Airbus Cuts Slow Selling A380 Production


As it struggles to revive sales of the world’s largest passenger aircraft, Airbus plans to cut production of A380 in 2017. Compared with the current rate of two per month, Airbus informed its suppliers to slow production to sustain an assembly of 1.7 aircraft per month by next year.

It is unclear however when the slowdown would be felt in the company’s assembly plant in Toulouse. Airbus declined to comment on talks with suppliers.

“We can’t comment on any discussions which may or may not have happened,” a spokesman said.

Sales of the A380 is badly affected by the improvements of the smaller but efficient two-engine models. Compare to 544 seats to fill, these twin engine planes are much easier to fill.

Since 2007, Airbus has delivered 143 A380s. Last year, it delivered 27 super jumbos and it expects to continue to break even based on similar deliveries in 2016. Meanwhile, it continues to stem costs in an effort to lower the breakeven point of 20 aircraft per year.

Based on a full year, which Airbus counts as 11.5 months, the new production rate would yield 19.6 superjumbos a year.

In February Airbus Group Chief Executive Tom Enders said it had between 20 and 30 A380s on its delivery list for 2017.

RBC Capital Markets analyst Rob Stallard said he estimates Airbus will deliver 24 A380s next year, with its profit margin on the jet staying at zero, or exactly breakeven.

ORDER CANCELLATIONS

At the end of March Airbus had 135 aircraft on its books that have been sold and are waiting to be produced, mainly for leading customer Emirates which recently topped up its order. But after deducting aircraft that are unlikely to be delivered, analysts say the order situation is weaker.

Air France has said it plans to cancel two A380s listed on the Airbus order book. Another 10 listed anonymously are believed to have been cancelled by Hong Kong Airlines and 20 are allocated to leasing firm Amadeo, which are seen as unlikely to enter production until the lessor places them with airlines.

Analysts also say Qantas and Virgin Atlantic are unlikely to take a combined total of 12 of the jets.

The project received a boost earlier this year when Iran announced a preliminary order for 12 superjumbos as it emerges from sanctions, but doubts remain over how quickly the order can be finalized as Iran faces continued financial restrictions.

Airbus says it is working on several sales campaigns.

Source: http://uk.reuters.com, Tim Hepher

 

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