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A380 cancellations by Qantas raise new questions about the superjumbo's future

 

 

Hong Kong (CNN Business)

Doubts about the future of the Airbus A380 have grown after yet another airline canceled an order for the superjumbo jet.

Australia's Qantas (QABSY) said Thursday that it had scrapped longstanding plans to buy eight more of the double-decker planes.
The A380 has been a major disappointment for Airbus (EADSF), racking up less than a quarter of the sales the European company forecast when it first introduced the giant jetliner more than a decade ago. The underwhelming demand has fueled questions about how long the manufacturer can justify continuing production of the iconic aircraft.
Airlines like Qantas have shifted their interest to lighter, more fuel efficient passenger jets.
"For Qantas, the A380 is the aircraft of the past and not its future," said Ellis Taylor, Asia finance editor at aviation intelligence firm FlightGlobal.
 
Other airlines including Virgin Atlantic have ditched plans to buy the aircraft in the past year. Airbus now has only 79 firm orders for it, according to FlightGlobal data.
 
The program's future could hinge on Dubai-based Emirates, the largest A380 operator with more than 100 of the aircraft in service. The Gulf carrier last year ordered a further 20 of the superjumbo jets, with the option to buy an additional 16 on top of that.
But Airbus said last month that it was renegotiating the deal with Emirates following reports that the airline was looking to switch its orders to the smaller and newer A350.
"Emirates switching all of its order would certainly be the death knell for the A380," Taylor said.
 
Other potential customers for the aircraft include British Airways and Japan's All Nippon Airways (ALNPY), but neither airline has committed to adding more A380s to its fleet.
"That makes it hard to see where more sales will come from in the near term," said Taylor.
An Airbus spokesman on Thursday confirmed that Qantas had changed its order but didn't comment on what it meant for the A380's future.
Qantas said it's in the process of upgrading its 12 existing A380s and planned to "operate the aircraft well into the future."

 

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A380 future in doubt as Airbus meets with Emirates

  • Airbus holds talks with Emirates over A380 program.
  • The future of the superjumbo program had already been in doubt.
  • The very first commercial A380 journey flew under a Singapore Airlines livery in 2007.
Published 8:32 AM ET Fri, 1 Feb 2019 Updated 11:27 AM ET Fri, 1 Feb 2019 CNBC.com
     
     
     
     
     
  
Mikhail Tereshchenko | TASS |

The European plane maker Airbus has dropped a heavy hint that it may end its A380 superjumbo program.

In January 2018, the Middle East airline threw the A380 a lifeline by agreeing to buy up to 36 more planes. At the time, then sales chief for Airbus, John Leahy, admitted that if no deal was possible then there would be "no choice but to shut down the program."

Fast forward to the beginning of 2019 and Airbus's order backlog for the A380 stands at 87 aircraft, with 53 of those lined up for Emirates alone. Many of that total are only considered tentative orders.

Emirates' latest A380 order is also shrouded in doubt due to incomplete negotiations with U.K. engineer Rolls-Royce over the production of more engines.

Airbus and Emirates were not immediately available when contacted by CNBC for comment

In a note released Thursday, Sandy Morris, an aviation equity analyst at Jefferies, said Airbus's statement to the market looked "ominous" for the world's largest commercial airliner.

"If a significant portion of the Emirates order is canceled, we believe the A380 program must end," he added.

Morris noted that Emirates' commitment to the aircraft was largely based on its ability to transport large numbers of passengers through the bottleneck of Dubai International Airport. However, the United Arab Emirates is in the process of building a huge new airport designed to allay that capacity squeeze and expects it to be operating by 2024.

Speaking to reporters at an event in London on Friday, the chief executive of British Airways parent IAG, Willie Walsh, said he remained happy with owning the A380, but if Airbus wanted to sell more "they're going to have to be very aggressive on price."

Jefferies estimated that ending the loss-making A380 program at its current stage would save Airbus as much as 300 million euros ($344 million) per annum.

While that is not deemed a huge benefit, Jefferies noted it would free capacity for Airbus to focus on its more popular A320 and A350 models.

Shares of Airbus and Rolls-Royce both rose Friday following the suggestion that the A380 program could end.

 

The very first commercial A380 journey flew under a Singapore Airlines livery in 2007.

But despite proving popular with many passengers, the plane fell well short of expected sales targets, failing to secure a single sale to U.S. airlines.

The A380's attempt to replace the Boeing 747 as the queen of the skies was swiftly undermined by the arrival of more fuel-friendly offerings such as Airbus's own A350 or Boeing's 787 Dreamliner.

