Air France-KLM Drops Order for Two Airbus A380s
March 16 2016 - 1:00PM
Dow Jones News
LONDON—Air France-KLM SA has dropped an order for two Airbus
Group SE A380 superjumbos, arresting order momentum the European
plane maker had recently enjoyed for its struggling flagship
aircraft.
Air France, which operates 10 of the A380s, on Wednesday said it
had dropped the final two A380s it had previously ordered in favor
of three of Airbus's A350-900 long-range planes. Airbus said it
wouldn't comment on discussions with customers.
Air France executives had previously indicated they would
abandon the order for their final A380s, saying the planes were no
longer needed amid changing priorities at the airline.
Airbus has been struggling to find customers for the A380 that
can seat more than 600 passengers and costs more than $400 million
per plane at list price, though buyers typically get discounts.
Airlines have shied away from the plane amid concern it may be
difficult to sell enough seats.
All Nippon Airways late last year agreed to buy three A380s,
ending a prolonged dry spell for new customers to sign up. Iran Air
this year also said it would take 12 of the aircraft, though the
deal hasn't been finalized.
The A380 has been a financial headache for the European plane
maker after a series of development and production problems caused
costs to skyrocket. After more than 15 years of trying to sell the
plane, Airbus has booked firm orders for only 319 A380s, including
the two Air France jets the airline is no longer taking.
Virgin Atlantic Airways Ltd., the airline founded by billionaire
Richard Branson, also has said it doesn't plan to take the 6 A380s
the airline has ordered.
Malaysia Airlines also has said it may shed some of the A380s it
has already received.
Airbus for years lost money on the A380s it delivered because
they cost more to build than airlines were paying. The
Toulouse-based company has said it broke even on A380 deliveries
for the first time last year. Airbus Chief Financial Officer Harald
Wilhelm has pledged the program would break even again this year
and next, though the period thereafter was uncertain and would
require new orders.
Boeing Co, the world's largest plane maker, also has been
struggling to secure deals for its largest aircraft, the 747-8
jumbo. The Chicago-based company this year said it would cut the
pace of production of the plane this year amid a dearth of demand,
while it awaits a rebound in appetite for cargo versions toward the
end of the decade.
Airbus's backlog of orders for A380s also is starting to
dwindle. The plane maker had delivered 182 of the ordered A380
jetliners at the end of last month.
Fabrice Bré gier, the head of Airbus's jetliner unit, has said
securing more A380 deals was a priority.
Qatar Airways Chief Executive Akbar Al Baker last week said the
Doha-based based carrier may exercise an option for three more of
the double-decker planes. Qatar has already ordered 10 of them and
taken delivery of six.
Tim Clark, president of Emirates Airline, the largest customer
of A380s, has said he would take as many as 200 more of the
aircraft if Airbus refreshed the design with new engines. The
European plane maker has held off on committing to such a program
in the near-future, saying it was focused on improving and selling
the current design.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
March 16, 2016 13:45 ET (17:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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