Airbus's A380 headaches turned into a migraine at the Farnborough air show last month when the manufacturer was forced to bow to the inevitable and reveal that production of the double-deck type will fall to one per month in 2018.
Considering that the existing production infrastructure is geared to achieve four A380s a month – with expansion capability incorporated at the design stage to go to eight – this move is clearly a watershed moment in the giant jet's development.
But what's really wrong with the A380? Airline passengers love it and there's no serious competition in its size category. When Boeing was in that position during the 747's heyday, it couldn't build jumbos fast enough.
But like many things in life, it's complicated.
Airbus has consistently projected a 20-year market for 1,500 of these giants. While obviously that projection contains a bit of marketing spin, many believed 600-700 units was a reasonable target – except perhaps Boeing.
As we approach the halfway point in that forecast period – the A380 marks a decade in service next year – Airbus has delivered almost 200 aircraft. But with just 120 or so more on backlog (half of which are for A380 stalwart Emirates), it's difficult to see where another 300-plus orders will materialise to enable sales to achieve even half of the long-term forecast.
The A380's customer list boasts an impressive array of blue-chip brands but, Emirates aside, none with an appetite for more than 10-20 aircraft. The next largest fleet after Emirates, which has 81, is Singapore Airlines with 19.
Speaking about the state of the A380 programme just prior to the rate-cut announcement, Emirates Airline president Tim Clark expressed his frustration that rivals could not grasp the appeal of the 500-seater.
"I think the size of the A380 – its capacity – scares most of the CEOs in the airline world today," said Clark. "That's why they probably regard me as being slightly bonkers – the fact that we have so many and we make them work. They just won't take that quantum jump."
The high cost of production is one issue that hasn't helped the big jet. Despite then Airbus chief executive Noel Forgeard insisting to the contrary, political and workshare concerns drove the complex industrial plan, which involves huge subassemblies moving around Europe by land and sea to a final assembly line in Toulouse, and aircraft having to be completed to flight-ready status before being ferried to Hamburg to undergo the lengthy post-production cabin-furnishing process.
This has put pressure on order negotiations after the hugely discounted launch deals, as Airbus sought to achieve its target pricing and sell for more than the cost of production. It perhaps explains why IAG chief executive Willie Walsh has been looking at the second-hand market after describing the asking price for new A380s as "outrageous".
But while the price isn't right, Walsh is still a big advocate for the Airbus giant. "Customers love it. The aircraft works very well," he says.
British Airways has 12 A380s and Walsh says IAG "can make a case for a few more", which could also be distributed among the group's other carriers.
"One of the issues we're always conscious of is flexibility in the event of an economic downturn," he says. "The A380 wouldn't work on every part of our network, so from that point of view we'd be less ambitious [in fleet size] than Emirates would be."
But despite these plaudits, for the A380 to be the industry game-changer that Airbus envisioned, it must convince CEOs like Walsh to be more daring in their ambitions.
When speaking at Farnborough about the rate cut, which he emphasised was temporary, Airbus chief executive Fabrice Bregier confidently assured that "the A380 is here to stay". But frustratingly for Toulouse, it will be the market – and not Airbus – which decides if that is the case.
Source: Airline Business