The long-term survival of the Airbus A380 might hinge on airlines from the Middle East, most notably Dubai’s Emirates, whose contribution to the superjumbo’s backlog far outstrips that of the rest of the customer base. Emirates's interest in another order might well account for Airbus’s best hope to keep the assembly line going late into the next decade.

The European OEM unveiled a raft of measures at the Paris Air Show in June aimed at boosting the flagging order book with the A380plus. The improvements, in what Airbus terms a “development study,” would include new large winglets and other wing refinements to provide “up to 4 percent fuel burn savings,” and 13 percent cost reduction per seat versus the A380. This would be achieved by increasing maximum takeoff weight to 578 metric tons and adding 80 seats in a new nine-abreast premium economy layout and an 11-abreast economy configuration.

End of the Line?

Whether the A380plus helps to revive hopes for the airplane’s long-term success remains an open question, but the airframer would certainly welcome a chance to quiet naysayers with an expression of interest by an airline at this year’s Dubai show.

One of those skeptics, Teal Group vice president Richard Aboulafia, predicts that Airbus will deliver no more A380s to airlines other than Emirates after 2018, and that expectations for delivering at least 40 of the remaining roughly 100 airplanes in backlog lack “substance.” He believes that Airbus’s announcement late last year of a delivery delay of 12 A380s effectively means that the airplane has no future.

“Since [Emirates is] the only customer after next year, that’s tantamount to killing the line,” said Aboulafia. “China has ordered only five A380s, compared with 142 from Emirates.”

“The last non-Emirates A380 will be delivered in 2018,” he continued. “Nobody else wants this plane...it looks like all eight 2019 deliveries will be for Emirates. If they keep deferring, then the [build] rate stays well below one per month, which is not sustainable.”

Stuart Rubin, a principal with New York-based ICF and an ISTAT senior appraiser, views the A380’s prospects as not quite so dire. Although he concedes that the proliferation of long-range twin-engine jets has softened the market for the A380, he said he expects Airbus will keep the line running, albeit at “fairly low” rates. “I think they will try to manage that rate as best they can to ensure the program’s continuity and deliver those remaining aircraft [in backlog],” said Rubin.

Airbus slowed delivery of A380s due to postponements late last year. It released a terse press release in December explaining it would “adapt the A380 delivery stream with six aircraft deliveries postponed from 2017 to 2018 and six others from 2018 to 2019.”

The manufacturer reconfirmed a target to deliver 12 a year from 2018, as announced in July 2016. “Further fixed-cost reduction initiatives will be accelerated so the impact on break-even in 2017 is minimal,” it added.

ICF senior vice president Samuel Engel noted that Airbus’s ability to influence demand through pricing—and instruments such as residual value guarantees—should also help ensure the A380’s viability. “Airbus probably has some ability through pricing to manage a steady level of demand or orders to fill that line and keep that line running steadily,” he explained. “If the pricing of the aircraft is such that it can offset [higher] operating cost, then it becomes more attractive or, in the case of a 500-seat aircraft, reduces some of the risk.”

Still, explained Rubin, the A380 presents a bigger resale challenge in the secondary markets than, for example, an A330, because of the small numbers of units spread across a limited customer base. “Plus you’ve got a high concentration at Emirates,” added Rubin. “So that to me is a much more challenging prospect from a secondary market standpoint. [That’s] not to say that it’s impossible. But I think that you’re going to have to work harder to place that aircraft and maybe be a little bit more creative.”

Meanwhile, boosting demand through technical improvements to the equipment looks less promising, suggested Rubin, notwithstanding Airbus’s efforts in the form of the A380plus. Emirates’s desire for a re-engined A380 known as the A380neo looks certain to go unfulfilled because of the lack of a clear business case from Airbus’s perspective, and the incremental improvements offered in the A380plus appear unlikely to convince the airline to order more, he opined. “I’m not sure it’s a significant enough change to really move the needle in terms of new sales,” said Rubin.

“[Emirates] will have probably more influence than other operators of the aircraft in what Airbus does,” he added. “And one thing that I think that Airbus and Boeing are both very good at is listening to their customers...but as far as what can Airbus do to stimulate demand for the aircraft, I’m not sure how much influence they’re going to have on that front.”    

Nevertheless, Rubin doesn’t see the A380 going the way of the now defunct A340 program because, he explained, no other airplane does what the A380 can do in terms of range and capacity capability. Engel agreed. “It’s a very good aircraft,” stressed Engel. “It is really an impressive piece of equipment and operators have been able to deploy it successfully. The issues that it faces have really more to do with exposure and risk and comparative economics.”

Emirates took its 100th A380 early this month. As of September 30, Etihad Airways had taken 10 and Qatar Airways eight. As of that date, only 100 other A380s were in operation, giving the Middle East’s Big Three well over half of the currently operational fleet of 218 aircraft. Emirates still has 42 more to come, Qatar two and Etihad none.

Aboulafia believes that Emirates will need to change tactics on the choice of Airbus A350s or Boeing 787s, as Qatar and Etihad have done. Qatar has placed 19 A350-900s into operation and Etihad maintains 16 Boeing 787s in its fleet. Both airlines have ordered several more long-range widebody twins.

“It makes a lot of sense, getting a smaller plane with a long range,” said Aboulafia. “It is the logical path. Does [Emirates] need the capacity? In terms of the orders currently in reality, the planes will be deferred. The 777-9X could be the answer. The A380 is effectively a proxy of this problem, where you have a volume and growth approach to the business rather than profitability.”     

While announcing an order for two additional A380s in April 2016, Emirates president Tim Clark saw things entirely differently. “We’ve always been open about how the A380 has been a big success for Emirates,” he said. “It’s a boon for our operations to slot-constrained airports and we get a lot of positive feedback from our customers. In fact, demand from customers for our A380 product is growing, as we expand our A380 network and more travelers have had the opportunity to experience it first-hand.”