Rolls-Royce has taken a £2.6bn hit to its order book after the Emirates airline scrapped plans to buy 70 Airbus A350s.
The Dubai-based carrier placed the order as part of a wider deal with Airbus in 2007 and had been due to receive the first extra wide body (XWB) A350 planes, which are powered by Rolls’ Trent XWB jet engines, in 2019.
The firm, that has bases in Bristol and Derby, said it was hopeful the delivery slots would be taken by other airlines but admitted that in the meantime the cancellation will reduce its order book by about 3.5 per cent.
The loss of the Emirates order comes in a year when Rolls-Royce expects revenues and profits will fail to grow due to the impact of defence spending cuts among major customers. Shares fell 2 per cent today.
Rolls said: "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."
Airbus said it remains confident in its A350 programme, with 742 firm orders half a year before the plane's entry into service. The decision to cancel the order follows the airline's commitment to buy 50 additional A380s at the last Dubai Airshow.
The planemaker said: "Airbus and Emirates benefit from a long-standing relationship and the airline recently reiterated its confidence in Airbus products particularly by praising the A380 and the benefits the aircraft brings to their operations."
The A350 has been hit by delays and a multibillion-dollar revamp as Airbus attempts to compete in a long-haul market dominated by Boeing's 777 and 787. Emirates has been adding the 777X to its fleet, including an order for 150 planes in a deal valued at $55.6bn (£33.1bn).
Sash Tusa, aerospace and defence analyst at Edison Investment Research, said the move by Emirates puts increasing pressure on Rolls to win new engine positions.
He added: "The blow to Airbus however may be far harder, with the loss of a 70 A350 wide-body plane order coming just as rival Boeing's 777X has been launched. It gives the unavoidable conclusion that the world's largest and most influential long-haul airline sees the 777X as the wide-bodied twin of the future."