Thursday, 29 December 2016

Airbus To Cut Its A380 Production


Airbus’s troubled A380 “superjumbo” has suffered a fresh blow with the pan-European plane-maker delaying delivery of a dozen of the giant airliners.

The company said that 12 of the aircraft scheduled for delivery to airline Emirates across 2017 and 2018 will now be pushed back by a year.

The hold-up is down to a deal between Emirates and Rolls-Royce, after the airline raised concerns about the performance of engines Rolls is supplying for 50 of its new A380s.

This is the second cut to production Airbus has announced for the A380 this year, having said in July that it would reduce the rate to 12 a year in 2018, down from the 27 a year ago.

While highly rated by passengers, the A380 has proved a slow seller for Airbus, with only 319 examples of the $433m jet ordered, as airlines opt for twin-engine aircraft which, while able to carry fewer passengers than the four-engine superjumbo, are cheaper to operate.

As a result, Airbus only began to break even on A380s this year, having lost money on each of the earlier jets, which first entered service in 2007.

Tom Williams, chief operating officer of Airbus, admitted in an interview with the Telegraph earlier this year that the A380 programme "would never be profitable" and the decision to build the giant jet may have been a mistake, but the company was operating in a different environment at the time.

Despite the poor sales and further troubles for the A380, they are unlikely to mean the imminent demise of the giant jet.

Independent aviation analyst Howard Wheeldon said: “I don't think it signals the end of four engines despite airlines maybe wanting that. Such is the difference in size of the A380 to say, a Boeing 777, that I do not believe, even if it were possible, that the overall market - both airlines and passengers - are ready for a 500-plus seat twin engine jet yet.”

However, Mr Wheeldon did acknowledge the superjumbo presents challenges for airlines. “The A380 is a technical wonder and well loved by passengers,” he said.

“But for airlines as operators it carries a large element of risk in terms of ability to fill every seat. It may be ahead of its time but then, we said that about the 747 in 1969 and look what happened a few years after that.”

Airbus said to help compensate for the financial impact of later deliveries, it would accelerate cost cuts.

Emirates is the biggest customer for the A380, with a total of 140 either in service or on order. Rolls scored a coup last year when it landed its largest ever order, winning the contract to supply engines for Emirates A380s, a deal worth £6.1bn, with the aircraft having been previously powered by engines made by Engine Alliance, a joint venture between US groups General Electric and Pratt & Whitney.

However, Emirates boss Sir Tim Clark warned of problems with the performance of Rolls’s engines a month ago, saying there were “technical issues” that needed to be sorted out before the airline took delivery of its first A380 powered by Rolls.

The issues seem to have been resolved with Rolls expecting the first delivery to take place this week, though the company has said it “continues to work with Airbus and Emirates to meet their requirements”.



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