World Economy

Few Buyers for Airbus’s Model A380

Few Buyers for Airbus’s Model A380
Few Buyers for Airbus’s Model A380

Airbus Group SE announced a drastic cut in production of its flagship A380 superjumbo, acknowledging that demand has fallen far short of original projections and raising the prospect of the world’s biggest passenger plane being prematurely axed.

The build rate for the double-decker, less than a decade in commercial operation, will be slashed by more than half to one plane a month by 2018, Airbus revealed Tuesday, Bloomberg reported.

Contrasting the success of the rest of the Airbus line, the company delivered the surprise damper just hours after pulling in several massive orders for its popular A320-type single-aisle jet at the Farnborough Air Show in the UK.

Having once predicted airlines would buy 1,200 supersize-planes over two decades, Airbus has settled into a far more modest reality and delivered only 193 A380s with 126 orders left to fill, some of them unlikely ever to materialize. Interest has faded with the introduction of more efficient twin-engine wide-bodies, leaving Emirates of Dubai as the only carrier to fully embrace the giant aircraft’s potential.

 Perilous Position

Even with Airbus seeking to reduce program costs to allow the A380 to remain viable at lower production levels, the severity of the planned rate cut—which Airbus says will put future output “in line with the current order intake”—suggests the program is on the brink of a terminal decline.

While a break-even rate of 27 deliveries achieved in 2015 should be cut to 20 by 2017, that’s still eight more than Airbus is counting on in subsequent years, putting the plane in a perilous position regardless of jetliner unit chief Fabrice Bregier’s declaration that “the A380 is here to stay.”

“It won’t recover from this,” said Richard Aboulafia, an aviation consultant at Teal Group in Fairfax, Virginia. “The new rate is seriously uneconomic; therefore it will die in a few years.”

Popular with travelers because of its wide open spaces, even when filled with the regulation 550 seats, the A380 has been less of a hit with the world’s airlines. While Emirates has ordered more than 140 of the planes and has around 80 in services, only two other operators, Singapore Airlines Ltd. and Australia’s Qantas Airways Ltd., have bought 20 aircraft or more.

Not a single US carrier has bought the A380, and Japanese airlines, leading clients for older leviathans like the Boeing Co. 747, have taken just a handful. The A380 is by far Airbus’s most expensive aircraft, commanding a list price of $432.6 million, though customers typically get steep discounts. There are so far no second-hand A380s in the market, making the plane’s resale value hard for operators and leasing companies to predict.