EADS announces earnings: depressed by A380 wing costs, a US customer Ch 11 and political issues

Not a good day for EADS and Airbus:

Reuters: Spat with Germany affects cash position

BBC: Hawker Beechcraft bankruptcy costs Airbus

Washington Post: A380 wing fix costs EADS; A350 program “challenging”

 

78 Comments on “EADS announces earnings: depressed by A380 wing costs, a US customer Ch 11 and political issues

  1. A meger profit of only E309M for a multi billion Euro company is almost like no profit at all. Airbus has dug its own grave with the A-350 project by building it in France and expecting that to be okay with the Germans. I also suspect the wing rib foot problem on the A-380 is going to cost a lot more than the projected E260M since Airbus has already burned through E200M of that money and still doesn’t have an economic solution to fixing the crack problem. Airline customers don’t like the 3000 man hours it takes to fix each airplane.

      • The story starts out blaming the Brits (again) when nothing is further from the truth. The Airbus engineers in France choose the design, material, and method of construction for the wings. then comes the sales pitch, touting increases in gross weight, more seats, range, etc., before finally saying a fix has not been completed yet. But, whatever the fix is, it will not increase the weight of the airplane. They are switching the material from 7449 to 7010, even though 7010 is a heavier material. Finally, in the last paragraph, Airbus admits, but tries to hide (in some double talk) the weight will decrease by about 660 lbs per wing by using composits for the wing ribs, but 7010 for the rib feet. That does nothing but increase the weight of the A-380s already in service or willbe delivered between now and the end of 2013.

      • That article has a July date. It didn’t make any sense then, and it doesn’t make any sense now.

        • So, can you be more specific than your coposters?
          Unspecific dissing of articles and information carries no distinction here 😉

    • 309MEuro are not a meager profit!

      More relevant numbers:
      In the third quarter, earnings before interest and tax rose to 537 million euros from 322 million euros a year earlier, not including one-time charges and currency movements. Revenue increased 15 percent to 12.32 billion euros. Airbus contributed 68 percent to revenue and 53 percent to operating profit, cementing its status as the central asset driving EADS.

      http://www.bloomberg.com/news/2012-11-08/eads-predicts-airbus-price-pressure-in-dent-to-industry-outlook.html

  2. Glad to see EADS be profitable but its earnings margin was probably very small given its small net earnings.

    More A380 charges pushing its profitability to beyond infinity…not surprised.

    “Airbus also forecast between 600 and 650 gross orders this year……and took in net orders for another 382 —”

    They need >200 more orders to achieve that. Maybe they will announce a large AirAsia order soon. We’ve also previously seen Airbus book a “flurry” orders before the end of the year so I wouldn’t be surprised if Airbus achieves those numbers.

    • Boeing results are always good, because the Headers will be “better then expected results” (“expected” being undefined) & additional 10 billion development costs are spread out over unsold aircraft in the far future. For Airbus you mention drawbacks in the headers & good news in the lower half of the article.

      It’s no lying, it’s called managing perception, customers (readers, advertisers) want their pre-occupations to be strenghtened, not burried. Takes some yrs to see the patterns.

  3. It pains me to say this, but the continuing critique of the A380 by many on the
    Boeing side, misses two important facts:
    1. The A380(STR) will be THE 747 replacement a/p for the next 40+ years,
    unless a BWB type a/p will eventually get going and
    2. It will also destroy the 747-8 which came too late, because Boeing Manage-
    ment from the beginning, failed to recognize the challenge posed by the A380,
    even as a freighter, because of the increasing number of 747-400s which
    are coming on the market ready for conversion to Fs and at a very low cost!
    SIA just added to their A380 orders, after deciding to dispose of all their 747-
    400s, as many other airlines are doing!

  4. The 747 replacement is not the A380, it is the 777 and soon to be A350. Flying into Tokyo Narita (admittedly Boeing biased) 10 years ago the gates were filled with 747’s. Flying in recently it is full of 777’s with a handfull of 747’s, a few A330/A340’s and an A380. Twin engine planes are inherently more economical. The A380 will occupy a niche roll in a handful of overloaded city pairs and those that have the option will avoid those in favor of direct routes or one stops in minor hubs. 2. The A380 will never displace the 747 as a freighter particularly for oversize cargo, and the 777F is eating into that market.

  5. The A380 replaces 747s only with AF, BA, LH, SQ, QF, Asiana, Korean, Malaysian, Thai and Virgin. HUB to HUB flights represent 80% of long haul traffic. So the number of citypairs may not be that high, but.. If you operate daily flights to Asia, a twin means cutting capasity in a growth market. Many airline do not do it.

    For Boeing there the rather large niche inbetween the biggest twins and the A380, where the 747-8i didn’t meet its sales expectations. Rewinging the 787 to make it a 350 longhaul machine too and develope a 777 seized twin deck VLA aircraft has been my longer term favourite strategy for Boeing. I think BWB will remain a nice concept for large passenger transport. The operational limitations remain show stoppers..

