Airbus’ earnings release today has highlighted a record-breaking year for the European manufacturer. However, amongst the healthy profits and solid order book, small nuggets of disappointment lurked. One such issue was the A380 program, which saw Airbus pegging a loss of €202m ($219n).
Airbus’ A380 loss
The A380 program is winding down. The last wings were shipped from Airbus’ UK manufacturing site at Broughton just last week, and with only a handful of orders to fulfil, Airbus is slowly closing down the project. While the A380 will be missed by many, the losses it has caused to the planemaker will not.
Airbus delivered just eight A380s over the course of 2019, as was revealed in its full year earnings presentation earlier today. Despite the numbers being low, the losses were enormous, with the planemaker clocking up a €202m ($219m) loss specifically on the A380.
Overall, Airbus had a pretty good year last year. It delivered 863 commercial aircraft and ended the year with 768 orders after cancellations. It’s commercial aircraft arm achieved record breaking revenue of €54.7bn ($59.4bn) and it heads into 2020 with a staggering 7,482 aircraft backlog estimated to be worth €471bn ($512bn) to the company.
The A380 loss was not on the program itself, but on the costs related to its cancellation. It’s not clear from the earnings presentation exactly what this involves, but we have reached out to Airbus for clarity and will update with further information.
Did the A380 ever make money for Airbus?
The Airbus A380 was a groundbreaking development for the European manufacturer. With Boeing occupying a monopoly on the large jetliner market for some decades, with its hugely successful 747, Airbus was a bit late to the party, announcing the A3XX in 1994.
The official launch of the program happened in December 2000, when the A380 name was revealed. Airbus invested $10.7bn in the development of the jet, betting on airlines requiring larger aircraft as passenger traffic ticked up.
However, difficulties with the project saw development costs balloon. By 2005, the cost of making the A380 had risen to over $19bn, even before it achieved certification from the FAA and EASA. Overall, Airbus estimates it has sunk $25bn into the A380 project and, despite passengers love for the aircraft, conceded that it would never recoup its investment.
At one point, every A380 produced was made at a loss. It was 2015 before the company even managed to break even on the project, and that’s without considering any claw back of its massive $25bn investment.
Low volume sales
The A380 only ever saw orders from a handful of airlines. As of November 2019, there were 251 orders from 14 different customers, with Emirates far and away the largest customer. Other big users include Singapore Airlines, Lufthansa, Qantas and British Airways, with 24, 14, 12 and 12 in their fleets respectively.
Emirates will end up with a fleet of 123 of the type. There are still eight to be delivered to them, as well as the last remaining Flying Honu for ANA. No more orders are being taken for the type.
Airbus itself has admitted that the A380 was just too late for its niche. Despite all the losses and the lack of success of the program, Airbus still stands behind the A380 and has even said it will go on to support those airlines that invest in second hand aircraft going forwards. Nevertheless, I’m sure they’ll be pleased to not have any more capital sunk into the A380 program going forwards.
Will you miss the A380? Let us know in the comments.