Airbus (AIR) Stock Rises as the Company Decides to Stop Making Largest Passenger Jet A380
Originally published on: CoinSpeaker
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February 14, 2019
The times are changing. While some new products from time to time appear here and there, the production of some others is discontinued due to the lack of demand from the side of the market. Now it’s time to say goodbye to the iconic superjumbo A380.
It’s the End for A380
For a dozen years, a major European planemaker Airbus SE has been producing its A380 double-decker. But now it has taken a decision to stop manufacturing this model from 2021. And it has some weighty reasons to do it.
Though passengers and politicians have fallen in love with this prestige plane practically immediately, airlines have never considered it to be an appropriate aircraft. Why? They prefer smaller and much more fuel- and, consequently, cost-efficient models.
Announcing their decision, Airbus Chief Executive Office, Tom Enders named it “painful” for them and the A380 communities worldwide. According to the statement, 3,500 Airbus job positions will be affected by these changes. Nevertheless, the company is going to offer its staff a significant number of internal mobility opportunities due to some changes in other production lines.
“We have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years.”
Buy what is interesting in this situation is that in early morning trading in Euronext ParisA Airbus stocks rose from €103.06 to €108.80 which means that they increased by 4.31 percent.
Buyers of A380
As we have already mentioned, the last A380 jumbo jet will be released in 2021, when the main customer Emirates Airlines and some other buyers (there are not so many of them) will get their orders.
It is also known that the UAE carrier will cut down its current order for A380. If earlier it planned to purchase 53 jets, now it’s going to buy only 14 but it additionally will get smaller A330neo and A350. It has already ordered 40 A330-900 and 30 A350-900 aircrafts.
Guillaume Faury, President of Airbus Commercial Aircraft and future Airbus CEO, commented such a decision of Emirates the following way:
“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. Going forward, we are fully committed to deliver on the longstanding confidence Emirates is placing in Airbus.”
Though the statement about the end of the A380 era can’t be considered to be a very positive one, Airbus still has a reason to celebrate. Today it has reported stronger than expected fourth-quarter results.
Its quarterly adjusted operating profit of 3.096 billion euros ($3.5 billion) is 56 percent higher than in the same period in the previous year. Moreover, its revenues rose as well and reached 23.286 billion euros.