  6. How many of those airlines are also flying long-haul twins or are ordering them? How many 4 engines are being ordered vs. the twins by those same airlines? 777’s primarily operate flights to Asia from Europe and North America and that is why I used Narita as my example. No doubt the 350 will compete in the same markets. Where does the hub to hub numbers you quote come from? And what do you consider hubs? There are something like 20-30 airports in the US that can be considered hubs and only a few could be considered good candidates for a VLA. Twin aisles have opened up more direct flights and use of secondary hub airports. What keeps an airline from operating two smaller twins at different times of the day and offer better choices for the flying public?

    Also the 787 never did or will have a larger wing than the original -8 configuration. The 787 has maxed out what 4 wheel landing gear can handle with the -9 (about 550K lbs). The -10x trades payload for range; there is only a marginal increase in gross weight. The shorter range (~6500 miles) still can handle almost every city pair in the northern hemisphere.

    Another thing to consider is what would happen if fuel prices double again? Ticket costs would jump significantly (even with efficient aircraft) and you would see traffic drop off proportionally. It is far easier to operate twins during a downturn than the 4-engine aircraft. To illustrate the point, one can look at how many 747-400’s were parked after Sept. 11, 2011. Most airlines continued to operate their twins during that period.

    Both the 747-8 and the 380 are drains on on their companies resources and neither one will make money. The real market is for the 777, 350, 787 and the 330 or its successor. Every one of these will outsell both 747-8 and 380 combined by a wide margin.

    • “The real market is for the 777, 350, 787 and the 330 or its successor. Every one of these will outsell both 747-8 and 380 combined by a wide margin.”

      Nobody has ever even come close to hinting that the 747 or A380 would ever outsell 777s, A350s, 787s or A330s. The issue is the business case, the A380’s having been heavily damaged due to extremely poor Airbus execution, for these aircraft. Boeings 747-8 was similarly damaged by less than optimal execution, but the 747 program overall has been quite successful over 40 years.

      The longevity of the complete 747 program points out that such an aircraft plays a great role in many airline fleets. Boeing hast frequently boasted about the great profit margins for the 747 series aircraft and Airbus is hoping to get in on that.

  7. Interesting wording in the Washington Post article, “Airbus also forecast between 600 and 650 gross orders this year.” and have taken in 382 net orders in the first nine months of 2012.
    How many cancellations have they had? When was the forecast made?
    If the forecast was recently made (a re-forecast, so to speak), one can be pretty certain that they do have a whole bunch of orders on hand.

  8. The A380 was a costly lesson for EADS, I wonder if it was really engineers or politicians who liked the idea most..

    I think a 777 competitor instead of the A380 in 2000 would have made a much better choice for Airbus, now they arrive very late to the big twin party and have to finance the whale/crack jet with the A350 program.

    • I have a different perspective. IMO you are missing the A333 in this storyline, it took out the 777-200ER during the last 10 yrs. It was the first big twin. Yrs ahead of the 777 as the A300 was years ahead of the 767. No late to the party on big twins at all.

      • No keesje, The B-77E and A-333 are not direct competitors. The B-77E was competing directly against the A-343 and the MD-11, and it has better than a 1000 nm advantage over the A-333. The B-77E and A333 carry about the same number of pax (B-777 = 301, A-330 = 295) and have the same cargo capacity (about 5700 ft3). The A-333 had an EIS about 3 years aheade of the B-77E. Both have about the same number in service (about 420). Remember the A-330 did not sell well until about the last 8 years or so. The A-333 is/was essentially a streched A-306R (the A-330/-340s are really members of the A-300/-310 family), the B-777 was a completely new airplane, but did start out with the shorter ranged B-772, the B-77E was the second model in that family. Te B-77E also has a MTOW advantage over the A-333 of about 240,000 lbs.

    • They did that too, A340-500 & 600, EIS 2002. It was just a monumental failure as well, due to fuel costs.

  9. It is impossible to underestimate the enormous, ever lasting damage the A380 development has done to the company, while forgetting and looking ahead for the 787. Both were late, the A380 nearly two years (19 months), the 787 more then 2 yrs (43 months). The A380 had first flight and STC delayed less then 6 months. The Dreamliner team would have given a leg for that.

    CX, ANA and UA are on the fence. Do they have/want big twins? Yes of course, but that is not the end of the story.

  10. Some people here have been yapping the same thing on Airliners.net since 2004/2005. I’m going to ask one question:

    Where are the orders for the A380?

    Its been 11 years since the first A380 orders. Even with SQ’s current 2012 order, using Wikipedia, there are only 262 orders. Kingfishers orders are almost certainly to be cancelled. VS it seems they might be moving away from it as well.

    The A380 has been and continues to be nothing but a financial and resource drain for EADS/Airbus. If I’m not mistaken, we are into years 11-12 for the “launch aid” for the A380. IIRC, EADS/Airbus will have to start repaying these launch aids in the next 5-6 years. Oops, yet another financial drag (note: I’m not saying EADS/Airbus wont’ be able to-they certainly can, just that they will have to).

    • Quite a number of Airbus bashers – with way too much time on their hands – have for the last decade been going after the A380 seemingly with a vengeance.

      “Where are the orders for the A380?”

      The backlog represents slightly more than 5 years of current production (30 per year). In comparison, the same figure for the 777 programme is around 3.5 years. And the A380 doesn’t have any credible competition on the horizon.

