FARNBOROUGH— is making a large cut to its output, as the manufacturer continues to struggle with securing additional sales for its largest aircraft.
On July 12, the company said that in 2018 it will reduce monthly production of the aircraft from the current 2.5 per month to one.
“With this prudent, proactive step we are establishing a new target for our industrial planning, meeting current commercial demand, but keeping all our options open to benefit from future A380 markets,” CEO Fabrice Bregier said in a statement. “We are maintaining, innovating and investing in the A380,” he added. In an effort to defer concerns that Airbus may abandon the A380, Bregier stated: “The A380 is here to stay.”
Airbus currently has orders for 319 A380s. It has delivered a total of 193 aircraft, 27 of which were delivered in 2015. This year it has handed over 14 aircraft, as of mid-July.
The decision to reduce production further will result in a huge challenge to keep the program profitable on a recurring cost basis. Airbus said it had managed to reach a break-even point in 2015 based on the output of 27 aircraft and it will “continue to improve the efficiency of its industrial system to achieve breakeven at 20 aircraft in 2017.” Airbus also “targets additional cost-reduction initiatives to lower breakeven further.”
Airbus depends on Emirates to sustain its flagship product. The airline has placed firm orders for 142 aircraft. Of the current backlog of 125 aircraft, the carrier is taking 61.President Tim Clark has recently voiced concerns that Airbus might discontinue building the A380. He has also been pushing the manufacturer to develop an A380neo featuring more efficient engines, likely to be provided by .
In support and anticipation of such a move, Emirates switched engine type for the last batch of 50 aircraft, but talks about the proposed A380neo proved to be nonconclusive. Emirates has indicated it might order as many as 200 A380neos if Airbus built the aircraft, but the manufacturer wanted additional customers before launching, and was concerned about cannibalizing the existing backlog.
A number of existing orders for the aircraft look shaky. Lessor Amedeo has 20 firm orders in place, but has so far not announced airline operators. It is unclear whetherwill ever take the six aircraft it has bought. Virgina Atlantic CEO Craig Kreeger said July 11 that the airline has the right to walk away from the deal.
A number of leases for Emirates andaircraft will start to expire in 2017. Willie Walsh, chief executive of International Airlines Group, has said the group may take used A380s, possibly for ’s Latin America operation, but would not order new aircraft. Key operators such as and have also said they have no plans to increase their existing A380 fleets.
Japan, a market that Airbus considered to be ideal for the aircraft, has been extremely sluggish:is the only Japanese customer to have ordered the aircraft; it has three pending. No North American airline has bought the type.
Airbus said the impact of its decision to reduce production will be minimal for employees, most of whom can transfer to other divisions or aircraft programs that are being ramped up.
has made a similar decision earlier for its struggling program, and is reducing the production rate to 0.5 aircraft per month in September.