Airbus 380

Quote: Pacomartin

People seem willing to spend insane amounts of money to fly business and first class on Emirates.

People? Or relatives of the various sheiks? Corrupt officials of various governments? Private showers, ultra luxury hotels. Is it a valid market or a flash in the pan?

>>>So the big issue is do they throw more money in developing a next generation set of engines to reduce fuel costs in the
>>>blind hope that US airlines will change their mind after decades of saying no, and purchase a 100 of these jets.
Blind hope is not much for a business plan these days, but new and quieter, more fuel efficient engines are nice to have.

>>>The Dreamliner cost $32 billion to develop, and while it is a less expensive plane, there are over a thousand on order.
Boeings got something going for it; or is it that Airbus has a bad reputation of going from Alternate Law to Crash.

In contrast to the Dreamliner, the A350 cost about $15 billion to develop and already has 750 jets on order. It is possible that the A350 may not outsell the Dreamliner, but prove to be more profitable because of the lower costs.
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It was naturally assumed that China and Japan would be purchasing some of the A380's, but so far China has bought only 5 and Japan zero. The US airliners are determined not to buy any, and there are predictably no orders in Latin America or Africa.

It is going to be difficult to decide to spend more money on a A380neo this year. Emirates is showing no signs of extending their 12 year leases on the current airframes (of course that may depend on if they have something to replace them). The resale market may fill up with old A380's, making selling new ones even harder.

Airbus is still hoping that Delta will buy the A380, but Wall Street is prepared to punish that decision.

Quote: Pacomartin

Airbus is still hoping that Delta will buy the A380, but Wall Street is prepared to punish that decision.

I don't know about profitability of any particular model, but I seem to recall that a great deal of the Dreamliner(?) is manufactured by others and merely assembled in Everett, Washington. So how do you allocate profit on an assembled versus a manufactured plane? Airbus probably has some subcontractors too.

I think the most "punishment" comes from maintenance costs, spare parts storage, training costs in any "second" plane. I also think the flying public will inflict some punishment, but don't know what Wall Street could do other than bad mouth the stock and hope the bankers charged higher interest rates.

Sure the Persian Gulf is an exception in the market. Solid Gold Faucets in those showers is not the usual factor in choosing an airline or airplane.
Everyone else seems to want: quiet operation, short haul capability, fuel savings, quick turnaround, and capacity.
I can't see these Gold Faucets as "part of the market" because the decisions on those planes are not made by "part of the market" the decisions are made by The Head Sheik and they will be made for ulterior motives at all times.

Quote: Fleastiff

I don't know about profitability of any particular model, but I seem to recall that a great deal of the Dreamliner(?) is manufactured by others and merely assembled in Everett, Washington. So how do you allocate profit on an assembled versus a manufactured plane? Airbus probably has some subcontractors too.

Profitability is measured by the general contractor. Profit made by subcontractors is sometimes figured by government to access economic benefit of the airframe in determining what kind of government incentives to offer.

Quote: Fleastiff

don't know what Wall Street could do other than bad mouth the stock and hope the bankers charged higher interest rates.

That's what I meant. Analysts will go crazy with dire predictions which will drive down the stock price.Wall street analysists sometimes praise moves that undermine the economy as a whole. If an airline elects to try and squeeze more than 30 years of life out of every airframe, delay new purchases, cram the seats 28" apart, get occupancy rates over 85%, then they often get the praise of analysts which drives up stock price.

Quote: Fleastiff

Sure the Persian Gulf is an exception in the market. Solid Gold Faucets in those showers is not the usual factor in choosing an airline or airplane.
Everyone else seems to want: quiet operation, short haul capability, fuel savings, quick turnaround, and capacity.
I can't see these Gold Faucets as "part of the market" because the decisions on those planes are not made by "part of the market" the decisions are made by The Head Sheik and they will be made for ulterior motives at all times.

Trump has solid gold faucets in his private jet. Profitability is certainly helped because they have customers who will pay $40K for private cabins.

The Middle East Airlines fly the A380 to 30 airports. I think there are 11 other airports that can handle the A380 that the three Middle East airlines (Emirates, Etihad, and Qatar Airlines) do not fly to as of now. Emirates also has 143 Boeing 777's, more than twice the 58 A380's in their fleet. They also have 30 older widebodies (no narrowbodies).

Although the A380 often has 400-427 seats in economy, the rest of the jet is being treated as an ultra luxurious yacht. The elite love it because they don't even have to go through the same door as the economy class. But the true financial return from the jet was supposed to be by flying 750-850 people at very low cost per seat. Part of that cost savings was to come from restricted slots for take offs and landings at crowded airports. But nobody is using the airframe that way.