      The EIS of the A380 coincided with the worst financial crisis since the Great Depression of the 1930s. That fact in addition to the production problems are IMO the most important factors for the relatively low order intake since EIS.

      “The A380 has been and continues to be nothing but a financial and resource drain for EADS/Airbus. If I’m not mistaken, we are into years 11-12 for the “launch aid” for the A380. IIRC, EADS/Airbus will have to start repaying these launch aids in the next 5-6 years. Oops, yet another financial drag (note: I’m not saying EADS/Airbus wont’ be able to-they certainly can, just that they will have to).”

      Yes, you are mistaken. The RLI will have to be repaid by December 19, 2017 (Assuming” agreed sales” target of 250 aircraft)

      Source: What is Reimbursable Launch Investment (RLI)?:

      http://trade.ec.europa.eu/doclib/docs/2010/september/tradoc_146485.pdf (page 2)

      The levy is set so that, once an agreed sales target is reached, the whole amount should be repaid with a rate of return, i.e. with interest, over a repayment period of 17 years (i.e. 11-12 years from the first delivery).

      • Addendum and correction.

        AFAIK, the original business case was for 250 a/c.

        2005 updated business case 270 a/c.

        Source: (page 5)

        http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CBsQFjAA&url=http%3A%2F%2Fwww.eads.com%2Fdms%2Feads%2Fint%2Fen%2Finvestor-relations%2Fdocuments%2F2006%2Funtitled%2FGlobal-Investor-Forum-2006%2Fgif2006_a380_sperl_heinen.pdf&ei=hmWdUMjcJKmJ4gTbrIH4Bg&usg=AFQjCNEo5YsdKixAAyZUq5iidDswCPKXwg&sig2=d4oxZbIfQ8U_g2l2XwdAPg

        Expected deliveries: 751 a/c (not changed)

        “Agreed Sales” = 751 a/c and not 250 a/c

        This would mean that sales must exceed 751 units if the investing governments are to continue to collect “royalties”.

        Source:

        “Once the actual sales exceed the target, as has happened, investing governments continue to collect “royalties” or “upside” on the additional sales, which will further increase their rate of return. ”

        http://trade.ec.europa.eu/doclib/docs/2010/september/tradoc_146485.pdf (page 2)

      • Addendum 2

        First Source Page 5 of the A380 financial update by Andreas Sperl (and not the general update on the A380 program by Mario Heinen) — Last part of the document.

      • So where do you come from? It seems you live in lala land as most people start to realise the world economy will not be very fun 20 years ahead. The problem with debt is that its hard to ignore in the end and it keeps piling.

        Fuel price will make air travel growth slow, among all other issues we live with. You probably think EU is just fine and dandy 50% unemployed youth in Spain.. Yeah its a great future ahead!

      • New generation more fuel efficient aircraft are for the time being making life somewhat easier for the industry. Once the price of bio jet fuel is at par with the price of fossil jet fuel, things will definitely change. Post 2050, large civilian aircraft may be powered by liquid hydrogen-powered fuel cells.

        http://skynrg.com/the-opportunity/current-market-dynamics/

        As for “most people”; would that be the wing nutters?

      • -Comparing backlog between the A380 and B777? Is that supposed to be some kind of joke? The B777 has been extremely profitable for Boeing. Each frame sold and delivered brings in an positive ROI. Certainly can’t say that for the A380, now can we?

        -40 year program? That’s where we are at now? From “break even of 250 planes” (according to EADS/Airbus) to 40 years?

        Maybe some people don’t understand, but [i]cost of opportunity[/i] is crucial in businesses which need to have a profit/ROI. That money wasted (IMHO) on the A3XX program could have been used for other products/projects. If anything, the money wasted on the A380 was better off in a money market fund. The ROI would have actually been better!

        IIRC management presented “lollipop” scenario returns for the A38XX program (unfortunately I can’t find the links/sources/documents). I’m no longer a share holder in EADS stock, but if I was a shareholder, especially a large shareholder, I would certainly push to have people in senior management fired. It actually seems some were removed.

        The A380 being “big”, “prestigious”, etc. sounds like the same thing which happened with the Boeing 747 back in the 70’s. The advantage the B747 had over the decades was range, better CASM, less competition and less hubs. That has changed now.

        In fact, I will find an article where either AirAsiaX or someone from Airbus stated that 10-across on the A350-1000XWB will have a better CASM than even the current generation of A380’s (in current standard configurations).

        I wonder what would have happened if Boeing went with an MD-12. Assuming both the MD-12 and A380 have the same operating economics and about a 50:50 market share, that would have been only 130-135 for each carrier…certainly not justifiable-nor profitable.

        Back in 2004/2005 many of us had prognosticated that the A380 program was going to be a financial failure or at the very least an unprofitable endeavor for Airbus/EADS (can be verified on the old A.net threads). 8-9 years later, that is indeed what is happening.

        This has nothing to do with being a “kool-aider” for a particular company.

        Regards.

  11. “Where are the orders for the A380?”
    http://en.wikipedia.org/wiki/List_of_Airbus_A380_orders_and_deliveries#Orders_by_date

    Production is now at 30 a year, target is 48
    http://www.flightglobal.com/news/articles/eads-hopeful-a380-could-break-even-in-2015-342126/

    Internally Airbus counts (in terms of logistics, manpower, etc) 1x A380 as 7x A320 equivalents. Comparing the number of sold A380s aircraft with other aircraft seems a bit opportunistic.

