A380n(e)o

[lospilotos]

Emirates Gives Up on A380Neo, Pushes to Get Its 142 Superjumbos - Bloomberg (http://www.bloomberg.com/news/articles/2016-06-03/emirates-gives-up-on-a380neo-pushes-to-get-its-142-superjumbo)

First time I've ever heard talks of shutting down the production early...

[Wizofoz]

They said last year they were considering finishing production in 2018- seems like the decision is to keep building it for the moment.

[Capn Rex Havoc]

Wiz - They said last year they were considering finishing production in 2018

Hmmm - This was never said by Airbus Wiz.

[SMT Member]

They said there are gaps in the production line from 2018, not that they are shutting down.

[Wizofoz]

Actually, it was two years ago-

Airbus Raises Prospect of Ditching A380 as Orders Vanish - Bloomberg (http://www.bloomberg.com/news/articles/2014-12-10/airbus-at-crossroads-as-a380-jumbo-faces-spendorfade-conundrum)

Hmmm - This was never said by Airbus Wiz.

Err, yes- yes it was....

[Capn Rex Havoc]

Sorry Wiz-
This is what the CFO actually said -

Mr Wilhelm said the A380 project would break even up to 2018, “if we would do something on the product, or even if we would discontinue the product”.

Bloomberg and other media outlets jumped on the "discontinue the product" bit.

The CEO at the time came out and defended the A380 and the CFO's comments with respect to the break even point.

But hey Wiz - Don't let the facts get in the way of the story. :E

[Capn Rex Havoc]

and this Wiz - Since you like to post links to articles-

Wither the A380? » (http://airinsight.com/2014/12/16/wither-a380/)

[JAYTO]

The first 380 to leave Emirates has been bought by Coca-Cola. Their can production line has just been given a boost.

Just a Rumour :)

J

[nolimitholdem]

No, that rumour has been dispelled. Apparently the cans won't hold any liquid due to cracking...

[Wizofoz]

So, he said they were considering discontinuing the product. what else does "or even if we would discontinue the product" mean?

They decided not to.

[Capn Rex Havoc]

Wiz - You are an instructor on the 777 aren't you? If you said "Rex you will get a five even you do a go around off this approach" Does not mean that you are going to make me do a go around"

You are taking his comment out of context like all good media outlets do.

Where did he say that they were discontinuing the product?

He said they will "BREAK EVEN UP TO 2018", regardless. You are reading it wrong, and further, the CEO went on to allay the media that they were not planning to discontinue the product.

Jeez - its not that hard mate. You can do it, - say that you were mistaken. :E

[Wizofoz]

I didn't say he said they WERE discontinuing the product. I said they were CONSIDERING ceasing production. What do you think he meant when he used the exact phrase "Or even discontinue the product"?

The press picked it up, because that is what he said.

[Capn Rex Havoc]

ok Wiz, I can see you are an Emirates instructor. :ugh:

Emirates will make a profit even if they ground all aircraft for 3 months.

Where are the words "Considering" spoken? No, I didn't think so.

[Wizofoz]

The word "if" was.

[Capn Rex Havoc]

You are getting there Wiz.

The point the CFO was making was the financial status of the the 380. Not the closing of the production line.

You can do it.

Wiz was wrong even IF he keeps belligerently responding. :ok:

[Wizofoz]

Right- I do see what you mean, that it would break even even if they discontinued the program. I can see that is probably what he meant, but I don't see why he would have said it if it wasn't on the table.

[fatbus]

Children take it outside.

[Wizofoz]

No need, Fatty, I just agreed with him.

[Capn Rex Havoc]

:ok::ok:

Its all good Fatty

[Visual Procedures]

And then this this morning..

Forbes Welcome (http://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#7ba17a561b65)

Do the numbers predict an earlier end than we even thought?

[donpizmeov]

For TC to publicly say something there must be concerns.
Just need an expert to tell me when this will fix my roster.

[Wizofoz]

It was always going to be a money-loser for Airbus- kind of like our generations Concorde.

[glofish]

... and if you read the facts in the article precisely, it now reveals itself as money-loser for EK as well.

Some (me included) have constantly predicted what AB and TC now slowly admit, only to be cried down by the whale groupies. But you can't fool physics and the truth will always eventually expose the arrogant.

The whale will make a great attraction at the Smithsonian though.

[Capn Rex Havoc]

It was always going to be a money-loser for Airbus- kind of like our generations Concorde.

Airbus may well cancel the line, but to draw parallels to Concorde is a bit extreme.

How can you say "It was always going to be a money loser?" Such prescience Wiz. I don't know why Airbus didn't contact you when they were designing it.

Did you send an email to Boeing when they were designing the 747-8 and also advise them that its not a good idea?

