Saturday 23 March 2019

Supersized shutdown: Airbus to scrap A380 production as sales to airlines slump

THE BIG PICTURE

Europe's Airbus is scrapping production of the A380 superjumbo, with lacklustre sales forcing it to abandon a dream of dominating the skies with a 21st century cruiseliner.

The world's largest airliner, with two decks of spacious cabins and room for 544 people in standard layout, was designed to challenge Boeing's legendary 747 but failed to take hold as airlines backed a new generation of smaller, more nimble jets.

Airbus said yesterday that the last A380 would be delivered in 2021.

The move comes after Emirates - the largest A380 customer - was forced to reduce its orders for the iconic superjumbo after an engine dispute and a broader fleet review, opting to order a total of 70 of the smaller A350 and A330neo instead.

Without the anticipated level of demand from the Gulf heavyweight, Airbus said its assembly lines would dry up.

"This was a joint decision. We cannot run after illusions and we have to take the only sensible decision and stop this programme," Airbus CEO Tom Enders said.

Airbus said it would enter talks with unions in coming weeks over the 3,000-3,500 jobs potentially affected. Mr Enders later said the company could not guarantee all would keep their jobs.

The jobs at risk are mainly in France and Germany but there could also be an impact in Spain and Britain too.

Airbus took a charge of €463m for shutdown costs, but is expected to be forgiven some €1bn of outstanding European government loans under a funding system that stands at the centre of a trade dispute with Boeing.

Airbus shares rose 5pc on investor relief that Airbus would close a long-running chapter of losses on the A380, also buoyed by stronger than expected 2018 results.

Airbus will produce 17 more of the planes including 14 for Emirates and three for Japanese airline ANA.

As part of the restructuring, Emirates placed a new order for 40 A330-900neo jets and 30 A350-900 aircraft, partially restoring a purchase of A350s which it cancelled in 2014.

Responding to behind-the-scenes concerns from airline customers from Asia to Europe, Enders stressed Airbus would continue to support the A380 as long as it remains in service.

Emirates, which had built its global brand around the A380 and Boeing 777 and which has 100 of the Airbus superjumbos in its fleet, said it was disappointed by the closure.

"Emirates has been a staunch supporter of the A380 since its very 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 programme could not be sustained, we accept that this is the reality of the situation," he added.

The decision came after Emirates failed to reach an engine agreement with Britain's Rolls-Royce, which said yesterday it noted the decision to shut down the programme.

Irish Independent

Also in Business