    IMO the A380 will be too big, prestigious etc. until NASA/Boeing develop something even greater to make the world a better place.

  12. jacobin777 :

    More A380 charges pushing its profitability to beyond infinity…not surprised.

    Bitter much? 260M€ is chump change. Maybe the breakeven rises by a whopping 5-10 planes. Doesn’t matter on a 40 year project at all.

  13. Rudy Hillinga :It pains me to say this, but the continuing critique of the A380 by many on theBoeing side, misses two important facts:1. The A380(STR) will be THE 747 replacement a/p for the next 40+ years,unless a BWB type a/p will eventually get going and2. It will also destroy the 747-8 which came too late, because Boeing Manage-ment from the beginning, failed to recognize the challenge posed by the A380,even as a freighter, because of the increasing number of 747-400s whichare coming on the market ready for conversion to Fs and at a very low cost!SIA just added to their A380 orders, after deciding to dispose of all their 747-400s, as many other airlines are doing!

    Rudy, what these people don’t seem to be able to grasp is that air travel will nearly double by 2030 and quadruple by 2050, and consequently, that larger planes will be needed to cater to the phenomenal growth of the industry.

    Air Traffic Growth Overwhelms Asia’s Airports

    http://www.aviationweek.com/Article.aspx?id=/article-xml/AW_09_24_2012_p40-494727.xml&p=1

    Phenomenal growth in passenger traffic across Asia, particularly from low-cost carriers, has fueled demand for bigger airports. The authorities, however, have failed to address this need, leading to flight delays and slot constraints.

    Nearly every major capital city airport in Southeast Asia has issues with congestion. The most notable examples are: Singapore’s Changi, Bangkok’s Suvarnabhumi, Manila’s Ninoy Aquino Internatonal and Jakarta’s Soekarno-Hatta International.

    “When you start hearing stories about congestion at Changi, which is run by some of the most far-sighted people, then that rings alarm bells,” says Andrew Herdman, director general of the Asia Pacific Airlines’ Association, which represents 15 full-service network carriers.

    Much of the airport congestion is a result of low-cost carriers (LCC), which use narrowbodies, says Herdman. These smaller aircraft result in more departures. Some airport officials say the liberalization of air services, coupled with the success of low-cost carriers, has led full-service airlines to operate smaller aircraft in an effort to match the frequency of LCC flights. This too has added to the number of departures. Singapore Airlines, for example, previously only operated Boeing 777 widebodies to Kuala Lumpur and Penang in Malaysia.

  14. It feels like a took a time machine to Airliners.net circa 2005-2007 lol. I still see some of the usual suspects.

  15. Even China can’t make work….

    “HNA Group may cancel order for 10 A380s – chairman”

    Quoting:

    “Chen said the A380s were ordered when the market was good and now the group had to consider the potential for a prolonged period of global economic weakness.

    “A380 is such a big aircraft, in these years, 10 of them, who has such strength (to buy),” Chen told reporters on the sidelines of the ruling Communist Party’s congress in Beijing.”

    http://www.reuters.com/article/2012/11/09/hna-airbuis-china-idUSL3E8M985D20121109

    • CAPA – the Centre for Aviation had a pretty good analysis recently on the A380 and China.

      http://centreforaviation.com/analysis/china-southern-to-finally-commence-long-haul-a380-services-but-operation-still-faces-challenges-83737

      A380 saga highlights China’s restrictive market and constraints on growth

      There is no fault or incapability with the A380; operations from Emirates and Singapore Airlines, amongst others, make that clear. As with any asset, the challenge is finding suitable markets. While some carriers are quietly concerned markets envisioned for the A380 when ordered have since seen significant changes, China Southern’s struggle is not the markets but access to them. It is a larger problem facing the Chinese industry.

      Competition is carefully managed and direct overlap internationally is rare. It is worthwhile to ponder what market conditions and restraints on competition China Southern envisioned when ordering its A380s in 2005. Hainan Airlines will certainly use China Southern’s A380 route approval experience when considering if it will take the A380s ordered by sister carrier Hong Kong Airlines.

      Amongst other justifications, this hand on competition allows growth and improvement – from the passenger and balance sheet perspective – without the fare wars that have plagued other markets and even seen carriers collapse. The downside to a stable Chinese market is that it is stunted.

      Two trends support a more open market. First, Chinese carriers have received the memo about service and each new aircraft type that enters the fleet is better than its predecessor, as China Southern’s A380 shows. Second, other carriers are circling, although China seeks a level playing field by restricting some air service agreements. A more open market is due to reward lean carriers and those making smart decisions. LCC Spring Airlines is a model of efficiency, and China Southern has admitted to a “huge gap” between the efficiency of itself and part subsidiary Xiamen Airlines. For market progression, a warmer welcome to China Southern’s A380 would have been a good start.

  16. Yeah China is not the magic pill all credit junkies make it out to be, China has a buble of historic proportions built into its economy. The western world is bankrupt. Where mr OV is the growth coming from? Mars? OV, sorry to say this but your bubble will burst soon.

