Airbus is running out of
buyers for its enormous A380s
Poor sales: An Airbus A380 during a flying display at the 51st Paris Air Show at Le
Bourget airport near Paris. The big airliner is attracting few buyers these
days. – Reuters
Malaysia Airlines Airbus 380
MAS to Kuala Lumpur to london Heathrow
MAS First Class A380
Malaysia Airlines Airbus 380
MAS to Kuala Lumpur to london Heathrow
MAS First Class A380
Wingspan: 262′ 0″
Top speed: 634 mph
Length: 239′
Range: 9,755.5 mi
Cruise speed: 559 mph
Engine type: Turbofan
First flight: April 27, 2005
Airline of the Skies
Airbus Documentary 2015
Airbus Full Documentary
First flight: April 27, 2005
Airline of the Skies
Airbus Documentary 2015
Airbus Full Documentary
SINCE its commercial introduction in 2007, the Airbus A380 has brought a long-lost sense of glamour back to travel.
Its first-class cabins feature private
showers and buttery leather armchairs. It sports in flight lounges where
bartenders mix bespoke cocktails. A broad staircase reminiscent of a 1920s
ocean liner links the two decks. Financially speaking, it’s a disaster of
similarly grand proportions.
An initial flood of interest from airlines
has turned into a slow drip, and Airbus is leaning heavily on one customer,
Emirates, for sales. Not a single US carrier has bought one, and Japanese
airlines, among the biggest cheerleaders for huge planes, have taken just a
handful. Airbus has delivered 193 A380s - early on it predicted airlines would
buy 1,200 supersize planes over two decades - and has only 126 in its order
book, to be built over the next five years or so.
Worse, many orders appear squishy, because
airlines are shifting away from superjumbos. As the aviation world starts
gathering on July 11 for the Famborough International Airshow in England, where
carriers often announce big orders, there’s little indication any A380 contract
will be unveiled.
Airbus concedes its timing was off with
the A380, which lists for US$433mil but almost always sells at a discount. The
financial crisis hit just as production was picking up in 2008, and soaring oil
prices made airlines reluctant to buy the four-engine behemoth. The company
only last year managed to start breaking even on production, and it’s
acknowledged it will never recoup the 25 billion euro (US$32bil) it spent on
development. Zafar Khan, an analyst at Societe Generale, says the concern is
that if production slips for below 30 planes a year, the programme could fall
back into the red. “The crying happens when it’s losing money,” Khan says.
Axing the A380 outright is hard to do.
Besides the embarrassment of admitting defeat on the programme, Airbus would
need to write off factories across Europe and redeploy thousands of workers.
Airlines would see the resale value of their A380s plummet, and the plane’s
demise would leave airports worldwide questioning the wisdom of facilities
constructed to accommodate it; Dubai, for instance, built a dedicated terminal
for the A380.
Airbus says 10 years is too short a time
to determine its fate. While chief executive officer Thomas Enders said in
December the company would assess the plane’s future “in cold blood,” sales
chief John Leahy has pledged to continue the programme. “The A380 is here to
stay,” he says. “We are maintaining, innovating, and investing in it.”
With its short snout and upper deck
crouching above the cockpit, the A380 can’t match the distinctive profile of
Boeing’s humpbacked 747. Nonetheless, the A380 has largely sucked the life out
of Boeing’s jumbo - perhaps the biggest Airbus success with its plane. Since
2012, when Boeing started deliveries of the latest passenger version, the 7478,
it has done far worse than the Airbus doubledecker, with just 40 sold and 11
more on order.
Four-engine planes have become a tough
sell because of their high fuel consumption. Airbus in 2011 scrapped the A340,
its other four-engine model, as carriers gravitated to smaller, more economical
wide-bodies such as the Airbus A330 or Boeing 777
adding more fuel-efficient engines to the
A380, an upgrade Airbus has pulled off for smaller planes, remains risky with
so few orders coming in.
Although the A380 is popular with
passengers for its spacious interior and smooth flight, carriers find it tough
to fill in turbulent economic times. Malaysia Airlines learned this the hard
way when, in the wake of a pair of fatal crashes involving other aircraft, it
couldn’t draw enough traffic to fill the half dozen A380s it had bought. The
airline is trying to offload two of them but can’t find buyers.
Lately, Airbus has seen a hemorrhaging of
contracts that once seemed solid. In the past two years, three A380 dropped
their orders because of financial difficulties or shifts in strategy. Leasing
company Amedeo three years ago announced plans to buy 20 A380s, but it’s failed
to find a single airline willing to lease them and has delayed deliveries. The
plane’s biggest fan by far is Emirates, with 81 flying and an additional 61
reserved, which adds up to 45% of the A380s Airbus has delivered or has on
order. The carrier is fretting about the jumbo’s future. “I think the size of
the plane scares most of the airline world,” says Emirates president Tim Clark.
The A380 was a prestige-fuelled project
for Airbus and the European governments that backed the programme. The c0mpany
had been successful with its A320 single-aisle jet introduced in the 1980s, but
it wanted a bigger piece of the lucrative long-range market. With the managers
who hatched the plan two decades ago long gone, the ardor has abated, says
Richard Aboulafia, a long-time critic of the plane and vice-president of aviation
consultant Teal Group.
“Nobody seems to want this plane other
than Emirates,” he says. “The A380 might just make it until 2020, but even
that’s almost optimistic at this point.”
The bottom line: A decade after the Airbus A380’s debut, its future is in doubt as airlines shift to more efficient
planes.
Adapted from StarBizWeek/ 9 July 2016 / Foreign Feature / 17Related Articles
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