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Abu Dhabi, UAESaturday 23 June 2018

Airbus may chop A380 output while Delta mulls 100-plane single aisle order

European plane maker may reduce production of world's largest passenger plane but smaller A320 family finds more favour

A new Airbus A380 aircraft for Singapore Airlines takes off. But the plane maker may reduce A380 output. Regis Duvignau/Reuters
A new Airbus A380 aircraft for Singapore Airlines takes off. But the plane maker may reduce A380 output. Regis Duvignau/Reuters

Airbus is considering cutting production of its A380 superjumbo to six or seven planes a year, but has made no final decision on the matter, a top executive said on Thursday amid growing question marks over the future of the double-decker jet.

The A380 has battled against sluggish sales, squeezed by smaller, more efficient twin-engined jets, and Airbus has already cut output of the plane from an annual peak of 30 while waiting for a recovery in demand.

"We believe we can produce this aircraft at 6 to 7 a year in an industrial way," the Airbus chief operating officer Fabrice Bregier said after the first Singapore Airlines A380 featuring a new cabin configuration, including revamped business class, landed in Singapore.

"The A380 will find its way progressively," Mr Bregier said.

Industry sources said this week that the company was exploring plans to cut A380 production to as low as six aircraft per year as it battles to make the world's largest airliner commercially viable beyond the end of the decade.

Singapore Airlines overhaule A380s will seat 471 people. In addition to the six suites, there will be 78 business class seats on the upper deck, and 44 premium economy and 343 regular economy class seats on the main deck.

epa06386931 An inside view of the Airbus A380 aircraft for the Singapore Airlines before a ceremony at the Airbus's delivery center in Colomiers, near Toulouse, Southern France, 13 January 2017. The A380 aircraft is the first of five new planes provided with the new cockpit. Singapore Airlines is first carrier in the world to operate the new Airbus A380 planes.  EPA/GUILLAUME HORCAJUELO
The new-look interior of the SIA Airbus A380. Guillaume Horcajuelo/EPA

The carrier has installed new seats and other in-flight products as part of a US$850 million investment. In economy class, passengers can expect more space and greater comfort through an improved design.

Business-class highlights include a full-length divider between centre seats which can be converted into couple seats. There is also under-seat stowage for cabin and laptop bags.

epa06386932 A view of seats in business class of the Airbus A380 aircraft for the Singapore Airlines before a ceremony at the Airbus's delivery center in Colomiers, near Toulouse, Southern France, 13 January 2017. The A380 aircraft is the first of five new planes provided with the new cockpit. Singapore Airlines is first carrier in the world to operate the new Airbus A380 planes.  EPA/GUILLAUME HORCAJUELO
Seats in business class of the SAI Airbus A380. Guillaume Horcajuelo / EPA

Following a clampdown on costs, Airbus has said the A380 can break even at production levels of 20 a year, while Mr Bregier has previously said he is pushing the breakeven level as low as possible to sustain low production.

The Airbus chief executive Tom Enders expressed his confidence in the jet on Wednesday, though analysts say ongoing negotiations over a deal with carrier Emirates will be decisive for the future of the aircraft.

Emirates, which held off signing an order for an estimated 36 aircraft at last month's Dubai Airshow, wants guarantees Airbus will produce the A380 for the next 10 years.

Reducing output to six a year would help to bridge that period and support key second-hand values while Airbus looks for other buyers, but could leave the programme losing money for at least part of the period.

The speculation over the future of the A380 comes as Delta Air Lines is leaning toward Airbus over Boeing for an order of about 100 single-aisle jets that will be announced after the carrier’s board makes a decision, people familiar with the matter said.

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The negotiations include Airbus’ longest single-aisle jet, the A321neo, said the people, who asked not to be named. A deal, which could be valued at about $13bn at list prices, would mark a victory for the European plane maker over Boeing’s newest 737, the Max 10.

Delta and Boeing are on opposite sides of a trade dispute after the Chicago-based manufacturer persuaded the US commerce department to slap 300 per cent duties on a new Canadian plane made by Bombardier. Boeing contends the CSeries jetliner was sold to the Atlanta-based carrier at well below cost.

Airbus, Boeing and Delta declined to comment. CNN reported earlier that Delta was set to place the order with Airbus.

The new Airbus jets will replace Delta’s 1990s-vintage McDonnell Douglas MD-90 jets, as well as aging Boeing 757 and Airbus A320 aircraft. Delta is expected to use them mainly for flights in the US and on shorter international routes. Delta has the oldest fleet among the biggest three US carriers, with an average age of 17 years among its 847 mainline planes. American Airlines averages slightly more than 10 years and United Continenta’s average aircraft is 14 years old.

Delta plans to use Pratt & Whitney engines to power the new planes, according to one of the people. Buyers of A320neo family aircraft can choose between the geared turbofan engine, made by United Technologies’ Pratt unit, or the Leap, a new power plant built by the CFM International joint venture of General Electric and Safran. A spokesman for Pratt declined to comment.

The new order continues Airbus’ success with Delta, which in the past has favoured Boeing planes. The carrier’s biggest order in recent years was for 50 Airbus wide-body jets in late 2014, with a value of $14bn at list prices. Since then, it has purchased more than 70 of Airbus’s less expensive A321 narrow-body aircraft in three separate transactions.

Delta’s last major Boeing order was for 100 737-900ER jets in 2011, although it has placed add-on orders for more 737s since then.

The carrier’s decision to go with Airbus will reinforce doubts about its willingness to purchase from Boeing going forward. Boeing’s trade case could delay delivery of 75 Bombardier CS100 jets to Delta or even scuttle the deal altogether. The Delta chief executive Ed Bastian said in mid-October that the spat wouldn’t affect its decision on the narrow-body jet order and that Boeing “has every opportunity” to win.