Airbus wins Ethiopian deal as Emirates talks go down to wire

By Tim Hepher, Alexander Cornwell and Pesha Magid

DUBAI (Reuters) -Ethiopian Airlines unveiled a provisional order for 11 Airbus A350-900 jets on Wednesday in a sign of reduced tensions over engine pricing that have blocked billions of dollars of Airbus deals at the Dubai Airshow.

The deal came as last-ditch talks for host carrier Emirates to buy dozens of larger Airbus A350-1000s looked set to drag into Thursday, amid the fallout from a clash with Rolls-Royce over engine performance and costs on Tuesday.

Emirates and its suppliers had no immediate comment.

Backroom engine negotiations that are often said to drive big-ticket airplane orders at the industry’s marquee events have been grabbing headlines this week, after a public spat between the Dubai carrier and Rolls-Royce.

Engines have become a pressing topic as airlines juggle fuel savings from the latest engines against the rising cost of keeping them maintained and flying over 20 years of service.

Emirates Airline President Tim Clark warned Airbus and Rolls-Royce on Tuesday that increased engine downtime in harsh Gulf conditions – as well as higher prices for servicing – stood in the way of an order for between 35 and 50 A350-1000 jets.

Rolls-Royce said it was taking steps to improve durability of Trent XWB-97 jet engines that power the A350-1000, but rejected Clark’s suggestion that the engines were “defective”.

As buggies shuttled executives between Rolls-Royce, Airbus and Emirates chalets in fading light on Wednesday, sources said differences were narrowing. One said the parties were “close” but not enough to pull off a turnaround on Wednesday.

The three-way standoff reflects a trend towards airlines buying jets at the same time as negotiating complex engine maintenance deals that sit more uncomfortably with the traditional quick-fire of air show announcements.

Emirates and Airbus had been close to finalising a deal on Tuesday but it later fell apart, sources said, without saying why agreement could not be reached at that stage.

“One minute it’s on, then it’s off,” one delegate said.


A major Emirates order would help rebalance the show after Boeing and engine maker GE dominated the opening with a $50 billion order including 90 777X jets on Monday.

However, sources cautioned that previous hiccups in air show negotiations over deals such as an Emirates purchase of Airbus A380s in 2017 needed months of further detailed talks.

The A350-900 ordered by Ethiopian uses a different variant of engine from the A350-1000, and sources said discussions on that model were more about pricing than durability.

UAE President Sheikh Mohamed bin Zayed Al Nahyan on Wednesday visited the show, where he was seen briefly meeting executives from Lockheed Martin and Saab.

Dubai Crown Prince Sheikh Hamdan bin Mohammed Al Maktoum and Emirates airline Chairman Sheikh Ahmed bin Saeed Al Maktoum were also seen at the show. Sheikh Hamdan on Monday attended a press conference where Sheikh Ahmed announced Emirates was placing a $52 billion order for more wide-body Boeing planes.

Speaking to Middle East reporters this week, Sheikh Ahmed hinted at the path to an agreement with Rolls-Royce.

“When we feel that we have a good deal, we will sign,” he said, Abu Dhabi-based newspaper The National reported.

“I need guarantees on when, at what price and the maintenance cost per hour. That would solve it,” he added.

(Reporting by Tim Hepher, Alexander Cornwell, Pesha Magid; Editing by Jan Harvey Mark Potter, Kirsten Donovan)