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A380 to be discontinued?

Airbus Raises Prospect of Ditching A380 as Orders Vanish - Bloomberg

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Airbus Group NV (AIR) raised the prospect of discontinuing its A380 superjumbo as soon as 2018, the first admission that it may have misjudged the market for the double-decker after failing to find a single airline buyer this year.

While Airbus will break even on the plane in 2015, 2016 and 2017, that outlook doesn’t hold for 2018, forcing the company to either offer new engines to make the A380 more attractive or discontinue the program, Chief Financial Officer Harald Wilhelm told investors at a meeting in London today.

His comments come as 2014 shapes up to be the first since the doubledecker entered service without a new airline customer. Its only buyer was a leasing company that has yet to line up a single carrier to take any of the 20 planes it ordered. The backlog remains as thin as it is fragile, highlighted by the cancellation of six jets ordered by Japan’s Skymark Airlines Inc. (9204), with two close to handover.

In its seventh year in operation, the aircraft that cost $25 billion to develop threatens to become a costly misstep. While popular with travelers, most carriers prefer smaller twin-jet models that are more fuel efficient and can access more airports. Emirates is the only stand-out sponsor, having ordered 140 units, while other airlines have either backed off or are struggling to fill the two decks of the jumbo.

Order Boom

“It’s an excellent plane but it only works for the right destinations,” said Air France-KLM (AF) Group Chief Executive Officer Alexandre de Juniac, who aims to cancel the last two of a dozen A380s on ordered and swap them for smaller models.

Chris Buckley, Airbus’s Executive Vice President, Europe, Asia and Pacific, said the company has been “at fault” in the way it marketed the aircraft, letting carriers customise the interiors in whatever way rather than pushing the high-density credentials of the double-decker.

The four-engine wide-body airliner is a rarity, after Airbus killed its A340. Boeing Co. (BA) said yesterday that it will cut back production of its 747 jumbo.

Emirates President Tim Clark is pushing Airbus to upgrade the A380’s engines to improve fuel efficiency, a move Airbus is resisting because the cost of doing so doesn’t match demand for the plane. Keeping the plane unchanged may mean running down the backlog and eventually shutting down production, now at just under 30 a year, analysts said.

‘A Pity’

“Airbus will be obliged to make a decision one way or the other in 2015,” said Yan Derocles, an analyst at Oddo Securities in Paris, who estimates an engine upgrade may cost Airbus 2 billion euros ($2.47 billion) because of work required on the wing.

An engine upgrade would take about four years, according to Derocles. The A380 now comes with a choice of engines either by Rolls-Royce Holdings Plc (RR/) or a joint venture between General Electric Co. (GE) and United Technologies Corp.’s Pratt & Whitney.

The A380’s lackluster demand contrasts with a boom in orders for other models. Airbus’s bestseller remains its A320 family of single-aisle jets, which it made even more popular by offering new engines. The same concept added momentum to the A330 wide-body jet.

The all-new A350, a twin-engine long-range wide-body plane made of advanced light-weigh materials, has almost 800 orders before its first handover.

‘A Pity’

Airbus has won orders for 318 of the jumbos. That’s a fraction of the 1,200 it thought airlines needed in that size category when it started marketing in 2000. Emirates accounts for 40 percent of the order book, while airlines including Virgin Atlantic Airways Ltd., Hong Kong Aviation and Air Austral are increasingly unlikely to ever take their planes.

Japan and China, originally seen by Airbus as key markets for the A380, have been disappointments, with only one Chinese airline taking 5 units. Boeing’s 747-8i, the only rival, has fared even worse, winning 51 orders from four airlines.

“It’s a pity,” Clark, the Emirates president, said of the A380 “It’s a very big cash generator for us. I just open the doors and the people come.”

Emirates has been successful with its fleet of A380s because the airline uses its Dubai hub as a central point from where to connect major routes around the globe with just one stop. The A380 is also popular on capacity-restricted airports such as London Heathrow, while many smaller airfields lack the infrastructure to accommodate the plane.

