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Airbus Will Stop Building Its A380 Superjumbo Jet -- 2nd Update

14/02/2019 6:57am

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By Robert Wall 

Airbus SE on Thursday pulled the plug on its A380 superjumbo jet even as it reported a record profit and said it would increase production to take advantage of a boom in global air travel and keep pace with rival Boeing Co.

Airbus said it would stop building the jet in 2021 after Dubai-based Emirates Airline cut its A380 order by 39 planes. The state-owned carrier will instead buy 40 A330neo and 30 A350 long-haul planes.

"As a result of this decision we have no substantial A380 backlog and hence no basis to sustain production," Airbus Chief Executive Tom Enders said.

Amid a period of record air travel and bumper plane orders, the A380 never caught on, leading to its unusually quick demise.

In 2000, Airbus made a bet worth more than $10 billion to build the 555-seat A380 in an effort to supplant Boeing's 747 jumbo jet, which first flew 50 years ago. But development delays set the project back early and sales momentum subsequently stalled. Passengers came to love the plane for its spacious, quiet cabin. But airlines were put off by its size and the need to sell so many seats. They instead flocked to other long-haul aircraft like the Boeing 787 Dreamliner or Airbus's A350.

Boeing's more popular 747 jumbo jet has also fallen out of favor, but more gradually. The American company has signaled it could stop building the plane--which is now made mainly to haul cargo--around 2022.

Airbus once planned to build more than A380s a year. Production briefly reached 30 aircraft a year but later rapidly fell. Airbus made 12 A380s last year. American carriers never bought the A380. Carriers like as Deutsche Lufthansa AG, Air France-KLM SA and Qantas Airways Ltd. trimmed orders. Virgin Atlantic Airways Ltd., an earlier buyer, canceled its deal before taking delivery of an A380.

The end of the A380 isn't a huge surprise. But it is an embarrassment for the European aerospace giant, which celebrates its 50th birthday this year.

Last week, Qantas said it formally canceled an order, places in 2006, for eight more A380s. That came just days after Airbus said it was in talks with Emirates over existing contracts for the plane. Virgin Atlantic Airways never took the planes it ordered and Air France-KLM also trimmed purchase plans. Singapore Airlines Ltd., the first airline to operate the A380, has retired its first two A380s. Those are now parked in France and are being sold for scrap.

Emirates, the world's largest airline by international traffic, will take 14 more A380s before production ends and said it would keep the planes in operation past 2030. Emirates will have bought 123 of the planes, or about half of the total that Airbus has sold.

Airbus signaled the program's termination could lead to as many as 3,500 job cuts over the next three years.

The Toulouse, France-based company said it would hand over 880 to 890 planes this year after delivering 800 in 2018. Boeing shares have taken off in recent weeks after the company promised to build as many as 905 airliners this year--a record for the industry--up from 806 last year.

Demand for new planes is being fueled by growth of air-passenger numbers above historic averages. The International Air Transport Association forecasts a 6% increase in passenger numbers to 4.6 billion this year.

For all of 2018, Airbus said its net profit rose nearly 30% to EUR3.1 billion ($3.5 billion) on EUR64 billion in sales. The company's adjusted earnings before interest and taxes rose to EUR4.8 billion from EUR2.4 billion. That figure should grow by about 15% this year, it said.

Airbus said profit growth will be driven in part by sales of its A350 plane. Airbus said the A350 would break even this year.

Write to Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

February 14, 2019 01:42 ET (06:42 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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