World Economy

No Buyers for Airbus A380s

No Buyers for Airbus A380sNo Buyers for Airbus A380s

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 but 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, Bloomberg reported.

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 Farnborough 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 $433 million 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 ($32 billion) it spent on development.

  Beyond Embarrassment  

Zafar Khan, an analyst at Société Générale, tells Bloomberg the concern is that if production slips far below 30 planes a year, the program 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 program, 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 program. “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 747-8, it has done far worse than the Airbus double-decker, with just 40 sold and 11 more on order.