[falconeasydriver]

As a pure observer these days I was paxing from SIN to GVA a couple of weeks ago to pick up the bosses jet and had a ride on an EK380. As it happened, I recognised the Skipper and said hello at the gate in SIN. Later on before departure I said hello and in the course of our 5 minute chat he showed me the tech log :ooh:
Without going into specifics, the jet was about 2 years old, but had the sort of problems I would have expected of a much much older airframe, typical Airbus, cheap to buy...but an expensive proposition to maintain.
Whilst all this is subjective, the thing just looks and feels poorly built, the upside is that it's quiet so I suppose that's a positive.

[nolimitholdem]

In April, Airbus executives admitted that output in 2017 could be as low as 20 aircraft. This is far below the 30 aircraft needed for annual recurring breakeven (this excludes program nonrecurring costs; there is no way to even begin to recover the $25-30 billion or so invested in the development of this aircraft)

Uhhh...I don't think you had to be a rocket surgeon to figure out that it was never going to make money for EADS. They admitted as much early on. (Surely most know by now that everything the EU touches is strictly not-for-profit?)

And IF it has made money for EK, even that could be viewed as a sort of subsidy due to extreme discounting at the launch not to mention the massive delay penalties. Knowing the modus operandi of the screw-tighteners at EK, all absorbed by the manufacturer. Good for EK short-term, but not exactly sustainable.

It was kind of amusing to watch Capn Rex trying to pedant Wiz to death only to have this article stick the dagger in.

[Capn Rex Havoc]

Glad that you are so easily amused Nolimit. Clearly you have a lot of time on your hands since you left EK.

:cool:

[fliion]

Glofish

Just expand a little on your theory precisely how it's losing $ for EK too pls?

[Wizofoz]

How can you say "It was always going to be a money loser?" Such prescience Wiz. I don't know why Airbus didn't contact you when they were designing it.


Plenty of people though it was a bad idea, and when the execution was so bad in terms of delays, it was apparent it was driven by the political hubris of the time, rather than any compelling reason to embark on the project, just like Concorde.

Why?

Because it was a four engine aircraft in the days of long range twins. Because it was designed to be stretched and never will be. Because it was a major airport aircraft when the world was going toward point-to-point services.

I'm not prescient, I'm professionally involved in aviation and had an informed opinion about the viability of the aircraft in terms of it's ability to be manufactured profitably.

Turns out that opinion was right.

Apparently having opinions, even ones that turn out to correct, is somehow offensive to you, Rex- strange that you participate in an internet aviation forum then, don't you think?

Did you send an email to Boeing when they were designing the 747-8 and also advise them that its not a good idea?

No, but in conversations with people about a subject we were both interested in (aviation) I pointed out that the 787-8, while a fine aircraft (as, I might add, is the A380) was a last ditch effort to produce a long range quad, and probably wouldn't sell very well, but at least the economics of producing a derivative were much lower risk than producing a clean sheet aircraft.

But then, that's me expressing an opinion, and that's a no-no, right?

[Capn Rex Havoc]

Wiz- Firstly, let me say, I apologise if you think I am offended by contrarian opinions. I am not. Because I differ in opinion to you does not, in any way shape or form say that I am offended. Methinks you are a being a tad precious here.

What you are saying, in argument, is that because it has four engines and is big, it was doomed to fail. I disagree.

If you need to get 615+ people to a destination in one go, you can't do it with a twin. If the technology was there to do it, then the 380 would have been a twin.

No doubt Airbus took a risk. Thats what innovation is all about. When Boeing first came up with the 747, the same arguments were made re no one would ever buy it as it was too big. Also, after the airlines committed to the 747, the economic down turn at the time, also meant that after the 747 was ready, airlines cancelled in droves and Boeing nearly went bankrupt.

There are two cases to look at here.

1. Is the aircraft profitable for an Airline like Emirates?

2. Is the aircraft profitable for Airbus.

I would say the answer to 1, appears, to be yes, after all, with so many 380s that EK has, over the years, and still produced a profit, I would say that it is a good fit.

I would say the answer to 2 is - Well, more grey. Clearly Airbus saw a greater demand marketing wise for the case to deliver the very large aircraft.

Feel free, to discuss. I am happy for it. :)

[fliion]

Rex,

There are actually three cases to look at (if we are talking about product success in the global marketplace)

3. The market's demand.

It's irrelevant whether EK or Airbus (highly unlikely) made actual money out of it when writing the 380's eulogy - the 742 & 744 were blockbusters.

The 764 & 748 - while making money for Delta & Airbridge Cargo et al respectively - were not.

The jury is still out on the 380 - but based on TCs comments this week, the opinions of respected objective experts n the field but more importantly market demand from long haul airlines - the 380's legacy is looking more ominous

[Wizofoz]

Rex

No problem.

I don't think it has been at all grey as to whether the aircraft has been a success for Airbus- it hasn't.

Even the statement by the CFO we talked about earlier simply said the aircraft would break even IN THOSE THREE YEARS- not even suggesting it would make profits to start to offset the enormous development costs.

