Rolls-Royce faced with £2.6bn black hole as Emirates pulls the plug on big Airbus order

DUBAI’S Emirates Airline has sent shockwaves through the civil aerospace industry by announcing it is pulling out of a major contract order with Airbus.

The airline has cancelled an order for 70 Airbus A350 wide-body aircraft following a review of its fleet requirements.

Emirates had placed the order for 50 A350-900 and 20 A350-1000 jets in 2007, with first deliveries scheduled from 2019.

The scrapping of the order has major implications not just for Airbus but for its suppliers as well.

Another to suffer is Midlands-based aero engine manufacturer Rolls-Royce.

In a statement today, Rolls-Royce said it had been notified of the airline’s decision and it was “disappointed” by the cancellation.

“We are confident that the delivery slots which start towards the end of this decade vacated by Emirates will be taken up by other airlines. Demand for the Airbus A350 remains strong, with more than 700 aircraft and 1,400 Trent XWB engines already sold,” it said.

It said it maintained a “close working relationship” with Emirates and would continue to support its 38 Rolls-Royce powered wide body aircraft currently in service.

Outlining the full impact of the decision on the business, it added: “As a result of today’s announcement, our order book will reduce by around 3.5% or £2.6bn.

“The order for 70 A350 aircraft was confirmed in 2007 as part of a larger $8.4bn announcement relating to a total of 120 aircraft, all with TotalCare services. The options for the additional 50 aircraft, and the TotalCare contracts were not included in the amount captured in our order book.”

The cancellation is a further blow to Rolls-Royce which only last month warned its profits for next year were likely to be flat.

However, it is pressing ahead with assembly of the first higher-thrust version of the Trent XWB, that will power the Airbus A350-1000.

The cancellation only affects the orders for the A350 aircraft.

Airbus said the airline remained committed to its fleet of A380 super-jumbos, including an additional 50 aircraft ordered in November at the Dubai Airshow.

Airbus said it also remained “very confident” in its A350 XWB programme.

“Half a year before entry into service, the A350 XWB order book stands at a healthy 742 firm orders. The A350 flight test campaign is progressing well and is on track for Type Certification in the coming months,” it said.

“Interest in the game changing A350 has always been very high with customers. Airbus expects the A350 order book to continue growing in 2014.”