ERA ENDS IN 2021
Lacklustre sales force Airbus to stop production of superjumbo designed to challenge Boeing’s legendary 747, barely a decade after its launch
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.
WHAT EXACTLY HAS HAPPENED?
Airbus said yesterday the last A380 would be delivered in 2021. Barely a decade after the 500-plus-seat plane started carrying passengers, Airbus said in a statement that they had “no substantial A380 backlog and hence no basis” to sustain production of the superjumbo. “It was a painful decision for us. We have invested a lot of effort, a lot of resources and a lot of sweat... but obviously we need to be realistic,” Airbus Chief Executive Tom Enders said.
WHAT WILL BE THE IMPACT OF THIS?
The decision could hurt up to 3,500 jobs and already cost the plane maker $523 million in losses in 2018, Airbus said. The company said it would enter talks with unions in coming weeks over the jobs potentially affected. However, the company is expected to be forgiven some €1 billion of outstanding European government loans under a funding system at the centre of a trade dispute with Boeing. The European economic powerhouse is also girding for serious disruption to its cross-continental manufacturing from a likely chaotic British exit from the EU next month.
WHAT DOES THIS MEAN FOR AIRBUS?
The end of the young yet iconic jet is a boon for rival Boeing and an embarrassing symbolic blow for Airbus. A pall of mourning hung in the atmosphere yesterday at its headquarters in the southern French city of Toulouse - but there was also a hint of relief after years of straining to keep the A380 alive. Still, Airbus announced a 29per cent jump in overall profits last year, and analysts said global demand is high enough for Airbus to weather the loss of its superjumbo.
WILL THE PRODUCTION STOP IMMEDIATELY?
No. Airbus will produce 17 more of the planes including 14 for Emirates and 3 for Japanese airline ANA. As part of the restructuring, Emirates placed a new order for 40 A330-900neo jets and 30 A350-900 aircraft. Responding to concerns from global airline customers, Enders stressed Airbus would continue to support the A380 as long as it remains in service.
WHAT WAS SO WOW ABOUT THE A380?
Industry experts initially expected A380s to long outlast the 747, which is celebrating its 50th birthday this year. When it started taking on passengers in 2008, the A380 was hailed for its roominess, large windows, high ceilings and quieter engines. Some carriers put in showers, lounges, duty free shops and bars on both decks.
IT’S AN ICONIC AIRCRAFT – SO WHAT WERE THE ISSUES WITH THE A380?
Among early detractors of the A380 was analyst Richard Aboulafia of Washington-based Teal Group, who said its demise was inevitable. “But thanks to the strength of the market right now, and the strength of Airbus’s other products, the damage will not have a huge impact on the industry,” he said. “For Boeing, it has been a very long time since they needed to worry about the A380 as a competitive factor.”
Airbus had hoped the A380 would squeeze out Boeing’s 747 and revolutionise air travel as
In 2000, when we took the decision to launch the A380, we didn’t know what the market would look like 20 years later… This is a painful decision for us. We have invested a lot of effort, a lot of resources and a lot of sweat... but obviously we need to be realistic.” Tom Enders | Chief Executive of Airbus
more people take to the skies. Instead, airlines have been cautious about committing to the costly plane, so huge that airports had to build new runways and modify terminals for it.
SO HOW DID THE FINAL DECISION COME ABOUT?
Making its maiden flight in 2005, the A380 was a major step in Airbus’s efforts to compete on equal terms with Boeing and challenge what had been a cash cow for its arch-rival. But the A380 had troubles from the start, including tensions between Airbus’ French and German management and protracted production delays and cost overruns. Those prompted a company restructuring that cost thousands of jobs. Sales of the industry’s largest four-engine jets also fell due to improvements in lighter twin-engine alternatives, such as the Boeing 787 and 777 or Airbus’s own A350. The prospect of a premature halt to A380 production emerged last month as part of a restructuring of orders first reported by Reuters.