Airbus cuts A380 delivery target to avoid glut

Airbus cuts A380 delivery target to avoid glut

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Europe’s Airbus on Tuesday cut the delivery target for its A380 superjumbo to 12 a year from 2018, down from 27 in 2015 and about half what is projected for this year, to prevent a glut of unsold planes as airlines shun the industry’s behemoths.

It announced the cutback late on the second day of the Farnborough Airshow, taking the shine off a $20 billion haul of orders for smaller jets, after the decision was reported in French newspaper La Tribune.

The move raises the possibility that Airbus could revert to losses on the double-decker jet after breaking even for the first time last year, but averts the need to start ordering parts for unsold planes: something it has pledged not to do. Parts for A380s must be ordered up to two years ahead.

Airbus said it would still break even with 20 deliveries next year, but gave no specific commitment beyond that.

“The company will continue to improve the efficiency of its industrial system to achieve breakeven at 20 aircraft in 2017 and targets additional cost reduction initiatives to lower breakeven further,” Airbus said in a statement.

Sales of large four-engine airliners like the 544-seat A380 have been hit hard by improvements in the range and efficiency of smaller two-engined models, which can be easier to fill.

The trend became starker on Monday when one of the mammoth plane’s earliest advocates, Richard Branson’s Virgin Atlantic, opted for 12 of Airbus’s A350-1000 twin-engined jets after progressively shelving its longstanding order for A380s.

Airbus Chief Fabrice Bregier insisted the aircraft was “here to stay,” while sales chief John Leahy said earlier he was talking to some potential A380 buyers. Read More

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