A380 woes

[KenV]

Airbus has not been able to sell a new A380 in a few years. Several used A380s are now on the market. And pretty soon the leases on the early A380s will expire, potentially putting even more A380s on the market. I think these used A380s will compete with new A380s, making new A380s even harder to sell. But Airbus COO disagrees and says “Used A380s do not compete with new A380s." I think that's extremely wishful thinking.

To make matters worse, 20 or more orders for new A380s have been cancelled or have not been placed with customers, so there are effectively a bunch of brand new A380 white tails competing for new A380 orders.

Worse still, the 777X will meet or beat the A380 in cost per seat mile, wiping out that one economic advantage the A380 still enjoys.

To me, the future of the A380 looks bleak.

Used A380 Superjumbos Threaten Airbus?s Drive for Sales - Bloomberg Business (http://www.bloomberg.com/news/articles/2015-06-07/used-a380-superjumbos-pose-fresh-threat-to-airbus-s-sales-drive)

[1a sound asleep]

Remember the Ford Edsel?

[glad rag]

Wonder how many GI Joe’s you could get in one?

Good capacity going "cheap" now that the US transport aircraft are out of production...


:E

[MrMachfivepointfive]

Mmmmh. Too early to tell. I remember similar things being said about the 747 around 1970. There were also a handful of years later a lot of A300 white tails stored in TLS. Airbus ended up giving away those airplanes for (almost) free to Eastern. Both stories had a happy end.
The 380 is not a bad airplane as such. It just had the bad fortune to enter service right in one of the modern world's most severe crises. Give her another decade and perhaps the NEO.

[glofish]

It just had the bad fortune to enter service right in one of the modern world's most severe crises

Silly argument Mach. The orders boomed while oil was 100$, they eroded when it fell to 40$ and air travel is at an all time high.

It beats me how one can pretend that the 380 has an economical advantage and no one wants that Wundervogel. It's numbers sold that speak, not spreadsheets.

On the other hand, if Leahy pretends his second hand 380ies will be offered at a price of a 77W (see article) then the shadow of 'subsidy' pops up again .....

[KenV]

I remember similar things being said about the 747 around 1970.Yeah, the 747 barely survived that period. But the 747 was the only airplane in that market niche. The A380 shares its market niche with other aircraft, making survival in the maketplace more difficult.

There were also a handful of years later a lot of A300 white tails stored in TLS. Airbus ended up giving away those airplanes for (almost) free to Eastern. Both stories had a happy end.Building airplanes at government expense and then giving them away to a foreign nation was doable in the 70s. It's not doable today.

The 380 is not a bad airplane as such.
I personally think the A380 is a great machine with some superb engineering. But the market place does not care about that and the market place seems to be going a different direction. Similarly, the Concorde was an eye watering machine with some brilliant engineering. But the marketplace rejected it.

It just had the bad fortune to enter service right in one of the modern world's most severe crises. Give her another decade and perhaps the NEO. But can it survive another decade? There have been zero sales for around three years, and it takes a 30 airframe per year rate to break even at current prices. Reducing rate ups the cost and holding price while increasing cost means losing money. Since Airbus can no longer count on government largesse to keep the line afloat, can A380 survive another decade? And is it remotely likely that management can justify developing a new model when the old model has not made any money? This is after all about making money, not making an engineering statement or national prestige, like it was in the 70s.

[fatbus]

Didn't UA just take two 380s, not used .

[SOPS]

You just have to hope STC has not bet the farm on them.

[Courtney Mil]

Similarly, the Concorde was an eye watering machine with some brilliant engineering. But the marketplace rejected it.

Well, not strictly true, Ken. Sorry to digress from A380 for a moment, but Concorde's demise was a far more complicated affair than pure market forces, or demand for seats.

Perhaps a more correct, but equally brief description would be, a Continental Airlines engineer, 9/11 and the global recession. I suspect some might disagree so I'll expand a little bit.

Concorde was bloody expensive and it always struggled to make a profit. That hardly mattered, though, because Britain and France enjoyed the kudos of running that service between Paris, London, NY and WDC, even after the cost was transferred to Air France and BA. But the people came and paid the price of a ticket for many reasons: people wanted to fly in it at Mach 2 across the Atlantic, businessmen enjoyed the time saved and the luxury, celebs wanted to be photographed flying in Concorde, etc. It worked. Just.

Then, in 2000, Continental dumped a piece of metal on the runway and we all know what happened - 113 people don't. But the following year she was back in the skies. Pretty much as before. They still came with their cheque books. And then there was 9/11, which led to an enormous slump in air travel. More profitable aircraft were able to withstand the slump, with a lot of pain, but Concorde with its delicate profit margin could not.

