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Two big reasons the A380 ‘superjumbo’ is ending production

Two big reasons the A380 ‘superjumbo’ is ending production

2019 02 15

2019 02 15

It’s loved by passengers, loathed by airline executives and feared by accountants. Now we know why the world’s largest airliner has been axed.

by Gavin Fernando and Benedict Brook

 

It’s loved by passengers, loathed by airline executives and feared by accountants.

Now, the world’s largest airliner has run out of runway after Airbus decided to close A380 production.

Production of the jumbo jet will cease in 2021, after its biggest buyers receive their final orders.

The decision marks the final act in one of Europe’s greatest industrial adventures, in a move that could affect more than 3500 jobs across the continent.

After a dozen years of faithful service, what happened?

 

WHY ‘BELOVED’ A380 HAD TO GO

The A380 may be widely beloved by passengers, but those on the financial side aren’t so starry-eyed.

And a lot of it has to do with the two engines on each wing:

The superjumbo model is a four-engine superjumbo in what’s become a twin-engine world, making it too expensive to fuel and maintain.

While passengers love its size, roominess and its features like airborne bars and showers, that sheer scale means it needed more passengers to make it economical to run.

While the 544-seat double decker boasts an impressive capacity, this also means more potentially-unsold seats, which would see the airline take a greater economic hit.

Air traffic is growing at a near-record pace but this has mainly generated demand for twin-engined jets nimble enough to fly directly to where people want to travel, rather than bulky four-engined jets forcing passengers to change at hub airports.

And although loyal supporters like top customer Emirates say the popular 544-seat jet makes money when full, each unsold seat potentially burns a hole in airline finances because of the fuel needed to keep the huge double-decker structure aloft.

“It’s an aircraft that frightens airline CFOs. The risk of failing to sell so many seats is just too high,” said a senior aerospace industry source familiar with the program.

 

CHALLENGES WELL BEFORE TAKE-OFF

The A380 has faced economic challenges since its conception.

Keep in mind that the costly A380 superjumbo took its maiden flight in 2007 — just as the global financial crisis was taking its toll on the world.

Passenger traffic declined heavily, costing the industry an estimated two years of growth.

Airbus saw it as a replacement for the popular Boeing 747 jumbo jet. Its bet was that airlines would need large four engine aircraft to fly between their busy global hub airports.

But Boeing had a different idea, it thought airlines would want smaller more fuel efficient two-engine aircraft, such as its 787-Dreamliner, which could serve hubs as well as smaller destinations.

More airlines agreed with Boeing’s vision. So much so, Airbus later produced its smaller A350 aircraft which it has proved to be a far greater success than the A380.

While major airlines like Qantas, British Airways, Lufthansa and Korean Air ordered A380s, they never got them in the large numbers Airbus hoped for and saved them for only their busiest routes.

Rising fuel costs and the push to drive down carbon emissions came as the final blow to the beloved A380 superjumbo.

As for the deep-pocketed US and Japanese airlines, they never warmed to the A380.

Indeed, while Japan’s ANA has received three A380s it was more a grudge purchase after it bought another airline that had signed up to the superjumbos.

Earlier this month, Willie Walsh, the chief executive officer of British Airways’ parent company IAG, said he would consider buying more A380s — but there was a catch.

“I’ve no concerns about the A380 … it’s been an excellent aircraft for us. We have made it clear to Airbus that we might consider some additional aircraft,” Mr Walsh said in Dublin.

“But the pricing of that aircraft has not been as attractive as we believe it needs to be.”

 

HOW BAD WILL ITS LOSS BE?

In economic terms, Bloomberg estimates that — if it’s really “the dinosaur that sales figures suggest” — it won’t really matter that the A380 disappears from the skies.

Some insiders worry that Airbus will lose a valuable symbol of pride and commercial audacity when production ends in 2021.

Now, airline bosses are seeking assurances that Airbus will support the A380 with spare parts for years to come. Many invested in the A380 as their flagship while airports also spent heavily on new facilities.

In the meantime, there’s no need to rush to ride an A380 just yet.

Most planes remain in service for at least 20 years meaning there’s a decade left on even the earliest models. Qantas has said it intends to spruce up its 12 A380s this year as part of a midlife refresh, meaning it’s likely the planes will still be ferrying passengers across the globe until well into the 2030s.

Some customers like Air France and Lufthansa may not shed too many tears, analysts say.

They too invested in the A380 but may also be relieved to see a potent weapon removed from Gulf rivals like Emirates, whom they accuse of flooding the market.

Emirates insists it plays fairly and has called the A380 a “passenger magnet,” misunderstood and badly marketed by rivals.

Its chairman said yesterday he was disappointed in the A380’s demise, but added: “We accept that this is the reality of the situation.”

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