Air France A380s in Doubt Put Airbus Goals Further Out of Reach

Air France-KLM (AF) Group said it’s exploring plans to drop orders for A380 superjumbos, in a possible blow for Airbus SAS’s flagship model that’s losing favor with customers from Australia to the U.K.

Air France-KLM Chief Executive Officer Alexandre de Juniac said the French carrier may swap some A380s already deferred to 2016 for other models. The airline had ordered 12 double-deckers and taken delivery of nine by the end of September. Another model is due for handover in 2014.

“The two remaining A380s have been postponed to 2016,” de Juniac told journalists today as he reported earnings. “We are still in the process of thinking of what we are doing with those.” Discussions with Airbus will take place over whether to take or replace them and are not urgent, he said.

Losing the order would ratchet up Airbus’s struggles to make the A380 a commercial success. Deutsche Lufthansa AG (LHA) has already dropped purchase plans this year for more A380s, and Airbus hasn’t booked a single firm commitment in 2013 for the model. The Toulouse, France-based planemaker is poised for a negative A380 book-to-build ratio for the third straight year after its backlog dwindled to 148 superjumbos last month.

Airbus’s inability to find buyers for its largest plane mirror Boeing Co. (BA)’s difficulties with its 747-8 jumbo. The U.S. manufacturer has cut output for a second time this year amid weak demand, and the Chicago-based planemaker will build only 1.5 aircraft each month through 2015, it said Oct. 19.

Open Slots

Airbus has open production slots as early as 2015 for the A380, which has a list price of $403.8 million. The planemaker had to scrap a target of selling 30 planes last year, with only nine bookings, and has a goal of 25 orders for this year.

Virgin Atlantic Airways Ltd. also has delayed taking its six A380s to 2018, with Chief Executive Officer Craig Kreeger saying in July “it’s hard but not impossible to see a world where we want to take the aircraft.”

Emirates, the largest customer for the A380, has said it may buy more planes ahead of an air show on its home turf in Dubai in mid November. The airline, which has 90 A380s on order in total, was among the aircraft’s six launch customers, which also included Air France-KLM, Virgin Atlantic and Qantas Airways Ltd.

Qantas has delayed delivery of two A380s by four years as it seeks to curb capital expenses and cut capacity. The Australian airline operates 12 of 20 A380s it has ordered

Doric Lease Corp. announced plans in June to buy 20 of the planes, the first aircraft leasing company to sign up for the world’s largest commercial airliner. The company has yet to turn the memorandum of understanding into a firm order.

Airbus parent European Aeronautic, Defence & Space Co. has been looking to the division to start making profitable A380s from 2015 at a rate of 30 aircraft a year. That would come after years of delivering planes that cost more to build than what Airbus was paid.

Boeing and Airbus differ on their long-term outlook for the market for the largest aircraft. While the U.S. planemaker sees demand for about 760 units over the next two decades, Airbus projects delivery of 1,334 planes in that time, or an average of 66.7 per year. The two combined for 46 deliveries in that size-segment last year.

To contact the reporters on this story: Robert Wall in London at rwall6@bloomberg.net; Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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