That's how it happened. But 27 years wasn't bad. Oh, and by the way, the Continental engineer who was sentenced to 15 months in a French prison wasn't the bloke responsible, but it is only two years since he was cleared - maybe a Continental patsy, but I don't think he even worked on the DC-10 in question. Just to be clear. But someone did.

No, the market place didn't reject Concorde as such.

[mockingjay]

It's not just the A380. The 748 is also struggling having hardly sold any in 2014. Four engines have a limited future. Two engines are the way forward.

[KenV]

No, the market place didn't reject Concorde as such. By "reject" I did NOT mean force the few built to stop flying. I meant the market rejected them when only two airlines (both with government pressure and assistance) bought a handful of airframes. It never made a dime for the developer and manufacturer. And that's what I'm talking about. Sure, airlines are making money flying the A380, but not enough of them are buying A380 for the manufacturer to make money building and selling them. The same thing happened to Concorde. From a manufacturer's point of view, Concorde died in infancy, Tu-144 died shortly after birth, and the American SSTs were aborted before birth.

[KenV]

Didn't UA just take two 380s, not used .
My understanding is that they're considering it and are in late negotiations with Airbus. But no contract has been signed yet. And if rumor is to be believed, they're doing it to leverage Boeing to reduce the price on 777x.

[tdracer]

Didn't UA just take two 380s, not used .

No they didn't - rumor that has subsequently been denied by the United CEO:
United Airlines CFO John Rainey has addressed the rumor saying the A380 "doesnt really work" for the United network. He does, however, admit that the airline is, in fact, currently examining the type as we reported. He has stated they would rather use multiple aircraft over one large aircraft, as business travelers prefer this.

[Lord Bracken]

The long term growth of air travel means there is space for the A380 as well as the 77X...especially when the latter is only a paper aeroplane.

If a certain Big Airline's experience of replacing 3 x 744 a day on LHR-LAX with 2 x A380 - with increased premium capacity, constant economy capacity and vastly reduced costs - you might see some more orders in the not too distant future.

As ever with large jets, if you fill them you'll make a fortune, if you don't...

[silverstrata]

Re:- The Concorde diversion.

Sorry, the demise of Concorde had nothing to do with the Paris crash. The truth is that many decades previously, it had only sold a handful of airframes, and only to national carriers who were obliged to take it. Had it been designed to sell in such low numbers, its price would have been ten times as high. The truth of the matter is that Concorde failed to sell because:

The US disliked it for nationalistic political reasons.
The sonic boom made it unrealistic for overland operations (the biggest market).
The passenger capacity was very low.
The range was pretty low too, and a fuel-stop defeated the object.
The airframe price and fuel burn was quite high.

As to the A380, it is a big beast and has demonstrated its unsuitability for many airports with several high-profile collisions. And an airline has to be confident of filling this leviathan, otherwise it will make a thumping loss. I can see the reasons for their reticence. And the fact that it looks like a pregnant turkey does not help. Remember the old adage of: 'if it looks right.....'

[KenV]

It's not just the A380. The 748 is also struggling having hardly sold any in 2014. Four engines have a limited future. Two engines are the way forward.

Indeed. The difference is that Boeing is confident that the large freighter market is picking up and the market analysts generally agree. And freight is the 747-8s main market niche. Airbus does not offer an A380 freighter and so cannot fall back on the freighter market to keep the A380 line going.

[mockingjay]

How many 747-8F has Boeing sold in 2014/15?

[tdracer]

2 in 2014, 4 so far in 2015.

However Boeing remains optimistic for the 747-8F - there are a lot of 747 Freighters that are approaching geriatric age and will need to be replaced.

[Dannyboy39]

The days of the four-engine passenger aircraft are certainly numbered.

Airlines are more interested in convenience, frequency and efficiency. The new Airbus A350, along with market incumbent, the Boeing 777, will be a commercial triumph - the vast majority of all long haul traffic in 2025 will occur on these airframes. The A350 has already 780 orders and the 777 close to 2000 orders now after being in service for over 20 years already.

Operators are also looking to operate into new markets all the time - however these routes obviously can't justify a 400-seat aircraft operating return daily.

Oh... and building an aircraft that you can only operate within 10% of the world's airports without modification is great commercial planning!

[archae86]

Airbus has not been able to sell a new A380 in a few years

The cited Bloomberg article specifies that Airbus has not gotten orders from new airlines in recent years, not that there have been no new orders.

Perhaps some discussion should swing to just how healthy or not it is for the aircraft to have Emirates as an enthusiastic and utterly dominant customer.

