Complex Made Simple

Emirates Airlines holds the key to the survival of A380 aircraft

Who said that regional companies cannot have a say in the future of big international industries?

Today, the destiny of A380 superjumbo hinges on a simple yes or no from Emirates airline.

If Emirates does not seal a long term deal with Airbus to buy more of its superjumbos, the aerospace company will have to stop the production of the A380, it confirmed on Tuesday.

What’s happening?

Airbus chief salesman John Leahy was quoted by CNBC as saying: “If we can’t work out a deal with Emirates, there is no choice but to shut down the program.”

According to CNBC, Leahy said the airline is “the only one who has the ability to commit to a minimum of six planes a year for a minimum of eight to 10 years, which Airbus needs to make the program viable.”

Read: Time to say goodbye to Emirates Airlines’ Airbus A380

Airbus was hoping to seal a deal with Emirates back in November during the Dubai Airshow but the Dubai carrier chose to purchase 40 Boeing 787 Dreamliners instead.

Emirates is holding off on some 30 additional A380s, after having ordered 144 aircraft and gotten delivery of 103, said French Le Monde magazine.

Emirates knows that since an A380 is marketed at $440 million, it could spend $13.2bn, so it doesn’t take that issue lightly.

The daily said Emirates will reach that decision in the coming weeks but that the airline required “guarantees”.

Le Monde said that these include full maintenance program warrantees over the entire length of time the airline uses the A380.

AFP reported that the last order for three A380 jets by Japan’s ANA, goes back to January 2016.

Also, the New York Times reported that Airbus did not book any orders for the A380 in 2017.

The once idolized aircraft is seeing its last days, but why?

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Engine problems

According to the Telegraph, the future of the Airbus A380 superjumbo is looking shaky after a significant engine failure forced an Air France flight to make an emergency landing in September 2017.

During an Air France flight from Paris to Los Angeles, passengers reported hearing a loud bang followed by vibrations that shook the cabin for 20 minutes.

A similar incident occurred in 2010 on a Qantas A380 flight from Singapore to Sydney, and a less serious engine malfunction caused another Qantas A380 Los Angeles-Melbourne flight to turn back in May of this year, as reported by the Telegraph.

To make matters worse, Airbus suffered a massive blow in December 2016 with the announcement that it was forced to postpone deliveries of 12 A380s to its biggest customer, Emirates, over the next two years due to an issue with its Rolls Royce engines, the Guardian reported.

Economic feasibility

The telegraph reported that the economics of operating A380 also have proved off-putting for airlines.

“Simply put, every service needs to run at close to full capacity for carriers to make money,” it said while adding that this has prompted airlines to buy medium-sized planes instead, such as the Dreamliner, the A320neo and the A350.

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 Tough competition

Saj Ahmad, Chief Analyst, StrategicAero Research, and an industry observer, said that as its signature airplane, the A380, became an immense vehicle for Emirates in opening routes, in which it needed extra capacity, and slot-constrained Heathrow is but one example.

That’s the good news. Here comes bad.

“On the flip side, the A380 has been a monumental financial abyss for manufacturer Airbus,” Ahmad offers.

He explains that the A380 has failed to come anywhere near the sale goals envisaged for it and that at nearly 20 years old it is entering the age of obsolescence and facing more efficient airplanes like 777X, 787 and A350.

“The A380 simply cannot cut the mustard against such competing rivals. That’s precisely why sales of the A380 have been so poor and this is why Emirates’ decision to buy 150+50 new 777X’s will eventually go some way to replacing the ageing A380s as they start to be withdrawn from service in a few years’ time,” Ahmad said adding, “ the reality is that the ageing A380 is on borrowed time.

 Which airline owns the most A380s?

According to Airfleets.Net, a portal for airlines statistics, Emirates is the company which owns the most A380 superjumbos (101) followed by Singapore Airlines (18), Lufthansa (14), Qantas (12), British Airways (12), Etihad (10), Korean Air (10), Air France (10), Thai airways, Malaysia Airlines, Asiana Airlines at 6 and China Southern owns only 1.

According to Bloomberg, Airbus is offering China a production role on its A380 superjumbo for the first time “in an effort to secure a program-extending order for the slow-selling double-decker jet.”

“The European planemaker is in early talks on granting finishing and interiors work to the Asian nation if it commits to a significant new order for the model,” it said.