Emirates change.

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It’s not the first time that Airbus has suffered at the hands of a major Emirates cancellation. Back in 2003 the airline was launch customer for the high-gross- weight A340-600 with an order for 18 aircraft, but subsequently cancelled the order in favour of standardising on a large fleet of 777-300ERs.

While Airbus has gained $21 billion-worth of A380 orders from the loss of the A350 contract, the situation looks somewhat less appealing to the XWB’s incumbent engine supplier Rolls-Royce, which says its orderbook will take a hit to the tune of £2.6 billion ($4.4 billion).

Emirates’ existing A380 fleet is powered by the rival Engine Alliance GP7200, but it is competing the selection for the new batch of 50 aircraft. Clark is pushing Airbus to go ahead with a re-engined “A380neo” and indicates that the UK engine maker is best placed to provide a powerplant for any revamped variant.

However, development of the A380neo is by no means certain, and would only account for the last 25 of the 50-aircraft batch for Emirates, which means there are at least 25 current-generation A380s to play for.

Significantly, when British Airways cancelled a batch of Rolls-Royce-powered Boeing 747-400 orders in 1998 in favour of more 777-200ERs, it switched from incumbent supplier GE to the Trent 800 for the new batch to compensate Rolls for the loss of the 747 business. So perhaps the A350 cancellation could in fact provide Rolls with the perfect opportunity to finally get onto Emirates’ A380s, regardless of the A380neo.