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Analysis: Farewell A380 – Airbus Pulls The Plug On The Super Jumbo

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Analysis: Farewell A380 – Airbus Pulls The Plug On The Super Jumbo

Analysis: Farewell A380 – Airbus Pulls The Plug On The Super Jumbo
February 14
08:22 2019

MIAMI — The Airbus A380 program has come to a rapid end. The European planemaker has decided to pull the plug on the production of the world’s largest—and most controversial—passenger aircraft in 2021.

With only 70 firm orders left to fulfill, of which 23 have been indefinitely deferred, the viability of one of the world’s most ambitious and expensive airplane programs is no longer plausible.

From 313 firm orders, 234 planes have been delivered—about 74% of the total order book.

Last year, Emirates re-ignited Airbus’s hopes for an extended lifeline on the A380 program by placing an order for 20 additional A380s, including an option for further 17 planes—enough to keep the manufacturing line running for at least five more years.

However, in what could be seen as a dramatic turn of events, the UAE flag carrier recently hinted that it was considering canceling that order, swapping it for the twin-engine A350 or A330neo aircraft. Today, this rumor was confirmed.

Emirates swapped its A380 order for 40 Airbus A330-900neo and 30 A350-900XWB, reducing their A380 order book from 162 to 123 aircraft. The airline will only be taking delivery of 14 more A380s over the next two years, until production comes to an end.

Back in October 2018, the UAE carrier told Bloomberg that its A380 order was at risk because of ongoing negotiations with Rolls-Royce about its engines underperforming and not meeting desired targets.

Emirates, the world’s number-one A380 operator (with 109 active planes in its fleet), asked Rolls-Royce to improve the efficiency and fuel burn of the plane’s engines, as agreed to in the contract the airline signed with the engine builder.

All these were nothing but strong signals that indicated that the viability of the A380 was no longer what once used to be.

And today, Toulouse was home to the announcement of the A380’s finale. The final delivery in 2021 will take place over 50 years since the first flight of the Boeing 747.

As things stand, All Nippon Airways (ANA) will be the last new customer to take delivery of an A380 in May.

An Ill-fated Beginning: A Logistical Nightmare


The Airbus A380 program, a tortuous, over budget, and delayed program to begin with, could be considered both an industrial and sales disaster.

Putting together an airplane as large as the Airbus A380 brought some logistical challenges that would put the program’s viability in jeopardy since its very inception.

The A380’s gargantuan wings, tail, and fuselage had to cross towns in France via lorry to the factory in Toulouse, not only requiring significant maneuverability but also forcing the authorities to shut down the town’s roads whenever an airplane part passed through.

The tiny French hamlet town of Levignac became quite a popular place for aviation enthusiasts alike, as the A380’s parts usually came within inches of colliding with buildings and houses.

To make things easier, the French government had to build a new road, dubbed Itineraire a Grand Gabarit, so that Airbus and its logisitcal partners could skim the towns and cause as least disruption as possible.

The A380 Business Plan


The future of the very large aircraft (VLA) market that was invented by the original Boeing 747, and that now encompasses the A380, is very much up in the air.

The center of Airbus’ pitch for the A380 in the early 2000s was the notion that the core of the long haul business model would be so-called hub-to-hub flights.

Essentially, the thesis went that long-haul and high-volume medium-haul flying between big markets would be handled primarily by the A380, while medium and short-haul connections at those markets would be handled by the 767/777/A330/A340 and narrowbodies, respectively.

PHOTO: The National.

It wasn’t a horrible thesis—at the time the Boeing 747-400 was a wildly successful plane that was used by airlines around the world in precisely this manner.

Meanwhile, the long-range versions of the 777—both -200(ER) and -300(ER)—hadn’t formally entered service, and the longest ranged jets (the 747 and the A340) were both quad-jets.

At a glance, these would be the London-Heathrow, Paris-Charles De Gaulle, Frankfurt, Singapore, Sydney, Los Angeles, Seoul, or the Kuala Lumpur type of hubs. These were the growing cores that would continue to see traffic funneled into them as the economy grew in the 21st century.

