Death of the superjumbo jet: Why Airbus is killing the A380

Alanna Petroff
·Senior Economics Correspondent at Yahoo Finance UK

Airbus is killing off the A380 double-decker superjumbo jet in what CEO Tom Enders is calling a “painful” decision.

Passengers have often raved about the A380 flying experience as it offers more legroom, space and upgrade options. But a lack of demand from airlines led to years of speculation that the company would eventually have to kill it off.

The final nail in the coffin was the decision by Emirates on Thursday to trim its A380 orders. Instead of buying 162, it plans to buy 123 of the superjumbo jets. The Dubai-headquartered airline said it was cutting down on A380s but would also be purchasing 70 alternative, smaller Airbus jets.

The double-decker Airbus A380 aircraft has room for about 544 passengers. Photo: Frederic Stevens/Getty Images
The double-decker Airbus A380 aircraft has room for about 544 passengers. Photo: Frederic Stevens/Getty Images

The decision could affect up to 3,500 jobs around the world, with hundreds in the UK. However, the French company said that ramp-up in production of another jet – the A320 – “will offer a significant number of internal mobility opportunities.”

Airbus (AIR.PA) will produce 17 final A380 planes, including 14 for Emirates and three for Japanese airline ANA. The last delivery is set for 2021.

“The A380 is not only an outstanding engineering and industrial achievement. Passengers all over the world love to fly on this great aircraft. Hence today’s announcement is painful for us and the A380 communities worldwide. But, keep in mind that A380s will still roam the skies for many years to come,” said Enders in a written statement.

Shares in Airbus were surging ahead by about 5% in afternoon trading as the company also announced better-than-expected financial results for 2018 and an upbeat outlook for 2019.

While it may be “enticing” to talk about the death of the A380, the massive profits Airbus delivered in the fourth quarter “is going to win the day” with investors, said Jefferies analyst Sandy Morris in an interview with Yahoo Finance UK.

“In short, we believe Airbus traveled a long way in full-year 2018 and heads into 2019 in good shape insofar as the core business is concerned,” he said in a research note.

Airbus’ American competitor Boeing (BA) has also struggled with orders of its 747 jumbo jet in recent years. Boeing said in 2016 it could end 747 production amid falling orders and pricing pressure.

But while major US airlines including United Continental Holdings (UAL) and Delta Air Lines (DAL) have quit buying the 747, Boeing continues to get some orders from UPS (UPS), which uses the jumbo jet as a cargo carrier.