Airbus Group (EPA: AIR) announced just recently that it is considering to cut the monthly production capacity of its A380 jets after being adversely affected by the decline in the demand of jumbo jets. The company will plans to produce one A380 jumbo commercial jet for each month by fiscal year 2018. Since airlines all over the globe are more interested to purchase single aisle smaller jets, the aircraft corporation has been experiencing problems when it comes to obtaining new orders of the commercial jet for an extended period of time.
The officials of Airbus told local newspapers that the present decision of the company would enable them to deliver pending new orders more effectively. Aside from that, analysts also assert that by doing this, the aircraft manufacturer may also manage to meet the lower market demand at present and would be able to keep the A380 production line much longer. Presently, Airbus produces approximately 2.5 of the commercial jumbo jets every month.
The aircraft giant stays positive about the future prospects of the A380 jets as it believes that the commercial aircraft can aid in addressing airport congestion and increasing passenger traffic. Airbus officials also think that the jumbo jet still has a spot in the product portfolio of the aircraft manufacturer on the back of plans to boost the efficiency of the jet.
The Airbus executives’ statement can be referenced to prior talks with Emirates, which demanded an overhauled version of the A380 aircraft. Emirates wanted the commercial jet to feature an engine that is more fuel-efficient. Earlier in 2016, Airbus refused to offer a revamped A380 version.
With this latest report, it appears like the aircraft company does not have any alternative other than to provide an overhauled version in order to obtain more orders from prospective clients.
Market experts are also pointing out that Airbus should have made this decision earlier in order to secure a better future for the A380 commercial aircraft. Boeing Co., major competitor of the company, is also considering the same approach which involves offering wide body commercial aircraft that feature fuel-efficient engines in order to maintain growth. Nowadays, fuel economy is one of the factors that clients consider when deciding to order an aircraft.
As of 3:34 PM GMT +2 on October 12, the stock of Airbus is changing hands at 52.24 EUR, down by 1.49 percent or 0.79 points.