Thu, Jul 14, 2016 - Page 10 News List

Airbus cuts delivery goal for A380s

NY Times News Service, PARIS

Airbus Group SE on Tuesday said that it would sharply curtail production of the A380 superjumbo jet, the world’s largest passenger plane, as airline demand dwindles for supersized aircraft.

In what it described as a “prudent, proactive step,” Airbus said it had slashed its plans for annual A380 deliveries to 12 planes per year beginning in 2018, roughly half the number it expects to deliver this year.

“We are establishing a new target for our industrial planning, meeting current commercial demand, but keeping all our options open to benefit from future A380 markets,” Airbus chief executive Fabrice Bregier said in a statement.

Introduced with great fanfare in 2007, the A380 was marketed to airlines as a new industry flagship that would help relieve congestion at the world’s busiest aviation hubs while restoring cruise-ship style glamor to intercontinental air travel.

More than 500 seats can be packed into the A380’s two decks and several airlines have capitalized on its generous proportions to introduce lavish amenities for first-class passengers, including opulent lounges, health spas and even “apartments” equipped with double beds and shower facilities.

However, despite Airbus’ grand ambitions, the A380 has failed to generate interest from more than a dozen airlines. With its four engines and 575-tonne frame, the plane, which lists for more than US$400 million, has been a tough sell with airlines, which have become increasingly concerned with fuel economy.

Airbus did not begin covering its costs on the A380 until last year — at an annual production rate of 27 planes.

As it starts to slow down its assembly lines, those razor-thin margins could evaporate quickly, analysts said.

Airbus once forecast sales of more than 1,200 of the planes over 20 years; it has so far delivered only 193 planes and has orders for just 126 more.

No US carrier has ordered the A380.

Only one airline, Emirates Airlines of Dubai, has placed a significant strategic bet on the superjumbo, ordering 142, including 75 already in service.

“This has been a one-way trip to death,” said Richard Aboulafia, an aerospace analyst at the Teal Group, an aviation consulting firm in Fairfax, Virginia, and a longtime critic of the A380.

“The market doesn’t want a 500-plus seat jet, it doesn’t want four engines and there are plenty of alternatives that do international routes much better,” Aboulafia said.

In scaling back its expectations for its biggest flagship, Airbus will most likely struggle to keep the A380 program profitable.

The company spent an estimated US$25 billion to develop the plane — a sum that was inflated significantly by a series of manufacturing problems that delayed its introduction by more than two years.

Airbus on Tuesday said that it would need to significantly streamline production and shave operating costs.

The company said that it expected to be able to break even at a production rate of 20 aircraft next year and would seek additional cost cutting measures in subsequent years as output slows further.

“We are maintaining, innovating and investing in the A380,” Bregier said.

“The A380 is here to stay,” he added.

Declining production will inevitably mean less work for the engineers employed on A380 assembly lines.

Airbus said that accelerating production of its other commercial jets, including the fast-selling 150-seat A320 and its most recent long-range wide-body, the A350, would likely offset any A380 job losses.

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