Why is the Airbus A380 not selling?

Tom Enders wanted to “hand over the group clean swept”, Airbus employees had praised in an interview with WirtschaftsWoche in the middle of the week - and by that he meant above all the group's relatively tidy financial position. Now the departing Airbus boss is making clear ship elsewhere.

Before his last annual balance sheet, Enders announced the final end of a big problem child: Airbus is stopping production of the A380. The last delivery of the air giant is planned for 2021, the group announced on Thursday in Toulouse.

"Today's announcement is painful for us," says Enders. In the end, he had little choice. The largest customer of the A380, the Arab airline Emirates, has reduced its order by 39 machines - from 162 to 123. Orders on hand are also insufficient with other airlines. "One of the last remaining orders from the leasing company Amadeo will also be canceled this month," said an insider. Therefore, there is now no longer any basis for continuing production.

Tom Enders headed Airbus for around seven years. Now he is presenting the annual balance for the last time. What the Airbus boss succeeded in, where he failed - and what he leaves behind to his successor.

The double-decker passenger jet has been causing Airbus a lot of stomach ache for a long time. In the past few years, hardly any airline had ordered a model. Airbus threatened to run out of orders. The group recently reduced annual production from at times up to 30 machines to just six.
It is the end of a lighthouse project for Airbus - and at least the temporary farewell to the gigantomania in aviation: the A380, after all the largest passenger jet in the world, has up to 853 seats, a range of 15,200 kilometers and is a good 72 meters, depending on the equipment long. Its wingspan is just under 80 meters. Numerous airports have new terminals for the aerial colossus.

The problem: for many airlines the plane is too big and uses too much fuel - that is not economically viable, especially if the giant jet is not fully occupied. Other aircraft at Airbus, however, are very popular. The smaller planes of the A320 family are considered to be big hits.

The better Emirates deal

As bitter as the end is for Airbus. It was only a matter of time and is now coming a few years earlier than expected.

On the other hand, the agreement with Emirates has a very positive side to it. Because in return for the reduction, the route from Dubai has ordered 70 long-haul aircraft - 40 A330s and 30 A350s. They have a higher financial value for Airbus. Because, according to insiders, the new jets are being sold at a lower discount than the A380 they are replacing.

They are also an important victory in a duel with Boeing. With the 40 planes from Emirates, the A330neo, which has so far been ordered rather slowly, is getting an important boost. This dispels Boeing's plans to keep the machine out of the market. The competitor had done this quite successfully for a long time by undercutting Airbus in tenders with extremely competitive prices, according to reports from experts.

One day it was supposed to revolutionize air traffic. But now the end comes for the largest passenger jet in the world. The last delivery is planned for 2021.

The second success is the order for the A350. Emirates had actually as good as ordered it before, but then decided in favor of the rival product Dreamliner. The order now is a strong tailwind for the program. The new order is well utilized in production. This in turn could lead to customers who have not yet decided to order so that they still have the chance to get a plane in the foreseeable future.

But the order is not only important for the order numbers from Airbus, but also for the aviation business per se. The orders show a kind of change in strategy at Emirates - and Lufthansa in particular should not like it for two reasons.

The Emirates model has so far been based on moving as many people as possible with one transfer in the desert between the major airports thanks to the A380. But in the end it has become less and less profitable. “Our average yields per flight ended up being often lower than on smaller jets,” a company insider recently admitted. That was one of the reasons why Aline had recently written poor numbers.

That should be different in the future. Because the A330 and A350 have significantly fewer seats, Emirates no longer has to fill them at competitive prices. Instead, the company can focus more on business travelers and well-paying vacationers than on cheap tourists and backpackers. This clientele gets a better product with the smaller planes. Because boarding and disembarking is faster for the smaller jets, Emirates can now offer shorter travel times.

In addition, the smaller planes allow Emirates to fly to more cities - especially in the growth markets of Asia: China and India. There they didn't get their previous standard jets like the A380 or the Boeing 777 with more than 400 seats, even with bargain prices.

With one of his last big deals, Tom Enders is not only cleaning up a bit more at Airbus - he is also changing aviation a bit.

Constant descent instead of steep ascent

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