Lighter, more modern carriers have a greater ability to fly longer distances, such as Qantas's London to Perth route, without stopping, thereby replacing hub-to-hub flying with more point-to-point flights.

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FEBRUARY 12, 2019 / 10:37 AM / UPDATED 6 HOURS AGO

Airbus poised to axe A380 as Emirates reviews demand - sources

 

3 MIN READ

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PARIS (Reuters) - Airbus (AIR.PA) is nearing a decision to axe production of the world’s largest airliner amid a downward revision in demand from the Gulf and is likely to give an update with its full-year earnings on Feb. 14, industry sources and analysts said.

 
 
FILE PHOTO: An Airbus A380 takes part in flying display during the 52nd Paris Air Show at Le Bourget Airport, near Paris, France June 24, 2017. REUTERS/Pascal Rossignol

The move to shut production of the A380 superjumbo earlier than expected coincides with a review of purchases of very large aircraft by the plane’s biggest customer, Emirates, which has a fleet of 109 superjumbos and 53 left on order.

Due to weaker demand, the Dubai carrier is expected to scale down these purchases and place greater focus on smaller models in a shake-up that could have implications for both Airbus and its U.S. rival Boeing (BA.N), industry sources said.

 

Airbus and Emirates declined to comment.

The fate of the A380 superjumbo has been in doubt since a vital order from Emirates foundered over inconclusive engine talks, forcing the two sides to weigh an alternative that would trigger a premature halt to A380 production.

Emirates is by the largest customer for the 544-seat aircraft and analysts say production is unsustainable beyond 2020 without the new Emirates order.

 

Under the proposed reshuffle, first reported by Reuters, Airbus hopes to broker a deal that would see Emirates switch part of its order to smaller models like the A350 or A330, while eking out a few last-minute A380 orders from British Airways.

The timing of any final announcement may be driven by the outcome of those talks, but Airbus will be under pressure to provide some clarity on its plans in time for Thursday’s earnings following mounting speculation over the plane’s future.

“The A380 is the elephant in the hangar; it will be impossible to avoid saying something on the subject,” said Agency Partners analyst Sash Tusa.

The A380 is already on life support due to weak sales.

Any decision to pull the plug on the iconic European double-decker after just 12 years in service must be approved by the Airbus board, which meets on Wednesday.

The prospect of shutting output comes at an awkward moment for Airbus as rival Boeing celebrates the 50th anniversary of its 747 jumbo - the jet that revolutionised long-haul travel and which Europe’s A380 was designed to squeeze out of the market.

The 747 survives mainly as a freighter and VIP transport, whereas a planned cargo version of the A380 has already been axed due to lack of interest and the sole VIP version of the A380 sold to a Saudi prince was cancelled several years ago.

That left the A380 reliant solely on passenger demand at a time when advances in twin-engined jets like the Boeing 777 and A350 made four-engined models like the A380 less popular.

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The story I have heard from inside Airbus is they're exactly where they were before the last announcement, Emirates is making insane demands, IAG is making obnoxious ones and Airbus is threatening the pull the plug. The brinkmanship continues.

Edited by Super 80

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1 hour ago, Super 80 said:

The 747 spent much of it's glory days flying half to a third empty and were albatrosses to many of the airlines that bought them.

And for others made lots of money.  So which airline were you with who operated an Albatross ? 😀  It is my understanding that the 100 and 200 models were profitable (cheap fuel) it was only later that some airlines found the newer models 300 and 400 were not. At that point, smart airlines moved away from them. Also don't forget, less weight upstairs was good for belly loaded cargo LD7s, 9s etc. One rule of thumb was, 1/2 full up stairs, grossed up with cargo down stairs was equal to a profitable flight, at least on the Orient.

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2 hours ago, Super 80 said:

The 747 spent much of it's glory days flying half to a third empty and were albatrosses to many of the airlines that bought them.

Ben Smith was in love with the 747 when he first came to Air Canada.

When I made the comment one day that it was just a big pig and was not profitable on a yearly basis he did not believe it until I pulled the numbers for him.

