Airbus scraps production of A380 superjumbo
February 14, 2019
European aircraft manufacturer Airbus on Thursday announced it will end production of the A380 double-decker passenger jet by 2021.
The Franco-German company had hoped the superjumbo would challenge Boeing's 747 and revolutionize air travel in the 21st century.
"Without Emirates, Airbus has no substantial order backlog and no basis to sustain A380 production after 2021," said Guillaume Faure, who is taking over as Airbus CEO from Tom Enders this spring.
The annoucement was made alongside the news that Airbus net profit had risen 29 percent in 2018 after strong demand for its smaller planes. Airbus managed to make these profits despite 899 million euros ($1 billion) in losses from the A380 aircraft.
The company's stocks fared well in trading later on Thursday, rising 4.5 percent with investors apparently relieved by the decision to cut the cord on a losing venture.
What the company said:
- Key client Emirates had informed Airbus it was cutting orders from 162 to 123 aircraft
- That left the company with no substantial A380 backlog and no basis to sustain production
- Shutdown costs are estimated at €463 million ($521 million) with a billion euros of European government loans forgiven
- It will still produce 17 A380s including 14 for Emirates and 3 for Japanese airline ANA
- CEO Enders said talks with trade unions about any potential impact on jobs would follow in the coming weeks
Read more:
Airbus's spurned A380 superjumbos to be stripped for parts
Emirates disappointed
The Dubai-based Emirates airline is the biggest A380 customerand built its global brand around the model. The A380 will remain a central part of the Emirates fleet into the 2030s, the airline said.
"Emirates has been a staunch supporter of the A380 since its inception," said Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum. "While we are disappointed to have to give up our order, and sad that the program could not be sustained, we accept that this is the reality of the situation." Emirates has ordered 40 A330-900neo jets and 30 A350-900 aircraft instead.
Airbus CEO Tom Enders called the superjumbo an "outstanding technical and industrial achievement," adding that the announcement was "painful for us and A380 communities around the world."
What was the problem with the A380? The world's biggest passenger jet started flying in 2008. With two decks of cabins and room for 544 people in standard layout, airlines were reluctant to commit to the costly plane and airports had to build new runways and modify terminals to accommodate it. The project suffered production delays and cost overruns right from the outset. The company was forced to restructure, costing thousands of jobs.
Enders said Airbus would continue to support the A380 for as long as it remains in service.
What effect will it have on earnings? Despite losses of €899 million ($1 billion) on the A380, Airbus on Thursday announced a 29 percent rise in profits for 2018. Net profit increased from €2.4 billion to €3.1 billion.
Airbus will book a €463 million in shutdown costs but expects to be forgiven a billion euros of outstanding European government loans under a funding system which has been central to its trade dispute with its US rival Boeing.
Overall, Airbus expects to deliver 880 to 890 planes this year after 800 last year, with steady demand for the midsize A320 which carries out short and medium-range flights.
What happens next? Airbus said it would start talks in the coming weeks with unions over the 3,500 jobs that could be at risk.
rt/jm (AP, dpa, Reuters)