A380 future in doubt as Airbus meets with Emirates

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HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group (L), and John Leahy, former Chief Operating Officer Customers at Airbus Commercial Aircraft.


Airbus

HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group (L), and John Leahy, former Chief Operating Officer Customers at Airbus Commercial Aircraft.

In a note released Thursday, Sandy Morris, an aviation equity analyst at Jefferies, said Airbus’s statement to the market looked “ominous” for the world’s largest commercial airliner.

“If a significant portion of the Emirates order is canceled, we believe the A380 program must end,” he added.

Morris noted that Emirates’ commitment to the aircraft was largely based on its ability to transport large numbers of passengers through the bottleneck of Dubai International Airport. However, the United Arab Emirates is in the process of building a huge new airport designed to allay that capacity squeeze and expects it to be operating by 2024.

Speaking to reporters at an event in London on Friday, the chief executive of British Airways parent IAG, Willie Walsh, said he remained happy with owning the A380, but if Airbus wanted to sell more “they’re going to have to be very aggressive on price.”

Jefferies estimated that ending the loss-making A380 program at its current stage would save Airbus as much as 300 million euros ($344 million) per annum.

While that is not deemed a huge benefit, Jefferies noted it would free capacity for Airbus to focus on its more popular A320 and A350 models.

Shares of Airbus and Rolls-Royce both rose Friday following the suggestion that the A380 program could end.



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