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One of the most complicated productions with sections of the aircraft arriving from various cities in Europe by land, sea and air for final assembly in Toulouse, France. 

https://www.cnn.com/2019/02/14/business/a380-airbus-news-emirates/index.html

45AE4062-3A03-449B-8746-9309106D3DDF.jpeg

4D20D5F8-17D4-4E20-BBFA-58A0CD79EEC1.jpeg

3CCC698A-B5DC-42E8-ADBD-2E8C46E17617.png

Edited by blues deville

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Airbus to axe A380 programme after Emirates order rejig

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  • 14 FEBRUARY, 2019
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  • SOURCE: FLIGHT DASHBOARD
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  • BY: DAVID KAMINSKI-MORROW
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  • TOULOUSE

Airbus is to close its A380 programme, stopping deliveries in 2021, ending an ambitious and expensive bid to challenge Boeing’s 50-year dominance in the high-capacity airliner market.

The decision follows a revised agreement with primary customer Emirates, which is to cut its order total from 162 to 123 aircraft – leaving just 14 to be handed over to the Dubai-based carrier.

“As a consequence and given the lack of order backlog with other airlines, Airbus will cease deliveries of the A380 in 2021,” says the airframer.

Emirates will, however, replace the A380 orders with 70 twinjets, comprising 40 A330-900s and 30 A350-900s.

Airbus’s decision comes less than a year after its then-sales chief, John Leahy, admitted that the A380 line could face closure if a deal with Emirates fell through.

Singapore Airlines received the first A380 in 2007, and is one of 12 operators to have already received all of the A380s for which they placed orders.

But Singapore Airlines also highlighted the dearth of interest in the type when it withdrew some of its early A380s from service, which then struggled to find a buyer – eventually being allocated to part-out.

The A380 had secured 313 total orders by the end of January this year, of which 234 had been delivered.

Emirates accounted for 162 of the overall orders and had received 109 of them. It accounted for 53 of the 79 A380s remaining on Airbus’s firm backlog.

Japanese carrier All Nippon Airways has been due to take three of the other 26 outstanding jets, the first of which has been newly painted.

But there is no sign that the remaining 23 aircraft – comprising 20 intended for lessor Amedeo and three for the entity Air Accord – are ever likely to be built.

Twelve other operators of the A380 have already received all of the aircraft for which they placed orders.

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Airbus scraps A380 superjumbo jet as sales slump

Emirates Airbus A380Image copyright EPA

European aircraft manufacturer Airbus has pulled the plug on its struggling A380 superjumbo, which entered service just 12 years ago.

Airbus said last deliveries of the world's largest passenger aircraft, which cost about $25bn (£19.4bn) to develop, would be made in 2021.

The decision comes after Emirates, the largest A380 customer, cut its order.

The A380 faced fierce competition from smaller, more efficient aircraft and has never made a profit.

What has prompted Airbus' decision?

The A380's future had been in doubt for several years as orders dwindled. But in a statement on Thursday, Airbus said the "painful" decision to end production was made after Emirates reduced its latest order. The Dubai-based airline is cutting its overall A380 fleet size from 162 to 123.

 

Emirates said it would take delivery of 14 further A380s over the next two years, but has also ordered 70 of Airbus' smaller A330 and A350 models.

"Emirates has been a staunch supporter of the A380 since its very inception," said the airlines' 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 order cut meant keeping production going was not viable, said Airbus chief executive Tom Enders, who is due to step down in April.

There was "no basis to sustain production, despite all our sales efforts with other airlines in recent years" he said.

Airbus has taken a €463m charge for shutdown costs, but it is expected that the repayment of government loans could be waived to help cushion the blow.

The aerospace giant said the financial impact of the decision was "largely embedded" in the firm's 2018 results, which showed a net profit for 2018 of €3bn (£2.6bn) up nearly 30% from the previous year.

Airbus said it would deliver between 880 and 890 new commercial aircraft this year.

Airbus factory in BroughtonImage copyright AFP Image caption Airbus employs 6,000 people at its main wings factory at Broughton in Flintshire

What does it mean for jobs?

Airbus said it would start discussions with partners regarding the "3,000 to 3,500 positions potentially impacted over the next three years".

The BBC understands that around 200 jobs in the UK could be under threat from the decision.

Airbus confirmed it hopes to redeploy a "significant" number of affected staff to other projects.

a380 production towns

Mr Enders said: "It needs to be evaluated. It's clear we make a lot of wings in Britain and a few wings for the A380.

"Hopefully we can redeploy a significant number of our employees there and re-use also the infrastructure."

Airbus UK makes the wings for its wide variety of aircraft in the UK. The company employs about 6,000 staff at its main wings factory at Broughton in Flintshire, as well as 3,000 at Filton, near Bristol, where wings are designed and supported.

Parts of the A380 are manufactured in France, Germany, Spain, and the UK, with final assembly and finishing split between Toulouse and Hamburg.

