Rolls Royce share price dives on cancelled Emirates order

 
Suzie Neuwirth
Shares in Rolls-Royce slumped 2.8 per cent yesterday after Emirates Airline cancelled an order for 70 Airbus jets, for which the aerospace giant makes the engines.

“As a result of today's announcement, our order book will reduce by around 3.5 per cent or £2.6bn,” said the FTSE 100-quoted firm.

Rolls-Royce said it remained confident that the delivery slots vacated by Emirates, due to start towards the end of the decade, would be taken up by other airlines. “Demand for the Airbus A350 remains strong, with more than 700 aircraft and 1,400 Trent XWB engines [made by Rolls-Royce] already sold,” it said.

Airbus said that Emirates’ decision to cancel the order of 70 A350 jets “follows on-going discussions with the airline in light of their fleet requirement review”.

It added that it expected the A350 order book to continue growing in 2014.

Sash Tusa, aerospace and defence analyst at Edison Investment Research, said that the cancellation “increases operational risk for Rolls-Royce” but would be a harder blow to Airbus, due to the recent launch of rival Boeing’s 777X jet.

Shares in Rolls-Royce closed down 5.5 per cent, while Paris-listed shares in Airbus fell 3.1 per cent.

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