Now, will it cost Airbus money? Quite possibly not, as Airbus financing has a lot of smoke-n-mirrors EU debt facility, where they secure loans that are only repayable should a project make profits- E.g a direct subsidy in that they are not open to normal commercial risk.

BUT it would be fanciful to think the aircraft will ever make profits for AB.

It doesn't make profits for airlines like Emirates- There ARE no Airlines like Emirates, there is only Emirates! Why else will we end up with more than half of all the airframes they will ever build.

And yes, I believe it makes money for the company at the moment. They got them cheap, and they fill them up with a lot of premium customers going to slot constrained airports- DXB-LHR is freakin' made for the aircraft, as probably is DXB-SYD.

But is there 120 airframes worth of such city pairs?

THAT gets grey.

It also then means, in the near future, we will hugely committed to an aircraft no longer in production, almost the sole customer for spares and with a doubtful after-sales market.

Then there's the 777-X

With it's introduction, the best way to transport those 615 passengers will be with two 777-8 flights, with the added bonus of having 250 more seats to sell.

[TURIN]

If EK are about to retire their first A380, what are they replacing it with?
Surely once the route structure builds up to this level of capacity it can only stay there or increase. Unless economic difficulties cause a downturn.
The 747 is in the main being replaced by 777s. Similar capacity at a fraction of the cost. Is there a similar replacement on the drawing board for the Whale?

[fliion]

Good question T...

Wiz's hypothesis doesn't cover slot constrained airports.

Airline boardrooms around the world are now well aware that placing a large order for the 380 - would actually be helpful to EK - everyone's competitor.

By not - a schadenfreude 'deathwatch' ?

[glofish]

Fliion:

Read the content in the article. It says that EK reported its first sales decline in a decade and the load factor has dropped by 3.1 points. It's admittantly open to interpretation, but to discard a contributing factor of the increase of capacity by the 380 would be nothing but naive. We all know that such oversize and overweight aircraft only work with very high load factors and the yield depends on the number of high yield seats. By simply looking at predicted loads, it is easy to see that basically only two or three destinations fulfill that wish.
No one "needs" to get 615+ passengers to any destination, one "can", but there is no where near any "need". The volume can be handled as Wiz described.

Your conspiracy theory of all other airline managers convening not to buy the whale, only to sabotage EK is only amusing. Feeling the low blood sugar level already?

[Monarch Man]

Just throwing a little more hydrocarbons on the fire.

The 380 has by its own lack of success in quantifiable terms taught AB a valuable lesson with respect to the market place for large aircraft such as it is.
Boeing, having created the market recognised 20 years ago that apart from several dozen super-hub or slot constrained airports already or projected to be in existence that the true growth potential lay in fragmented point to point travel. It was part of the business case for the 777, and definitely the 787 /777x. For their part, the talking heads in Toulouse realised that in order to be a true competitor they needed a bigger twin which we now see in the 350. The A380 programme has in essence been a financial and sales disaster for AB and the EU, but it has created a number of innovations that will live on in the 350, which by all accounts is a fantastic aircraft. Any commercial aircraft programme that is reliant on a sole customer for the vast majority of orders must be seen as not meeting the markets requirements, it must also follow on that the sole customer will employ this aircraft in increasingly niche roles (aka super-hubs, slot constrained airports), which thanks to its superior pax/payload combination will forever doom it ultimately to this role.
Make no mistake, the 380 is going to be in and out of DXB, LHR, SYD etc etc for years to come, it won't however pioneer a new age in aviation and will be regarded much like Concorde in that whilst a fantastic technical accomplishment it may be, it will never rule the sky's like the 747, 737, or as the A320 does today.

[fliion]

Glo - you go from

"... and if you read the facts in the article precisely, it now reveals itself as money-loser for EK as well. "

To a volte face of

"admittantly (sp?) open to interpretation"

&

Board room awareness to..... "conspiracy"

Fine print challenged I see....nothing further

[donpizmeov]

Wiz, there are 80 in the fleet now. Only 40 more of Fleet growth. So only another 20 to 25 destinations. Not that hard.

[Wizofoz]

Sure Don,

That pre-supposes they are not being shoe-horned into routes already that would actually be more profitable with a triple.

[donpizmeov]

Good point. However no one here will ever know the answer to that one. As we don't know what discounts were negotiated on purchase price, what value/rate leases are running at, or how much each slot is worth, we cant even guess.

[notapilot15]

A380 per seat cost may be cheap but per trip cost way too high for many airlines.

Of course STC always claimed it is a money maker, depends on which money he is talking about. With the uncanny ability to produce stats and white papers, anything coming out of EK PR need to be taken with a sack of salt.

STC likes it because it allows him to dump capacity on any market to put competition out of their misery quickly. Run double daily A380 to any airport, that airport is ready for a RC club after double EK turnaround.

Whether A380 was a money maker or not, Airbus showed leadership by saying no to A380NEO. That $2 Billion would have been good money throwing at bad.

I think both manufacturers realized by now world needs more than 3 airlines operating LH/ULH for their own survival.