Richard Aboulafia, vice president at the Teal Group and longtime critic of the plane, said the new large twin-engine planes coming to the market will be the death of the A380.

“I don’t think it lasts more than a few years into the next decade,” he said of the A380. “The quicker they let go, the quicker they can devote themselves to marketing efforts on other products.”

Seems like its bye, bye A380. Aircraft is old before it lived a decade. Massive failure if they need to stop production, guess boeing was right regarding point-to-point.

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“It’s an excellent plane but it only works for the right destinations,”

Stating the obvious for any aircraft. or truck, or ship.

Cheap deal for EZY and RYR?

I think they both lost. B748 wasn't cheap to develop either, and has been an even bigger flop. A350 and 77x are what have killed the 4 holers, so at least it was their own aircraft that killed off the big birds

The ghastly 10 abreast economy seating now becoming common on the 777 is why airline bean counters favour the type so much!

Perhaps the A380 is the right aircraft at the wrong time. In ten years, fuel prices and slot availability could be completely different and the A380 could have been the right aircraft.

This is what happens because Lagardere ordered the A3XX project simply because he wanted to have a bigger one

Might be harsh, but for me, I will see it as serving airbus right for their part in pulling the plug on Concorde. :)

This would have a rather drastic effect on the economy of southern France, wouldn't it?

No, I think the space and the workers would be immediately moved to the future planned production lines. It is the prospect of recruitment for A350 production that will could be affected. So less growth in long term , and only perhaps.

But things can change rapidly , with cheap fuel coming around ,and the mega Gulf airports coming to life shortly, it is perhaps a bit too early to bury the beast yet.

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This would have a rather drastic effect on the economy of southern France, wouldn't it?

No, and there's certainly no panic locally since contrary to popular belief EADs aren't the only high tech employer in and around Toulouse.

It's been obvious for a while that the A380 production rate had plateaued and many of the sub-contractors have already moved on to other things, also as ATC watcher has said, there's 350 production to consider. A quick glance at the Airbus ramp at Blagnac these days usually reveals maybe one or two 380s at most but a lot more of their twin engined stuff ..

It is all the fault of ETOPS.

I'm so very sorry :{ :ouch:

Wouldn't all the current operators love that? It would increase the value of their Aircraft wouldn't it?

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It would increase the value of their Aircraft wouldn't it?

Only if there were buyers out there who wanted second hand A380s.

The figures for the Boeing 747-8 are not entirely correct, as they omit the freighter version, which seems to be selling OK(ish). Reference here. Not exactly a money-spinner either, though.

Just wait till the big bomb drops when Emirates cancels a large number ... like the 50 that yet does not have an engine type specified (read wanting neo).

Not only are accountants renouned for lack of personality but this one knows the cost of everything and the value of nothing :mad:

Is the guillotine still available for an employee who talks down one of the biggest investments in aviation history?

It means more pilot jobs!

If you look at how relatively few A380s are flying for the European flag carriers and correlate that with the lack of appropriate airport expansion and night curfews at home, is it any surprise that the Gulf operators are winning pax? Europeans living around airports want no noise, no pollution, but when they want to fly to the sun or visit Great Aunt Georgina in Sydney, they'll scour the internet looking for the cheapest deal. And that will more often than not see a one hopper via DXB or SIN. Aviation minded nations that are promoting their carriers rather than artificially strangling growth and therefore airplanes like the A380.

There are enough city pairs that warrant the capacity of the A380, strange that none of the US carries are linking East Coast cities with European capitals with the double-decker.

It is strange how passengers are willing to do all kinds of daft things to save what v can be an insignificant amount of money. Fly FR to nowheresville international because its 40 Euros cheaper and then spend 50 Euros on the longer transit.

Happens all the time with aviation, A380 is a really nice pax experience 773 pretty awful, noisy , wallowing ride and cramped but the seat cost is fractionally lower so that's where the finance people want to put their money.

Personally I think the 380 is far from dead partially due to pax appeal and partially because of the need to maximise revenue per slot at a lot of airports, biggest weakness for it I think is the lack of cargo space compared to the long triple .