    • LOL! You seem to be living in a world of Malthusian scarcity populated by groups as varied as the ones who are ideological followers of millenarianism and those who believe in resource exhaustion and societal catastrophe.

      • Not only Noir Crime stories…. 😉

        Why do we love Scandanavian culture?

        IKEA has outstripped John Lewis as the nation’s favourite shop; The Bridge is set to enthrall us on TV – just what is it that makes Scandinavian culture so alluring?

        http://www.telegraph.co.uk/lifestyle/9221267/Why-do-we-love-Scandanavian-culture.html

        Hurrah, it’s Saturday! Or should I say, Hurra hurra, det er lørdag!

        Which these days in Britain means that we will be snuggling up among the Marimekko cushions on the Ikea sofa, with a smorgasbord of gravlax, before cracking open a bottle of aquavit and settling down in front of the Bang & Olufsen to watch the latest Scandi-thriller served up, in a great double helping, on BBC Four.

        For it is a curious fact that despite our Special Relationship with the United States, our proximity to France, our common language with Australia, we have – wholly unexpectedly – become a nation in thrall to all things Scandinavian. Indeed, furniture giant IKEA has just been crowned Britain’s Favourite Retailer, knocking John Lewis off its perch.

        Hmm, it may look like as if not everything is rotten in the state of Sweden….

      • en590swe sounds like a former colleague of mine… but I am pretty sure it is not him.

        Both, for reasons hidden in obscurity, hate the EU almost to the point of bitterness. Don’t know why, as Europe is definitely a better place with than without.

        Being on the other side of the puddle might not give you the whole pic I guess…

  17. Rudy Hillinga “…The A380(STR) will be THE 747 replacement a/p for the next 40+ years…SIA just added to their A380 orders, after deciding to dispose of all their 747-400s, as many other airlines are doing!”

    To use your example, SIA, their current fleet + on order (no options) is: 34 A330’s, 64 A350’s, and 50 777’s for a total of almost 150 single aisles. Now for four engines: 5 A340’s (out of service in 2013) and 24 A380’s.

    The 747 enjoyed success for a long time because intercontinental travel required multi-engines and there was no other planes with the ranges required. Since large twins became available the 747 pax has had mediocre sales (something like a decade now) and the -8 only postpones the inevitable. The A380 is a status symbol for many airlines, much as the 747 once was and many airlines will buy a few of them for that reason. But the twins will be the workhorses and the money makers.

    “…Much of the airport congestion is a result of low-cost carriers (LCC), which use narrowbodies” Yes, the two busiest airports in the world, Atlanta and Chicago, are dominated by single aisles. The solution already in work – move away from regional jets and move to larger single aisles and small twin aisles (737-8/-9 A320/321). Interestingly the LCC’s bypass these two by using Chi-Midway, Charlotte NC, Nashville TN, etc.

    Does one really think that there will be a quadrupling of passengers into the existing major hub airports? People will fly into other airports unless they have no other choice. Dubai is a great example of a recently emerged hub (Yes, I do know that many A380’s fly there). Newark, Osaka are other examples.

    • The fact of the matter is that in Asia and Europe you won’t see very many new airports built over the next 40 years, but you’ll see massive growth at nearly all existing airports, many of which are already slot-constrained.

      As for Dubai, in 2040 Emirates could quite possibly have a fleet of 300 A380-900s…..

      • OV-099 :
        The fact of the matter is that in Asia and Europe you won’t see very many new airports built over the next 40 years, but you’ll see massive growth at nearly all existing airports, many of which are already slot-constrained.
        As for Dubai, in 2040 Emirates could quite possibly have a fleet of 300 A380-900s…..

        So the dozens of new airports planned or underway in India, China, the US (where new “terminals” are often in fact new airports in new locations) as well as the middle east are all going to fail or be abandoned? The population density of Western Europe probably precludes many new airports although there are several recent examples of new construction. There are several new airports under construction in the former Warsaw Pact countries as well as in former Soviet republics. And as was pointed out, many of these airports are designed for LCCs

      • There is more to Asia than just India and China and developers have to deal with growing NIMBY movements as well. New airports may rather supplant older less efficient ones as airlines in general don’t want to operate from two nearby airports, thereby increasing costs and reducing flexibility. Also, airports thrive on international passengers as they make more valuable contributions to an airport’s overall revenue than domestic passengers, helping to drive airport retailing and a range of related services. Partly therefore, many of China’s smaller airports catering mostly to domestic services are economic sinkholes.

        As for the US, it is “at risk [of] being turned into a feeder system for the global aviation network” because its infrastructure is falling behind much of the rest of the world.

        http://atwonline.com/airports-routes/article/aci-na-warns-about-declining-us-airport-infrastructure-1003

  18. Speaking of A380’s I was checking out the Commentaries section of this website… Did any see the October piece form Richard Aboulafia??

    http://www.richardaboulafia.com/

    The article isn’t about the A380, Its about fear. But the opening line is very funny!

    Quote:

    “Remember when an aircraft could scare you? Not like, “For Halloween, I’m going as the A380 Business Plan. Boo!” ” 😉

    Anyway in other news…

    Anyone think we may see the return of the Deutsche Mark??

