Airbus warns A380 jumbo’s future at risk
London — Airbus has publicly questioned the future of the A380, saying its flagship aircraft programme risks being shut down if the manufacturer fails to win a crucial order from the plane maker’s main backer, Emirates.
Emirates is the only airline with enough capacity to take enough planes to keep the programme alive, Airbus sales chief John Leahy said on Monday in an online presentation. Discussions were ongoing, he said.
"I believe we can find a solution with Emirates in hopefully the not too distant future," Leahy said in an interview with Bloomberg TV.
"But we do need a strong base that only a big operator like Emirates can provide."
Airbus has struggled to rack up sales of the superjumbo, which it argues will be needed to help increase passenger traffic at the world’s busiest airports. The firm was forced to slash production rates in July to try and stretch out the order book.
Emirates, by far the biggest operator of the plane, scuttled a deal to buy 36 of the planes in November, raising doubts about the future of the programme.
Airbus wants Emirates to order enough planes to sustain production at six a month over the next 10 years, giving the plane maker scope to sell two or three of the superjumbos on top of that to eke out a profit on the programme, Leahy said.
The company produced 15 in 2017 and has said it plans to reduce that figure to eight in 2019. Airbus can break even producing as few as six of the planes a year, chief operating officer Fabrice Bregier said.
The plane’s future has been in doubt for several years. As far back as 2014, chief financial officer Harald Wilhelm said the programme could be killed if demand did not pick up.
The final 2017 order tally for all aircraft, announced on Monday, highlights the challenges facing Airbus as the company prepares for a wholesale overhaul of its leadership team.
The plane maker, run from Toulouse, France, has had success selling smaller planes while demand for wide bodies wanes.
The four-engine A380, introduced in 2005, is so big that some airports had to expand runway facilities in order to accommodate the 550-seat plane. While it is used in the world’s biggest airports including London’s Heathrow and New York’s JFK, the industry as a whole has moved towards smaller planes going point-to-point, reducing airlines’ dependence on bigger hubs.
More business from Emirates is key to attracting other buyers of the plane and ensuring jets sold now would hold their resale value.
With a list price of $446m, the plane is one of the most expensive and least flexible for airlines to deploy in their fleets. Without new orders, it becomes impossible for Airbus and its suppliers, which include Rolls-Royce Holdings, GKN and the General Electric-United Technologies venture Engine Alliance, to make a profit.
While the A380 struggles, Airbus is outselling its rival, Boeing, on smaller single-aisle aircraft such as the A320 family. The company announced a bonanza of orders in late December, and said on Monday that it sold more than 1,000 of the planes in 2017. The achievement is especially notable since Boeing refreshed its lineup last year with the 737 Max 10, a direct competitor.
Leahy, the outgoing chief salesman, said Monday he would stay on for several months after handing over the job to his successor, Eric Schulz, on January 25. CEO Tom Enders said last month he planned to step down in 2019. Bregier will leave in February. He said Monday he planned to seek a job at another company.