In mid-January, Emirates signed a memorandum of understanding to buy up to an additional 36 Airbus A380s, in addition to the 142 Airbus A380s they had already ordered from Airbus (100+ of which are already in their fleet). With this deal they intend to place a firm order for 20 additional Airbus A380s, with options for an additional 16 aircraft. Emirates intends to take delivery of these planes starting in 2020. At list prices, the deal is valued at up to 16 billion USD.
Not only is this deal significant because it represents the first new A380 order in a long time, but it’s also significant because Airbus was at the point where they had to decide whether they wanted to shut down A380 production, due to a lack of demand. For years we had been hearing rumors of Airbus shutting down A380 production, given that Emirates is the only airline that seems to love the A380, while they haven’t seen much additional demand from other airlines.
With that in mind, Emirates was in a tricky situation — if they wanted A380 production to continue (in hopes of the A380, which they invested billions of dollars in, not becoming completely old technology), they’d need to place an order to keep the program alive. At the same time, presumably they placed an order in hopes of this not just extending A380 production by a few years, but rather for much longer than that.
The reason for this post is that a few weeks ago Emirates had signed a memorandum of understanding for the additional A380s. While that’s significant, sometimes it can be a long time between when that is signed and when the order is firmed up. Sometimes airlines even back out of deals. Yesterday, just weeks after the MoU was signed, Emirates has finalized their A380 order.
This agreement was signed on the sidelines of the World Government Summit in Dubai, with HH Sheikh Mohammed bin Rashid Al Maktoum of the UAE, and Mikail Houari of Airbus, in attendance.
Here’s what was said at yesterday’s event:
Sheikh Ahmed said: “This agreement underscores our commitment to the A380 programme, providing stability to the A380 production line and supporting tens of thousands of high-value jobs across the aviation supply chain. For Emirates, the A380 has been a successful aircraft for our customers, our operations, and our brand. We look forward to continue working with Airbus to further enhance the aircraft and onboard product.”
“We thank Emirates, HH Sheikh Ahmed, Tim Clark and Adel Al-Redha for their continued confidence in the A380, which has so successfully transformed air travel in the 21st century,” said Fabrice Brégier, Airbus President Commercial Aircraft and Chief Operating Officer. “This latest agreement further demonstrates the strength of our valued partnership with Emirates in support of their impressive growth.”
Congrats to Airbus and Emirates for finalizing this order, and here’s to hoping that the A380 is around for many years to come. I’m still skeptical about the future of the program, though there have been rumors of British Airways placing a further A380 order. I’ll be curious to see if that comes to fruition.
It's been tenable for over a decade, and let's hope it continues. Moreover, there's every indication it would given the number of 747s operating, and that are approaching end of life. How is reducing capacity of all those flights tenable?
I like others above don't see major growth in the point to point market. There's still a lot of capacity delivered by the 747 and A380. I can't see that lost and somehow displaced to...
It's been tenable for over a decade, and let's hope it continues. Moreover, there's every indication it would given the number of 747s operating, and that are approaching end of life. How is reducing capacity of all those flights tenable?
I like others above don't see major growth in the point to point market. There's still a lot of capacity delivered by the 747 and A380. I can't see that lost and somehow displaced to secondary markets operated by the a350 and 787 - and nor is capacity available at primary airports to increase frequencies with only those smaller airframes.
Emirates hasn't saved anything, only extended an untenable product. Without another major airline purchasing in similar quantities as Emirates or without majority adoption of the plane by many airlines in smaller numbers of planes the future of the plane will be very uncertain. Emirates won't be able to save them in a few years.
Very happy to see this order materialize. As someone who primarily flies in economy, Boeing's current planes provide a sardine-can passenger experience. The 737, 787 and 777 are all narrow and cramped, entirely forgettable. I avoid them when I can.
The A380 provides some relief to economy passengers.
I agree with @Airways and Travels and @SullyofDoha. Unless there's a strong O&D demand with higher yield (like ANA NRT-SJC), those longhaul "secondary city" strategy seems not working well. United stopped Hangzhou flight, for example. Airlines instead consolidate and form JV which will enable a mega-hub.
Airbus better get a Cashier's Check from BA.
Sorry, I don’t buy the ‘point-to-point’ model, unless an airline may be a niche player.
Where's all this growth of P2P traffic? Sure, some LCC carriers have grown long haul P2P, but even Norwegian can count on a decent degree of connectivity in OSL and LGW. P2P is mostly true short haul.
When the A380 was introduced, that was the selling point -- that in slot-limited airports and with worldwide passenger growth, it's the only way to build capacity.
The A380 was announced in 2000 -- 18 years ago. Yet in all this time, we haven't seen a big issue with airports reaching capacity to the point that only a super-jumbo can solve the problem. I think it's like EY said -- instead there has been growth...
When the A380 was introduced, that was the selling point -- that in slot-limited airports and with worldwide passenger growth, it's the only way to build capacity.
The A380 was announced in 2000 -- 18 years ago. Yet in all this time, we haven't seen a big issue with airports reaching capacity to the point that only a super-jumbo can solve the problem. I think it's like EY said -- instead there has been growth of more point-to-point flights on smaller, efficient planes like the 787.
I suspect the order was most in favor of Emirates given their monopsony-like power over Airbus. In addition, I would also venture that Airbus is trying to push the program onto life support until a time at which landing slot congestion at airports becomes the primary limiting factor for airlines to schedule availability versus satisfying demand.
This is a first, there is a honest to god, reasonable question, and then there is a honest to god, smart in-depth answer to that question.
There is hope for humanity after all.
@Jay with smaller aircraft, airlines can offer more frequencies, which passenger like. Also, the airline industry is moving from a hub model to a point to point model. Most importantly, most markets can’t sustain the a380, so smaller aircraft allow airlines to open more routes, especially thinner ones. In addition, new generation aircraft are much more fuel efficient than the a380. Also airlines risk the filling the whole airplane, which would be costly. The a380...
@Jay with smaller aircraft, airlines can offer more frequencies, which passenger like. Also, the airline industry is moving from a hub model to a point to point model. Most importantly, most markets can’t sustain the a380, so smaller aircraft allow airlines to open more routes, especially thinner ones. In addition, new generation aircraft are much more fuel efficient than the a380. Also airlines risk the filling the whole airplane, which would be costly. The a380 is only profitable when almost all seats are filled, which is hard in most markets. Let me know if you have any other questions. Hope this clarifies!
I'm not a very frequent traveler but I have been on international flights on a 777-300ER, a 747-8i, a 787-8 and an A380. The A380 is easily the most amazing of all those, for me. I imagine the costs of 4 engines factors a lot into the A380 vs twin-engine purchase decision by airliners, but all I hear about is how air traffic will just keep growing and skies will get more congested. If that...
I'm not a very frequent traveler but I have been on international flights on a 777-300ER, a 747-8i, a 787-8 and an A380. The A380 is easily the most amazing of all those, for me. I imagine the costs of 4 engines factors a lot into the A380 vs twin-engine purchase decision by airliners, but all I hear about is how air traffic will just keep growing and skies will get more congested. If that keeps happening, won't airlines eventually be "begging" for a plane the size of an A380 so they can meet demand without adding as many additional flights to congested skies?