IAG's Walsh to Airbus: drop A380 price to boost sales

[February 01, 2019]   By Alistair Smout

LONDON (Reuters) - Airbus should lower the price of its A380 jetliner if it wants to sell more of them, IAG CEO Willie Walsh said on Friday, adding that the airline group would consider additional aircraft if the price was right.

Walsh's comments come as Dubai's Emirates is exploring switching A380 orders to the smaller A350 in a move raising new doubts about the future of the superjumbo, people familiar with the matter said on Thursday.

"I've been very clear with Airbus that if they want to sell the aircraft, they're going to have to be very aggressive on the price," Walsh said at a Oneworld event in London.

Airbus is trying to broker a deal for Emirates, the largest customer, to switch some A380 that are already on order to the smaller A350 in a move likely to trigger a shutdown in production of the slow selling superjumbo, sources said on Thursday.

That would be part of a broader package to end an impasse between Emirates and Rolls Royce over terms for engine support and could involve salvaging as many sales as possible to a handful of airlines still interested in buying the plane.

Industry sources say Airbus is in talks with IAG-owned British Airways on the A380. Rolls Royce provides engines for both the A350 and A380.

Analysts say Airbus would rather sell A350 which is generating cash than A380 which is draining cash.

General view shows an Airbus A380 at the final assembly line at Airbus headquarters in Blagnac near Toulouse, France, March 21, 2018. REUTERS/Regis Duvignau/File Photo

But it remains to be seen whether Emirates will agree to the reshuffle and Airbus rival Boeing is expected to try to disrupt the move as it negotiates with emirates to finalize a provisional deal to sell 40 787s to Emirates. The A350 competes with Boeing's 787 and 777.

Walsh said that IAG was in talks with Airbus and Boeing to get more wide-body aircraft to replace 747s that are due to be retired in the coming years.

"Those discussions are ongoing... and we're pleased to have the choice of excellent aircraft," Walsh said.

IAG's British Airways currently operates 12 A380s. Walsh said he was committed to the A380s which the group already operates, and that IAG might consider some additional aircraft if the price was right.

"I've no concerns about the A380... it's been an excellent aircraft for us. We have made it clear to Airbus that that we might consider some additional aircraft," Walsh said.

"But the pricing of that aircraft has not been as attractive as we believe it needs to be."

(Reporting by Alistair Smout, additional reporting by Tim Hepher in Paris,; Editing by Paul Sandle and Louise Heavens)

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