Airbus Gives Up on Superjumbo A380
Airbus finally has accepted the inevitable. The company will stop building its A380 superjumbo passenger jet in 2021, once it delivers the final 14 copies of the plane to its sole remaining customer, Emirates.
The company announced the plan Thursday morning after Emirates reduced its orderbook for the A380 from 162 to 123. Emirates has agreed to new orders for 40 A330-900s and 30 A350-900 aircraft, softening the blow to the Airbus backlog.
Airbus CEO Tom Enders, who will retire later this year, said:
As a result of [Emirates] decision we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years. This leads to the end of A380 deliveries in 2021. The consequences of this decision are largely embedded in our 2018 full year results.
Airbus said it will begin discussions with its “social partners” (i.e., unions) in the next few weeks regarding the 3,000 to 3,500 jobs that will be affected as A380 production winds down. The company also said that the new widebody order from Emirates offers “a significant number of internal mobility opportunities.”
The company booked a charge of €463 million (about $523 million) to account for the shutdown of the A380 program and noted that future charges related to job cuts would not be “substantial.”
Airbus also booked a charge of €436 million on its A400M military transport aircraft program. In 2016 and 2017 the company wrote down more than €2.2 billion in program costs on the A400M and said that risks remain on the table, although it gave no details on costs.
For the full year, Airbus’s revenue totaled €63.7 billion (up from €59 billion in 2017), with EBIT at €5.8 billion (€3.2 billion in 2017). Free cash flow was flat at €2.9bn, and Airbus closed 2018 with €13.3bn (€13.4bn in 2017) in cash. The backlog on commercial jets totals 7,577 aircraft valued at more than €400 billion at list prices. Airbus delivered 800 commercial jets in 2018 and wrote new orders for 747.
Shares are trading up about 4.5% in Paris late Thursday afternoon, at €109.10 in a 52-week range of €77.50 to €111.16. The 12-month consensus price target is €$120.82.