Mubasher: Airbus is reportedly looking to discontinue producing the world’s largest jetliner, the A380, unless more orders are placed by Dubai-based airline Emirates.
An order for 36 superjumbos worth AED58.7 billion ($16 billion) was projected to be inked between both Airbus and Emirates at Dubai Airshow in November 2017.
Accordingly, the loss-making venture is currently facing a gradual closure after 10 years in production since the deal was not completed by the end of 2017, Arabian Business reported, citing sources familiar with the matter.
A new order from Emirates would ensure the firm’s commitment to the A380 for another ten years at least, the magazine highlighted, quoting comments made by Airbus’s outgoing chief operating officer Fabrice Bregier in November.
“At its current production rate, with no new deals, Airbus will have delivered all of its order backlogs by 2019,” according to the magazine.
The European manufacturer was considering cutting back A380 production to six per year to meet Emirati airline’s demands.
“Lowering the production rate to six per year reflects the desire to buy time in the hope of being able to boost sales over the next decade, when global mega-cities and their airport hubs will reach congestion points,” aviation analyst and managing partner of 1BlueHorizon Group Leonard Favre told Arabian Business in an interview.
“Across the industry, demand has cooled for the double-decker wide-bodied jet the same way it did for the Boeing B747-8 program. Carriers are focused on planes that are smaller, cheaper, and that can be operated with better economics thanks to two engines,” said Favre.
“As fuel costs, rise, operating a four-engine super-jumbo aircraft like the A380 becomes extremely unattractive,” he added.
Any reports about abandoning the A380 programme are speculation and “cannot be confirmed,” a spokesperson for Airbus told Arabian Business.
“Adjusting production rates are nothing unusual and do not suggest the end of the A380 programme. It’s something we are clearly moving forward with, and I can tell you discussions with airlines are ongoing,” the spokesperson added.
“That Airbus has failed thus far to secure an additional order from Emirates speaks volumes,” chief analyst at StrategicAero Research Saj Ahmed told Arabian Business in an interview.
Moreover, Ahmed highlighted that “Airbus cannot sustain production, much less launch a re-engined model and committing to more A380s will mean it becomes harder to finance purchases as institutions step back from lending money for what is essentially a depreciating asset,”
“Emirates is not keen to bear all the risk of being the biggest customer going forward. This is precisely why the airline does not own a single A380. They are all on sale and leaseback agreements,” he added.
The future for Airbus is expected to lie with the A320, which was first developed to compete with the Boeing 747 at a cost of approximately EUR 11 billion (AED 48.5 billion).
