Skymark seen scrubbing order for six Airbus A380s

Bloomberg

Airbus Group NV has agreed to drop an order for six A380 superjumbos by Japanese low-cost carrier Skymark Airlines Inc., sources saidn, in a blow to a program that’s struggled to keep customers.

Skymark can’t afford the aircraft, said the sources, who asked not to be identified because the discussions are private. Negotiations between the two sides continue about compensation, and options range from delaying delivery to outright cancellation, another source involved in the talks said.

Losing the Skymark order extends a drought for the A380, which has failed to attract a new airline customer in two years and came away with no new business in July at the Farnborough Air Show, typically a forum for deals. Airbus’s most loyal buyer for the aircraft is Emirates, with 50 in service and a total of 140 on order, almost half the backlog.

“It’s hard to see how this ends,” said Richard Aboulafia, vice president at the Teal Group, based in Fairfax, Virginia. “They have exactly one enthusiastic customer.”

Airbus fell as much as 28 cents, or 1.7 percent, to €44.78 in Paris and traded at €43.79 as of 4:18 p.m. Monday. That values the company at about €34.3 billion ($46.1 billion), down 22 percent since the beginning of the year.

The only Japanese airline to order the double-decker model, Skymark initially signed a firm contract for four A380s in 2011, and later came back for two more. The aircraft, the biggest and most expensive commercial airliner, has a list price of $414 million per unit, though customers get discounts and the jet would have been cheaper in 2011.

Airbus spokesman Stefan Schaffrath declined comment, while officials at Skymark were not immediately available to comment outside regular business hours. Airbus Group, based in Toulouse in southwestern France, reports earnings on Wednesday.

Airbus suffered its biggest-ever plane cancellation last month, when Emirates scrapped 70 A350s valued at $16 billion. Still, it will be easier for Airbus to fill open delivery slots for the A350 than for the bigger A380, given the A350 backlog is for more than 700 planes from a broader customer base.

Finding another taker for Skymark’s planes may be tough given that one of the aircraft has already been partly customized. Airbus said in April that Skymark’s first A380 performed its maiden flight and was heading for cabin installation and final painting in Germany.

The aircraft tail had been painted with Skymark’s signature yellow star against blue background when the plane made its first flight. Airbus is already struggling to find airline customers slated for early 2016 deliveries willing to take planes that will come off the production line in late 2015.

Les Echos previously reported that Airbus and Skymark had decided to cancel the order, without saying where it got the information.