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Originally Posted by Rabina (Post 8778224)

Europeans living around airports want no noise, no pollution, but when they want to fly to the sun or visit Great Aunt Georgina in Sydney, they'll scour the internet looking for the cheapest deal. And that will more often than not see a one hopper via DXB or SIN.

I believe EK have more 777's than A380's.....

Here's my woefully uninformed $0.02 on how Airbus can save the A380:
- New engines (GE9X?)
- Stretch to -900 and -1000 lengths
- Wing extensions with folding wingtips, like the 777X, resulting in a higher-aspect-ratio and more efficient wing. (The A380 pays a ~22% aspect-ratio-caused induced drag penalty due to having to fit into the "80-metre box")
- Putting business class and/or first class (depending on weight) in the rear, so that more bags / cargo can be loaded in the rear holds without adverse affects on C of G
- Relating to the above, partner with seat / IFE / cabin companies to design much lighter weight premium sections
- Strongly recommend that all A380s are sold with at least 600 seats, and that they are lightweight ones e.g. Recaro
- Look at possibly lowering the top deck floor slightly to increase A and K seat headroom, allowing an extra seat in each row (improbable)
- Look at finding even 3" of space on the main deck by reducing the thickness of the wall / cabin fittings by re-siting air ducts, thinner insulation etc., allowing an extra seat on each row (already mooted - we all know that the "whale" only starts to make money when it is totally stuffed)
- Find ways to push the utilisation way, way, way up (12x 12 hour flights in a 7 day period, for example, using irregular flight schedules instead of antiquated "daily" flights)

Unfortunately this will cost another several billion dollars :{ and also Airbus designed the wing to be only just strong enough so it will have to be reinforced, adding weight.

There is some cause for optimism: pressure from airlines and competition from Boeing is forcing Airbus to move (see A330Neo, the announcement of which surprised me)... let's see.

How long before we see A380s regularly flying London-Glasgow etc?

Back in 2004, one of the passenger configurations being proposed was 990 seat (albeit on the postponed A380-900), allegedly for inter-Japan operation. If the budget airlines offered a handful of flights a day with that density on the most popular routes, the traditional carriers may start hurting.

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- Putting business class and/or first class (depending on weight) in the rear

And wait for the unwashed masses to disembark before me? Never! I almost spilled my glass of Chivas Regal when even thinking about the horror....

Booglebox, Why would Airbus want to make all that investment, when they can just add a few more A350 sales for the cost of some extra marketing?

I would think there is more chance of them adding seats in the baggage hold and aiming it at the low-cost, short-range market, maybe even with just two engines, if its not got to lug lots of fuel around.

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This would have a rather drastic effect on the economy of southern France, wouldn't it?

Not really, the communist government will always support its state/parastatal enterprises, at least until the money runs out, then there will be fireworks.

It's the small businesses and independent traders that they are trying to force out of business at the moment. Airbus will be fine.

Quoting Tim Clark

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We are on the hook for this plane. I get pretty miffed when we have put so much at stake.

so either Airbus is trying to bluff their way to scare existing customers to buy more (or else...), or it was a gaffe of some financial beancounter who prematurely spilled his "what if" scenarios...a bit as if a pilot needlessly announces over the PA "we do plan for all eventualities, and we have plans ready to divert to other airports".

(thinking out loud, the analyst/shareholder/stock market/investor relations team at Airbus probably has a very different agenda to deal with than customer facing employees. I assume this statement wasn't cleared with the sales team, they're probably just as miffed as Tim Clark...)

A bigger winglet might be one way to get a bit of extra efficiency on the A380.

The current one always struck me as rather small for the size of the aircraft. My assumption all along was that one would be coming as an easy identifier of who's got the latest of the type, as it has been with other airliners.

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Perhaps the A380 is the right aircraft at the wrong time. In ten years, fuel prices and slot availability could be completely different and the A380 could have been the right aircraft.

