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Airbus set to scrap production of the world's largest airliner

Key Points
  • In a statement published on Thursday, Airbus said the last A380 will be delivered in 2021.
  • The decision comes after Emirates — the world's largest A380 customer — decided to cut back its orders of the iconic aircraft and order a total of 70 of the smaller A350 and A330neo models instead.
  • Emirates Airline said it would continue to use Airbus' flagship aircraft well into the 2030s.
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Ending A380 production a ‘painful’ decision that had to be made, Airbus CEO says

Europe's Airbus announced plans to scrap production of the world's largest airliner on Thursday, abandoning its A380 superjumbo program in favor of smaller, more nimble jets.

In a statement published on Thursday, Airbus said the last A380 will be delivered in 2021.

The decision comes after Emirates — the largest A380 customer — decided to cut back its orders of the iconic aircraft and order a total of 70 of the smaller A350 and A330neo models instead.

"As a result of this decision we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years. This leads to the end of A380 deliveries in 2021," Airbus CEO Tom Enders said in a statement on Thursday.

"The consequences of this decision are largely embedded in our 2018 full year results," Enders said.

Airbus said it would start discussions with unions in the coming weeks regarding the 3,000 to 3,500 jobs potentially affected by the news.

A Singapore Airlines A380 passenger plane taking off at Changi International Airport in Singapore.
Fyrol Mohn | AFP | Getty Images
Emirates CEO 'disappointed'

On Wednesday, Airbus hinted it was considering plans to drop the A380 superjumbo, saying it was in discussions with the carrier Emirates in relation to a joint contract.

Airbus said Thursday it would produce 17 more A380s, including 14 for Emirates and 3 for Japanese airline ANA.

"Emirates has been a staunch supporter of the A380 since its very inception," HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman and CEO of Emirates Airline and Group, said in a statement on Thursday. "While we are disappointed to have to give up our order, and sad that the programme could not be sustained, we accept that this is the reality of the situation."

"For us, the A380 is a wonderful aircraft loved by our customers and our crew. It is a differentiator for Emirates," the statement said.

Al Maktoum confirmed Emirates Airline would continue to use Airbus' flagship aircraft well into the 2030s.

"The A380 is Emirates' flagship and has contributed to the airline's success for more than ten years. As much as we regret the airline's position, selecting the A330neo and A350 for its future growth is a great endorsement of our very competitive widebody aircraft family," Guillaume Faury, president of Airbus Commercial Aircraft and future Airbus CEO, said in a statement.

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"Going forward, we are fully committed to deliver on the longstanding confidence Emirates is placing in Airbus," Faury added.

Meanwhile, Airbus reported stronger-than-anticipated fourth-quarter earnings on Thursday. Europe's largest aerospace group projected higher aircraft deliveries and profits in 2019.

End of an era

The very first commercial A380 journey flew under a Singapore Airlines banner in 2007.

But despite proving popular with many passengers, the plane fell well short of expected sales targets, failing to secure a single sale to any U.S. airlines.

The A380's attempt to replace the Boeing 747 as the queen of the skies was swiftly undermined by the arrival of more fuel-friendly offerings such as Airbus's own A350 or Boeing's 787 Dreamliner.

Lighter, more modern carriers have a greater ability to fly longer distances, such as Qantas's London to Perth route, without stopping, thereby replacing hub-to-hub flying with more point-to-point flights.

"We sensed a growing sense of impatience events were not unfolding fast enough at Airbus. Termination of the A380 and the re-baselining of the A400M may dispel that," Sandy Morris, an aviation equity analyst at Jefferies, said in a research note published Thursday.

"When things do all click into place, we still believe Airbus will become a favorite; even the favorite, in European capital goods," he added.

— CNBC's David Reid contributed to this report.