Why the Superjumbo A380 Is Flying Into Retirement: QuickTake - EcoFinBiz Blog

Blue Host

Why the Superjumbo A380 Is Flying Into Retirement: QuickTake

The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp

(Bloomberg) -- Airbus SE took the drastic measure of terminating its flagship A380 superjumbo, with the last double-deckers rolling off the production line in 2021. That will be just 14 years after its first commercial flight and just a year after Airbus appeared to have secured the aircraft’s long-term future with a much-needed order from Emirates. But its biggest customer had second thoughts and pared back its commitment, leaving Airbus with no choice but to scrap the program.

1. Why didn’t the A380 catch on?

The four-engine plane had been on shaky ground for years as the aviation industry increasingly turns to leaner twin-turbine planes like the Airbus A350 and Boeing’s 787 Dreamliner for longer routes. Put simply, the A380 is just too thirsty for most airlines, with only a handful able to make the fuel-burn economics feasible. It may also be too big for its own good. Airbus designed the jet to meet a surge in passenger traffic, reasoning that crowded airports would compel carriers to operate bigger aircraft. While that’s been the case in some locations -- London Heathrow, with just two runways, is the second-biggest A380 hub, after Dubai -- the prediction has by and large proved inaccurate. Airports are expanding capacity to keep pace with demand, and cities around the world are increasingly getting direct links, undercutting the need for Persian Gulf-style mega-hubs.


2. Does it matter that the A380 disappears from the skies?

If it’s really the dinosaur that sales figures suggest, no. Yet some in the industry -- and at Airbus -- have a nagging sense that the A380 simply arrived too soon, and that the global economy, held back by the 2008 slump, is still traveling toward a point where a huge aircraft will come into its own. Airbus rival Boeing Co. has already effectively written off the superjumbo sector, choosing to upgrade its venerable 747 rather than create a new model and focusing resources on smaller jets such as the Dreamliner and a revamped 777. That’s why -- pride and jobs aside -- Airbus was so eager to secure a lifeline for the A380; if demand did turn, it would have had the market to itself. But now it looks as if the 50 year-old 747, the “Queen of the Skies” has outlived the teenage A380.

3. Why was Emirates both kingmaker and gravedigger?

The double-decker A380’s cavernous interior is a hit with customers, and airlines regularly make it a focus of ad campaigns. But even the biggest carriers have stopped short of buying the jet in large numbers. Top European operators such as British Airways have a dozen or so, and Singapore Airlines has ordered twice that number. Only Emirates has truly bought into the A380, ordering 162 aircraft that are the linchpin of a global hub strategy that’s made it the world’s biggest long-haul airline. But even the largest long-distance airline isn’t immune to demand swings, and the company took a hard look at its order book and decided that it had overspent. With a pared-back purchase plan, there were no other buyers left.

4. Why weren’t the engine companies clamoring for the business?

The engine makers never had much love for the program. While each A380 boasts four power plants, the total number of orders was never really enough to warrant the sort of investment required to deliver significant improvements in fuel burn. Though Emirates had reluctantly accepted that its A380s wouldn’t get a wholly new engine, it was told the planes should benefit from upgrades planned by Airbus to keep the program going for another decade. But an alliance of General Electric Co. and Pratt & Whitney showed little enthusiasm for the engine enhancements and incumbent supplier Rolls-Royce Holdings Plc has resisted the airline’s price and performance demands.

The Reference Shelf

--With assistance from Richard Weiss and Benjamin Katz.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Laurence Arnold, Benedikt Kammel

©2019 Bloomberg L.P.

. Read more on QuickTakes by BloombergQuint.

No comments


Theme images by merrymoonmary. Powered by Blogger.