Photo: Richard Silagi

It also required that aviation route authorities remain a scarce commodity, with routes and seat volumes awarded on a case by case basis. This had the effect of dampening competing airports within single markets (Melbourne competing with Sydney, or Manchester competing with London-Heathrow) and artificially boosting capacity at the hubs.

The problem for Airbus was that this thesis was dependent on an international airline hub structure. The model looked a lot like that of the early 1990s, with 15-20 major global hubs.

Airbus Was More Or Less Exactly Wrong


Airbus realistically could not have foreseen the degree to which those two conditions would not hold.

Rather than keeping firm as it had for nearly two decades, the international airline hub structure was torn asunder by the rise of the Indian and Chinese economies and of course by the growth of the Middle Eastern airline giants, Emirates, Qatar Airways, and Etihad (the MEB3).

Even though all MEB3 are A380 customers, they are living breathing proof of the immense volatility in global aviation over the past decade and a half.

Dubai International Airport • Photo: Emirates

Each of the airports in which they operate has grown its annual passenger traffic volume by more than 500% (Doha and Abu Dhabi are over 600% in the same period).

And the rise of Open Skies agreements between numerous countries worldwide has diluted the aggregating power of single, strong hubs.

The world of aviation is now the world of the 787 and the A350 and, eventually the 797, or whatever Boeing’s middle of market (NMA) plane ends being called.

Boeing’s point-to-point (more accurately hub-to-spoke) thesis was correct in the end.

Today, airlines are more keen on offering its passengers point-to-point connectivity on more fuel-efficient and user-friendly planes, such as the Airbus A350 or the Boeing 787 Dreamliner.

Early Cancellations


One of the program’s biggest failures was to not come forward with a freighter version of the A380, which saw Airbus lose 22 potential planes for three cargo operators.

The first order cancelation came in November 2006, when FedEx withdrew its order for 10 A380 Freighters. A few months later, UPS followed suit, canceling the 10 planes it had ordered. Emirates came in third, canceling its orders for two A380 freighters destined for its SkyCargo division.

An Airbus render of the A380 Freighter

In 2008, Etihad Airways followed, canceling four units, together with ILFC, which had signed an order for 10 planes.

Air Austral also canceled two in 2009, followed by Lufthansa, which axed three more. Indian carrier Kingfisher withdrew its intentions to take five A380s in 2013, as well.

In 2014, Japanese carrier Skymark canceled six A380s it had ordered, representing a $1.7 billion transaction that never came to fruition.

SkyMark Airbus A380 rolling out of the Assembly Line

Later on, in 2017, Air France confirmed its first A380 cancelation with two units being removed from the backlog.

Last year Virgin Atlantic also decided to cancel its order for the A380, followed by the 10 units that Hong Kong Airlines had booked.

In 2018, Air France decided to return five of its leased A380s to its owners, keeping only the owned planes in operation.

The French carrier is planning to return five of the 10 double-deckers to its lessors by the end of 2019, following an audit led by the airline’s new CEO, Benjamin Smith.

The results of the audit revealed that the plane has become too expensive to run, especially when compared to the Boeing 777-300(ER)s that the airline deploys on similar missions.

On the first week of February, Qantas Airways also canceled its remaining order of eight Airbus A380s. The Australian flag carrier confirmed a decision was made towards the cancelation of the order, which was placed in 2006.

An Airbus spokesman said that the manufacturer had agreed to the “contract amendment” announced by Qantas.

In a short span of time after Qantas Airways, Akbar Al Baker, Group CEO of Qatar Airways, told aviation journalist Alex Macheras that his 10 Airbus A380s will also be retired from the fleet.

“For the A380s, on the 10th anniversary, we will retire them,” said Al Baker. “Once we have paid our financial obligations, they will go.”

The Qatari carrier operates a fleet of 10 A380s, the first of which was delivered in 2014. This gives the Qatari A380s until 2024, after which they will be returned and probably parked for good.

