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A380 production will create 'digestible' losses: Airbus

Airbus intends to reduce A380 output to six units a year from 2020 in a bid to sustain its flagship programme while keeping losses from the aircraft's production at a "digestible" level.

The airframer plans to deliver 12 A380s this year and reduce production to eight units in 2019.

Speaking at a results briefing in Toulouse yesterday, chief executive Tom Enders said the rate of six aircraft represented a "minimum" volume at which production could be maintained with a "reasonable level of efficiency".

He adds: "It doesn't mean we are still making money on that, but the losses that such a low rate would produce are certainly digestible."

In 2017, Airbus delivered 15 A380s and was "very close" to production breakeven, says chief finance officer Harald Wilhelm. He notes the airframer had originally put breakeven at 30-35 aircraft a year, but has since realised efficiencies to sustain production at a lower level.

Wilhelm suggests that additional savings can be made to keep losses under control as production is being further reduced. "The efficiencies don't end here," he says.

The rate of six is based on an order from Emirates, signed in January and spanning 20 A380s plus options for a further 16. Under the plan, the 20 orders will sustain production until 2027, while the 16 options could extend the line by a further two years.

Enders acknowledges that the production volume from 2020 represents a "rock bottom" level and is "clearly not where we want to leave it".

He says he is "pretty sure" Airbus will gain additional A380 orders either from existing or new operators. Enders has repeatedly said he sees sales opportunities for the double-deck type in Asia and, particularly, China. The A380 is "under-represented" in China today but is "ideally suited" to that market, he argues.

When asked how many aircraft he expected to be delivered from the existing order backlog – Airbus in January listed 95 orders for the A380 – Enders responded: "I can't exclude that one or two customers might drop out of that."

But noting that Emirates' orders represent the bulk of the backlog, he insists that "clearly at least the majority" of it will be delivered. He adds: "Backlog is not something lofty. Backlog is where people have put serious money down. This is an audited backlog. These are firm orders."

Under the production plan, the risk associated with the A380 programme is "minimal", Enders asserts, and he is hopeful of a "revival" during the 2020s. "Don't count it out yet," he warns.

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