Airbus had already cut staffing as A380 orders dried up, and the future of employment at the company very much now depends on the success of its new generation of aircraft.

Unite, the largest union representing aerospace workers in the UK and Ireland, said it was "bitterly disappointed" by the news, adding it would seek "urgent assurances" from Airbus that there would be no job losses because of the decision.

"We are of the firm belief that with a full order book in single aisle planes, such as the A320, that our members affected can be redeployed on to other work in Airbus," said Rhys McCarthy, Unite's national officer for aerospace.

Why has demand for the A380 fallen?

The spacious jet, which had its first commercial flight in 2007 with Singapore Airlines, was popular with passengers but it was complicated and expensive to build, in part thanks to the way production was spread across various locations.

A380 countries involved

But ultimately demand for the A380 from airlines dried up as the industry shifted away from larger planes in favour of smaller, wide-body jets.

When Airbus was conceiving the A380, Boeing was also considering plans for a superjumbo. But the US company decided to scrap the idea in favour of its smaller, efficient - and more successful - 787 Dreamliner.

"The very clear trend in the market is to operate long-haul aircraft with two engines [such as] Boeing's 787 and 777, and Airbus's A330 and A350," said Greg Waldron, Asia managing editor of Flight Global.

Airbus had been working on a revamped A380 to make it more efficient, but needed sufficient launch orders to make the huge investment viable.

Despite Airbus' website describing the Airbus as the "future of long-distance travel" the last aircraft will be delivered in 2021.

Presentational grey line

Where did Airbus go wrong?

Analysis: By Dominic O'Connell, Today programme business presenter

When Airbus's A380 first took off it was hailed as a technological marvel that would meet airlines' needs for a new large aircraft to connect the world's crowded airport hubs - London, New York, Dubai, Tokyo. Airbus said the market for the giant planes would be 1,500.

After today's decision to end production, it will have made just over 250.

In hindsight, airlines were already turning their back on very large aircraft when the A380 made its debut.

Advances in engine technology meant planes no longer needed four engines to fly long distances - and carriers were able to use a new generation of light, fuel-efficient, twin-engined aircraft to link secondary cities, bypassing the crowded hubs altogether.

Even though Airbus was aware of the threat posed by these new types of plane, they pressed ahead.

There was a bigger game afoot - Airbus needed to negate Boeing's 747, believing that the profits the American company made on 747 sales were helping it cross-subsidise other, smaller planes. The A380 succeeded in that - the last passenger 747 was built two years ago - but Boeing will have a kind of last laugh.

Freighter versions of the 747 will be built past 2021, meaning the venerable jumbo jet will outlive the plane sent to kill it.

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One of the most complicated productions with sections of the aircraft arriving from various cities in Europe by land, sea and air for final assembly in Toulouse, France.

Many years ago there was an hour documentary on TV which showed video of all the pieces being shipped and  coming together in Toulouse. I was there on the A310 course back in '88 for 5 weeks.....Toulouse is a nice little town but the problem is that you always have to be looking down when walking....No "poop and scoop" law... 😯

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Boeing had the 747 and airbus want to have a bigger one.

While bigger may be better, apparently it doesnt have the staying power.

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1 hour ago, boestar said:

Boeing had the 747 and airbus want to have a bigger one.

While bigger may be better, apparently it doesnt have the staying power.

I think the nail in the coffin happened awhile ago when not one US carrier was interested. Too many costs involved with airports and gates. LAX had to beef up and design a specified taxi route to handle its weight and a whole new terminal was added to handle its size. I’ve had a few rides in them and although it’s like being on a ocean liner, you’re either in the top half of the tube or the bottom. Nothing really special.

The 747 just had its 50th birthday. An airplane orginally conceived for the US military in completion with Lockheed who won with their C5A Galaxy which is also still flying today. 

9453E140-BCD3-4275-909C-B52A10EC0755.jpeg

Edited by blues deville

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I had a tour of the C5 Galaxy by a USAF friend of mine. It was quite impressive in those days.....the moment you stepped in it you heard a wirrrrrring sound and your weight was put in the load data base !!!

The old grizzled engineer who accompanied my friend and I couldn't stop bitching about the young pilots who just got their wings and were allowed to crew on the aircraft. He said the aircraft was really well built and it had to be the way those "newbies" just kept  "crashing " it on the runway.

Was in Colorado Springs when one C5 pushed up the throttles prior to takeoff roll and the entire over/under run behind the aircraft probably landed in Wyoming . 

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