May 20, 2020 / 6:40 PM / 11 days ago

Air France axes A380, Emirates seen cutting deliveries

DUBAI/PARIS (Reuters) - The world’s largest airliner, the Airbus (AIR.PA) A380, took a step closer to the aviation archives on Wednesday as Air France said it would permanently axe its grounded fleet and sources said Emirates was in talks to reduce remaining deliveries.

FILE PHOTO: Emirates Airlines Airbus A380-800 plane approaches for landing at Dubai Airports in Dubai, United Arab Emirates, December 26, 2018. EUTERS/ Hamad I Mohammed/File Photo

The superjumbo is close to the end of its production run after demand switched to smaller jets, and airlines including Air France (AIRF.PA) have been idling the double-decker temporarily because of the coronavirus crisis.

Air France announced a fresh 500 million euro ($548.50 million) writedown as it permanently retires its nine jets, just over a decade after becoming the first European airline to operate them.

Airbus last year announced plans to stop producing A380s in 2021 due to poor sales. It has nine left to build including eight for Emirates and one for Japan’s ANA.

Emirates no longer wants to take all eight A380s due to the pandemic and is in talks with Airbus, industry sources said.

Bloomberg earlier reported Emirates hoped to cancel five.

Both Emirates and Airbus said they were in regular dialogue with each other, declining further comment.

Halting Emirates deliveries could be painful for both sides, with the airline foregoing deposits and Airbus left with parts already ordered and no significant market to dispose of them.

Each A380 is worth some $200 million post-discounts, with virtually all represented by parts before assembly, suggesting an Airbus exposure of around $1.5 billion, market sources said.

Emirates has 50 A350s on order, the price of which could become a bargaining chip in discussions, one added.

Emirates is the biggest A380 operator with 115 and has said it expects to keep some into the 2030s.

But the pandemic has forced belt-tightening worldwide and Emirates is considering retiring some A380s earlier than planned, sources said.

One said Emirates was focused on reducing the number of leased A380s first.

(This story amends number of Air France A380s in para 3; airline corrects data published by Airbus to show that one out of 10 aircraft originally in the fleet has been returned to its lessor)

Reporting by Alexander Cornwell, Tim Hepher, Laurence Frost; editing by Emelia Sithole-Matarise and Barbara Lewis

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