Not counting Soviet era Aeroflot, I don't recall other aircraft of importance near that of the A380 having such a narrow customer base. (Concorde was narrower, but...)

[KenV]

Not counting Soviet era Aeroflot, I don't recall other aircraft of importance near that of the A380 having such a narrow customer base. (Concorde was narrower, but...) Indeed. A narrow customer base is one sure sign of narrow market appeal. In other words, your product is addressing a small, niche market. For something as capital intensive and having a LOOOOONG development time as an airplane, small niche markets are very risky. Airbus may end up losing this bet.

[Una Due Tfc]

tdracer might correct me here, but I'm guessing the development costs of the B748 were considerably lower than the A380, given the former is a modified (albeit extensively) existing airframe versus a brand new one.

Airbus have said the A380 programme will move into the black by the end of 2015, so even if they don't get any more orders, they'll get away with it, just. Boeing will sell enough freighters (which are cheaper to make than passenger aircraft anyway) to cover their investment and probably make good money in the long run.

We talk about how hard these giants are to fill, which makes it surprising to me that Lufty, Korean and soon Transaero are going to be running both simultaneously.

[alemaobaiano]

Indeed. A narrow customer base is one sure sign of narrow market appeal.

So their order for 150 777x would fall into the same category?

[KenV]

So their order for 150 777x would fall into the same category?
Ummmm, emphatically, NO. The 777 has orders form several dozen different customers. That's a huge customer base. The 777X is still in development and there is every indication that it will have as many different customers as the 777. But yes, Emirates will be a huge customer for the 777X just as they are a huge customer for the 777. They've ordered 152 777-300ERs, but that did not make the 777 a niche product.

By the same token some airlines have bought literally several hundreds of 737s and a number even have all 737 fleets. The does not make the 737 a niche product by any stretch of the imagination.

[tdracer]

Una Due Ttc, I don't know what the total Boeing investment was in the 747-8/8F (and if I did I probably couldn't repeat it) - I do know it went well over budget. But I'm sure it was a small fraction of the A380 development costs. I do know that the original business case for the -8 was based on a relatively small production run, but the development cost overruns certainly increased that number significantly.

As for the A380 "moving into the black" this year, what Airbus has said is that they expect the A380 to become 'cash flow positive' in 2015 - meaning they are spending less to build each aircraft than they are selling them for. They remain far from paying off the reported $15 - $20 billion development costs.

Both Boeing and Airbus have some tough decisions coming up quickly - the long lead time for some of the 747 and A380 parts is over 30 months and both programs have significant holes in their delivery projections starting in 2018.

[vapilot2004]

Used aircraft coming onto the market nearly always affect prices of new aircraft and therefore, sales. It's basic market economics. The only way that is minimized is when the demand is overwhelming. The A380 was a game changer - but developed a bit early according to many. There are also those that believe if Airbus can 'hang in there', the aircraft will likely enjoy a minor resurgence down the road.

RE: Concorde - BA, in the latter years of Concorde operations was making a huge profit and she served as a standard bearer/iconic symbol for the airline. For whatever reason, Air France failed to make a profit with their Concordes.

The AF crash was caused by a series of unfortunate events and circumstances. Several BA and early Concorde development folks have been quoted as not blaming the aircraft or (specifically) the strip of metal in various documentaries and books published. Also, to clear up another factual error in this thread: the Continental engineer in Tel Aviv was cleared of all criminal charges. Does anyone else see the bitter irony (considering the history) in the story: a part installed by an American in Israel led to the deaths of a group of German citizens carried by the French?

[Courtney Mil]

Vapillt2004,

I think I was very clear in stating that the engineer accused was (a) cleared and (b) not responsible.

[Courtney Mil]

Silva strata,

I hope you won't mind me adding my answers to your post. It's just an easy way to deal with that number of points.

Sorry, the demise of Concorde had nothing to do with the Paris crash.
Yes it did. Concorde did not make a massive profit so the grounding after the AF crash ate into the bottom line

The truth is that many decades previously, it had only sold a handful of airframes, and only to national carriers who were obliged to take it.
Although there were hopes of a global revolution in air travel and tonnes of customers, it was accepted fairly early on that only France and UK would be likely to operate it. The two countries took the cost on for a few years, but eventually transferred costs to the airlines. They really didn't expect huge sales after the early customers pulled out.

The US disliked it for nationalistic political reasons.
True, but the operators worked round that (even cheated a bit:ok:)

The sonic boom made it unrealistic for overland operations (the biggest market).
Might have been. But, guess what, even in the 50s when the concept was being discussed, they knew about sonic booms. That will never change. In truth the 'boom' from high altitude wasn't a huge issue. Plenty of folk here that will tell you they heard it every day without consequences. We operated supersonic in mil aircraft over the European mainland for decades as long as we were above a certain altitude.

