According to the news report by Reuters, Airbus SE reported on Thursday that orders to the tune of $4 billion had been cancelled. Eight of the cancellations were of the A380 jet liner.
This massive cancellation highlights a bleak picture for the world’s biggest airplane maker as the company prepares to close production due to lowered demand.
Australian airline Qantas announced that it would not be buying any more of the giant A380 jetliners and would stick with its fleet of 12 rather than the original 20 the company had ordered.
The big cancellation comes on the heels of discussions with Emirates, Airbus A380’s biggest customer, that the Middle Eastern airline was thinking about switching to smaller models. This happened because the airplane maker failed to secure an engine contract for its last round of orders.
According to people familiar with the matter, unless there is a surprise order that could help support the A380, Airbus is looking at winding down production of the giant airplane much earlier than it had initially planned. The sources said that the company could make an announcement about the closure of A380 production as early as February 14, when Airbus releases its annual results. The company is also expected to announce its annual forecast during the earnings report.
While an industry source commented that this marked the end of the world’s biggest passenger airliner, Airbus declined to say anything on the matter.
The A380 is a huge four-engine. 544-seat double-decker this is very popular with fliers. However, it has come under a lot of pressure due to technological advances that have improved the efficiency of twin-engine jets.
The A380 was not the only aircraft model to face cancellations. Airbus also reported that it had received cancellation orders for 5 units of its smallest model, the A220-100, which is a 110-seat aircraft. These 5 plans had earlier been assigned to private or unnamed government buyers.
The French airplane maker inherited this model of aircraft from its recent acquisition of the Canadian airplane manufacturer Bombardier.
Thus, Airbus is a facing a total cancellation of orders for 13 aircraft, which means that the company is going to start the year with a negative count. This is going to hurt the company since the French plane maker has unusually not won any new business in January.
Also, in January, Airbus delivered 39 new aircraft to its customers. The company’s management has been focusing on fixing the recent problems Airbus has faced in its supply chain and ensuring that jets are delivered so that its record backlog of orders can be cleared.
The airplane maker, however, has been playing down the fact that it has no new orders. A company spokesperson stated that one month of no orders did not make a year of no orders.
Fortune gave further details about the cancellation by Qantas, the Australian company had placed the orders for the 8 new A380s in 2006. While formally cancelling this long-standing order, Qantas stated that these 8 new aircraft had not been a part of the company’s plans for its fleet or network for some time now.
In addition to Emirates’ possible change of mind, Hong Kong Airlines also cancelled its order for 10 A380s in January.
However, the biggest blow to Airbus would come if the Dubai airlines were to change 20 orders to the smaller A350 model. Last year, it was the Emirates airline that saved the A280 from demise after the aircraft carrier promised to buy 36 of the giant planes.
To keep an efficient production line, Airbus need to make at least 6 A380s per year.