By Benjamin Katz

Five years ago, Airbus made a bold bet: The plane maker would launch a zero-emissions, hydrogen-powered aircraft within 15 years that, if successful, would mark the biggest revolution in aviation technology since the jet engine.

Now, Airbus is pulling the brakes. The company has cut the project's budget by a quarter, reallocated staff and sent remaining engineers back to the drawing board, delaying its plans by as much as a decade.

Airbus's reckoning with hydrogen adds to the lineup of companies now recalibrating green efforts that they rushed to embrace in recent years. Oil giant BP recently said it would slash spending on renewable energy and pivot back to fossil fuels. Porsche has similarly scaled back its all-electric ambitions and is investing in new combustion-engine cars, citing lower-than-expected demand from consumers.

Airbus has spent more than $1.7 billion on the project, according to people familiar with the matter, but over the past year concluded that technical challenges and a slow uptake of hydrogen in the wider economy meant the jet wouldn't be ready by 2035.

The setback is a blow for the dream of clean aviation, which governments, investors and customers have pushed the industry to tackle.

Airbus says the past five years of work and money haven't been wasted. The company has established that hydrogen is technically feasible and delaying the project will give it more time to fine-tune the technology, executives said.

"Our destination is not changing," Bruno Fichefeux, Airbus's head of future programs, said in an interview. "To get there, we need to adjust to reality."

'Historic moment'

Airbus first unveiled a trio of proposed hydrogen-powered planes toward the end of 2020. The most ambitious would carry as many as 200 passengers and have a range of up to 2,000 nautical miles -- enough to fly from New York to Las Vegas.

"This is a historic moment," Airbus Chief Executive Guillaume Faury said at the time. "We intend to play a leading role in the most important transition this industry has ever seen."

Airbus set about laying the groundwork, recruiting a dozen airlines, from Delta to Air New Zealand, and more than 200 airports to explore how hydrogen could be built into their operations.

The plan raised eyebrows. Executives at airlines and suppliers privately questioned whether the 2035 goal was attainable, given hydrogen technology was still in its infancy.

There were a raft of technical challenges, not least the safety concerns exemplified by the 1937 Hindenburg disaster. Engines would need to be reconfigured to run on a different fuel. Aircraft would need to store the hydrogen in liquid form at minus 423 degrees. The heavier fuel load and equipment would weigh on seat capacity and range.

A hydrogen plane would also require a new supply chain to produce the fuel in large-enough quantities, transport it, and safely store it at airports.

Executives at Boeing, which had explored hydrogen for years, were vexed.

"We don't think hydrogen's the answer," then Boeing CEO David Calhoun said at an investor day in late 2022 when asked what the company was doing on the technology.

Despite the skepticism, Faury was determined. An engineer by training, the Frenchman had tried to convince Airbus's leadership to take hydrogen seriously even before becoming CEO. He mentioned it so often that some executives would roll eyes when he brought it up in meetings, former colleagues said.

Part of Faury's motivation came from his time as head of research and development at Peugeot, the French carmaker, in the mid-2010s. The auto industry had been caught off guard by the rise of electric vehicles, and Faury was wary that Airbus could face a similar battle, people familiar with his thinking said.

Airbus also had a commitment to a major shareholder -- the French state. The company had been a major beneficiary of a Covid-era government support package for the aviation and aerospace sector of 15 billion euros, equivalent to roughly $16.6 billion. The deal required Airbus to spend a portion of the money on bringing green aircraft to market by the 2030s.

The hydrogen project helped Airbus access additional government funding, as well as private green financing. Money was flowing into companies with green credentials, posing a potential risk for the aviation industry, which accounts for between 2% and 3% of global carbon emissions.

The hydrogen plane also helped attract new engineers at a time when green activist Greta Thunberg had helped popularize "flight-shaming" in Europe.

Airbus ultimately assigned the project an annual budget of about EUR400 million, primarily funded through its own coffers, according to people familiar with its financing arrangements. The company, which doesn't detail its R&D spending, declined to provide a breakdown of its spending.

Another 'development loop'

Last year, it started to become clear that Airbus might need to backpedal on the 2035 promise.

The company's initial 200-seater concept, which relied on feeding hydrogen directly into a regular jet engine, was fundamentally flawed: The combustion would still produce NOx emissions. Engine makers were also hesitant about investing heavily in the project, according to people familiar with it.

Instead, Airbus shifted focus to hydrogen-fuel cells, which use a chemical reaction to generate energy for an electric motor. It would produce only water vapor, but would require a more radical redesign of the airframe and propulsion system. The plane would carry only 100 passengers about 1,000 nautical miles.

Over time, even that proved challenging because of the extra weight of the fuel cells and their limited electricity generation. Instead of a short-haul narrow-body -- the workhorse of the aviation industry -- at best the aircraft would be more akin to a less appealing regional turboprop.

Meanwhile, Airbus executives watched as broader enthusiasm for hydrogen withered away. BP and Finland's Neste, for example, are among companies to have pulled plans for new hydrogen plants.

In early February, Airbus told workers that the hydrogen project's budget was being cut, and its timeline delayed.

Later that month, Faury said the project hadn't yet led to a commercially viable aircraft that could compete on price and performance. Engineers would start a second "development loop" to figure out what seat capacity and range the hydrogen aircraft might have, he said on an earnings call.

At a company event in March, the CEO compared the project to Concorde, a supersonic jet that was relegated to the annals of aviation history because it was too expensive to operate. "We have come to the conclusion that it would be wrong to be right too early," Faury said.

Write to Benjamin Katz at ben.katz@wsj.com

(END) Dow Jones Newswires

April 20, 2025 09:00 ET (13:00 GMT)

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