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Airbus wins brinkmanship battle, but A380 is still on the brink

So Emirates Airline blinked first. In the brinkmanship contest that has been going on for the past few months between the Dubai airline and the European manufacturer of the Airbus A380, the Emiratis appeared to give way with an immediate order to buy 20 of the monster planes and an option to purchase another 16 in a deal valued at $16 billion.
That same deal was all-but signed back in November at the Dubai Air Show, but was shelved at the last minute when rival US plane maker Boeing snuck in with a similar-sized deal for its 787 Dreamliners, the A380s main rival.
That was a PR coup for the Americans, but it also ratcheted up the stakes in the Airbus standoff to the stage where, earlier this week, the Europeans were warning — credibly — that they would cease production of the A380 altogether if Emirates did not reaffirm its commitment.
The Airbus threat — that would have involved plant closures and job losses in France and Germany — was credible because, lovely plane though it is, the A380 has not proved to be a hit with most of the world’s airlines.
The big US carriers have largely put America First and gone for Boeings; some A380s have been sold in Europe and Asia, but not in enough quantities to guarantee its future, without Emirates. The Dubai airline flies over half of the global total, and that proportion will rise with the latest Emirates order.
There are good reasons for that. The A380 was a product that fitted Emirates’ global strategy perfectly in 2008, when it first took delivery.
The Dubai airline wanted to make itself the premier “super connector” in the world, flying passengers in big numbers between big aviation hubs. It also wanted to do its bit for the Dubai economic strategy of relying on the. “Three Ts” — trade, transport and tourism. Few could deny it has been successful in both those aims.
But a lot of other things have happened in the decade since Emirates hit on its winning strategy. Plane and engine technology has advanced to the stage where smaller, more fuel efficient aircraft than the A380 can make the globe-crossing trips, often without the need to stop at a super-connector.

The Airbus threat — that would have involved plant closures and job losses in France and Germany — was credible because, lovely plane though it is, the A380 has not proved to be a hit with most of the world’s airlines.

Frank Kane

So what looks like a climb-down by Emirates is actually a statement of “mission accomplished” by the Dubai airline. It has used the A380 to get where it wanted, and can now pursue its strategy with a variety of other aircraft, including smaller and more efficient Airbus models.
It does not suit Emirates to get rid of the A380 just yet. Too much of its brand investment has been involved in the plane, and it still has a cachet among global travelers.
But the planes days are still numbered. The fact that Airbus threatened to stop production without Emirates’ new orders is a small sign of desperation in itself. The plane has been a financial disaster for Airbus that the new orders will never hope to reverse. 
Although Airbus senior executives are optimistic the Emirates’ order will persuade other airlines to back the A380, most experts are skeptical this will happen in any quantity necessary to reverse the decline.
“Airbus hasn’t secured anything other than a deal to make even more loss-making planes that will never be profitable,” one aviation analyst said yesterday.
The A380 is still a great plane, and will fly for years in Emirates’ livery. But its day has clearly come, and nearly gone.
• Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai