Fury at Airbus after it hints the super-jumbo may be mothballed
Suggestion sent shockwaves through the aviation industry
Airbus plunged deeper into crisis yesterday as customers reacted with fury to its suggestion that it may stop producing the fabled A380 super-jumbo in 2018 because of poor sales.
The prospect of the European plane-maker, which employs thousands of workers in the UK, mothballing the giant passenger airliner sent shockwaves through the aviation industry yesterday and triggered a major fall in the company’s share price.
Chief financial officer Harald Wilhelm started the speculation frenzy when reports emerged that he had told investors Airbus might have to discontinue the plane unless it can invest in improvements to make it more attractive to customers. Although analysts and rivals have suggested it for some time, it was the first time the manufacturer had talked publicly about the humiliating possibility.
He said the A380 manufacturing programme would break even next year but not into 2018 without new engine types. That decision on the engine has to be made soon, because it would normally take about four years – and $2bn – to develop.
Sales of the A380 have been sluggish because of a limit to the number of routes where a 500-seater is needed. No airline has ordered A380s at all this year, while in July, the Japanese carrier Skymark Airlines cancelled the six it had ordered.
Airbus plunged deeper into crisis yesterday as customers reacted with fury to its suggestion that it may stop producing the fabled A380 super-jumbo in 2018 because of poor sales.
The prospect of the European plane-maker, which employs thousands of workers in the UK, mothballing the giant passenger airliner sent shockwaves through the aviation industry yesterday and triggered a major fall in the company’s share price.
Chief financial officer Harald Wilhelm started the speculation frenzy when reports emerged that he had told investors Airbus might have to discontinue the plane unless it can invest in improvements to make it more attractive to customers. Although analysts and rivals have suggested it for some time, it was the first time the manufacturer had talked publicly about the humiliating possibility.
He said the A380 manufacturing programme would break even next year but not into 2018 without new engine types. That decision on the engine has to be made soon, because it would normally take about four years – and $2bn – to develop.
Sales of the A380 have been sluggish because of a limit to the number of routes where a 500-seater is needed. No airline has ordered A380s at all this year, while in July, the Japanese carrier Skymark Airlines cancelled the six it had ordered.
Emirates airline president Sir Tim Clark said yesterday he had protested to Airbus about the comments. His airline has 56 A380s in its fleet, according to its website, and has 140 more on order. Emirates is by far the most committed to the model.
“We are on the hook for his plane,” he said: “I get pretty miffed when we have put so much at stake.”
Sir Tim – one of the aviation industry’s most influential leaders – urged the company to invest with Britain’s Rolls-Royce in building better engines to improve fuel consumption, rather than scrapping the whole A380 project.
He is annoyed at the European engineering firm because of the message its finance director’s downbeat comments sends to other potential big buyers. Rather than talk of mothballing the A380, it should be stepping up its marketing effort to sell more, he said, insisting Emirates A380s were “full to the gunwales” and making profits.
He added that the original idea behind the superjumbo – to help overcome airport congestion – had been proved right. “This is where Airbus needs to be going, to persuade airlines in the long-haul business that this definitely has a place,” he said.
He called into question Airbus’s management decisions, asking: “What is happening over there? I would like a first-hand understanding on where they are going.”
Airbus management yesterday tried to undo the damage its finance director’s words had caused as they watched shares in the company fall a further 4.5 per cent on top of the previous day’s 10 per cent caused by a profit warning.
“The entire Airbus top management continues to believe strongly in the market prospects of the A380, but any investment by Airbus requires a sound business case, which we will continue to study,” its spokesman said.
Boeing shares also fell 3 per cent yesterday as investors reacted to its European counterpart’s grim prognosis.
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