    Quote: “Exclusive: Worried Germany seeks study on French economy – sources”

    http://news.yahoo.com/exclusive-worried-germany-seeks-study-french-economy-sources-103220230.html

    • RA doesn’t stop there:
      “In fact, since the ‘90s, the concept of “strategy” has been reduced to futile counterinsurgencies, misguided nationbuilding efforts, and frequent drone-launched assassination strikes. ”
      How amusingly observant!

  19. Uwe :
    So, can you be more specific than your coposters?
    Unspecific dissing of articles and information carries no distinction here

    Not sure it is over.
    In September the issue was discussed here http://wp.me/piMZI-2Gs

      • So Uwe, did you read the article in the post? It is interesting to note that the cost related to wing cracks issue is still a problem. I am quite sure the costs related to the issue will haunt them in 2013 and 2014 too.

        So, the deliveries in 2013 will be affected. I am not sure that 30 deliveries in 2013 is even achievable despite the fact there are some aircraft in 2013 that should have been delivered in 2012.

      • IMU you are trying to add cost factors twice from your referenced article.
        Organisational Learning:
        A nondysfunctional company will show learning capability. ( As someone pointed out elsewhere: Airbus and Boeing tend to not repeat failures. They find new modes instead 😉

        This is more difficult in a Hire and Fire environment.
        ( See Boeing warming up Oldtimers to fix things )
        But that is certainly not something applicable for the EU environment.

  20. When Boeing does a big innovative project, it’s boldly setting new standards, bravely betting the company, leapfrogging the competition and moving forward in sustainable technology.

    If Airbus does the same, its nation building, prestige projects, subsidies and shacky business cases.

    As said it takes years to see the patterns. In Europe we have a good laugh about it and move on.

    Cheers.

  21. OV-099 :
    There is more to Asia than just India and China and developers have to deal with growing NIMBY movements as well. New airports may rather supplant older less efficient ones as airlines in general don’t want to operate from two nearby airports, thereby increasing costs and reducing flexibility. Also, airports thrive on international passengers as they make more valuable contributions to an airport’s overall revenue than domestic passengers, helping to drive airport retailing and a range of related services. Partly therefore, many of China’s smaller airports catering mostly to domestic services are economic sinkholes.
    As for the US, it is “at risk [of] being turned into a feeder system for the global aviation network” because its infrastructure is falling behind much of the rest of the world.
    http://atwonline.com/airports-routes/article/aci-na-warns-about-declining-us-airport-infrastructure-1003

    Well Japan is still building and expanding her airports. A growing NIMBY movement that has no political power or influence isn’t much of an impediment. Smaller airports have a tendency not to stay that way; the range provided by a modern widebody like the 787 or A350 means that smaller interior airports can in fact engage in international travel.

    I’ll see your atwonline and raise you a New York Times!
    Building Boom Takes Hold At US Airports

    I’m fortunate enough to frequently fly between San Jose International and Indianapolis International which are amongst the two newest (2009, 2011) airports in the US.

  22. jacobin777 :
    -Comparing backlog between the A380 and B777? Is that supposed to be some kind of joke?

    No, the comparison was done in order to put into perspective that the order backlog for the A380 is really not all that bad. Backlog is typically a function of availability. There are fewer A380 near term production slots available than there are 777 production slots available. Simple as that. Same thing with the 787. You can get a 777 far sooner than you can get a 787.

    “The B777 has been extremely profitable for Boeing. Each frame sold and delivered brings in an positive ROI. Certainly can’t say that for the A380, now can we?”

    >

    With all due respect, that’s not an intellectually honest comparison.

    The original 777 program (dash 200, A market model) reportedly blew the budget by a 100 percent cost overrun. What was the break-even point then for the triple seven? I would guess somewhere between 500 and 1000 aircraft. Now, there are 576 orders in total for the 777-200, 777-200ER and 777-300. This would seem to indicate that the original 777 program was not a profitable undertaking for Boeing. The 777-300ER was the aircraft that ensured 777 program profitability. However, were I to hazard a guess, I would reckon that only after a further 150 – 200 77W/77L/77F deliveries, and only some 18 years after the program was launched, did the 777 program finally become a truly profitable undertaking.

    40 year program? That’s where we are at now? From “break even of 250 planes” (according to EADS/Airbus) to 40 years?

    In the same as the original 777 program (777-200, 777-200ER and the 777-300) was not a profitable undertaking for Boeing, the A380-800 will in all likelihood never be a profitable undertaking for Airbus. Therefore, I would guess that it would be fair to say that it’s only a next generation state-of-the-art A380-900s and/or an A380-1000, entering into service a decade hence, that will be determining whether or not the A380 program will be a profitable undertaking.

    Maybe some people don’t understand, but [i]cost of opportunity[/i] is crucial in businesses which need to have a profit/ROI. That money wasted (IMHO) on the A3XX program could have been used for other products/projects. If anything, the money wasted on the A380 was better off in a money market fund. The ROI would have actually been better!

    Yeah, right! As if putting money in a money market fund drives technological development.

    Now, I wouldn’t be surprised at all if financial advisers back then, sharing that same particular worldview, had no qualms advising people to invest in hedge funds that were later to face billions in losses.

