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Negotiation Insights

Global Negotiation Map - Airbus A380 saved by a $16 billion Emirates Deal

Negotiation Map | 2017 | Week 38

A few days ago, Airbus announced that unless they received new orders for the A380, they would discontinue the superjumbo plane. Early on Thursday, news came out that Emirates Airlines had agreed to order 36 new A380 after long and difficult negotiations. This is a major win for Airbus SE, adding a decade to the superjumbo's production. As of 2pm GMT, Airbus Group's shares have risen of 2.44%.

When Airbus announced that it might end production of the A380, it placed significant pressure on the Gulf giant. The new model is important to their premium services, and represents 40% of the airline's fleet. Additionally, Emirates had already invested millions in building infrastructure to accommodate the aircraft in Dubai. It appears like the French manufacturer's threat to end production of the A380 had a significant impact on the negotiations between both parties: it was announced that a tentative deal for 20 planes with an option for 16 more, starting in 2020, only a couple of days later.

While the bid appears to have been successful, Airbus has only bought some time to save the A380 line. On that matter, Airbus COO John Leahy said "I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s."

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