Airbus could make a call about the fate of the A380 tomorrow

Airbus is due to make its full year earnings announcement on February 14
Airbus could make a call about the fate of the A380 tomorrow
Emirates accounts for more than two-thirds of all 79 outstanding A380 orders after accounting for Qantas’ cancellation.
By Shayan Shakeel
Wed 13 Feb 2019 11:27 AM

Airbus might make a statement on the fate of its A380 programme during its earnings report tomorrow, according to reports. 

French plane maker Airbus is due to make its full year earnings announcement on February 14.

Forward looking statements will likely need to address a loss of nearly $5.65 billion in contracts at book value, contributed to in large part by airlines reneging on agreements to buy more of its superjumbo aircraft.

“The A380 is the elephant in the hangar; it will be impossible to avoid saying something on the subject,” Agency Partners analyst Sash Tusa said in a report by Reuters.

Orders

Last week Australian carrier Qantas cancelled eight of the 20 A380s it had ordered in 2006, saying, These aircraft have not been part of the airline's fleet and network plans for some time," according to a spokesperson.

The news came after the A380s largest customer, Dubai-based Emirates, was said to be in talks to convert part or all of its order for 20 A380s made in 2018 into the smaller but newer A350 aircraft or A330neo aircraft.

Made after a prolonged bout of negotiations that stretched weeks after the Dubai Airshow in 2017, Emirates’ $16bn order was deemed life-saving for an aircraft that cost approximately $22bn to develop.

However, while the world’s largest capacity aircraft is crucial to Emirates’ plans to grow Dubai’s status as a hub, no engine manufacturer has been able to agree to the price and performance demands it deems crucial to making its A380 operations viable.

Emirates accounts for more than two-thirds of all 79 outstanding A380 orders after accounting for Qantas’ cancellation.

Ageing

“The A380s ordered last year look like they will be dumped. Emirates still has enough on order to replace ageing A380s that start to come off lease next year. Emirates is loathe to take more of the Rolls Royce Trent 900 engines on the A380 in the absence of either performance guarantees or penalties,” said Saj Ahmad, chief analyst at StrategicAero Research.

“The A380 is also a total sales disaster and a massive cash drain or Airbus, and both Emirates and Airbus are likely to conclude it's better off cancelling the order rather than Airbus suffer the pain of building more loss-making airplanes and Emirates ending up with a performance-choked machine.” it has no penchant for,” he added.

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