    IIRC management presented “lollipop” scenario returns for the A38XX program (unfortunately I can’t find the links/sources/documents). I’m no longer a share holder in EADS stock, but if I was a shareholder, especially a large shareholder, I would certainly push to have people in senior management fired. It actually seems some were removed.

    May I ask, are you a shareholder in Boeing stocks, and if yes, have you ever pushed for the removal of Mr. McNerney?

    The A380 being “big”, “prestigious”, etc. sounds like the same thing which happened with the Boeing 747 back in the 70′s. The advantage the B747 had over the decades was range, better CASM, less competition and less hubs. That has changed now.</blockquote<

    Well, air traffic is 5 times greater today then it was back then…

    In fact, I will find an article where either AirAsiaX or someone from Airbus stated that 10-across on the A350-1000XWB will have a better CASM than even the current generation of A380′s (in current standard configurations).

    10 across on the a350 is not comparable to 10 across on the A380. Like for like, you would have to put 11 across on the A380.

    Back in 2004/2005 many of us had prognosticated that the A380 program was going to be a financial failure or at the very least an unprofitable endeavor for Airbus/EADS (can be verified on the old A.net threads). 8-9 years later, that is indeed what is happening.

    Well, funny enough, many of the self important prognosticators on a.net utterly failed to foresee what was about to happen with the 787 program as they were seemingly caught up in “the tremendous drug-like rush of the 787 program”.

  23. A380 was a gamble and it looks like it wont pay off, the market voted for big twins and more frequncy over mega hubs and 500+ seats and less frequncy. Even in China it seems that congested hubs are not the way forward. The future was 777/787 and A350. The A380 would work in a world if all nations hade a LHR problem but things went a different way.

    EK and a few others seems to see a use for the whale but most other airlines got scorned by the financal mess we live in, sitting on over capacity is every CFOs worst nightmare. With Chinas economy slowing I dont see any big orders coming from them for the whale.

    The growth of the airtravel has gone down considerably over the last year, it grew only 5% YoY and we see no economic growth anywhere on this planet right now.

    Sorry for all EADS shareholders and EU taxpayers. This one will hurt. Lets al hope the A350 can make up for the A380 blunder.

    • The A380 is certainly not a gamble!

      At the worst the A380 is a poor vision brilliantly executed whereas the 787 was a brilliant vision very poorly executed (I can’t remember the exact words nor the author, probably Aboulafia)

      As many have said, the A380 will pay in the long run, particularly with the derivatives.

      • With Airbus making just E309M per quarter, and the A-380 developement “RLI” was also ruled illegal, Airbus cannot afford any A-380 “derivatives”.

      • Does Airbus have authority-to-offer, provisional or otherwise for any A380 variant? How far along is the design, engineering and overall realization of such A380 variants?

        My questions are strictly for information and not polemical in nature.

  24. This pessimism reminds me the early days of the 747s.
    Quote from wiki (reference in the page http://en.wikipedia.org/wiki/Boeing_747#Entry_into_service)
    The recession of 1969-1970 greatly affected Boeing. For the year and a half after September 1970 it only sold two 747s in the world, and did not sell any to an American carrier for almost three years.[55]:302 When economic problems in the United States and other countries after the 1973 oil crisis led to reduced passenger traffic, several airlines found they did not have enough passengers to fly the 747 economically, and they replaced them with the smaller and recently introduced McDonnell Douglas DC-10 and Lockheed L-1011 TriStar trijet wide bodies[65] (and later the 767 and A300 twinjets).

    The aircraft construction business in the early 1970’s was extremely difficult. Somebody wrote in the Seattle Times, “Would the last person to leave Seattle please turn out the lights!”

    Hopefully, Boeing overcame the issues, develloped excellent derivatives (except the -SP) nobody had to turn the light off 😉

    kc135topboom :
    With Airbus making just E309M per quarter, and the A-380 developement “RLI” was also ruled illegal, Airbus cannot afford any A-380 “derivatives”.

    • You’re welcome.
      But this is a (squanderable) gift not a property.

      The problem is that this vantage is not considered in assessing the situation elsewhere on the globe. ( and a trend to reflexive activity. )

    • Ewe, the density charts you are showing are somewhat deceiving because they average populations over the entire land mass of a country, which tends to make big countries look like they have lower densities. In most cases populations are densest along coastlines and often have very low populations in the interiors. If one looks at the northeast and west coasts of the US you will find very high population densities. The low densities are mainly in the Midwest and Mountain areas. Likewise Canada, Austrailia, Scandinavia, Russia and even China are virtually unpopulated in their cores.

      One model that makes sense is to have large intercontinental airports in more rural areas (Examples include Chicago – O’Hare, Tokyo – Narita, London – Gatwick) perhaps with high speed rail links for the relatively small percentage that the city is the final destination. Having travelled by train in Germany there are lots of wide open spaces one could build big airports!

      Given the large amount of time spent (wasted) checking bags, getting boarding passes, and going through security, one could envision a rail link with reliable schedules that performs all these functions on the train with passengers and luggage directly entering secure areas of the airport. That would be innovative!

      The older core airports that were “obsolete” by newer airports often come back into service as LCC and regional hubs (Chicago – Midway, Tokyo – Haneda).

