Bloomberg News

Air France Defers Delivery of Airbus A380s on Slack Demand

April 11, 2013

Air France-KLM Group (EAD) is looking to push back delivery of two Airbus SAS A380 superjumbos it has on order as Europe’s biggest airline reins in capacity growth amid sluggish demand.

The company, which has eight A380s in the fleet of its French division and four yet to arrive, disclosed the plans in documentation published ahead of a May 16 annual meeting. It also canceled a single A380 option that couldn’t be extended.

Air France-KLM is delaying deliveries of the double-decker as it pursues a three-year plan aimed at paring debt and lifting productivity to make it more competitive. The A380s in question had been due for handover in 2013 and 2014, and the carrier will now take just one plane in each year, according to Airbus.

“Given the uncertain economic environment and the persistent imbalance between transport supply and demand, the group has opted for a limited increase in capacity in both passenger and cargo,” Air France-KLM (AF) said in the AGM document. Delivery of one Boeing Co. 777 will also be delayed by a year.

Rate Reduction

The carrier’s main operational fleet stood at 407 aircraft as of Dec. 31, of which 167 are long-haul planes. Following capacity growth of just 0.6 percent last year, it plans increases of 1.5 percent in 2013 and 2 percent next year.

Airbus said in January it aims to win 25 A380 sales this year after securing only nine against a target of 30 in 2012 for a plane that seats 525 passengers in a three-class layout.

The Toulouse, France-based company, which handed over the 100th superjumbo on March 14, has also cut the delivery rate for this year to 25 aircraft to help cope with wing repairs.

“We listen to our customers and try best to work along their current fleet needs,” Airbus spokesman Stefan Schaffrath said, adding that delivery dates for the last two Air France A380s are under discussion and “subject to confidentiality.”

Deutsche Lufthansa AG (LHA) board member Carsten Spohr confirmed today that Europe’s second-biggest airline is sticking with a capacity freeze at its main German business. According to plans first revealed last year, Lufthansa will keep the fleet at 400 aircraft, with older models retired faster than originally planned as new, more fuel-efficient planes are delivered.

The freeze means the carrier will operate 20 fewer aircraft than once planned this year and double that number in 2014.

Cologne-based Lufthansa will trim the number of single- aisle models to three as part of a push to restore European profitability that will see the carrier fold its main brand’s short-haul flights outside Frankfurt and Munich into an enlarged version of the Germanwings low-cost unit.

Lufthansa’s Bombardier Inc. DHC-8s and Avions de Transport Regional ATR72s will go this year, followed by its Bombardier CRJ700 turboprops and Boeing Co. (BA:US) 737s in 2015, Spohr said.

French newspaper La Tribune reported earlier that Air France would delaying taking the A380s to conserve cash.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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