That seems unlikely to me. They've struck oil in Texas and North Dakota. The Texas field alone is estimated to hold more than 3 times the oil than the Saudi fields BEFORE they started pumping it out. The N Dakota field is nearly as large. Canada also has huge new oil fields and once the much delayed pipeline from Canada to the Gulf Coast is completed, we'll be awash in oil. North America will be a HUGE oil exporter not tied to OPEC, with OPEC already disintegrating. The predictions of continued oil scarcity were way way off. In my opinion, with supply going up considerably faster than demand, the only thing that can drive oil prices up is massive carbon taxes. I don't see the national governments having the nerve for that.

It may be a ploy to get A380 suppliers to cut or at least hold current prices on components. Not all suppliers will have components on A350 so they could lose Airbus business all together if A380 goes. Keeping component prices down will keep the A380 airframe cost down and more likelihood of sales and keeping the line open, as well as more chance of Airbus getting a profit from A380 for themselves.

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Originally Posted by deptrai (Post 8778495)

....or it was a gaffe of some financial beancounter who prematurely spilled his "what if" scenarios...

Maybe they had no choice. As a publicly traded company,and with the way financial rules work these days (e.g. Sarbanes-Oxley), a board can't just tuck the bad news under the carpet and hope for the best. Once they know of stuff that's going to significantly impact the business, it's their duty to inform the market.

If someone had, say, reported to the board a few months ago that they would have to close the line in 4 years, and then the board didn't make that known, and someone bought shares on an expectation that the A380 was ticking along nicely, then the news came out, there'd be Hell - and a whole slew of lawyers! - to pay i suspect.

Lots of speculation here, lots of B/S. Bottom line is the A380 has hit market capacity as did the the 74 series. The twin jets are the economical future. The A380 failed as a freighter, the 748 has just about hit bottom in the market with new aircraft sales. Difference is the A380 has to make many more deliveries before they claim to break even on the sales, it has been a liability for way to long. Makes me think of the MD-11 (sold many more aircraft), once the delivery's dwindle so will the service from Airbus.. Goodnite.

Read somewhere, and don't hold me to the numbers, that Boeing "bet the farm" when they built the 707 and had to sell like 300 air frames just to cover R&D costs. Then again 1000 air frames for the 747.

The Orient Express, that takes off like an airliner and then goes to ramjets and skips across the earths atmosphere at supersonic speeds was deemed to be doomed. R/D costs vs. number of aircraft to saturate need. You can't benifit from it's speed say NYC to LAX because you have to orbit the earth before you land. City pairs that work requires only 9 aircraft, 10 with a spare.

The A380 doesn't fill the gap.

Wouldn't want to be in Herr Wilhelm's shoes - look for announcement that he's off to spend more time with his family.

Prediction: the A380 will be in production in one form or another for another 20 years. It may not be a volume seller, but new markets will open up in the next decade for it to sell in sufficient quantities to be profitable.

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adding seats in the baggage hold

I've always wondered why airlines don't do this. Sure you'd have to engineer staircases on either side of the center fuel tank / wing spar, and no windows gets pretty unpleasant / claustrophobic, but to get from A to Z in the cheapest way possible it's a good solution!

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How did this guy rise to the level of CEO and not understand what the press does with data that is presented?

To be fair, he's 'only' the CFO. Chief bean counter, in other words. Which might go some way to explain his unfamiliarity with the press, and their insidious habit of quoting out of context.

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How did this guy rise to the level of CEO and not understand what the press does with data that is presented?

Don't know about that, rumours has it he's pretty damn good at the bean counting side of the business.

The C-5 Galaxy carries 73 passengers in a windowless cabin. If passengers want to know what is going on outside, then it wouldn't be difficult to run a feed from an external camera to the seat back display.

Adding galleys and toilets where there is no current provision could prove expensive, although if the lowest deck seats were only offered to able bodied passengers, they could use the upstairs toilets.

Lots of other stuff to be considered, but if it could give the equivalent of an extra 737's worth of passengers per flight on busy short haul routes then it could be worth the expense.