European aerospace giant Airbus has said it would stop building its A380 superjumbo, the double-decker jet which earned plaudits from passengers but failed to win over enough airlines to justify its massive costs.
The company announced on Thursday that it would stop deliveries of the superjumbo after just over a decade in operation, following a decision by the A380’s biggest customer, the Dubai-based carrier Emirates, to reduce its total orders by 39 planes.
It marks a disappointing end to a bold bet on how millions of people would travel in the future, as airlines struggled to fill a plane capable of carrying anywhere from 500 to 850 people.
“Without Emirates, Airbus has no substantial order backlog and no basis to sustain A380 production after 2021,” Guillaume Faure, who is taking over as Airbus CEO from Tom Enders this spring, said in a conference call with analysts.
A sad ending
Airbus chalked up 321 orders for the superjumbo, which has a list price of $446 million (Sh4.46 billion) — though the company often had to offer substantial discounts.
Analysts had warned that Airbus wouldn’t start to recover the billions of euros in investment and production costs unless at least 400 planes were sold, and possibly up to 600.
The programme’s future had been in doubt for years as Airbus slowed production, and the company acknowledged last year that the A380 would be scrapped if no new orders came in.
It received a lifeline when Emirates ordered 36 more A380s, but on Thursday, Airbus said the airline had balked and would buy smaller A330 and A350 models instead.
After just 10 deliveries last year, Airbus will build eight this year, seven in 2020 and the final two in 2021.
“The A380 is a world-class feat of engineering, much loved by passengers, and we are obviously saddened that deliveries will come to an end,” said Chris Cholerton, head of civil aerospace at Rolls-Royce, one of the A380’s engine suppliers.
British Airways, which has 12 A380s, said the planes “are very popular with customers”, but it had no plans to buy new ones.
Winding up the programme cut Airbus’s 2018 earnings by 463 million euros, but it still posted a 29 per cent surge in net profit to three billion euros.
Investors appeared to welcome the results, pushing Airbus shares up more than four per cent in morning trading in Paris.
The jobs of up to 3,500 A380 workers are at risk, but Airbus said that given its solid order book for other planes, it expects to move most of these employees to other projects. Rhys McCarthy of Britain's Unite union said it was “a sad day for Airbus's dedicated UK workforce”.
“It is a much-loved aircraft manufactured by a highly skilled workforce,” he said, adding, the union was seeking urgent assurances that would be no job losses.
Other challenges for the Airbus
Airbus said it expects to deliver 880 to 890 planes this year after 800 last year, reflecting steady demand for the A320, the workhorse midsize jet for short and medium-range flights.
It is also targeting more clients for its A350 long-haul jet, aimed at competing more directly with its US arch-rival Boeing.
But the A380’s demise is a stark admission of defeat in the race against Boeing, which had pointedly dismissed Airbus’s bet that airlines wanted huge transporters serving a handful of global hubs.
Airbus has faced scepticism over the plane’s prospects since the 1990s, when it began to envision a competitor to Boeing’s hugely successful 747.
Initial orders however were solid, especially among Asian and Middle East airlines with extensive long-haul operations.
And passengers raved at a noticeably quieter cabin with decent legroom even in economy class — most airlines configured the plane for 500 to 550 passengers, instead of the all-economy potential for 850 seats.
But Airbus suffered a series of costly delays before the A380's first commercial flight by Singapore Airlines in 2007.
Production problems, including extensive wiring issues, and cost overruns in the billions of euros continued to plague the project, forcing Airbus to report its first-ever annual loss for the 2006 financial year.
Airbus stood by the A380 even after it was slammed by the global financial crisis of 2008, when airlines started having second thoughts about owning huge planes that were profitable only when filled to the brim.
In 2006, the plane was at the centre of a suspected insider trading scandal, after top managers and key shareholders were accused of selling shares in Airbus’s parent company shortly before the superjumbo’s production problems were made public, though no one was ever convicted.
Pledges to get the A380 programme back on track were unable to avoid further delays, even as a series of safety scares raised questions among potential clients, including long-targeted Chinese airlines. (AFP)
World-class aircraft aimed high, but never really hit commercial cruising speed
Nearly 30 years ago, Airbus began charting a new course for air travel with a mammoth jet that would shuttle hundreds of people to far-flung cities worldwide, but harsh economic realities eventually got the better of the A380 superjumbo.
After the plane’s launch just over 11 years ago, the final two A380s will be delivered in 2021, Airbus said Thursday, marking the end of an ambitious, but ultimately misguided bet.
“The A380 was a strategic feat, which put Airbus on equal footing with Boeing, by dethroning the 747,” said Sebastian Maire, an aviation expert at the consulting firm Kea & Partners.
But from the start, the huge double-decker struggled to get off the ground, causing headaches for executives as they tried to convince airlines to take a punt on how to move millions of passengers in the future.
The idea was to prepare for a surge in traffic as middle classes emerged in Asia and other developing regions, eager to join the growing ranks of business and leisure travellers as globalisation rippled across the globe.
With the A380, airlines would cut fuel costs and pollution by moving more passengers via fewer planes between major airports, where smaller aircraft would then bring them to their final destinations.
But this “hub and spoke” model would require huge investments by both airlines and airports, which had to lengthen and widen runways and hangers to accommodate the huge wingspans.
And, in the end, industry dynamics proved the opposite: airlines instead opted for more direct flights between more cities, using midsize planes like Boeing’s hugely popular 787 Dreamliner.
