Emirates has reduced its A380 order backlog and opted to purchase A350s and A330neos.
Emirates announced it will only take 14 more A380s instead of the 53 it had on firm order so far. The order is revised and now includes 40 A330-900s and 30 A350-900s, according to a new heads of agreement.
“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,” Airbus CEO Tom Enders said. “The consequences of this decision are largely embedded in our 2018 full year results.”
“The A380 is not only an outstanding engineering and industrial achievement. Passengers all over the world love to fly on this great aircraft,” Enders said. “Hence today’s announcement is painful for us and the A380 communities worldwide. But, keep in mind that A380s will still roam the skies for many years to come and Airbus will of course continue to fully support the A380 operators.”
“Emirates has been a staunch supporter of the A380 since its very inception,” Emirates Chairman and CEO Ahmed bin Saeed Al Maktoum said. “While we are disappointed to have to give up our order, and sad that the programme could not be sustained, we accept that this is the reality of the situation. For us, the A380 is a wonderful aircraft loved by our customers and our crew. It is a differentiator for Emirates.” According to Al Maktoum, Emirates will continue to operate the aircraft “well into the 2030s.”
Emirates had ordered 70 A350s before, but cancelled the deal in 2014. The future of Emirates’ 2017 commitment for 40 Boeing 787-10s is now unclear: “We continue to evaluate our fleet options, including the 787,” the airline said.
After years in crisis mode, the decision to stop production of the world’s largest civil aircraft does not come as a surprise. But having to cancel the multi-billion project little over 18 years after it was launched in December 2000 shows how much Airbus was off in its demand forecast for very large aircraft. Instead of the around 1 500 orders for aircraft in the category that Airbus expected over 20 years, only a fraction materialised.
Emirates had signed a firm order with Emirates in January 2018 that has been included in the backlog. Since then the airline never reached an agreement with engine manufacturer Rolls-Royce over the terms and performance guarantees for an additional Trent 900 order. The carrier had been unhappy with performance shortfalls it has seen on engines that it has been flying on its existing fleet. Also, after multiple deferrals, Qantas finally cancelled the remaining eight aircraft of the 20 aircraft it had originally bought.
The A380 entered commercial service on 25 October 2007 with Singapore Airlines. The first flight from Singapore to Sydney was operated under the flight number SQ380. Since then Airbus has delivered a total of 234 A380 aircraft. With leases of the first two Singapore Airlines aircraft not having been extended, two aircraft have already been retired after little over 10 years in commercial operations. More aircraft currently operated by Singapore Airlines could follow. Air France has also said that it plans to phase out three of its 10 A380s. Qatar Airways said it plans to phase out its A380s when they turn 10 years old – starting five years from now.
Orders for the A380 stood at 313 aircraft at the end of January. The figure included the Qantas cancellation, but all the Emirates aircraft were still kept. With orders for 162 A380s, Emirates was by far the largest customer for the aircraft and has at least twice rescued the programme from earlier termination through additional purchases. At the end of January, Emirates operated 109 A380s.
In addition to the 53 more aircraft earmarked for the Dubai-based airline, the January A380 backlog included 20 aircraft for lessor Amedeo, three for All Nippon Airways (ANA) and three for Air Accord, a special purpose vehicle holding order originally placed by bankrupt Russian carrier Transaero. An agreement between Airbus and Amedeo allowed the lessor to push out deliveries until it has found an operator for the aircraft. It has not placed an aircraft since the commitment was signed in 2014. ANA placed its A380 order in late 2015 after having bought a minority stake in bankrupt Japanese carrier Skymark, a move for which it needed Airbus support. Among others through a large order for six A380s placed by Skymark, Airbus was a big creditor in the bankruptcy process.
Two decades earlier, the European companies forming the Airbus consortium at the time were well advanced in their preparations to launch what they considered to be the last missing piece completing their commercial portfolio: An aircraft that would compete with the Boeing 747 that, as the European aerospace community suspected at the time, generated the kinds of profit margins that allowed Boeing to aggressively market other programmes like the 737 against competing Airbus products.
Work on several different layouts had started in the late 1980s already. In 1993, Boeing and Airbus partner companies launched a feasibility study into the development of a very large commercial transport (VLCT). After Boeing dropped out of the project Airbus pursued the plans on its own, initially under the A3XX project name. In 1996, Airbus created the large aircraft division headed by Juergen Thomas, later called the “father of the A380.”
The programme was formally launched with firm orders for 50 aircraft from Virgin Atlantic, Qantas, Air France, ILFC, Singapore Airlines and Emirates. Shortly after the launch, Lufthansa, FedEx (for the freighter version offered at the time) and Qatar Airways were added to the customer list.
Entry-into-service, initially foreseen for 2005, was delayed until 2007 after Airbus discovered wiring layout in aircraft sections produced at different sites did not match. The problems led to senior executive departures including Noel Forgeard as European Aeronautic Defence and Space Company (EADS) CEO and Gustav Humbert as Airbus CEO. The Power 8 restructuring programme was launched. In spite of the billions in additional costs and lost revenues, Airbus went ahead with the launch of the A350 in 2006.
The A350, as well as the Boeing 777 and 787, were key reasons why demand for the large aircraft stayed way below initial expectations: There was no more economic justification to operate a large, expensive aircraft at risk of not filling the many seats, when cheaper-to-buy alternatives offering the same or lower seat-mile costs became available. Smaller long-haul aircraft also opened up more secondary routes that are not feasible for the A380 or the 747.
A380 production peaked in 2012 and 2014 when Airbus delivered 30 aircraft respectively, way short of its earlier ramp-up target of 45 per year. 2013 was the best year in terms of post-launch orders with 42 new commitments. Airbus delivered 15 A380s in 2017 and only 12 in 2018. Before the programme cancellation, production was planned to be reduced to six a year from 2020 onwards.
Airbus stopped publishing development costs that were initially specified at close to €10 billion ($11.3 billion). Industry observers estimate the real costs are around €25 billion.