Engine Issues May Spell Doom for Future of the A380 Program

Emirates has been credited with saving the Airbus A380 program by placing a massive 11th-hour deal earlier this year. But progress on the $16 billion order has ground to a halt due to stalled negotiations with Rolls-Royce, the official engine provider for Emirates.

The issue has to do with the price and fuel burn on the engine, a design that has already fallen short of performance parameters, according to Bloomberg. As a result of the delay, the companies have missed the original deadline for engine selection, which may delay the first delivery scheduled for 2020 — and can possibly imperil the entire order overall, which now includes a total of 36 A380s after continued negotiations this year.

At the beginning of the year, Airbus sales chief John Leahy stated on record that Emirates was "the only [airline] with the ability" to purchase enough aircraft to keep the A380 program afloat. The manufacturer needed at least a commitment for the delivery of six planes a year for at least eight to 10 years. Just a few days later, the Dubai-based carrier stepped up to the plate. About half of the A380s on order are for Emirates.

The partnership between Emirates and Rolls-Royce began in 2015, with a "historic" $9.2 billion commitment to supply Trent 900 turbines for 50 Emirates planes. However, the UK engine manufacturer has struggled to attain the quality control standards it previously guaranteed, racking up millions in legal charges against the durability of its high-pressure turbine blades for its Trent 900 and 1000 engine models.

As a result, Emirates may be looking to rebuild a relationship with its previous provider Engine Alliance, a joint venture between General Electric Co. and Pratt & Whitney. Engine Alliance supplied GP7200 engines for the first 90 A380s in the Emirates fleet, and Etihad Airways, Qatar Airways, Korean Air Lines Co. and Air France also operate aircraft powered by Engine Alliance engines.

Emirates sales chief John Leahy stated this past January that "absolutely, [Engine Alliance] has a chance of getting back in" with Emirates as an engine provider, and Engine Alliance is the only realistic competitor for developing the A380 engine. However, confidential sources within the company told Bloomberg that it's hesitant to consider powering the A380s, having turned its attention to other programs after receiving no new orders for the A380 engine in years.

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All of these delays may spell doom for the Airbus A380 program as a whole if engine negotiations cannot be resolved quickly. Shares for both Airbus and Rolls-Royce fell in the wake of the stalled progress news, and Emirates stands to lose significant resale value on its existing A380s if Airbus terminates the aircraft model. Emirates already owns more than 100 A380s — easily the largest single-owner fleet in the world. The program, which has been on rocky footing for years, has caused Airbus to drop its production of A380s from 15 in 2017 to only six in 2018 and for future years. Airbus has also been attempting to leverage the Emirates deal to sign on new A380 clients including British Airways, although the pitch has not been successful thus far. The Rolls-Royce production delay no doubt will further hinder that effort.