The share price of Rolls-Royce (LSE: RR) is down 1.5% so far this morning, following an announcement by Airbus that Dubai’s Emirates Airline has cancelled an $16bn order for 70 Airbus A350 wide-bodied aircraft.
The order was originally placed by Emirates back in 2007, with delivery scheduled for 2019. The cancellation will mean that Rolls-Royce takes a £2.6bn hit to its order book — a reduction of around 3.5% in the total value.
In its announcement Airbus said:
“Airbus is very confident in its A350 XWB programme. Half a year before entry into service, the A350 XWB order book stands at a healthy 742 firm orders. The A350 flight test campaign is progressing well and is on track for Type Certification in the coming months.”
Commenting on the cancellation, Rolls-Royce said
“While disappointed with this decision, we are confident that the delivery slots which start towards the end of this decade vacated by Emirates will be taken up by other airlines. Demand for the Airbus A350 remains strong, with more than 700 aircraft and 1,400 Trent XWB engines already sold.
“We retain a close working relationship with Emirates and continue to support their 38 Rolls-Royce powered wide body aircraft currently in service.“
Following today’s fall Rolls-Royce’s share price is now down 18% so far in 2014, at 1,060p, compared with a 1.5% rise in the FTSE 100 index. Much of the collapse in the company’s value followed the publication, back in February, of its final results for 2013, in which it forecast flat revenue and profit for the year ahead
But long-term shareholders have been rewarded with a gain of 218% over the past five years, an increase that leaves the FTSE 100’s 54% growth over the same period trailing in its wake.