Al Baker added that he doesn’t see a secondary market for the superjumbo, evident from the fact that the ex-Singapore Airlines planes are still sitting on the ground in Tarbes waiting for a new operator to come in and take them.

“This year there will be aircraft available to the second-hand market from Emirates,” Al Baker added.

Up to date, Airbus has received up to 84 A380 cancelations, about $37.4 billion worth of lost revenues, based on current list prices.

Business un-friendly


The Airbus A380 rapidly lost relevance in an industry that is now focusing more on efficiency and on point-to-point services, rather than adding massive capacity on hub-to-hub routes.

Beyond the high-level economic thesis, the A380 has been plagued by specific problems with its operating economics on a route-by-route business.

At the highest possible level, this problem boils down to the following adage: it’s easy to fill a fleet of A380s in the summer but nearly impossible to do so in the winter.

Lufthansa Airbus A380 Lower-Deck Economy Cabin looking aft. (Credits; Author)

The introduction to the market of the Boeing 777-X, however, could be considered as the true nail in the coffin for the A380.

The 777-X, more or less, matches the A380’s unit costs while seating ~100-150 fewer passengers at a smaller overall trip cost.

Essentially, if you can fill your 777-X profitably in the summer, you can still break even on it in the winter. You just cannot say that today about the A380.

Fundamentally, the A380 is just too big of a plane for a lot of customers. Another issue that has arisen is the fact that despite being the largest airplane in the world by passengers carried, the A380 may not have the lowest seat-mile costs (seat-mile costs tend to decline as a plane increases in size assuming that both the planes are in the same generation of technology) of any plane in the market today.

The Etihad Residence

The introduction of the A380 also allowed its operators to offer as many as 850 seats in a high-density, single class configuration. However, not a single airline chose this option, choosing a more luxurious and amenity-filled cabin instead.

In fact, when the Boeing 777-9X debuts in 2020, it will outstrip the A380 in terms of unit costs (CASM).

Therefore, the solution to the A380’s equation was simple: it had to be re-engined, or the program would die out.

Singapore Goes First


Singapore Airlines withdrew the first Airbus A380 ever delivered from their fleet last year. The aircraft, 9V-SKA, was delivered in October 2007 and was just a young 11 years old at the time of retirement.

Singapore Airlines (SIA/SQ) Airbus A380 (9V-SKA) landing on 20C at Singapore Changi Airport. PHOTO: Terence Ong.

This surprising move by Singapore Airlines was perhaps the first reality check for Airbus, signaling that its A380 program was heading downhill at an unstoppable pace.

But a few weeks later, Portuguese wet-lease operator, Hi Fly, announced the acquisition of two former Singapore Airlines A380s.

The wet leasing airline took delivery of its first Airbus A380-800 in July 2018, becoming the world’s first second-hand operator of the largest passenger plane on earth.

“We welcome the arrival of the Airbus A380 in our fleet, and we are extremely happy with the market reaction so far on this new availability in our wet lease product offering,” said Paulo Mirpuri, Hi Fly’s President, and CEO.

The plane was seen operating numerous flights for Thomas Cook and Norwegian between London and New York, but these runs were short lived.

Hi Fly’s Airbus A380 landing in Palma de Mallorca on behalf of Thomas Cook.

Aafter a few months of operations, the first Hi Fly A380 struck a jet bridge in Paris while being towed, grounding it indefinitely. The carrier was forced to substitute the aircraft with a Boeing 777-300(ER) until a proper fix was found.

In September, the Hi Fly A380 was put back into service. Since then, however, very few flights have been carried out. Overall, the second-hand market for the A380 clearly does not exist.

The A380 Plus? Not Enough


At the Paris Air Show 2017, Airbus unveiled the A380plus, an upgraded and more fuel efficient version of the A380.

The A380 had been a weak link in the Airbus product lineup for some time now, with its last “big sales” year coming back in 2013 when Airbus sold 42 A380s.

