Emirates cancels 70-plane A350 order in blow to Airbus, Rolls

Wed Jun 11, 2014 1:25pm EDT
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By Cyril Altmeyer and Tim Hepher

TOULOUSE (Reuters) - Airbus suffered an unexpected reversal for its newest aircraft on Wednesday when Dubai's Emirates scrapped a $16 billion order for the A350, hitting shares in the European planemaker and engine firm Rolls-Royce.

The surprise decision by Airbus's largest customer to cancel all 70 A350s on order comes months before the long-haul jet is due to enter service and removes 9 percent of the order backlog for a plane which took eight years and $15 billion to develop.

Airbus said it was not worried about replacing the lost orders, with its top salesman saying some airlines had immediately expressed interest in buying some of the Emirates aircraft, the first of which was due to be delivered in 2019.

But shares fell as analysts told investors the move raised questions over aircraft demand, whether for the A350 itself or implying a more general wobble of confidence that could also hurt Airbus's main rival, the U.S. planemaker Boeing.

Shares in Airbus closed down 3.1 percent at 52.21 euros and Rolls-Royce, the sole engine supplier for the A350, fell 5.5 percent to 10.17 pounds.

Airbus acknowledged it was disappointed with losing the A350's joint second-largest customer, but said it did not see any financial impact and that flight tests were on track.

"It is not good news commercially but not bad news financially," Airbus sales chief John Leahy told reporters, adding the rival Boeing 787 had suffered more cancellations.

"There is certainly going to be no hole in production," Leahy said.   Continued...

An Emirates Airlines plane lands at the Emirates terminal at Dubai International Airport, February 6, 2012. REUTERS/Jumana El Heloueh