Emirates May Have Doomed the Airbus 380
Matthew Greenwood posted on February 08, 2019 |
The airline is renegotiating its contract for the superjumbo, which could force Airbus to close down...

A year after Emirates threw the Airbus 380 passenger jet a lifeline with an order for 36 additional planes, the airline could be trying to get out of the deal—which would likely end Airbus’ production of the model.

Since signing the contract, Emirates has been arguing with the engine supplier Rolls Royce over engine performance. This has stalled the order for a year. Emirates may switch some or all of its most recent A380 orders to the smaller A350 or A330neo, according to sources familiar with the issue. That’s 20 planes—over half of the most recent order. Emirates has committed to 59 A380s in total over the years.

Last year, when the planemaker and Emirates were negotiating the deal, Airbus executive John Leahy threatened that, if a deal wasn’t signed, Airbus would shut down production of the A380 entirely. According to aviation analyst Sandy Morris at Jeffries, “if a significant portion of the Emirates order is canceled we believe the A380 program must end.”

One of the reasons Emirates ordered the superjumbo was to deal with capacity issues: the A380, which can transport over 600 passengers, was seen as a solution to the bottleneck at the airline’s Dubai International Airport hub. But the Gulf carrier may be planning to move to the massive new Dubai World Central airport expected to be completed by 2024—which would minimize Emirates’ need for the largest plane possible.

Emirates Airbus A380 Cabin Tour.

The A380 has only been in service for just over a decade. But even though it’s been a hit with passengers, Airbus has struggled to hit sales targets for the plane—and hasn’t made a sale in the lucrative U.S. market. Other than Emirates, who saw the plane as integral to its strategy of becoming the world’s biggest long-haul carrier, airlines simply haven’t shown much interest in the A380.

And the superjumbo’s campaign to replace the 747 as the world’s marquee passenger jet was quickly derailed by the entry into the market of more fuel-efficient planes such as the Boeing 787—and Airbus’ own A350. These lighter, more economical jets can fly longer distances, making direct flights more popular and reducing the demand on hub-to-hub flights that superjumbos like the A380 are suited for.

Airbus may already be seeing the writing on the wall. The planemaker is already slowing A380 production to eight planes this year and will only produce six annually from 2020 on. And Airbus stock rose 1.5 percent when the news hit, indicating investors don’t see a future for the A380 either.

Read more about the A380’s troubles at Two Unwanted Airbus A380s to Be Scrapped.

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