The commercial aircraft division of Airbus has not received a new order for its double-decked, four-engined superjumbo A380 in more than two years. And even though the A380-800 carries a list price of $428 million — the highest for any commercial jet from any manufacturer — the price is probably not the main reason for the worse-than-anemic sales.
The big problem is that Airbus has a single customer for the plane, Emirates, and the airline’s CEO wants Airbus to put new engines on the plane before he’ll order more. A new engine could generate an order for up to 200 of the planes from Emirates and a (much) smaller order from Qatar Airways, which currently has six A380-800s in its fleet and two more on order.
At the end of the third quarter, Airbus reported that its A380 had stopped eating up cash and made a positive contribution to the company’s free cash flow and EBIT. Airbus has a goal of reaching break-even on the A380 by the end of this year. The company had delivered 24 new planes by the end of November and deliveries are secured through 2017.
Even though the A380 is the most expensive plane to purchase, the economics of flying the plane are competitive if the plane is configured to carry about 600 passengers and if the seats are full. The plane’s four engines do not weigh on operating costs much when the plane is stacked up against existing versions of the 777-300ER from Boeing Co. (NYSE: BA), but when the 777-9X reaches customers in 2020, that could change. Boeing’s 747 is slightly more expensive to operate right now, and Boeing has said that it has no plans to update its largest plane.
The question of the moment is whether Airbus will put new engines on the A380. If it decides not to do so, that decision could spell the end of the superjumbo jet.
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.