Airbus just announced that it is halting production of the A380 superjumbo plane, abandoning the $16 billion project after airlines around the world flocked to smaller, nimbler jets for long-range travel, reports The Wall Street Journal (Feb. 15, 2019). The A380 was the European company’s answer to Boeing’s 747, which brought long-haul travel to the masses 50 years ago and was the undisputed queen of the skies for decades. The A380, which first went into service in 2007, represented a future for long-distance commercial aviation based on big jets, shuttling between major hubs.
Passengers came to love the plane for its spacious, quiet cabins. Most airlines, though, were less enamored, turning instead to a new breed of fuel-efficient smaller jets that gave them the flexibility to serve less popular routes. A380 sales lost momentum early. Airbus never turned a profit on its flagship plane, and write-offs related to the program weighed on the company for years. This week, Dubai-based Emirates Airline, the A380’s biggest customer by far, cut sharply its plans to buy more of them. Airbus’ CEO said the airline’s decision left the company with “no basis to sustain production.”
In 2000, Airbus unveiled its superjumbo program, saying it would spend $10 billion to build a 555-seat jet in an effort to supplant its U.S. rival’s 747. But development delays and $6 billion in cost overruns set the project back early. Boeing’s 747 has also fallen out of favor, but more gradually. The aircraft is now made mainly to haul cargo. Only about 230 A380s have been built, versus more than 1,500 747’s. But as we point out in Chapter 5, every product has a life cycle–some shorter than others.
Classroom discussion questions:
- Why was the 747 more successful in sales and longevity?
- Research some of the reasons why the A380 program was an OM nightmare.