The last decent year for the plane was 2014 when it won 13 net orders thanks to a purchase of 20 A380s by lessor Amedeo.

The enhancements found on the A380plus include aerodynamic changes such as a 4.7 meter high winglets and other wing refinements.

Along with maintenance program optimizations and an expanded cabin, Airbus projected that the A380plus could deliver as much as a 13% seat-mile cost reduction against today’s A380 airframes.

“The A380plus is an efficient way to offer even better economics and improved operational performance at the same time,” said John Leahy, Airbus’ COO, Customers.

He added that “It [the A380plus] is a new step for our iconic aircraft to best serve worldwide fast-growing traffic and the evolving needs of the A380 customers. The A380 is well-proven as the solution to increasing congestion at large airports, and in offering a unique, passenger-preferred experience.”

The new winglets consist of a 3.5-meter uplet, and a 1.2-meter downlet . According to Airbus, these would yield a 4% savings in fuel burn which enable 80 extra passengers or 300 extra nautical miles (nm) of range.

In addition to the aerodynamic add-ons, Airbus included a capacity-expanding interior option with the New Forward Stairs (NFS) option, which would allow airlines to add 20 extra seats in the A380 by relocating the forward stairs from door 1 to door 2 and combining the staircase to the upper deck (NFS) and the staircase down to the crew rest area.

The NFS would allow airlines to add up to 80 additional seats against the average capacity of the A380s in service today (497).

One major negative to the A380plus is that existing A380 aircraft cannot be retrofitted to become A380plus’. All A380plus’ will need to be newly built aircraft.

Life After The A380


The Airbus A380 not only represented an expensive project for the European manufacturer, but also to the hundreds of international airports that were forced to revamp its gates, runways, and taxiways to accommodate the heavy airliner.

In our hometown gateway, Miami International Airport, the construction of one A380 gate represented an investment of more than $13 million.

In airports such as Frankfurt-Main, where Lufthansa operates most of its A380 fleet, over 20 gates are fitted with jetways capable of handling the double-decker airliner. The costs associated with this are, inherently, exponential.

The Airbus A380 has allowed airlines to offer its passenger unseen amenities, such as the Emirates full stand bar, showers, and spa; the Korean Air duty-free shop; the Etihad Residences and Apartments; or the China Southern forward lounge.

A Korean Air A380 on the production line. (Credits: Airbus S.A.S.)

These amenities will be long gone once the existing A380s are retired. It would be hard to imagine any of these offerings available on an Airbus A350-1000 or a Boeing 777-X, especially now that airlines are carefully monetizing every inch of their real estate inside their planes.

And unlike other aircraft programs, the A380’s second-hand market remains practically inexistent. Therefore, the likelihood of seeing these 12-year-old planes scrapped is much higher than seeing other airlines taking over them.

On the Airbus side, there will be plenty of space left in Toulouse and Hamburg once both assembly lines and completion centers are shut down.

Arguably, the manufacturer could ramp-up the production rate of its new A350 and A330neo lines, offering customers more rapid deliveries while taking advantage of an already fitted working environment.

The Emirates Dichotomy


It would be unfair to blame Emirates for the early termination of the A380 program. Although the UAE carrier played an important role in the decision of shutting the program down, the 20 planes it had ordered last year were not going to make a substantial change to the fate of an already failing venture.

After all, Emirates has been the biggest A380 supporter since day-one.

Interestingly, however, both Emirates and Airbus reached an agreement to swap the current A380 order for the more fuel-efficient and user-friendly Airbus A350 and A330neo.

This swap might also put in jeopardy the major Boeing 787-10 that the UAE carrier signed with the American planemaker at the Dubai Air Show in 2017.

Emirates placed a massive order for 46 Boeing 787-10 Dreamliners valued at $15.1 billion. According to Boeing, the Dreamliners will join Emirates’ fleet starting in 2022. The order includes conversion rights to switch to the smaller variant, the 787-9.

