Airbus pulls plug on costly A380 superjumbo
Paris : European aerospace giant Airbus said Thursday it would stop building its A380 superjumbo, the double-decker jet which earned plaudits from passengers but failed to win over enough airlines to justify its massive costs.
The company announced it would stop deliveries of the superjumbo after just over a decade in operation, following a decision by the A380's biggest customer, the Dubai-based carrier Emirates, to reduce its total orders by 39 planes.
It marks an disappointing end to a bold bet on how millions of people would travel in the future, as airlines struggled to fill a plane capable of carrying anywhere from 500 to 850 people.
"Without Emirates, Airbus has no substantial order backlog and no basis to sustain A380 production after 2021," Guillaume Faure, who is taking over as Airbus CEO from Tom Enders this spring, said in a conference call with analysts.
Airbus chalked up 321 orders for the superjumbo, which has a list price of 446 million (396 million euros) -- though the European aviation giant often had to offer substantial discounts.
Analysts had warned the company wouldn't start to recover the billions of euros in investment and production costs unless at least 400 planes were sold, and possibly up to 600.
The programme's future had been in doubt for years as Airbus slowed production, and the company acknowledged last year that the A380 would be scrapped if no new orders came in.
It received a lifeline when Emirates ordered 36 more A380s, but on Thursday Airbus said the airline had balked and would buy smaller A320 and A350 models instead.
After just 10 deliveries last year, Airbus will build eight this year, seven in 2020 and the final two in 2021.
"The A380 is a world-class feat of engineering, much loved by passengers, and we are obviously saddened that deliveries will come to an end," said Chris Cholerton, head of civil aerospace at Rolls-Royce, one of the A380's engine suppliers.
Winding up the programme cut Airbus's 2018 earnings by 463 million euros, but it still posted a 29 percent surge in net profit to three billion euros.
Investors appeared to welcome the results, pushing Airbus shares up more than five percent in early trading in Paris.
The jobs of up to 3,500 A380 workers are at risk, but Airbus said that given its solid order book for other planes, it expects to move most of these employees to other projects.
Airbus said it expects to deliver 880 to 890 planes this year after 800 last year, reflecting steady demand for the A320, the workhorse midsize jet for short and medium-range flights.
It is also targeting more clients for its A350 long-haul jet, aimed at competing more directly with its US archrival Boeing.
But the A380's demise is a stark admission of defeat in the race against Boeing, which had pointedly dismissed Airbus's bet that airlines wanted huge transporters serving a handful of global hubs.
Airbus has faced scepticism over the plane's prospects since the 1990s, when it began to envision a competitor to Boeing's hugely successful 747.
Initial orders however were solid, especially among Asian and Middle East airlines with extensive long-haul operations.
And passengers raved at a noticeably quieter cabin with decent legroom even in economy class -- most airlines configured the plane for 500 to 550 passengers, instead of the all-economy potential for 850 seats.
But Airbus suffered a series of costly delays before the A380's first commercial flight by Singapore Airlines in 2007.
Production problems, including extensive wiring issues, and cost overruns in the billions of euros continued to plague the project, forcing Airbus to report its first-ever annual loss for the 2006 financial year.
Airbus stood by the A380 even after it was slammed by the global financial crisis of 2008, when airlines started having second thoughts about owning huge planes that were profitable only when filled to the brim.
And in 2006 the plane was at the centre of a suspected insider trading scandal, after top managers and key shareholders were accused of selling shares in Airbus's parent company shortly before the superjumbo's production problems were made public, though no one was ever convicted.
Pledges to get the A380 programme back on track were unable to avoid further delays, even as a series of safety scares raised questions among potential clients, including long-targeted Chinese airlines.
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Nitish announces Rajya Sabha foray, ending tenure as Bihar's longest-serving CM
Patna (PTI): JD(U) chief Nitish Kumar on Thursday announced that he will be contesting the Rajya Sabha polls, bringing the curtain down on his tenure as the longest-serving CM of Bihar.
Kumar, who has been the CM since 2005, said the new government that will be formed in the state will have his full cooperation and guidance.
"For more than two decades, you have consistently placed your trust and support in me, and it is on the strength of that trust that we have served Bihar and all of you with complete dedication. It was the power of your trust and support that has enabled Bihar today to present a new dimension of development and dignity," he said, expressing gratitude to the people of the state.
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Kumar said that from the very beginning of his parliamentary journey, he wanted to become a member of both Houses of the Bihar legislature as well as both Houses of Parliament.
"In keeping with this aspiration, I seek to become a member of the Rajya Sabha in the elections being held this time," he said.
"I want to assure you with complete honesty that my relationship with you will continue in the future as well, and my resolve to work together with you to build a developed Bihar will remain steadfast. The new government that will be formed will have my full cooperation and guidance," he added.
With Kumar stepping down after leading the ruling NDA to a landslide victory in the 2025 assembly elections, a BJP leader is expected to take over the top post.
If that happens, Bihar will get its first BJP chief minister -- the only Hindi heartland state where the party has not held the office so far.
Five Rajya Sabha seats from Bihar will go to the polls on March 16, and Thursday is the last day for filing nominations.
Kumar's election to the Upper House of Parliament is all but certain, as per the tally in the state legislature.
