Airbus pulls plug on A380 superjumbo after Emirates cuts order

Aerospace group probably 10 years too late with A380, chief executive says

Airbus have announced that they will end production of their flagship aircraft, the A380, in 2021. Billed as the pinnacle of air travel, where did it go wrong for the double-decker airplane? Video: David Dunne

 

Airbus will stop production of the A380, the world’s biggest passenger aircraft, in 2021 after its largest customer Emirates dramatically cut its order, spelling an eventual end to one of the industry’s most ambitious programmes.

The European aerospace group on Thursday said the Dubai-based airline would slash its planned fleet size of A380s by 39 aircraft, from 162 to 123. Emirate will take delivery of 14 further A380s over the next two years.

The airline said separately it would purchase 70 smaller A330neo and A350 wide-bodied jets.

“Today’s announcement is painful for us and the A380 communities worldwide,” said Tom Enders, Airbus chief executive, in a statement. “What we’re seeing here is the end of the large four-engine aircraft.

“There has been speculation for years that we were 10 years too early, but probably we were 10 years too late, or more. In retrospect, it’s all easy.”

But he stressed: “We are talking about the end of production of the A380, not the end of the programme. Airbus will support these 200/230 aircraft as long as our customers want to operate these aircraft.”

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates Airline and Group, said the company was “disappointed” to have to give up on its order but had accepted the “reality of the situation”. He added: “Emirates has been a staunch supporter of the A380 since its very inception.”

About 3,500 jobs could be at risk over the next three years and Airbus said it would start talks with unions.

Superjumbo

Airbus hoped the A380 would revolutionise passenger air travel when the aircraft began flying in 2007, but strong demand failed to materialise.

The strategy was based on a belief that airlines would crave the superjumbos to move customers between hub airports. Passengers give strong satisfaction ratings for the double-decker aircraft, which carry about 500-600 people.

But the development of smaller long-range aircraft that are more fuel-efficient and can connect smaller airports led to its demise.

Rival aircraft manufacturer Boeing has also struggled to find customers for its first double-decker aircraft, the 747.

Willie Walsh, chief executive of IAG, parent company of British Airways, has described the asking price of the A380 as “outrageous”.

The A380 programme was delayed and over budget, and did not turn a profit as Emirates was the only carrier to place significant orders. As of last month, Airbus had received 313 orders for the aircraft. A reasonable target was believed to be about 600.

Results

The news overshadowed strong results from Airbus for the full year, which beat analyst expectations despite an additional charge of €463 million related to the closing of A380 production.

Airbus reported revenues of €63.7 billion to the end of December 2018, up from €59 billion the year before. Adjusted earnings before interest and tax, which excluded material charges, totalled €5.83 billion, up from €3.19 billion.

Reported earnings before interest and tax came in at €5.04 billion, up from €2.66 billion, but included a net additional charge of €463 million related to the A380, as well as an additional charge of €436 million related to the A400M military transport programme.

Airbus said it expected to deliver between 880 and 890 commercial aircraft in 2019. – Copyright The Financial Times Limited 2019/Reuters/PA