Why this is important to Wisconsin businesses: While some orders were canceled, increases in production of other models provide opportunities for Wisconsin suppliers.
As recently announced in the Guardian newspaper, AIRBUS made a decision to halt production of its superjumbo jet A380. This was largely due to the reduction in orders for the plane from Emirates, a major client whose outstanding order for 53 planes will be reduced to 14, leading to possible job cuts in the UK jobs at risk.
An article written in the French newspaper Europe 1, however, directly contradicted the Guardian article and cast the decision to halt production as good news since it allegedly ended a long-term battle in the airline market,. The A380, although popular with passengers, was never seen in the same light by the aircraft companies. Ending production will allow AIRBUS to concentrate on more profitable models such as their A320, according to the article authored by French journalist Clément Lesaffre. Over the past five years, only 17 planes with capacities of 575 to 850 passengers have been sold. Purchases are still clearly centered on the core market of long-range, medium-capacity and heavy carrier aircraft such as the A320 and A350 models. This has been proved by the fact that the Emirates switched their original order to 40 units of the A350 instead.
AIRBUS actually saw an increase in their share price of 4.3% after the announcement, as well as an increase in the group’s net profits of 29% to €3 billion and a progression in its turnover in 2018 of 8% to €63.7 billion.
The decision by the Emirates to switch to the A350 means a production boost over the next 10 years, resulting in a total of 7,600 planes on the AIRBUS order books (including the A330 model). The orders placed in 2018, worth €55.5 billion, bring total order value to €460 billion as of Dec. 31, 2018.
In terms of employment, no layoffs are planned, but rather, the estimated 3,000 to 3,500 workers on the A380 program will be reabsorbed into production lines for other aircraft models. Orders will decrease for subcontractors of parts for the A380 as the program approaches its 2021 end date.
The ramp-up of production to manufacture the new generation Airbus A320 and A350, the existing A330 family, and additional new programs announced by Dassault all provide opportunities for U.S. suppliers to enter the French aerospace market with niche and specialty parts or solutions. The market is moving toward high-tech solutions—in particular, materials such as carbon fiber—and environmental issues such as reducing engine noise and fuel consumption are increasingly important since the Paris COP21 environmental summit. The primary point of entry for most suppliers is to partner with Tier 3 small and midsize French companies, although original and unique technologies may capture the attention of the Tier 2 companies.