The passenger capacity was very low.
Yep. 100. But the ticket price was huge. It was an elitist liner and the price tag reflected that. But, as you said, BA made it pay.

The range was pretty low too, and a fuel-stop defeated the object.
The airframe price and fuel burn was quite high.
Obviously. But how many jets do you know that can do Mach two all the way across the Atlantic today?

Everything you said is true. All part of the design and well known to the designers, builders and operators -and any potential customers. All those things discouraged others from buying it and you could argue that because the only operators were the France and UK placed the whole project on a more vulnerable footing. But none of those things actually killed it.

Sorry for the thread drift. I shall leave it there and let you get back to the A380. Good luck.

[Turbine D]

Bigger is Better, that was the thought promoted by the leaders of PanAm and Boeing in the 1960s and along came the 747. It is a very complex story. Bigger is Better is the name of Chapter 6 in the book The Sporty Game written by John Newhouse. This book gives great insight into the complex world of airlines, aircraft and of course, the jet engines that power the aircraft. It is a fascinating read.

The 747 was successful as it was because it had no competition and if didn't work as a passenger aircraft, it was designed to be easily converted into a freighter and many have been.

The A-380 doesn't have the luxury the 747 had and today's market is different. Technology developments and enhancements for both airframes and engines have come along more rapidly than ever before. The A-380 and 747-8 programs are not long runway programs and neither manufacturer will make money while covering development cost no matter what the bean counters report.

The money making long runway programs are the 737, 777 (including new advancements) A-320 and A330 (including new advancements). These are the aircraft that will serve the most customers, generate the most profits for the aircraft manufacturers and the engine manufacturers that have engines on them. The revenue stream will be long lasting with service and replacement parts. IMHO, it remains to be seen if the 787 or A-350 programs will be long runway profitable programs or not.

[WingNut60]

Two completely different market segments - comparable in only a few small areas.

Concorde ended up filling the only market niche that it could satisfy.
That is;


Limited duration sectors
Mainly over ocean
No re-fuelling stops
Good on-time performance - because each aircraft generally only did one flight per day and overnighted at the eastern end of the service sector
Scheduling to suit the very small niche that it satisfied

A wonderful aircraft but it was never going to be successful on really long-haul.
As soon as you start eating into time saving with fuelling stops then the advantage disappears
Especially when coupled with (probable) frequency of service
Nobody in Sydney wants to wait three days to catch Concorde just so they can save six hours travelling.

Concorde ended up being a biz-jet for those who couldn't afford their own

[ATC Watcher]

Next week in le Bourget some annoucements will be made ( always are) by Airbus that will shade some light as to the A380 future.

They are working on MSN200 at the moment, with still over a 100 in backlog order, most of them for Emirates. So roughly 3 years of production.

I think price of oil in the next year(s) will be a key factor in determining the future of the beast, and if the Emirates bet works . (If it does others will have to compete or give up that segment.)

Passenger comfort might also play an unexpected role . An OPS friend in SIA recently told me that specific requests for the 380 flights over the 747 and even over the 777 on routes like FRA-SIN is becoming extremely high, same with LH I believe.
Anyway we'll know in 3 years.

[sk999]

The A380 has been in production now for about 8 years (through the end of 2014). According to Wikipedia, it has racked up 317 orders. The B-747, at the same point in its lifecycle, had racked up 315 orders. Quite comparable.

However, in the next four years Boeing took in another 239 orders. The way the A380 is going (no new orders this year), it has a lot of catching up to do.

If one looks at the history of orders for the 747, it was quite cyclical - large swings up and down on multi-year timescales. One should be cautious about reading too much into the current A380 slump.

Interestingly, the separation in capacity between a B-747 and its nearest competitor - the DC-10 - was about the same as that between the A380 and its nearest competitor (excluding the 747-8) - the B-777 - a factor 1.5 to 1.6. However, the big strength of the 747 was its range - a factor 1.5 bigger than that of the DC-10, which meant the 747 could operate routes that the DC-10 could not. The A380 has no clear-cut advantage here - the 777 comes in various models that trade range for capacity, and the longest range version outstrips the A380. So I guess one could say that the big weakness of the A380 is its one-size-fits-all characteristic.

