Airbus’ superjumbo A380 heading towards ‘certain death’ – analyst

The world’s largest commercial jet, the A380, is heading towards a “certain death”, according to an analyst.

The double-decker aeroplane has been struggling with lack-lustre sales, forcing Airbus to scale back production.

It received a further jolt late last month after Airbus was forced to postpone the delivery of 12 A380 planes to Dubai-based Emirates Airline over the next two years, following an agreement between Emirates and engine supplier Rolls-Royce.

Six deliveries will be postponed from 2017 to 2018, with another six postponed from 2018 to 2019, the plane manufacturer said.

“Airbus re-confirms the target to deliver around 12 A380s per year from 2018 as announced earlier in July 2016. Further fixed cost reduction initiatives will be accelerated so the impact on break-even in 2017 is minimal,” the company said in a statement.

The delay damages the ability of Airbus to effectively market the sales of the struggling airplane, stated Saj Ahmad, chief analyst at StrategicAero Research.

“It also means that the loss making programme will endure a more uncertain future as the backlog shrinks and it is likely now, that in the absence of a new-engine platform for it, the A380 is on borrowed time,” he added.

Emirates is the A380’s biggest customer and flies the jet to over 45 destinations across its network.

Its current fleet includes 89 A380s, with 53 more pending delivery. The airline took delivery of its latest A380 jet – and the first powered by a Rolls-Royce engine – on December 29.

With the other GCC airlines also among the A380’s primary customers, will they allow the jumbo jet to “die”?

“Yes they will allow it to die because as an engineering product, it is outdated when you consider the advances that the 787, A350 and 777X will bring,” opined Ahmad.

“Etihad and Qatar Airways have less than 30 units between them – they won’t care if the A380 dies. Emirates has 150x 777X orders with another 50 options. These will be enough to replace the current 777 fleet and its likely they will order another 200-250 more 777Xs in the next few years as they look to replace the ageing A380s.

“Emirates’ first A380 looks primed to come off lease and be dumped as soon as 2020, in part because the second hand market for A380s is nil and because residual values for it are so hideously low.

“This is why Emirates will be keen to get them off their books once their useable life comes to an end,” he added.

According to Ahmad, the $35bn invested into the A380 programme is unlikely to be recouped. So far Airbus has received 319 orders for the jumbo aircraft, with 200 delivered and 119 in its backlog.

“The deferrals by Emirates and the 2018 rate cut to just one airplane a month means the A380 is on life support already and many of the other customers with deferred orders like Qantas (x8), Air France (x2), Amedeo (x20) plus more will never get delivered anyway,” he said.

“So the backlog is wafer thin today as it is. A programme death is inevitable,” he added.