Dubai raises stakes in talks for A380 lifeline order

Dubai wants a guarantee that Airbus will keep production of the A380 superjumbo open for at least 10 years before state-owned Emirates places a new order for the world's largest jetliner, the airline's president said on Monday.

Speaking to Reuters at the Dubai Airshow, Tim Clark also said the largest Middle East carrier would probably stick with the Boeing 787 for its mid-sized fleet needs after ordering 40 of the jets on Sunday, and could order more in future.

Airbus's hopes of a new order from leading customer Emirates for the slow-selling A380 were thwarted on Sunday when the airline unveiled a surprise order for 40 Boeing 787-10 jets worth $15.1 billion at list prices, but no European contract.

Delegates said negotiations continued overnight and that Airbus may be willing to meet Dubai's conditions in order to secure a much-needed order for its flagship product. "We continue to have a dialogue with them," Clark told Reuters. "If that comes to some kind of fruition during the course of the week, or the next few months, is very much down to them."

Airbus has been scaling back production plans for the A380, which was launched as the solution to ever-rising air travel between major international hubs but has been outflanked by smaller, efficient widebody jets. With 100 A380s already in Emirates' fleet, Clark made plain the concerns about Airbus' commitment to the project were being felt as high as the Dubai government, which owns the airline.

"I think the ownership here are concerned about continuation (of the A380). They need some copper-bottom guarantees that if we do buy some more, then the line will be continued for a minimum period of years and that they are fully aware of the consequences of cancellation and leaving us high and dry."

"Those assurances I am sure will come. Quite when, I don't quite know."Asked what would be a reasonable commitment to unblock a deal, he said: "A minimum 10 years. These are vast capital investments for us and we can't afford to have anything less than 10 years; hopefully it would be 15. But it is their call". Emirates is by far the biggest customer for the A380, which entered service in 2007 during the financial crisis and never generated as many sales from other carriers as Airbus had hoped.

Emirates has ordered 142 of the jets, worth $436 million each at list prices, and last week it took delivery of its 100th. Scrapping production would raise concerns about future support and the value of jets in Emirates' portfolio. Dubai's demand for industrial guarantees raises the stakes in negotiations and would be a matter for the Airbus board, industry sources said.

"We know management is likely to be structured slightly differently. On the basis of that we wish to know that irrespective of what the management does.”

-Reuters, Dubai