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Qantas Drops Its Remaining A380 Deliveries: Where Does This Leave Airbus?
This week Qantas’ Chief Executive Officer announced that the airline sees no market for the remaining eight A380 aircraft the airline is due to receive, highlighting the continued decline for the airframe’s long-term prospects.
“There’s a network for 12 [the airline currently has in service] that’s very good and works very well, but the airline “struggles with a network for the next eight” said CEO Alan Joyce.
It is a move by the Australian flag carrier that hasn’t surprised many in the industry. The airline was one of the early operators of the aircraft and had a total order for 20 A380s. But in 2012, the airline deferred orders for the sake of cash conservation, a move which was then repeated in 2014 for the same reason. Although the airline makes no plans for it’s deliveries, the order for the remaining 8 have not been formally cancelled. The news brings more clouds over Toulouse in France, the headquarters of the manufacturer Airbus. The airframe hasn’t seen a substantial order in almost two-and-a-half years, with the last order coming from Dublin-based lessor Amedeo who signed for 20 aircraft in February 2014.
Airbus CEO, Fabrice Bregier, has consistently maintained a positive position on the A380’s future, saying he is “convinced the aircraft will find its way,” turning to the rise in global traffic and increasingly busy hubs and airways as a driver for large aircraft. Bregier goes on to say “this is not possible – with the congestion of traffic – that the A380 will not be seen as the aircraft of choice for many airlines.”
Emirates on the other hand is bemused by the lack of interest from other carriers for the aircraft type. Tim Clark, the current CEO of Emirates, says that he is frustrated that the appeal of the airframe hasn’t occurred to other airline executives.
Clark stated he is “doing more to sell the aircraft to my competitors than Airbus is”. He continued “I think the size of the A380 – its capacity – scares most of the CEOs in the airline world today. That’s why they probably regard me as being slightly bonkers, the fact that we have so many and we make them work. They just wont take that quantum jump.”
The airline has been the biggest customer for the A380, owning 142 out of the 319 orders, with 81 currently operating. Clark has revealed in the past that discussions between the airline and the manufacturer have dwindled over plans for a neo version of the type. “We have a contract for 140 A380s that we will take, neo or no neo, because it is a good airplane at the moment. My main concern is that they would stop producing the airplane – I want my 140 delivered.”
At the start of the year, British Airways’ parent company International Airline Group (IAG) said it would look to add “five or six” second-hand A380s to the fleet of 12 it already has, describing the type as a “fantastic” but “inflexible” aircraft. IAG boss Willie Walsh had previously stated a similar reason to what Qantas have now said on the prospect of more airframes, that he did not see room for additional A380s at BA beyond the 12 ordered.
The manufacturer saw 30 deliveries in 2012 and 2014, the highest since deliveries began in 2007. Flight Global’s Fleet Analyzer predicts 2016 to see between 25-30 to be delivered, 20-25 in 2017 and 10-15 in 2018. At the Farnborough Airshow last month Airbus conceded it would take a “prudent, proactive step,” warning production might slip back into red ink on each aircraft produced at that time. Bregier assured the rate cut would be temporary saying, “I think if we do that we’ll be able to sustain the A380 at this low level fora few years before ramping up again.”
Flight Ascend Consultancy chief Rob Morris says Airbus is having to deal with the dynamics of the evolving market in the wide body sector saying, “The A380’s economics are competitive with the current Boeing 777-300ER, but the 777-9 resets the equilibrium and the A380 as designed today is threatened.”
Morris continued by stating, “The challenge for Airbus today is to maintain the aircraft in production for several more years while developing a next-generation A380 which can apply new engine, materials, systems and aerodynamic technologies to reset the economic equilibrium in its favour. If this is towards the middle of the next decade it will also likely see more increased demand for A380-sized aircraft. But maintaining profitability at one a month with a declining and increasingly concentrated backlog will be a not-insignificant challenge.”
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