Airbus Shares Soar As Company Ends Production Of A380 Superjumbo

Airbus shareholders celebrated on Thursday, bidding the French aerospace company's shares higher by 4%, after the company announced that it would pull the plug on production of the 12-year-old A380 Superjumbo, the world's largest passenger jet, the Wall Street Journal reported, as airliners have favored smaller wide-body planes.

The company is taking a $500 million charge in shutdown-related talks, and is in discussions with its unions about how to reapportion staff affected by the cuts. The end of the program could lead to as many as 3,500 job cuts over the next few years.

Emirates

The decision to end production was made after Emirates reduced its latest order, saying it would accept delivery of only 14 more A380s over the next two years. The Dubai-based airline is cutting its overall A380 fleet size from 162 to 123. The last deliveries of the jets have been set for 2021. In a decision that was symbolic of the issues that threatened the A380 throughout its life, Emirates will instead shift its purchases toward the smaller the A330neo and A350. Airbus isn't the only manufacturing considering a phase out of its super-jumbo jet: Boeing previously said it could end production of its 747, which is now almost exclusively used to haul cargo.

Emirates isn't the first airliner to cancel or reduce a major order of A380s recently. Qantas said earlier this week that it would canceled an order, placed in 2006, for eight more A380s. Already, Singapore Airlines Ltd., which launched the first long-haul flight using an A380 back in 2007, has retired its first two A380s. It's currently in the process of selling the planes for scrap.

Airbus

While passengers appreciated the A380s spacious cabin, "airlines were put off by its size and the need to sell so many seats. They instead flocked to other long-haul aircraft like the Boeing 787 Dreamliner or Airbus’s A350," WSJ said. US airlines balked at the jet, and no US airlines bought them.

The Airbus was born back in 2000, when the company said it would invest more than $10 billion to build the 555-seat A380 to try and supplant Boeing's 747. However, the project was seemingly cursed from the beginning as it was plagued with numerous development delays. Sales never picked up, and airliners were put off by the jet's size. Across all of its models, Airbus expects to sell between 800 to 890 planes this year, after selling 800 last year, as its profits are expected to grow amid an increase in air traffic numbers beyond historical averages.

Airlines instead flocked to other long-haul jets like the Boeing 787 Dreamliner (which was plagued by production issues of its own) and Airbus’s A350.

While the decision to kill the A380 isn't a surprise, it is still "a huge embarrassment" for Airbus.