Emirates will buy 100 more A380s if Airbus agrees to upgrade

[DUBAI] Emirates, the biggest customer for the A380 superjumbo, said it has told Airbus Group NV it would commit to buying 100 more jets worth more than US$43 billion at list prices if the manufacturer agrees to equip the plane with a new engine.

The world's largest airliner, typically seating 525 people, has "enormous" possibilities in terms of its passenger appeal and potential contribution to profitability, and developing a so-called Neo upgrade would help press home those advantages, Emirates President Tim Clark told Bloomberg Television in Davos.

"What we've said as Emirates is if you're going to do the Neo, we're in for 100," he said at the World Economic Forum. "Put it on the table, we'll start off for you."

Mr Clark's comments increase the pressure on Airbus to commit to further development of an aircraft that's no longer at the top of its agenda as sales slow and it focuses on boosting production of the new A350 wide-body. Dubai-based Emirates has 57 A380s already in its fleet with 15 more arriving this year out of an order for 140 in total, it said Jan 13.

The future of the A380 - which won no airline orders in 2014 - was thrown into doubt last month when Airbus Chief Financial Officer Harald Wilhelm told investors that halting the program might be an option after 2018, when the order book starts to thin out. Fabrice Bregier, who heads the airliner unit, has since sought to calm concerns, saying the superjumbo's best days are still ahead.

The plane, which sells for US$428 million after Airbus raised its prices an average 3.3 per cent on Jan 1, is so popular with Emirates customers that jets operating to London's Heathrow airport are 90 per cent full, Mr Clark said today, adding that it would be "a major pity" if the model were to be dropped.

A Neo development would cut seat-mile costs by a further 10 to 13 per cent, said the executive, who could expect to pay far below the list price as a major buyer, while a failure to keep the A380 going would leave Airbus with a thin lineup in the large wide-body sector following the demise of the A340 model.

The double-decker, in service for less than a decade, currently comes with a choice of turbines from Rolls-Royce Holdings Plc or the Engine Alliance of General Electric Co and the Pratt & Whitney unit of United Technologies Corp London-based Rolls is regarded as most likely to offer a Neo upgrade.

Mr Clark, who said he was at Airbus's Toulouse base in France last Friday and spoke with the manufacturer on the A380, urged other carriers to reevaluate the superjumbo as a solution to the capacity constraints likely to come into play at airport hubs in the Americas and Europe in the next three-to-seven years.

"The Neo would do a lot of good for marketeers to go and sell what I think is essentially a very good product," he said. "I'm confident that if they do that, they can find buyers for this plane post-2020."

BLOOMBERG