Airbus and Rolls-Royce hit as Emirates axes A350 order - UPDATE

11th Jun 2014 07:11

Gulf carrier Emirates has ditched a $16bn order for Airbus A350 aircraft, sparking concerns about the global airline industry's growth prospects.Airbus said Emirates had cancelled the deal for 70 jets following ongoing talks between the pair "in light of Emirates' fleet requirement review".Neither company commented on the reasons for the decision, but analysts said the A350 delivery schedule may not have fitted Emirates' growth capabilities.They also said Airbus was struggling to generate demand for the smallest version of the A350 and Emirates was keener on the 777 from Airbus' arch-rival Boeing.The news, which coincided with a profit warning from German airline Lufthansa due to disappointing passenger and freight revenue, hit airline and aerospace industry shares.Airbus shares fell €2.07 to €51.78 at 12:42 CET, while shares in British Airways and Iberia owner IAG dropped 18.5p to 394.1p at 11:42 in London.Accendo Markets analyst Mike van Dulken said the news would "raise concerns about the health of traditionally strong traffic volumes from the Middle East".Shares in engine-maker Rolls-Royce also fell 29p to 1047p as the engineer, which is the only company to make engines for the A350, said Emirates' decision would cut its order book by 3.5% or £2.6bn, although it was confident of making up the difference from other airlines.The A350 aircraft uses four giant Rolls-Royce Trent XWB engines. Rolls-Royce said: "While disappointed with this decision, 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."Emirates originally placed the order for 50 A350-900 and 20 A350-1000 jets in 2007, with first delivery slots scheduled from 2019.Airbus said the A350 XWB order book was healthy, with 742 firm orders six months before the aircraft was due to enter service.The Toulouse-based group said in a statement: "Interest in the game-changing A350 has always been very high with customers. Airbus expects the A350 order book to continue growing in 2014."OH/PW