Abu Dhabi, UAETuesday 23 July 2019

Airbus to scrap A380 production by 2021 as Emirates orders 70 smaller jets

Emirates reaches agreement on A380s with Airbus, airline to receive 14 more A380s by end of 2021, as superjumbo production ends

Emirates airline ordered 70 Airbus jets at a value of $21.5 billion (Dh78.97bn) and reached an agreement with the plane manufacturer to receive 14 more A380s, whose production will stop by 2021.

Emirates ordered 40 A330-900 aircraft and 30 A350-900 jets, the airline said in a statement on Thursday. The latest generation of A330neo and A350 aircraft, will be delivered to Emirates starting from 2021 and 2024, respectively.

The Toulouse plane manufacturer and Emirates reached an agreement on the outstanding A380 deliveries, according to which the airline will receive 14 more double-decker jets from 2019 through to the end of 2021.

These deliveries will take Emirates' total A380 order book to 123 units, a drop from the original 162 figure.

“While we are disappointed to have to give up our order and sad that the programme could not be sustained, we accept that this is the reality of the situation," said Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates.

The A380 is a "differentiator" for Emirates and the aircraft "will remain a pillar" of its fleet until the 2030s, he added.

Emirates, which shunned the double-decker at the 2017 Dubai Airshow for Boeing's 787s, salvaged the A380's production in January of last year with an order for 20 more jets as the future of the superjumbo was in question.

Until that point, Airbus had not sold the aircraft dubbed the flying palace in more than two years. Emirates, which invested billions of dollars to establish a transportation hub in Dubai, had demanded that Airbus commit to a production timeline of at least a decade due to a lack of traction from other airlines for the aircraft and the absence of a secondary market for the jet.

But even with Emirate's order, the market dynamics didn't change for the A380, making it the second most iconic aircraft to be retired after the Concorde ceased operating in 2003.

“As a result of this decision we have no substantial A380 backlog, and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years. This leads to the end of A380 deliveries in 2021,” said Airbus chief executive Tom Enders.

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The age of the A380 - how to fly the world's largest passenger play

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Airbus incurred €463 million (Dh1.191 billion) in charges for scrapping the production of the A380. The first double-decker to go into operation was in 2007 as part of Singapore Airlines’ fleet, and was retired in June 2017. Airbus' shares rallied in morning trading, jumping 5.3 per cent to €109.86 at 10:43am Paris time.

Sheikh Ahmed said Emirates’ order of A330neos and A350s complements the airline's fleet mix, enhances its flexibility and supports the growth of its network. The jets will "play an important role in our future fleet and network plans", he said.

Emirates will operate the A330neos on its regional destinations, helping the airline serve smaller airports and new routes, and also provide the latitude to enhance its global network. The A350s will supplement Emirates’ long-haul operations, providing the airline with added flexibility in terms of capacity deployment on eight to 12-hour routes from its Dubai hub.

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Cabin tour: inside an Emirates A380

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Emirates ordering the A330neos and A350s and reducing its original order of A380, lessens "its exposure to the giant jet and arguably introduces more fleet flexibility", said Saj Ahmad, chief analyst of StrategicAero Research.

"This is critical with its deepening relationship with flydubai in its pursuit to expand and capture efficiencies across its growing fleet. Given that Emirates leases all its A380s, it has shielded itself against a new defunct programme and an asset whose values will only decline as time goes on," he said.

Meanwhile, Etihad Aviation Group said it has restructured its aircraft orders after concluding talks with Airbus and Boeing.

The parent of Etihad Airways said on Thursday it will take delivery of five long-range A350-1000 aircraft and 26 A321neos from the European manufacturer Airbus and receive six 777-9x from the US plane maker Boeing.

Middle East airlines will spend about $600bn on new aircraft in the next 20 years, as the fleet size of the regions’ carriers are projected to more than double to 3,320 aircraft in the period, according to Airbus. The region’s carriers will require around 2,590 new aircraft by 2036.

Passenger traffic to and from the Middle East is forecast to grow 5.9 per cent until 2036, beating the world average of 4.4 per cent, according to Airbus projections. The region is forecast to experience the fastest growth rate in the world behind Africa, which is projected to grow by 5.9 per cent to 400 million passengers by 2036, according to the International Air Transport Association (IATA).

Updated: February 14, 2019 04:23 PM

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