Lufthansa Receives Its First Airbus A380, but the Airliner’s Delivery Rate Remains Behind Earlier Projections

 - May 27, 2010, 7:50 AM
The top management of Airbus and Lufthansa were all smiles at the delivery of the German flagcarrier’s first A380 on May 19, but the airframer faces an uphill struggle to get its deliveries of the superjumbo back on track and is not expecting to break even on the program until 2015.

Airbus did its best to show a brave face during the May 19 ceremony marking the delivery of the first Lufthansa Airlines A380. For despite the festive atmosphere and the fact that Lufthansa had become the fifth airline to accept delivery of the superjumbo, the struggles the program has experienced couldn’t go completely ignored. 

The ceremony marked delivery of the 28th A380 to roll off the final assembly line in Toulouse, France. Airbus continues to produce A380s at only half the rate it had projected it would by this time. The company delivered only 10 A380s last year and this year its projection for 20 deliveries includes three airplanes it had originally intended to deliver last year. Including the first delivery to the German flag carrier, Airbus has delivered five A380s so far this year. 

The well-documented problems with the A380 program, much of them stemming from the high level of customization requested by various customers, continue to stain the company’s balance sheets with red ink. Although Airbus executives stress that the company has begun to come to grips with the production “issues” that have plagued it since before it delivered the first A380 to Singapore Airlines in October 2007–almost two years late–it appears that Airbus won’t stop losing money on A380 deliveries for at least another five years, judging by comments from Hans Peter Ring, EADS chief financial officer, during the company’s May 14 first-quarter conference call.

“The A380 continues to weigh significantly on underlying performance,” conceded Ring. “Provided the progress we see and also the maturity of the aircraft, which still needs to be improved, is progressing, certainly I would say there is some hope that toward the end of [Airbus’s five-year] planning horizon we [will approach] break even.” 

Much will depend on the exchange rate for the U.S. dollar, which, of course, has strengthened lately, giving the European manufacturer cause for optimism. “We will see the break-even somewhere on the A380; we will see it particularly, obviously, if the dollar is at rates as we see them today,” concluded Ring.