Airbus A380 Lacks Airline Customers for Delivery Slots in 2015Andrea Rothman
Airbus SAS said it must step up efforts to market its flagship A380 as it still lacks buyers for some of the 30 double-decker planes it wants to build and deliver in 2015, the year the program is supposed to break even.
While Airbus still believes in the business rationale behind the superjumbo plane, the company needs to work harder to win more customers, Harald Wilhelm, the chief financial officer of Airbus and parent company European Aeronautic, Defence & Space Co., told journalists today. Airbus reiterated that it expects to deliver 25 double deckers this year.
“There are still some slots to be booked from 2015 so this is a top priority for John and his team,” Wilhelm said, referring to John Leahy, the head of sales at the Toulouse, France-based planemaker. “Our view on the A380 is unchanged. This asset has its its place.”
Airbus brought in only four new orders for the A380 last year, compared with a target of 30, and the company hasn’t booked a purchase for the airliner this year, on a goal of 25 contracts. The company has cut back output plans as it works through changing the wing structure, eating into sales growth that EADS reiterated will be “modest” in 2013.
EADS rose as much as 84 cents, or 2 percent, to 42.04 euros in Paris, and traded at 41.85 euros as of 10:34 a.m. The company said earnings before interest, tax and one-time items in the first quarter rose to 741 million euros ($963 million), boosted by Airbus profit that more than doubled.
Boeing Co. said last month it is cutting the production rate of its 747-8 model to 1.75 planes a month from two, citing dwindling demand. Wilhelm declined to say if Airbus is also considering adjustments. He didn’t say how many slots, or production positions, lack promised buyers, saying it’s “clearly in single digits” and that the company would make every effort to deliver profitable planes regardless of output.
Airbus starts cutting metal for planned A380 deliveries about two years before the plane is handed over, while it doesn’t need to know the buyer for cabin customization until about nine months before the transfer. A permanent fix for wing rib feet will be incorporated into planes handed over from 2014.
Wilhelm said the A380 typically wins more business toward the latter part of the year, and the aviation industry still has the Paris Air Show and the equivalent expo in Dubai ahead, where airlines tend to place large orders.
“They’ll need a good Paris Air Show, and certainly good announcements at Dubai to fill the gap,” said Yan Derocles, an analyst at Oddo Securities in Paris. “I think it’s critical to manage break-even on this program in 2015.”
Besides the A380, Airbus’s other challenge is getting its smaller A350 wide-body jet ready for flight. The first flyable A350 rolled out of the paint shop yesterday as engineers prepare for its maiden take-off, and Wilhelm said today he’s more confident of a first flight this summer.