Emirates key to Airbus’ pole position

Noël Forgeard, Airbus chief executive, is to visit Dubai this weekend for talks with Emirates, the fast-growing Middle East airline and one of the European aircraft maker’s key customers worldwide.

He will have a crowded agenda. He must seek to explain delays in the delivery schedule for the A380 superjumbo while seeking to secure vital launch orders for the group’s planned new long-range, mid-market aircraft, the A350.

Mr Forgeard is fighting for his reputation and record at Airbus. During the past seven years he has led the European aircraft maker to a position of narrow supremacy over its US rival, Boeing, but for months now he has been embroiled in a damaging internal struggle for management control at the Airbus parent company, EADS. For weeks he has been due to be confirmed by the EADS board as joint chief executive of EADS, moving up from Airbus, but on Thursday night the group’s Franco-German shareholders were still struggling to reach agreement on the new management structure.

Emirates is by far the biggest customer to date for the A380, accounting for almost a third of the order book for the world’s biggest passenger jet with 45 of a total 154 orders and commitments. The airline is basing much of its dramatic planned growth in the next decade on the 555-seat superjumbo, but Airbus was forced to admit this week that initial deliveries are going to be delayed for up to six months.

At the same time Airbus is desperately seeking the crucial initial orders for the A350, so that it can announce the industrial launch for the project, ideally at the Paris Airshow in two weeks’ time.

The A350 is being developed in haste to compete with Boeing’s 787 Dreamliner, which is rapidly building an impressive order backlog and looks set to win back market leadership for Boeing this year, measured by new orders, for the first time since 2000.

Airbus has outsold Boeing in five of the last six years and has delivered more aircraft in each of the last two years, but there is a growing sense in the civil aerospace industry that the US group is finally staging a comeback led by the 787. It has already secured 266 orders and commitments from 21 customers and, significantly, has won over several key traditional Airbus customers to the 787.

John Leahy, Airbus chief commercial officer and the group’s “super-salesman” who has driven the group’s sales success for more than a decade, has long been hopeful that the breakthrough A350 orders would be ready to announce at Le Bourget. On Thursday he told the Bloombergs new agency, “I'd been saying I expected orders for 100 (A350s) at the Paris Airshow. Now I think that will be higher based on discussions I've had with airlines.”

An Airbus spokesman on Thursday confirmed the target for more than 100 A350 orders at the airshow.

If the goal is to be met Emirates will again be crucial in shaping the European aircraft maker’s fortunes.

It is in negotiation for an order of around 50 medium-capacity, long-range aircraft and has been pitting the A350 against two derivatives of the Boeing 777 as well as against the 787 Dreamliner. An executive close to the talks said on Thursday that “the A350 is in pole position”.

In addition to Emirates, Airbus is still hopeful of securing key launch orders for the A350 from Qatar Airways, another important fast-growing Middle East customer and also a buyer of the A380, as well as from the leading aircraft leasing companies ILFC and Gecas. To date the only commitment made to the A350 has come from Spain’s Air Europa for 10 aircraft.

Mr Forgeard will have to be at his persuasive best in Dubai. Several of the target airlines on the Airbus hit-list for the A350 have already opted for the Boeing 787, including Northwest Airlines of the US and Air Canada, and Airbus must register important wins soon, if the controversial project is to be launched.

The fate of the A350 is at the forefront of the trade battle between the European Union and the US over alleged billion dollar illegal state subsidies for new aircraft development.

Just as importantly, Mr Forgeard must mollify Emirates over the A380 delays. Qantas, the Australian flag carrier, said this week that its deliveries would be delayed for six months to spring 2007 “as a result of manufacturing issues at Airbus.”

Emirates was on a similar delivery schedule. Tim Clark, president of Emirates, said on Wednesday that a six to 12-month delay would be a serious issue for the group, as it would slow down the airline’s ambitious growth plans.

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