Could AirBus Group NV (EPA:AIR) Gain New A380 Customer By The End Of The Year?

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By Mark Michaels on September 26, 2014 Company

John Leahy, the cheif of sales of Airbus Group NV (EPA:AIR), stated yesterday that the company sees a distinct possibility of the addition of at least one new customer by the end of the year for its superjumbo jet A380.

The European plane manufacturer currently holds a total of 318 orders from 19 distinct customers for the A380, the largest passenger jet in the world. The aircraft is designed to carry up to 525 people.

According to Mr. Leahy, the industry rumors regarding a deal to add another new name onto the list of companies in line for the plane is a real possibility.

On Wednesday, Airbus lowered its demand predictions for the industry’s largest type of aircraft, which includes the Boeing 747-8 as well as the A380. However, the company revised up its overall demand predictions for jets for the next 20 years.

In July, the company lost one of its existing customers for the A380 when its recalled an order for six A380 aircrafts from Skymark Airlines, a Japanese company that faced challenges in funding its purchase.

The European aircraft maker also booked a previous order in February of 20 aircrafts from Amedeo, a leasing company, which leaves a net total of 14 orders so far for the year.

Hong Kong Airlines also submitted an order for 10 A380s, which it plans to cancel. The order has been moved to a part of the Airbus order books that is designated for unnamed buyers.

However, according to delegates from the financial industry, the company is focusing on the addition of up to two new buyers for the super jet in the next few months.

Fabric Bregier, the chief executive officer of Airbus, stated yesterday on Thursday that he is convinced that a strategic marketing plan will help push up sales.

The double decker A380 plane retails for a price tag of $414 million. Airlines usually get sizeable discounts for orders for new planes. Due to the aircraft’s size, some executives of airline companies see the A380 as a risky investment in a struggling economy. However, Bregier insisted that it is profitable to operate.

At an industry conference this week, rumors circulated that Turkish Airlines could lease a number of A380s, either from Amedeo or another airline, or both. While this would not yield immediate benefits for Airbus, but it is welcomed by the company as a indirect marketing push.

Turkish Airlines has connections through a codeshare agreement with Malaysia Airlines. Malaysia Airlines operates A380 aircrafts and is looking for immediate solutions to get funds to finance its restructuring of its operations following two aviation catastrophes.

After being asked about the prospects of leasing some A380 aircrafts, Temel Kotil, the chief executive officer of Turkish Airlines stated that there was nothing new to say on that subject.

Airbus is currently very dependent on three Gulf carriers that make up more than 50 percent of the orders for the A380. Of these three carrier, Emirates from Dubai holds the majority of the orders at 140 planes. According to Emirates, the airline company would be willing to purchase even more A380 planes if Airbus will improve its engines to save fuel.

Bregier said to media outlets that upgrading their A380 engines is not one of their priorities right now. Rather, his current goal is to sell the current model, which is making more than enough profits for key operators.

The chief executive also added that the company needs to convince other airlines that Airbus is confident in its ability to do so. However, Mr. Bregier did concede that in a few years the company will be looking into ways to innovate and improve the A380.

Most industry experts believe that is it very likely for Airbus to concede to the demands by Emirates, the company’s top customer. However, Airbus faces challenges regarding timing. Delaying the improvements too long could prevent its sales from bouncing back, while moving on too soon could limit the amount of new technology and developments available and put too much pressure on engineering resources.

On the other hand, Etihad Airways, a state owned airline by Abu Dhabi, unveiled its first A380 and showed off its new branding as it tries to take the battle in luxury flying to a whole new level and extend its rapid growth.

James Hogan, the chief executive officer of Airbus, stated that it was uncertain if Etihad Airways would up its order for 10 A380 planes. Qatar Airways, on the other hand, received its first 10 units of A380 aircrafts last week and hinted that it will purchase more later in the year.