Airbus open to possible A380 rate cut

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Airbus is prepared to examine a possible rate cut for the A380 if the backlog continues to decline, but is maintaining its forecast of production break-even in 2015.

The airframer has not landed an order for the double-deck aircraft since Singapore Airlines signed for five in December 2012, and the backlog was trimmed this year when Lufthansa cancelled three.

Although it has an outstanding deal for 20 from Doric Lease, the fate of some other orders – notably those of Virgin Atlantic and dormant Kingfisher Airlines – is uncertain.

At the end of October the backlog had reduced to 144 aircraft.

Airbus parent EADS’s chief financial officer, Harald Wilhelm, says a “handful” of slots are still open in 2015 but there is room for “minor” shifts, between the last quarter of 2015 and the first quarter of 2016.

Wilhelm adds that the 2016 backlog “doesn’t look bad”, and that for 2017 is similar, but says the company will “then need to replenish” with new orders for 2018 and beyond.

A380 orders are “still slow”, he admits, adding that the target of 30 for 2015, when Airbus aims to reach production break-even, is “a hard number to achieve”. Airbus expects to deliver its target of 25 aircraft for this year.

Wilhelm acknowledges that competition is “tough” and that Airbus’s own A350-1000 and the proposed Boeing 777X are affecting the “competitive landscape” for the A380.

“We’re working hard on a number of campaigns,” he says, adding that Airbus still sees a place for the jet as a growth product for customers.

But while reaching break-even in 2015 is “difficult” below 30 aircraft, says Wilhelm, further measures are possible to reach this target. He adds that Airbus is making “good progress” on cost reductions on the type.