Monday, December 11, 2017

Airbus may cut A380 production to six planes a year

Airbus is exploring plans to cut A380 superjumbo production to as low as six aircraft per year as it battles to make the world's largest airliner commercially viable beyond the end of the decade, industry sources said.

Squeezed by smaller but efficient twin-engined jets, Airbus has announced plans to lower A380 output to 12 aircraft in 2018 and eight in 2019, down from an annual peak of 30, as it holds out for what it believes will be a recovery in demand.

But plans to maintain that rate are in doubt as Airbus seeks to finalise an order for 36 new aircraft from Emirates.

Industry analysts say ongoing negotiations with Emirates will be decisive for the future of the A380 aircraft, which recently marked its 10th anniversary in operation.

Airbus, which has delivered 14 A380s so far this year, has told some suppliers it is studying eventually reducing production to six a year, industry sources said.

The timing of the move was not immediately clear.

An Airbus spokesman declined to comment on production beyond the company's previous announcements.

Emirates, which held off signing an order for an estimated 36 aircraft at last month's Dubai Airshow, wants guarantees Airbus will produce the A380 for 10 years and has expressed confidence it will be able to meet the conditions.

Industry sources say Airbus appears comfortable giving the undertaking, ensuring production remains open until 2028, though there are questions over the support of suppliers.

Reducing output to six a year would help to bridge that period and support key second-hand values while Airbus looks for other buyers, but could keep the programme in the red for at least part of the period.

Airbus shares extended losses and were down 2.16 percent at 1601 GMT.

Airbus broke even on the A380 for the first time in 2015, when it delivered 27 aircraft. After a clampdown on costs it has said the A380 can break even at around 20 a year and Chief Operating Officer Fabrice Bregier has said he is pushing the breakeven level as low as possible to sustain low production.

The company said in October that any losses triggered by lower A380 production would have little financial impact.

Finance Director Harald Wilhelm also told analysts that A380 deliveries were protected by the existing backlog until 2019.

Singapore Airlines, the first airline to fly the double-decker jet, is due on Wednesday to take delivery of the first A380 featuring a new cabin, following an $850 million investment.

(Tim Hepher - Reuters)

No comments: