TOULOUSE, France (Reuters) - Airbus’s decision to shut production of the A380 looks set to reignite a translatlantic trade row over mutual claims of illegal aircraft subsidies, even as Airbus implements a two-year plan to stop making the world’s largest airliner. Slideshow ( 2 images ) The planemaker announced the shutdown on Thursday due to weak sales, eliminating a model at the heart of a record trade dispute between the European Union and United States over government support for Airbus and its U.S. rival Boeing. After 15 years and thousands of pages of arguments, the two sides are locked in arbitration proceedings at the Geneva-based World Trade Organization to determine the amount of harm each has caused through support, a possible precursor to sanctions. The WTO’s appeals body last year said the EU had failed to remove subsidized government development loans for the world’s largest airliner, the A380, and Europe’s newest long-haul jet, the A350, causing losses for Boeing and U.S. workers. Now, the EU is preparing to argue to the WTO that A380 subsidies no longer exist because the aircraft is being taken off the market, said a European source familiar with the case. It will argue that the A380 part of the case should be halted because it will not be built after 2021, citing an earlier decision to drop charges on the now defunct A340, two European sources said. The United States argues that subsidies paid to the A380 in the form of government loans have irreparably caused lost sales to Boeing and that this should be remedied through sanctions. Airbus and Boeing declined to comment. Last year’s appeals ruling was part of a two-way battle between the EU and the United States over aircraft subsidies that could spark tit-for-tat reprisals between the two trade superpowers. The Trump administration last year said the United States would slap countermeasures on European goods unless the EU stopped “harming U.S. interests”. WTO rules allow it to target any industry since all goods fall into one category. Boeing has predicted such tariffs could reach billions of dollars a year starting as early as 2019. The EU has highlighted wins in a parallel case against U.S. subsidies for Boeing, and Airbus says this could in turn spark EU sanctions against the United States. Airbus said on Thursday it would no longer need to repay state loans on the A380 because governments had agreed to share some risk in the roughly 15-billion-euro project. It is estimated to have 1 billion euros in remaining unpaid government loans tied to the A380. The United States has consistently called on Airbus to forego the European loans or pay them back at market rates.<doc-sep>The Airbus A380, the world’s largest jetliner with a wingspan of almost 80 metres, is seen on the tarmac during the Paris Air Show in Le Bourget airport. Reuters/Pascal Rossignol/File Photo The Airbus A380, the world’s largest jetliner with a wingspan of almost 80 metres, is seen on the tarmac during the Paris Air Show in Le Bourget airport. Reuters/Pascal Rossignol/File Photo When it flew for the first time just over a decade ago, the Airbus A380 was famously hyped for being a bird so enormous that infrastructure at airports would have to be expanded to accommodate it. Airbus has now announced that the superjumbo has only a couple more years to live – the world’s largest passenger airliner will not be produced after 2021. Emirates, the A380’s biggest customer, will take delivery of 14 more aircraft over the next two years. The Dubai-based carrier has restructured its order, cutting the orderbook with Airbus from 162 aircraft to 123. As a consequence, and given the lack of order backlog with other airlines, Airbus will cease deliveries of the A380 in 2021. The over 500-seater double-deck aircraft, which came at a list price of $446 million, inspired awe among passengers and aviation enthusiasts, but put serious pressure on airline accounts. Also in Explained: Why is IndiGo cancelling its flights? What lies ahead? The fuel-guzzling luxury jet also faced powerful competition from dual-engine long-range aircraft such as the Airbus A350 and A330neo, and the Boeing 787 and 777 families, all of which made more financial sense for carriers. When it first took off in 2007, the A380 was expected to cater to a market of 1,500 giant aircraft connecting global hubs such as London, New York, Dubai and Tokyo. But as of now, Airbus has sold only about 250 A380s, and has never made a profit on the aircraft. As orders shrank, Airbus has been cutting employees, and the future of jobs at the company is now heavily dependent on the success of its new generation of aircraft. Emirates has decided to replace its A380 order with A350s and A330s, and will take deliveries of 70 of these smaller aircraft in place of 39 A380s. The A380 is seen as being complicated and expensive to build, with aircraft parts being manufactured in France and Germany (fuselage), Spain (tail section), and Britain (wings), and the final assembly and finishing being done in Toulouse and Hamburg. However, what really killed the plane was the fact that the industry, already leaning towards more efficient aircraft when the A380 first took wing, has in the years since made a decisive shift away from giant machines to smaller, wide-bodied jets. Airbus employees work in the fuselage section of an Airbus A380 airplane at the production line of the Airbus facility in Finkenwerder near Hamburg, Germany. Reuters/Christian Charisius/File Photo Airbus employees work in the fuselage section of an Airbus A380 airplane at the production line of the Airbus facility in Finkenwerder near Hamburg, Germany. Reuters/Christian Charisius/File Photo Indeed, even as Airbus conceived the A380, its competitor, Boeing, was working on plans for its own superjumbo. But the American company took the call to give up that idea and instead put its money on the smaller and more efficient 787 Dreamliner. Airbus did have a plan to revamp the A380 to make it more efficient, but did not have an orderbook that would justify the investment. The stoppage of production does not, however, mean the majestic beast will become extinct in the skies. The existing fleet of A380s, in the service of carriers such as Emirates, Singapore Airlines, Lufthansa, Qantas, British Airways, and Air France, will continue to operate for at least another 10 years.<doc-sep>"Emirates has been a staunch supporter of the A380 since its very inception," said the airlines' chairman Sheikh Ahmed bin Saeed al-Maktoum. "While we are disappointed to have to give up our order, and sad that the programme could not be sustained, we accept that this is the reality of the situation," he added.<doc-sep>Airbus has announced it will end production of the world’s biggest passenger plane, the A380 “Superjumbo” model, by 2021. The admission of long-term failure comes after Emirates, the largest customer of the A380, reduced its order from 162 to 123 aircraft. The double-decker plane is beloved by passengers but has proved an abject commercial failure. More than half of the entire production planes ordered are for Emirates. The Dubai-based airline has opted to take smaller A330 and A350 jets instead. Emirates said it had struck a reduced deal worth $21.4bn (£18.9bn) with Airbus that will see it take on another 14 new A380s in the next two years, and that the airline was “sad” to see the model discontinued. Inside the A380: the world's largest passenger plane Show all 12 1 /12 Inside the A380: the world's largest passenger plane Inside the A380: the world's largest passenger plane First class lobby of the A380 2014 model AFP/Getty Inside the A380: the world's largest passenger plane Lounge bar on the A380 2015 model AFP/Getty Inside the A380: the world's largest passenger plane First class suite of the A380 2014 model AFP/Getty Inside the A380: the world's largest passenger plane First class compartment of the A380 2007 model AFP/Getty Inside the A380: the world's largest passenger plane The 1st class bar and lounge of the A380 2004 model AFP/Getty Inside the A380: the world's largest passenger plane Business class compartment of the A380 2007 model AFP/Getty Inside the A380: the world's largest passenger plane Business class bathroom of the A380 2010 model Getty Inside the A380: the world's largest passenger plane Bar on the A380, 2016 Getty Inside the A380: the world's largest passenger plane First class suite of the A380 2014 model AFP/Getty Inside the A380: the world's largest passenger plane First class suite of the A380 2014 model AFP/Getty Inside the A380: the world's largest passenger plane First class compartment of the A380 2014 model AFP/Getty Inside the A380: the world's largest passenger plane Business class seating on the A380 2016 model Getty The Airbus chief executive, Tom Enders, said: “As a result of this decision we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years. “This leads to the end of A380 deliveries in 2021.” Mr Enders, who is set to retire in two months, said: “The A380 is not only an outstanding engineering and industrial achievement. Passengers all over the world love to fly on this great aircraft. Hence today’s announcement is painful for us and the A380 communities worldwide.” Airbus A380s will continue in operation for a wide range of airlines, including British Airways, for years to come. The planemaker has vowed to continue to provide technical support for the model. A year ago Airbus said the future of the plane had been secured for the next decade, though the rate of production would fall to one every two months. But since then the secondhand value of the aircraft has come into question, with two of the first Singapore Airlines planes to fly being broken up for parts after just 10 years in service. The Airbus A380 first flew commercially for Singapore Airlines in 2007, and has been bought by a dozen other airlines including British Airways, Air France, Lufthansa and Qantas. The jet has proved extremely popular with passengers, with a special website allowing travellers to pick routes and airlines that will allow them to fly on the Superjumbo. But the A380 has never flown many important business routes, including the premier intercontinental link between London and New York, on a sustained basis. Up to 3,500 jobs will be affected, including hundreds in the UK at the Airbus factory in Broughton, north Wales, and at the Rolls-Royce plane engine factory in Derby. Airbus reported healthy profits in its 2018 full-year results.<doc-sep>
Airbus has announced it will end production of its A380 superjumbo passenger jet after failing to secure orders – a move that puts UK jobs at risk. The European aerospace group said it had made the “painful” decision to stop making the world’s largest superjumbo in 2021 after Emirates, the A380’s biggest customer, reduced an outstanding order for 53 planes to only 14. Emirates will instead order 70 of the smaller A330 and A350 aircraft, underlining the trend towards smaller, more efficient aircraft that made the A380 unsustainable. The cancellation of the A380 will affect the jobs of as many as 3,500 Airbus staff, including about 300 at its factory in Broughton, north Wales, which constructs the model’s wings. The Broughton site has about 6,000 employees, while there are another 3,000 in Filton, near Bristol; some of whom work on landing gear and fuel systems for the A380. However, Airbus said a “significant number” of staff will move to production of other, more popular models and major job losses in the UK are not expected as a result of the announcement. Rhys McCarthy, the national officer for aerospace at Unite, said the union is seeking assurances from Airbus that there will be no job losses. He added that companies in the A380 supply chain, including Redditch-based GKN, are a “key concern”. Tom Enders, Airbus’s outgoing chief executive, said the cancellation was “painful for us”. He said: “We have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years.” Speaking at Airbus’s headquarters in Toulouse, France, Enders said the effect on jobs in the UK “needs to be evaluated”. He said: “Hopefully we can reuse and redeploy a significant number of employees there. “What we’re seeing here is the end of the large, four-engine aircraft,” said Enders, who admitted that the company was a decade late in developing the superjumbo. Boeing, Airbus’s American arch-rival, this month celebrated 50 years of production of its 747. Engines for the A380 are produced in Derby by Rolls-Royce, another major British aerospace employer, although it is thought that the effect on UK jobs numbers will be small. In a statement, Chris Cholerton, Rolls-Royce’s civil aerospace president, said: “The A380 is a world-class feat of engineering, much loved by passengers, and we are obviously saddened that deliveries will come to an end.” Airbus said that more than 190 million passengers have flown in the A380 since the first plane rolled off the assembly line in Toulouse, France, in 2007. However, the plane, which can theoretically carry as many as 800 passengers, has struggled for profitability as demand for mid-sized jets boomed. Airbus, which on Thursday also announced stronger than expected profits for 2018, is planning to ramp up production of its smaller models even as the A380 winds down. It is targeting between 880 and 890 deliveries of aircraft to its customers during 2019, a 10% increase from its record haul of 800 in 2018. However, the A380 cancellation will add another element of uncertainty for the future of UK operations already threatened by the prospect of a no-deal Brexit. Enders last month decried “Brexiteers’ madness”, saying that future investment decisions would be influenced if Brexit led to significant trade frictions. Guardian business email sign-up Enders on Thursday said he believed the “voices of reason” would prevail, avoiding a no-deal Brexit. In June last year Airbus said there would be a cost of €1bn (about £880m) for every week of delay in production. The company and its suppliers have built up buffer stocks of about €1bn, in line with estimates made in June. Enders said: “Looking at the situation as it is I’m still optimistic that a solution can be found that avoids a fall from a cliff.” The end of the A380 may free up space at Airbus’s Toulouse and Hamburg facilities, where final assembly is currently carried out, giving them a boost in the competition for business with the UK. However, Enders denied reports that Spain had made a formal offer to take wing production from the UK after Brexit. The end of the A380 comes at a crucial time for Airbus as it takes on a new leadership team after losing out to Boeing in the aircraft deliveries race in 2018. Guillaume Faury, a former helicopter engineer who became the president of Airbus’s commercial aircraft business in February 2018, will take over from Enders as chief executive in April.