Airbus’ earnings release today has highlighted a record-breaking year for the European manufacturer. However, amongst the healthy profits and solid order book, small nuggets of disappointment lurked. One such issue was the A380 program, which saw Airbus pegging a loss of $219m.
The A380 program is winding down. The last wings were shipped from Airbus’ UK manufacturing site at Broughton just last week, and with only a handful of orders to fulfill, Airbus is slowly closing down the project. While the A380 will be missed by many, the losses it has caused to the planemaker will not.
Airbus delivered just eight A380s over the course of 2019, as was revealed in its full-year earnings presentation earlier. Despite the numbers being low, the losses were enormous, with the planemaker clocking up a 219m loss specifically on the A380.
Overall, Airbus had a pretty good year last year. It delivered 863 commercial aircraft and ended the year with 768 orders after cancellations. Its commercial aircraft arm achieved record-breaking revenue of €54.7bn ($59.4bn) and it heads into 2020 with a staggering 7,482 aircraft backlog estimated to be worth $512bn to the company.
The Airbus A380 was a groundbreaking development for the European manufacturer. With Boeing occupying a monopoly on the large jetliner market for some decades, with its hugely successful 747, Airbus was a bit late to the party, announcing the A3XX in 1994.
The official launch of the program happened in December 2000, when the A380 name was revealed. Airbus invested $10.7bn in the development of the jet, betting on airlines requiring larger aircraft as passenger traffic ticked up.
However, difficulties with the project saw development costs balloon. By 2005, the cost of making the A380 had risen to over $19bn, even before it achieved certification from the FAA and EASA. Overall, Airbus estimates it has sunk $25bn into the A380 project and, despite passengers love for the aircraft, conceded that it would never recoup its investment.
At one point, every A380 produced was made at a loss. It was 2015 before the company even managed to break even on the project, and that’s without considering any clawback of its massive $25bn investment.
The A380 only ever saw orders from a handful of airlines. As of November 2019, there were 251 orders from 14 different customers, with Emirates far and away from the largest customer. Other big users include Singapore Airlines, Lufthansa, Qantas, and British Airways, with 24, 14, 12 and 12 in their fleets respectively.
Emirates will end up with a fleet of 123 of the type. There are still eight to be delivered to them, as well as the last remaining Flying Honu for ANA. No more orders are being taken for the type.
