On the Mark

Emirates to the A380 rescue

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So Emirates Airline has come to the rescue of the Airbus A380. Was it gallantry or pressure that led to this outcome? It’s probably a bit of both.

With the Jan. 18 signing of an MOU for up to 36 new A380s, Emirates is assuring that production of the ultra-large widebody—which can seat between 525 and 853 passengers and has a 15,200 km range—will continue for another 10 years. The announcement came just three days after Airbus COO-customers John Leahy said the A380 program would have to be shut down if Emirates did not commit to a new order. The two parties have been negotiating for a further commitment for quite some time, with Emirates seeking assurances from Airbus that A380 production would continue for at least 10 years, and Airbus, in return, pressuring Emirates to place an additional order to guarantee that an end customer for the aircraft, and its production line, was out there.

As of Dec. 31, Emirates has 41 of a total of 95 A380s in Airbus’ production backlog. The new order boosts that total backlog to 131 aircraft. Airbus delivered 15 A380s in 2017, and has said it plans to deliver 12 in 2018, then eight in 2019, with deliveries possibly dropping to six per year beyond that, which would support A380 production into 2032. Airbus Commercial Aircraft president Fabrice Brégier said on Jan. 15 that the company “came to the conclusion that we can go down to six aircraft per year and maintain an industrially efficient production line.” If Airbus indeed sticks to a six-per-year production rate, now that a potential 131 A380s are in backlog, production could carry on an additional 18.5 years beyond 2020, to 2038—another two decades.

And Leahy has not given up on future customers for the aircraft. “This is an airplane, I assure you, whose time has come,” Leahy said on Jan. 15, emphasizing that that forecast traffic growth into major hubs will force demand for larger aircraft. Leahy envisions Airbus selling six-to-eight A380s per year “until the market level gets to 25 a year, but it will take a few more years to get there.”

Is it just wishful thinking, or a prescient strategy? Airbus hasn’t sold a new A380 since March 2016, which was an Emirates order for two of the model. Nonetheless, Emirates’ MOU now gives Airbus some breathing room for its A380 program. Will Airbus stick with its previous six A380 per year production plan, or will the company go at a higher rate? This is still to be seen.  Both Leahy and Brégier plan to retire fairly imminently. Future A380 sales campaigns and production decisions will be left to their successors.

Additional airlines and lessors with backlog A380 orders include Russia’s Air Accord—an entity that took over aircraft orders transferred from defunct Russian carrier Transaero—(three in backlog); Dublin-based lessor Amedeo (20 on order, but with no announced  operators); ANA (three);  Qantas (eight); Qatar Airways (one); Singapore Airlines (three); and Virgin Atlantic (which has deferred its six A380s several times).

It was up to Emirates to keep the A380 program alive, and the Gulf carrier group’s chairman and CEO Ahmed bin Saeed Al Maktoum extolled the aircraft’s virtues.

“We’ve made no secret of the fact that the A380 has been a success for Emirates. Our customers love it, and we’ve been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix,” Al Maktoum said. “This order will provide stability to the A380 production line [and] we will continue to work closely with Airbus to further enhance the aircraft and onboard product … the beauty of this aircraft is that the technology and real estate on board gives us plenty of room to do something different with the interiors.”

This resolution to Airbus’ A380 crisis is a positive story. It allows Airbus to continue to employ thousands of production line workers worldwide. Manufacturers of components for the aircraft will continue to have a steady production flow. Emirates and other operators of the A380 (including Air France and British Airways) will continue to have replacement parts and, potentially, replacement aircraft if they deem to order any. And passengers will still be able to experience a flight on what many customers say is the most elegant, quiet and even luxurious aircraft yet made. 

To know the A380 will still be out there, in operation, and with new models still to be built and delivered—the biggest of the big commercial passenger airplanes—gives travellers one more travel bucket list opportunity to attain, before the big jumbo jets are gone forever.

For Emirates to make this possible is indeed an example of a certain kind of gallantry.

Mark Nensel mark.nensel@informa.com

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