Airbus Bets On Smaller Jets After Dumping The A380

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Today’s Stock Market News — European plane maker Airbus for two decades was the biggest champion of the world’s largest airliners. After dumping the A380 superjumbo earlier this year, the jet maker is all but ceding the market for the very biggest airliners to rival Boeing Co.

Guillaume Faury, who takes the chief executive reins next month, said the market for planes with 400 seats or more is too small to fight over. The company instead will step up its battle with Boeing for a range of smaller jets that make up the bulk of the commercial-airliner fleet.

“It might make more sense to be more and more competitive serving 95% or 98% of the market than trying to invest a lot of money to capture the small remaining part of the market,” Mr. Faury said in an interview ahead of taking Airbus’s top job. He currently runs the company’s commercial-plane business.

Airbus last month said that in 2021 it would stop building the A380, which never turned a profit. Airlines shunned the 555-seat double-decker, spooked by the need to fill so many seats and by the plane’s pre-discount price tag: $445.6 million.

Airbus’s decision leaves Boeing dominating the big-plane market. That is a big switch. Boeing for years denigrated market prospects for big, four-engine planes after Airbus bet on the A380. Now the U.S. plane maker is the one pushing the big planes, albeit mostly with more efficient two-engine models. It is winding down production of its own four-engine jumbo, the humpbacked 747.

Boeing next week will formally unveil its new 777X, a 425-seat twin-engine long-haul plane. It is even longer than the 747 jumbo jet and more fuel efficient. British Airways parent International Consolidated Airlines Group SA last week announced an $18.5 billion order for that airliner to replace the carrier’s aging 747 jumbo jet fleet. Boeing already has won more 777X orders before the plane even takes off than Airbus secured for the A380 over the 19 years it was for sale.

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Airlines will need 1,500 or more 777X sized planes, said Ihssane Mounir, Boeing’s senior vice president for commercial sales.

Without the A380, Toulouse, France-based Airbus is left to compete at the top end of the airliner market with its biggest twin-aisle plane, the A350-1000. It carries on average 366 passengers and has a list price of $366.5 million before industry-standard discounts, compared with $442.2 million for the largest of two versions of Boeing’s 777X.

The two manufacturers also battle over the smaller wide-body market, where Boeing offers the 787 Dreamliner and Airbus the A330 and A350-900. Airbus previously studied stretching the A350 to add more seats but shelved the project to focus resources on upgrading smaller models. Airbus didn’t see much demand for the larger plane, which also could have further weakened demand for the A380 when Airbus still sold it. Mr. Faury said Airbus has no new plans to enlarge the A350.

“We will see whether there are, at some stage, reasons to stretch a bit the aircraft and to which extent there is any market large enough to justify further investment,” he said. Echoing Boeing’s longstanding argument against the A380, Mr. Faury said demand for long-haul planes is focused more on smaller, very long-range aircraft.

Getting that bet right is vital for the incoming CEO to prevent Boeing from stealing an edge in their tightly fought duopoly. Boeing’s Mr. Mounir says the current competitive landscape gives his company an edge. “There is no real competition,” he said. The size of the 777X gives it a per-seat fuel-burn advantage over the rival Airbus plane, he said, adding the Boeing plane also has a larger fuselage.

Boeing has secured 777X orders from the world’s biggest carriers, including Emirates Airline, Deutsche Lufthansa AG and Qatar Airways Co., many of the world’s biggest large-plane buyers. But even they see limited demand in the segment.

“The airlines that have ordered it are the ones you’d expect to order it,” said Willie Walsh, IAG chief executive, a week after buying the new Boeing plane. “I think it’s a small market.”

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