Okay some snob appeal is involved in separate doors and uncluttered this and that and gold and heck we all know Korean tyrants like saucers not plastic bags... but every decision done in the Emirates is still done by a self motivated Sheik.

No one is safe in forecasting business decisions made by people who can afford to be whimsical for their own amusement.

Quote: Fleastiff

... but every decision done in the Emirates is still done by a self motivated Sheik..

I will grant you that the whole idea of Emirates airlines seems a bit crazy. It's a city of 2 million people compared to London with a metro population of 13-14 million. Northern Europe is the most natural place in the world for major hub airports as it is densely populated and in the center of the land hemisphere (the half of the world containing the most land).

But Emirates Air has a vast and much more modern fleet of widebodies than British airways.

Widebody	British Airways	Emirates
Airbus A330	0	21
Airbus A340	0	7
Boeing 747	43	3
Boeing 767	14	0
Boeing 787 Dreamliner	8	0
Boeing 777	58	143
Airbus A380	9	58
	132	232

The launch of the A380 project in December 2000 was based on the following 6 firm orders for passenger+freight versions. Airbus was convinced that this order was enough to start the project with the hope that 250 would be break even point, but total orders would exceed 700.

12+0 Qantas
10+0 Singapore Airlines
10+0 Air France
5+2 Emirates
6+0 Virgin Atlantic
5+5 ILFC (leasing company)

Of that initial group of six orders, here is how they stand today. The freighter version was cancelled completely a few years ago.

12 QANTAS AIRWAYS (fulfilled initial order)
19 SINGAPORE AIRLINES (fulfilled initial order & 9 more)
10 AIR FRANCE (fulfilled initial order)
58 EMIRATES (fulfilled initial order & 51 more + 97 on order)
0 Virgin Atlantic (technically not cancelled, just delayed)
zip ILFC cancelled their order and is now merged with Aercap

Not the growth envisioned by Airbus.

Quote: Pacomartin

I will grant you that the whole idea of Emirates airlines seems a bit crazy. It's a city of 2 million people compared to London with a metro population of 13-14 million. Northern Europe is the most natural place in the world for major hub airports as it is densely populated and in the center of the land hemisphere (the half of the world containing the most land).


Not the growth envisioned by Airbus.

Even if one concedes the pre-9/11, pre-dotcom crash nature of the time when Airbus planned the project, it still reeks of a we-must-make-a-bigger-one mentality. The era was full of execs who came up with all kinds of crazy nonsense that failed.

Quote: Pacomartin

The launch of the A380 project in December 2000 was based on the following 6 firm orders for passenger+freight versions. Airbus was convinced that this order was enough to start the project with the hope that 250 would be break even point, but total orders would exceed 700.

Remember the Concorde would sell 250 units in a few years? About twenty were built total :(

Now the A-380, previously the Concorde and, not that I recall it but I've read about it, the Comet(*). In contrast I don't recall a major post-war American airliner project being such a dud. Maybe the L-1011 Tri Star by Lockheed (I flew in one with Delta in 1990!), long past the glory days of the Constellation.

Military aircraft are another matter. Plenty of duds on both sides of the pond (F-20 anyone?)

(*) Actually the Comet was a big hit, which ironically was the downfall of de Havilland, it's manufacturer.

Quote: Nareed

Now the A-380, previously the Concorde... In contrast I don't recall a major post-war American airliner project being such a dud.

The A-340 with 377 airframes built was pretty much a dud as well. Especially in comparison to the immensely profitable A330 with over 1100 built and the A300 with over 560 delivered.

Of course, a lot could be blamed on 9-11 (less than 10 months after they began the project). No one expected air traffic expansion to slow so massively in the following decade. They thought that more airports would have limited landing slots which would have made the big capacity more valuable.

It will be interesting to see if they fund the A380neo.

Quote: Pacomartin

Of course, a lot could be blamed on 9-11 (less than 10 months after they began the project). No one expected air traffic expansion to slow so massively in the following decade. They thought that more airports would have limited landing slots which would have made the big capacity more valuable.

About the Concorde much was blamed on the oil shocks after the Yom Kippur War, and the ban on supersonic travel over the US. Some accounts add the increasing importance of transpacific travel and the Concorde's limited range.

It may be Europeans lack something which keeps them from evaluating the market. or it may be US companies are less prone to taking chances. Boeing's SST died for lack of government support, which no industry should ever use and much less rely on. Its Sonic Cruiser stopped at the conceptual stage. I recall Boeing and maybe McDonell-Douglas (before it was swallowed by Boeing), both studied a super-jumbo like the A-380 but decided against it. MD did try out a revolutionary type of engine, the unducted fan jet, late in the 80s, but nothing came off it. On the other hand, Boeing has done a lot of innovation in materials. This is not seen, but its effects are felt.