Newsstand - Bombshell for Airbus over A380 superjumbo costs

BTW, is superjumbo all one word?

AIRBUS’s A380 superjumbo programme will lose more than $8 billion (£4.2 billion) over its commercial life and never pay back the £2 billion-plus in state aid that helped launch it, according to a report from a panel of leading American academics and analysts.

http://www.timesonline.co.uk/article/0,,2095-1572218,00.html

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The study was originally completed in 2002, but was not released by Boeing then “for reasons not shared with the study team”.

Probably it is being released now because of the trade dispute between Boeing and Airbus. I seriously doubt if the guys who wrote the report have had any access to Airbus's cost and operating figures. It is possible to come up with any kind of figures if you pluck figures out of the air.

Also the total orders for the A380 before it has even flown and before too many airports have been upgraded is 250 (149 firm orders + options).
http://news.airwise.com/story/view/1106247220.html
This is half the sales predicted by the report over 20 years even before the first plane has even flown, despite the fact that unlike other aircraft before it, airport modifications are required in order to operate it.

Time will tell. If the A380 maintains a good safety record and crosses a certain threshhold of A380s in operation, the A380 is going to be able to hold its own for certain needs. In any event time will tell better than a Boeing-funded study or two.

Remember that the 300 plane "break-even" point assumes all those planes are sold at the ~$280 million list price. You can bet that a good chunk of those first 150 orders were at steep discounts - probably upwards of one-third off list in actuality, even if the report says 50% off.

That being said, I still see no reason why Airbus can't sell upwards of 750 of these planes over the 20 year program life, which should ensure a nice return on the investment.

Mind you, every airplane program does this, and you can be sure NH received a substantial discount to order the first 50 787s and Boeing has been offering discounts and other incentives (such as a training center in SIN the SQ 777-300ER order and sourcing parts from Korea for the KE 787 order).

However, Boeing very much wants to be sure Airbus cannot get launch aid for the A350. EADS has a large part of their capital invested in the A380 and their ability to get "open-market" financing for the A350 will be tough. If Boeing can stall the A350 launch for a few years, that gives them time to win more 787 orders and possibly make the A350 unviable (especially if current Airbus customers order the 787 because they can get it now).

Mind you, Airbus doesn't need launch aid anymore. As a mature manufacturer with a complete product line and an equal share of the market, they should seek their capital on the open market as Boeing does (the rules of the current agreement does allow the US government to provide direct launch aid for the 787, but the US govt. is not about to do so). And EADS defense side is as big as Boeing's, so Airbus can no longer claim Boeing gets "stealth funding" from Integrated Defense System's contracts.

On the surface, Airbus seems to have more to lose from going to the WTO then Boeing does. It is likely the WTO will rule government launch aid illegal, and even if they also throw-out the $3 billion 20-year gift WA state gave the aerospace industry to build the 787 and as many of it's components as possible within the state, Boeing doesn't have the option of building the plane somewhere else.

And Airbus would doubly lose, since those benefits that WA state gave Boeing are being offered to EADS to build the A330-T here, as well. And if that is tossed, Airbus will not be able to get a similar deal elsewhere in the US, which will raise the price of the A330-T program.

If Boeing threw enough cash at them I'm sure they would write anything...

Boeing is in no position to play these games...

I'm in the too-early-to-tell camp. So far, the A380 has picked the obvious, low-hanging fruit. The next several years will show whether demand can go beyond the initial surge. As the histories of the 747 and Concorde show, very smart, informed people can make predictions that turn out dead wrong.

Probably it is being released now because of the trade dispute between Boeing and Airbus. I seriously doubt if the guys who wrote the report have had any access to Airbus's cost and operating figures. It is possible to come up with any kind of figures if you pluck figures out of the air.
That and the barrage of Boeing press releases trying to pre-empt coverage of A380 first flight. Noticed the flurry of order announcements recently?

The figures reported may well be true - but airplane prices were extraordinarily depressed post 9/11, not to mention delivery was many years away for the A380then. A much better measure of the A380 program profitability is what Airbus is getting now for each sold, which is why a 3 year old article isn´t worth as much as sensationalistic headline may suggest.

I think after the first batch of A380 sales (which correspond to the first batch of airport modifications), A380 sales will be quiet for a while, and then when the air travel picks up again and airports and airlines find more cash for new planes and airport expansion, and the A380 proves itself in operational service, A380 sales will pick up again.

I tend to agree. Airlines bought the plane for the proposed efficiencies over operating the 747. The plane is heavier then expected, which on paper hurts those claimed efficiencies, but until the thing is in the air (and, really, operating), nobody knows.

It may prove to be as expected, in which case where they can replace 747s they will.

It may prove to be amazing, which will spur all 747/777/A340-capable airports to modernize because airlines will want to replace as many of the above three planes they can with A380s where they can.

It may prove to be terrible, in which case airlines will either have to go to 800-seat configs, or look hard at 777-300ERs and 747-ADVs for their future purchases.

Mind you, even if it is not great, in an 800-seat config, the darn thing has to make money. :) And China and India's internal travel alone could make such a model very successful.

http://seattlepi.nwsource.com/business/220497_airbus18.html

Airbus SAS, the world's largest maker of commercial aircraft, said its new A380 plane will be "very profitable," and rejected a study funded by its main rival saying the superjumbo will lose billions of dollars.

I don't get why everyone is getting so worked up over this. What would you expect a study funded by Boeing to say? If Airbus funded a study that said the 787 would be a financial disaster, would you pay any attention to that?

Let the PR kids have their fun, but we don't have to dignify their drivel (on either side) by giving it more respect than it deserves

Airbus SAS, the world's largest maker of commercial aircraft, said its new A380 plane will be "very profitable," and rejected a study funded by its main rival saying the superjumbo will lose billions of dollars.

I'll spot them the 700 passenger planes (assuming China and India traffic takes off as Boeing and Airbus hope), but I'd be deeply surprised if they sell 300 A380Fs - especially with the 747ADV-F and 772-F entering service.

I don't get why everyone is getting so worked up over this. What would you expect a study funded by Boeing to say? If Airbus funded a study that said the 787 would be a financial disaster, would you pay any attention to that?

Let the PR kids have their fun, but we don't have to dignify their drivel (on either side) by giving it more respect than it deserves





Well Said...

I'll spot them the 700 passenger planes (assuming China and India traffic takes off as Boeing and Airbus hope), but I'd be deeply surprised if they sell 300 A380Fs - especially with the 747ADV-F and 772-F entering service.


A news release from April 21 says that China Southern Airlines just signed an order for 5 ex A 380 + 25 other Airbus aircrafts...