Buzz this week has been all about Airbus hinting that it would be forced to scrap the A380 superjumbo program without new orders. The current industry trend is away from the superjumbos and toward smaller, fuel efficient aircraft. Monday, Airbus executive John Leahy said the A380 was on a slippery slope, stating, “Quite honestly, if we can’t work out a deal with Emirates there is no choice but to shut down the program.”
There had been no new orders for the A380 in over two years. Airbus’ biggest customer for the two-decker superjumbo jet, Emirates Airlines, had not made a solid commitment to add to their fleet, leading to speculation that the A380 was going to die a slow, painful death.
Initially the expectation was that the deal would be signed at the Dubai Airshow. Instead, Emirates made an agreement with Boeing to buy 40 Dreamliners for more than $15 billion to the public dismay of Mr. Leahy. Mr. Leahy is known to be a tough negotiator and was counting on the deal with Emirates to give him a press-worthy send-off into retirement. As of this morning, however, it looks like Mr. Leahy will be sent off into the sunset as a hero after all.
Emirates ensures production will continue
Emirates will purchase 36 A380s in a deal worth $16 billion. Airline spokespersons say 20 firm orders have been placed and deliveries are set to commence in 2020. Emirates Airlines also took options for an additional 16 double-decker aircraft, adding to the already 101 A380s already in its fleet.
“Our customers love it, and we’ve been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix,” said the airline’s Chairman and CEO Sheikh Ahmed bin Saeed Al-Maktoum. He added, “We’ve made no secret of the fact that the A380 has been a success for Emirates.”
Today’s announcement of the Emirates order ensures that the A380 program will continue for the next decade or longer. Leahy had stated that Emirates was regarded as the only airline capable of placing an order large enough to keep the program going, “This new order underscores Airbus’ commitment to produce the A380 at least for another ten years. I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s.”
Chief Operating Officer Customers, Airbus Commercial Aircraft John Leahy joined His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline Group to sign a memorandum of understanding this morning.
Puts many questions to bed, at least for now
In 2007, Airbus’ decision to manufacture the A380 was deemed questionable. The economics seemed iffy with airlines having to operate the huge superjumbo at full capacity every flight to make a profit. Boeing’s Dreamliner was marketed as being more efficient and versatile, suitable for both medium and long-range flights.
But Airbus executives like Leahy continue to argue that the A380 is most suitable for congested airports and mass-market travel. Airbus says it needs to make at least six A380s per year to keep the program going. Airbus is hoping China will lead the next wave of orders once demand for the long-haul superjumbos picks up. Investors welcomed news of the order and Airbus shares have climbed more than two per cent higher on the Paris Bourse.