[VickersVicount]

remember the 747 heyday when everyone was trying to keep up with the jones' . The following airlines took delivery of 747's that youll never see in their colours on an A380
ie TAP Air Portugal
Icelandair
SAS
Air Lanka
Sabena
Swissair
Olympic
El Al
Air New Zealand
Royal Air Maroc
Luxair
etc etc. How times have changed

[giblets]

Most of those Airlines purchase the 747 for it's range rather than it's capacity (TAP to S. America for instance, Air Lingus is another good example), ELAL (to N.America) is never going to buy the A380 anyway for political reasons.
At the time of it's launch your only really effective other option was the 707/ DC-8

[Fairdealfrank]

The capacity to carry some cargo along with pax favours/favoured the B747 over the A380.

[Epsomdog]

Having flown numerous times on B747, B777 & A380 flights. I have to say the A380 is far more comfortable than the Boeings. The low cabin noise levels in the 380 are remarkable! I suspect the B787 may well match those, though I can't comment without actual experience.

[LadyL2013]

I think you're missing the important 'bums on seats' factor. If airlines can fill an A380 on busy sectors, they'll continue to have an important role to play.

[AerRyan]

I think Virgin would be foolish not to take A380's. They can reduce the frequency marginally on the highest grossing routes yet keep the capacity and in turn get slots to start routes to other destinations.

[beardy]

AerRyan,

Great sense of humour!

[Cyrano]

I think Virgin would be foolish not to take A380's. They can reduce the frequency marginally on the highest grossing routes yet keep the capacity and in turn get slots to start routes to other destinations.

Which multiple-daily VS routes would you see as candidates for lower-frequency A380 service? (Serious question)

[SARF]

The Vegas flight from gatwick. Though frequency wouldn't change and the slots arnt an issue, Er ignore me :cool:

[B772]

Malaysian (MH) are concerned about the low 'offers' they have received for their A380 fleet either for purchase or lease.

It appears Airbus may rescue their predicament if a large order for the A350 is forthcoming.

[cheesebag]

VS seem to be going smaller not larger?

[tdracer]

Volga-Dnepr Group (Airbridge Cargo) just announced their intent to buy another 20 747-8F
Boeing gets cargo boost for 747 jumbo jet at Paris Air Show - MarketWatch (http://www.marketwatch.com/story/boeing-gets-cargo-boost-for-747-jumbo-jet-at-paris-air-show-2015-06-17?siteid=yhoof2&ref=yfp)

Given the lack of competition and the unique capabilities of the 747 Freighter, my crystal ball says Boeing will be able to keep the 747 line going at ~15-20 aircraft/year for quite a while, building mainly freighters. And if someone comes in and wants a few Intercontinentals, so much the better.

[HOODED]

Volga-Dnepr Group (Airbridge Cargo) just announced their intent to buy another 20 747-8F
Boeing gets cargo boost for 747 jumbo jet at Paris Air Show - MarketWatch (http://www.marketwatch.com/story/boeing-gets-cargo-boost-for-747-jumbo-jet-at-paris-air-show-2015-06-17?siteid=yhoof2&ref=yfp)

Given the lack of competition and the unique capabilities of the 747 Freighter, my crystal ball says Boeing will be able to keep the 747 line going at ~15-20 aircraft/year for quite a while, building mainly freighters. And if someone comes in and wants a few Intercontinentals, so much the better.

Firstly this is not a firm order. Secondly Volga-Dnepr I believe are Russian?? Aeroflot have just cancelled 22 787s and may also cancel further new ac as sanctions bite. If this comes to fruition great...I have my doubts. The 748 is in just as perilous a position as the A380 perhaps more so given its design age. Maybe less so due to its unique position as a freighter. Time will tell the LOI slates delivery over 7 years so If this becomes firm Boeing will need more orders to keep the line moving along or further reduce the production rate which may not be economically viable. They do have the 777X which should be a huge success to move the guys onto if further orders dry up. As for the poor old A380 Emirates should keep the line open for a while but unless the world economy picks up significantly then the days of four holders are surely numbered.....

[Mr Mac]

I think a number of people are missing the point. When people have travelled in a 380 in what ever class there appears to be a palpable positive comment from them which you do not get from other A/C currently. The A/C wins with the customer, but may not win with the bean counters, as it as has been said. It is only useful on some high volume routes and this is where it will make its name and money. It will never be like the early 747 which were bought by every little country world wide with aspirations in a "mines bigger than yours" so to speak kind of way regardless of the economics - sub Saharan Africa to think of one area. It is not the game changer that the Jumbo was but it has a place on high volume long haul although its cargo capacity is limited in comparison with 747 I would agree. At the end of the day its is down to the accountants who will decide ultimately its success or otherwise, not the public / pilots / spotters / interested observers.
My two pennies worth.


Regards
Mr Mac ( an unfortunatly far too frequent 380 flyer)