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AIRBUS CUTS A380 PRODUCTION AGAIN AS DOUBTS GROW OVER FUTURE OF 'SUPERJUMBO' "Credit News 24"

Airbus's A380 has failed to sell in the numbers the manufacturer hoped for.

The future of Airbus’s A380 super jumbo looks even more bleak after the pan-European aircraft company said it was cutting production of the double-decker airliner.

Reporting half-year figures, Airbus said that “considering the current order booking situation” delivers of the A380 will be reduced to eight in 2019.

At last year’s Farnborough airshow the company said it would slow production to just 12 a year by 2018, down from a rate of 27 the year before.

Demand for the giant four-engined aircraft has waned as airlines seek the efficiencies of smaller twin-engine aircraft. Airlines have ordered just 317 A380s; so far 213 have been delivered.

Industry commentators have long speculated that the A380 programme will be closed and even senior executives from the company concede Airbus will struggle to make money on it.

Aviation analyst Saj Ahmad from Strategic Aero Research said: “Cutting the A380 underlines the marketing disaster that belies the programme and that Airbus is realising that even life support has to be turned off - and its evident that day looms closer.”

Calling the superjumbo a vanity project that “needs to be killed off”, he added: “Even if a mooted order from Emirates emerges, it will not support a rate increase. It will be nothing more than Airbus having to make more A380s at a loss and still face the barrel of execution of the airplane.”

Airbus reported flat group sales at €28.7bn, with net profit down 15pc at €1.5bn. Underlying earnings eased 3pc to €1.8bn, although this figures was boosted by the €560m sale of the defence electronics business and a €174m currency windfall. Adjusting for these and other similar one-off similar charges - Airbus’s preferred measure of performance - earnings were €1.1bn, down 35pc.

Problems which held back performance included problems with advanced new engines from supplier Pratt & Whitney for Airbus’s bestselling A320neo small airliner.

Airbus is scaling up production to meet demand and is targeting about 200 A320neo deliveries for the full year, but admitted this could be “more challenging” because of the engine issues.

Tom Enders, chief executive, said: “The commercial aircraft environment remains healthy while the robust order backlog continues to support our production ramp-up plans. However, we are facing challenges due to ongoing engine issues but we have a clear road-map in place and have maintained our full-year guidance. Achieving the aircraft delivery target depends on the engine suppliers meeting their commitments.”

The A320 aircraft is a cash cow for Airbus and if deliveries suffer as a result of engine problems it could cause cash flow issues for Airbus and potentially open up the company to compensation claims from customers.

The airliner business represents the vast bulk of Airbus’s work, delivering €21.8bn of revenues and €1.1bn or earnings during the period.

Airbus delivered 306 airliners during the half, eight more than the same period last year, and took orders for a further 203 in the first six months of the year. However, the mix included more smaller, cheaper aircraft, resulting in the order backlog falling 8pc to €932bn.

The smaller defence and space business suffered a 15pc drop in revenues to €4.6bn, though earnings jumped 72pc to €816m.

The A400M military cargo plane - which the RAF is taking into service - continues to prove troublesome for Airbus, with the company taking a €70m charge on the programme.

Some customers have complained the A400M fails to meet specifications, resulting in rising costs for Airbus, which said it “continues with A400M development activities toward achieving the revised capability roadmap shared with the customer” though admitted “achievement of the contractual technical capabilities and associated costs remain highly challenging”.
Title : AIRBUS CUTS A380 PRODUCTION AGAIN AS DOUBTS GROW OVER FUTURE OF 'SUPERJUMBO' "Credit News 24"
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