Business

Air France axes A380 superjumbo and Emirates seen cutting deliveries

REUTERS

The world’s largest airliner, the Airbus A380, took a step closer to the aviation archives on Wednesday as Air France said it would permanently axe its grounded fleet and sources said Emirates was in talks to reduce remaining deliveries.

The superjumbo is close to the end of its production run after demand switched to smaller jets, and airlines including Air France have been idling the double-decker temporarily because of the coronavirus crisis.

Air France announced a fresh €500 million (¥59 billion) writedown as it permanently retires its 10 jets, just over a decade after becoming the first European airline to operate them.

Airbus last year announced plans to stop producing A380s in 2021 due to poor sales. It has nine left to build including eight for Emirates and one for All Nippon Airways.

Due to the pandemic, Emirates no longer wants to take all eight A380s and is renegotiating with Airbus, industry sources said.

Both companies said they were in regular dialogue with each other, declining further comment.

Halting Emirates deliveries could be painful for both sides, with the airline foregoing deposits and Airbus left with parts already ordered and no significant market to dispose of them.

Each A380 is worth some $200 million (¥21.5 billion) after discounts, with virtually all represented by parts before assembly, suggesting an Airbus exposure of around $1.5 billion, market sources said.

Emirates has 50 A350s on order, the price of which could become a bargaining chip in discussions, one added.

Emirates is the biggest A380 operator with 115 and has said it expects to keep some into the 2030s.

But the pandemic has forced belt-tightening worldwide and Emirates is considering retiring some A380s earlier than planned, sources said.

One said Emirates was focused on reducing the number of leased A380s first.

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