Airbus shares opened lower Thursday, following news late Wednesday from Reuters, that the plane maker could axe production of its A380 plane if it can’t secure a new order from regular customer Emirates airlines.
By 0815 BST, Airbus shares were 0.63% lower at €84.70. Airbus shares closed 0.82% higher Wednesday at €85.24. Airbus shares hit a peak of €88.86 on December 6.
Customer demands change
The Reuters report, citing sources familiar with the matter, suggests that while Emirates has been a fan of the larger A380 planes Airbus makes, talks between the two companies over a new order stalled at the Dubai Airshow.
They are reported to have resumed discussions. However, if the order for 36 A380 planes isn’t agreed, Airbus could begin winding down production of its 500-passenger jet.
It appears it’s not because Airbus wants to end its A380 production. But, without the guarantees another bulk order would provide the plane maker, it can’t realistically keep its A380 building capacity open on hopes more major orders will come in.
However, the report adds its not just Airbus who’s looking for guarantees. Reuters sources say Emirates wants to be able to rely on continued A380 production which will help protect its potential investment.
Smaller planes more popular?
As the lack of demand for the Airbus A380 from new customers underscores, many airlines prefer smaller planes. They’re easier and cheaper to fill, making them a good option for the budget airlines that operate around the world. And for the bigger airlines too.
Indeed, Airbus’ deal with Bombardier in the manufacture of the C-Series jet, is a case in point. Airbus is the major share-holder in the C-Series project, which is currently the subject of a disagreement between Boeing and Bombardier.
The reason for the disagreement? In a nut shell, Boeing has accused bombardier of selling the C-Series to US customers for below cost price thanks to illegal subsidies from Canada. Currently the US ITC agrees with Boeing. The case is ongoing.
However, Boeing is also in talks with Brazilian plane maker Embraer, who focuses on smaller planes.
With all this going on in the background, are the A380s days numbered?