Daily Management Review

Failure To Secure Bulk Order For A380 From Emirates Would See Airbus Phasing Out The Jumbo Carrier


12/28/2017




Plans to phase out A380 superjumbo - the world’s largest jetliner, would be put into force by Airbus if its attempts to secure a critical order Dubai’s Emirates fails, said media reports.
 
The A380 superjumbo has been a slow-selling product and has been in service for just about 10 years. Despite some big ticket investments by the airline in development of new cabins were unveiled this month, the fate of one of the most globally visible symbols of Europe is hanging by a threat.
 
“If there is no Emirates deal, Airbus will start the process of ending A380 production,” a person briefed on the plans was quoted in the media reports. And the weak demand for the product justified the move, a supplier added according to the report.
 
There were no comments from Airbus and Emirates.
  
Airbus currently mainly has orders for the A380 superjumbo form Emirates and it plans to implement the phase out in a gradual manner to that it has enough time to fulfill the existing orders.
 
According to experts, the orders at hand currently for Airbus would be enough to be completed by the next decade only.
 
The supremacy of Boeing 747 was challenged by the Airbus A380 and the cost of developing it was 11 billion euros. The plane is able to carry about 500 people.
 
But since there had bene a change in customer tastes as most of the airlines were inclined to purchase smaller twin-engined models that are much less expensive to maintain and are easier to fill with passengers. And this led to very slow demand for the four-engined goliaths.
 
But with orders for 142 of the A380, the largest customer for the aircraft is Emirates. The company has already taken deliveries of about a 100
 
Last month, talks for an order of 36 superjumbos at a cost of $16 billion broke down between Airbus and Emirates at the Dubai Airshow. While it is being reported that talks have resumed, no potential agreement appears to be in sight.
 
Airbus wants the reassurance of bulk orders as the one expected from the Emirates so that it is able to keep the factories running despite the fact that interest in the A380 has been shown by some airlines like British Airways.
 
On the other hand, Emirates is demanding that to ensure that it is able to keep getting spare parts and maintenance of the A380s, Airbus should guarantee that it would keep the factories open till another decade.
 
It can be said that Emirates would tilt towards Boeing if there is a failure to strike a deal with Airbus. The European plane maker would stand to lose one of its largest customers. While analysts have denied any politics playing any role in the potential deal between the Emirates and Boeing, there are reports that this tilt in intent of the Gulf carrier is a reflection of the growing influence of U.S. President Donald Trump over the Gulf states.
 
(Source:www.reuters.com)






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