Airbus to halt A380 production blaming weak sales

(qlmbusinessnews.com via news.sky.com– Thur, 14th Feb 2019) London, Uk – –

UK jobs are threatened as Airbus says there was too little love in the airline sector for the A380's future to be viable.

Airbus has blamed weak sales for its decision to scrap production of the A380 superjumbo – the world's largest airliner.

The European aerospace giant confirmed on Thursday it would deliver the final aircraft, with its two decks of cabins and room for 544 passengers, in 2021.

Following months of speculation over the plane's future, Airbus said it had taken the decision after Emirates scaled back an order for A380s – choosing instead to focus on smaller planes.

Airbus chief executive Tom Enders said: “As a result of this decision we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years.

“This leads to the end of A380 deliveries in 2021. The consequences of this decision are largely embedded in our 2018 full-year results.”

They showed losses of £788m from the A380 programme, with the hugely delayed A400M military transporter plane also putting a dent in profits.

Nevertheless, Airbus said it made £2.7bn in overall net profits – a jump of 29% on the previous year.

Shares jumped by 6% in early deals following the announcements.

Mr Enders said the A380 decision marked “the end of the large four-engine aircraft” in global aviation.

The company said it planned talks with unions over the potential for harm to up to 3,500 jobs connected to the superjumbo, which is assembled in France.

The Unite union said it was seeking assurances over any impact on the UK workforce, which Mr Enders told reporters was yet to be evaluated.

Airbus makes wings for the A380 in the UK – employing 6,000 staff at Broughton and 3,000 at Filton.

The firm said an increase in production of its A320 model would offer “a significant number of internal mobility opportunities” – but Brexit could also form part of the decision-making process.

The chief executive warned last month in a company video it could move operations abroad in the event of hard Brexit “madness”.

The company later admitted to Sky News that Downing Street had asked it to make clear the impact of a no-deal scenario.

The A380 was first launched 14 years ago as a challenger to fierce rival Boeing's 747 jumbo jet but its popularity has struggled to take off.

Emirates said it was “disappointed” to give up its order – citing new plane and engine technology – leaving just 14 superjumbos in the production pipeline for the Middle East carrier as it opted to pick up a total of 70 of the smaller A350 and A330neo models instead.

The airline said it planned to keep flying the A380 well into the 2030s and Airbus confirmed the planes would continue to be supported.

Just one other airline has A380s on order, with Japan's ANA due to have three delivered.

Air industry expert, Professor Andreas Wittmer from the University of St. Gallen, commented: “From our research we know that A380 was well perceived by passengers.

“Furthermore, its fuel consumption per pax (person) was low.

“But based on its whole weight and the four engines it was not efficient enough.

“New engines and a lighter version of the A380 would have been needed. But the A380 was not break even taking into account the whole planning and production set up costs.”

By James Sillars, business reporter