The cancelled order for 70 Airbus A350s before the company’s annual Innovation Days was a surprise and an embarrassment that took the edge off what was intended to be a two day promotion of Airbus programs.
The cancellation by Emirates Airlines was certainly not good news. But it probably should not have been a total surprise. That it was had more to do with people not paying attention. Emirates had been signaling for some time it had issues with the program ever since Airbus rejigged the A350-1000 a few years ago, without consulting Emirates in the process.
Headlines were bad and while most analysts were measured and reporting balanced, there were a few exceptions of hand-wringing disaster for breathless stories.
Airbus tried to downplay the cancellation, without much success. But an objective analysis suggests Airbus and the rationale analysts are correct: while a blow, it’s hardly a program-defining moment, any more than the Bombardier CSeries-Pratt & Whitney engine failure last month was a defining moment in that program.
John Leahy, COO-Customers, pointed out that Boeing saw more cancellations for the 787 than Airbus has for the A350. Boeing saw some 200 orders for the 787 cancelled during its program delays. The largest single cancellation was for 35 from Qantas Airways. Qantas actually cancelled 51 787s over three actions. Lessor RBS Capital cancelled 25 in one go.
The Emirates deliveries began in 2019, five years hence. This gives Airbus lots of time to find new customers, and Leahy told the media at Innovation Days he’s already had some calls from customers seeking the slots. He also said he can resell them at higher prices than Emirates received as a launch customer.
Why did Emirates cancel? No doubt dissatisfaction with the A350 revision is part of it. Upgauging is another element. Emirates is aggressively expanding and there is limited room at its Dubai airport hub. The Boeing 777-8 ultra-long haul airplane is larger than the shorter-range A350-900 and the 777-9 is larger than the A350-1000.
Had these been near-in delivery slots, there would be more cause for concern. But it’s a long time before “metal” is cut and engines are built.
We aren’t worried about this, any more than we were hand-wringing over the 787 cancellations. Those who engage in hysteria over this simply don’t understand the realities of the market.