Emirates Offers A380 a Lifeline, Signing $16 Billion Deal With Airbus

Posted January 18, 2018 11:47 a.m. EST

The Airbus A380 lives on, for now.

The Dubai-based airline Emirates threw a lifeline Thursday to the A380, the world’s largest passenger aircraft, putting in a $16 billion order for up to 36 of the planes to be delivered starting from 2020. The agreement, which includes a firm commitment to buy 20 aircraft and an option for 16 more, comes just days after Airbus said it would end production of the A380 if it did not receive more orders.

When Airbus started delivering the A380 a decade ago, it pitched the plane as the future of aviation, offering a solution to airport congestion and to increased demand for international travel. The number of planes that can land at an airport on a given day is limited, the European company argued, so the A380, with the capacity to carry more than 500 passengers, would allow airlines to transport more passengers.

But the bet on the four-engine plane turned out to be a financial disaster for Airbus as the industry increasingly used smaller airports, a shift that favored its main competitor, Boeing, and other manufacturers of midsize aircraft.

Airbus did not book any orders for the A380 last year; in fact, orders for two planes were canceled. The poor performance for the aircraft overshadowed an otherwise decent year for the company. On Monday, John Leahy, Airbus’s chief operating officer, said that if the company were unable to agree on a deal with Emirates, the superjumbo’s days might be numbered.

The deal announced Thursday gave Airbus some respite — the company needs six to eight orders a year to ensure it can continue to manufacture the A380.

“This new order underscores Airbus’ commitment to produce the A380 for at least another 10 years,” Leahy said in a statement. “I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s.”

With passenger traffic doubling every 15 years or so, Airbus will be looking to keep production of the A380 going, betting that constraints on expanding airport capacity will eventually make the superjumbo look appealing again, said Andrew Charlton, the managing director of Aviation Advocacy, a consulting firm.

Emirates has also been buying Boeing’s 787 Dreamliners, midsize planes which give it flexibility in expanding its network. But the A380 order nevertheless fits in with a broader strategy, Charlton said. The airline’s business model of flying between major hubs requires large planes and the order will go some way toward maintaining its fleet.

Sheikh Ahmed bin Saeed al-Maktoum, the chairman and chief executive of Emirates, said in a statement, “We’ve made no secret of the fact that the A380 has been a success for Emirates.”

“This order will provide stability to the A380 production line,” he added.