“In 2000, when we took the decision to launch the A380, we didn’t know what the market would look like 20 years later,” Airbus’s outgoing CEO Tom Enders told French daily Le Figaro in an interview Thursday.
“It was a risky decision.”
Few would have imagined how it would all end when heads of state and industry executives gathered in January 2005 at the Airbus headquarters in Toulouse, southwest France, to celebrate the plane’s first factory roll-out.
The project dovetailed perfectly with the desire of European nations to build up their aerospace groups into a continental powerhouse, capable of taking on Boeing and other US rivals.
Ex-president Jacques Chirac treated the leaders of Britain, Germany and Spain to lunch after the glitzy unveiling, lauded as proof of Airbus’s success.
Huge sections of the A380 would be built at Airbus factories spread across Europe before being transported to Toulouse for final assembly.
But the launch enthusiasm quickly faded as production snafus and missteps emerged, in part reflecting the difficulty in integrating national teams with different corporate cultures.
Electrical wiring proved especially vexing, leading to problems that would cost billions of euros to fix and a series of delivery delays.
Inaugural client, Singapore Airlines, had to wait an extra 18 months before finally launching the first commercial flight in October 2007.
While passengers raved about the quiet and spacious cabins, production delays continued, heightening concerns that the plane would turn out to be a white elephant. Despite an initial burst of orders mainly from Middle East and Asian clients, most airlines balked at the A380, which could be profitable only if every seat was sold on every flight.
The global financial crisis of 2007-08 put paid to that strategy, and made other airlines wary of committing to the costly plane, which currently has a list price of 446 million euros (396 million euros) a piece.
Airbus managed to chalk up just over 320 orders for the A380, and had already slowed production in recent years before pulling the plug on Thursday.
“Our customers love the aircraft. It’s very efficient in the way we operate and we are pleased with it,” Willie Walsh, head of British Airways and Iberia parent IAG, said earlier this month.
But Walsh said the price tag was keeping him from adding to BA’s fleet of 12 superjumbos.
“We have made it clear to Airbus that we might consider some additional aircraft, but it would only be at a price that we would find attractive,” he said.
Boeing, by contrast, has seen its bet on the smaller, but more fuel efficient Dreamliner, garnering more than 1,100 orders since it entered service in 2011.
At a conference call with Airbus management Thursday, few analysts dwelt on the A380’s failure, instead congratulating the company on the robust 29 per cent jump in 2018 profits.
“We often praise the ability of new-economy companies, especially American ones, to quickly take decisions and experiment with new ideas,” an associate at the Boston Consulting Group, Philippe Plouvier, said.
“It would be a mistake to criticise Airbus for exploring a new frontier in aerospace, and then decide to move on to something else,” he added.
The Concorde blazed the trail of technical feats, commercial flops
The scratching of the superjumbo jet Airbus A380 echoes the sad fate of the supersonic Concorde, another feat of aviation technology that turned out to be a commercial flop.
The inaugural commercial flight on January 21, 1976 of Concorde, the world’s first supersonic passenger plane, promised a revolution in aviation.
Distinctive for its long pointed nose, which drooped downwards during take-off for better pilot visibility, the “great white bird” was designed, built and operated jointly by France and Britain.
It was the first computer-controlled commercial aircraft in history and also innovated with a weight-saving aluminium body and triangular delta wings.
The aircraft could fly at over twice the speed of sound, creating its famous “sonic boom” when it burst through the sound barrier.
With a cruising speed of nearly 2,200 kilometres (1,370 miles) an hour, it could get a small number of passengers from Paris to New York in three and a half hours. The same journey in a standard flight today takes around eight hours.
But there were also major, eventually crippling, drawbacks: it was thunderously noisy, reaching nearly 120 decibels at take-off, and it guzzled fuel at a rate of 20 tonnes per hour.
Extremely expensive to develop at an estimated final overall cost of around 1.6 billion dollars, according to BAE Systems, only the wealthiest passengers were able to afford the exorbitant ticket prices for its 100-144 seats.
The aircraft — only ever used by Air France and British Airways, who between them operated 14 planes — never made a profit.
A crash on July 25, 2000 in a suburb of Paris that killed 113 people was a major blow, with the aircraft grounded for investigations. After the September 2001 airplane attacks in the US that caused a major crisis in the industry, worsening business prospects, the Concorde’s fate was sealed.
Air France flew its final commercial Concorde flight in May 2003, and British Airways followed suit in October of the same year.
Boasting double the capacity of a traditional passenger aircraft, the Airbus A380 was also hailed as a turning point for aviation when it arrived in the skies on October 25, 2007.
The world’s largest passenger jet, developed by European aerospace giant Airbus, was seen as a step into the future as the industry prepared for soaring numbers of long-haul passengers.
The double-decker, four-engine plane can pack in up to 853 passengers, and has 50 per cent more floor space than the next biggest aircraft, the Boeing 747. Its capacity was seen as a way to combat airport congestion.
By the end of January 2019, 234 aircraft had been delivered around the world, according to Airbus data. But the size of the A380 turned out to be its weakness.
Even though it is unbeatable in terms of price per seat, an A380 — which sells for roughly $445 million (Sh4.45 billion) —has to fly at near-full capacity to be profitable.
Having envisaged at its outset that it could sell 1,200 planes over 20 years, Airbus has seen orders decline and struggled to find enough buyers to justify its production.
Airbus announced Thursday it would end production of the superjumbo and stop deliveries in 2021.