According to Emirates, the new 787-10s will come equipped with a mix of two- and three-cabin configurations—presumably with a capacity up to 330 passengers.

Ironically, at the time, Sheik Ahmed bin Saeed Al Maktoum, chairman and CEO of Emirates said that he saw the 787 “as a great complement to our 777 and A380 fleet, providing us with more flexibility to serve a range of destinations as we develop our global route network.”

This order for the Dreamliner had been seen as a major loss for Airbus. Back at the 2007 Dubai Air Show, Emirates had ordered 70 Airbus A350s in lieu of the Boeing 787. However, Emirates changed its mind and canceled the order for the Airbus wide-body seven year later.

The airline’s CEO revealed that the Boeing 787-10 “has the lowest cost of operation, even against all A350 variants,” who admitted that it was a “no-brainer” for the Emirati carrier to select the Dreamliner program.

The Sheikh went on to admit that Emirates compared both programs as if they were apples to apples. “We looked at different options for maintenance and so on and came to the agreement,” he said.

But with the failure of the A380 program, the airline is now forced to re-visit its 2017 statement and change its mind.

After all, money talks.

Other Failed Airplane Projects…


The Airbus A380 will now join other failed aircraft programs that did not generate much of a profit or breakeven for several other manufacturers.

We look first at the Boeing Stratocruiser, where it only produced a measly 56 units between 1947 to 1963, offering very little life in the commercial field. This was due to poor reliability in the four 28-cylinder P&W R-4360 Wasp Major engines as well as structural problems with the aircraft itself. 

With the Lockheed theme, the same thing happened with the L-188 Electra.

Produced between 1957-1961, only 170 units were built, but was converted into the P-3 Orion for Military Operations, meaning it only offered a commercial lifespan of up to the late 1970s, although two are still in service as of July 2018.

We continue with the Lockheed L-1011, where only 250 TriStars were developed between 1968 and 1984.

Production saw up to two years of delays due to development and financial issues at engine manufacturer Rolls-Royce. This ultimately resulted in Lockheed Martin withdrawing from commercial sales due to its below-target numbers.

Moving forward, we then turn to the Douglas DC-10.

Only 386 of this aircraft type were delivered, with a production life from 1968 to 1988. Again, like with the A380, due to lack of orders, the program stopped as well as it being due to the poor reputation for fuel economy.

It could be argued that the MD-11 had the same fate, only selling and building 200 units between 1988-2000. With a program cost of $1.7 billion, it meant that each unit was selling between $132m-$147.5m. On top of this, internal competition for the likes of the Boeing 767-400 and the 777 did not help the cause. 

Moving away from the Boeing side, we finally look towards the Convair 880 and 990 models. 

The 880 was designed to compete with the likes of the Boeing 707 and Douglas DC-8, but only had a production lifespan of three years, 65 units built in total.

General Dynamics dubbed it a failure due to how competitive the market was and how successful the likes of the 707 and DC-8 were.

The 990 was the same thing as the 880 but was a stretched version to give it one last shot at gaining some traction in the market.

This was even more of a failure than the 880, only delivering 37 units between a two-year production cycle in 1961 and 1963 accordingly.

As this termination announcement is clear, it now dubs the next stage in where aircraft production and evolution will take us.

It’s almost poetic that the A380’s death knoll will be 50 years and 5 days after the first flight of the 747, the Queen of the Skies for more than half a century.

For many aviation enthusiasts, however, we will still see the A380 fly for at least another 15 years before the last remaining carriers send it to its fate.

The A380’s demise will be something significant as we will see between 130-200 units scattered around airports globally awaiting scrap or tear down for recycling.

Overall, the termination of the A380 program is nothing but an anticipated conclusion that had been forecasted by many analysts during the early 2000s. The future is in the point-to-point, twin-engine market. Just like the A340 and 747, four engines are no longer coherent with today’s and the future economic environment.

Farewell, A380.


Analysis written by Enrique Perrella, Vinay Bhaskara, Chris Sloan, and James Field.

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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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