      • I thought my coposters to be intelligent enough to know about that caveat. . . . I am regularly too optimistic.
        ( and imho you can spare yourself the cheap name calling )
        LH used to have rented trains connecting as regular flightnumbers. http://de.wikipedia.org/wiki/Lufthansa-Airport-Express ( Just like the KLM airfreight flight from HAN to AMS used to be a 38t truck 😉
        The issue with new airports is not the acreage used for runways ( though that can be quite an issue too, see FRA )
        the trouble stems from the people under the flightpath. Follow
        legal action in relation to the BBG airport rebuild from Berlin Schönefeld, return to FRA or look at cross border hagling over Bern flightpath.
        Doing screenings for flight in any backwater town will not work.
        You have to duplicate fascilities everywhere and have the unsolvable problem of not tainting the achieved security clearance on the way to the airport.
        This imho is unworkable. Difficult for baggage and certainly unachievable for passengers.

    • “American Exceptionalism” You might explain that to the readers Marauder. I’m afraid outside the US no one knows what that means.

  25. OV-099 :
    China struggles for solution to growing NIMBY movement

    Smaller airports have a tendency not to stay that way; the range provided by a modern widebody like the 787 or A350 means that smaller interior airports can in fact engage in international travel.
    The question is, of course, if there will be enough daily demand from all these smaller Chinese airports to Africa, Europe and North/South America.

    From the article you cited:

    “Previously, similar cases were reactivated without much scrutiny from the public. The public is much less organized, so when the crisis calms down it’s difficult for them to monitor what’s going on”

    Hard to be a NIMBY when you are not told and have no effective way to really scrutinize what is going on in your backyard!

    The question you pose is exactly the question that Boeing, Airbus, Bombardier, Embraer, Mitsubishi, COMAC, Sukhoi and Irkut have grappled with internally. The non-Airbus answer seems to be that narrowbodies and more efficient entry-level widebodies are the way forward.

    • One of the major issues in China is the issue of sustainability. China has committed to concepts regarding sustainability and environmental issues, but of course, they also have to address the issue of economic development. Conflicts of opinion are occurring with increasing frequency between all types of stakeholders: individuals; NGOs ; local and state governments as well as the central government; and private companies. Environmental risks, both local and global, will be an increasing policy challenge for the Chinese authorities.

      “The question you pose is exactly the question that Boeing, Airbus, Bombardier, Embraer, Mitsubishi, COMAC, Sukhoi and Irkut have grappled with internally. The non-Airbus answer seems to be that narrowbodies and more efficient entry-level widebodies are the way forward.

      P2P is not in the cards for China.

      China’s air transport plan: rising dragon
      http://www.flightglobal.com/news/articles/chinas-air-transport-plan-rising-dragon-355695/

      But the international expansion of Chinese airlines cannot be successful without the strong support of a sophisticated hub-and-spoke network, which did not begin to emerge in China until the early 2000s. Point-to-point is still the dominant route structure of Chinese airlines. For this to change, development in hub and spoke airports will need to be strengthened.

      Hub development, with the rapid expansion of Beijing, Shanghai and Guangzhou airports, has made progress. Growth of 13% propelled Beijing Airport, the hub of Air China, to be the second busiest airport in passenger numbers, handling 73.9 million in 2010. As the next step, China’s hub development at these airports will place quality before quantity, enhancing their ability to consolidate traffic, while improving service and efficiency. This aims to better position them to compete with major air hubs in neighbouring countries for international connecting traffic.

      Spoke airports remain a weak point. Due to China’s low airport density (1.6/100,000 square kilometres), there are not enough of them. Of the existing ones, many are under-used as a result of difficulties in forming and supporting regional air markets. For many years, air transport turnover in regional markets has accounted for only 3% of the country’s total.

      The government aims to address this by increasing airports from 175 today to 244 by 2020. Most of the new airports will be in the less-developed western regions. The government is also considering borrowing experience from the Essential Air Service Programme in the USA to foster regional market development for secondary airports.

  26. marauder :
    Does Airbus have authority-to-offer, provisional or otherwise for any A380 variant? How far along is the design, engineering and overall realization of such A380 variants?

    There currently seems to be no official ATO for any subtype beyond the -800 in 560t,510t,569t,?575t? MTOW versions. On the highboard waiting is a HGW version that uses the wingbox for fuel.
    Airbus recently did some test with significantly increased (600t) weights.
    A ~490t low MTOW “LHR” version “super silent”
    http://www.air-cosmos.com/industrie/deux-nouvelles-versions-de-l-a380-pour-2013.html
    The MTOW subtypes must be “done”. Any other derivative is in unknown progress.
    ( I could lend you my set of used tealeaves 😉
    What Airbus said is that slimming efforts precede any further subtyping.

  27. marauder :Does Airbus have authority-to-offer, provisional or otherwise for any A380 variant? How far along is the design, engineering and overall realization of such A380 variants?
    My questions are strictly for information and not polemical in nature.

    No ATO. Not even close. Enders hinted in an interview a couple of years ago that a stretch of the A380 is, at the very earliest, only possible at the end of the decade.

    Considering what they have going on for the next few years, and the difficulties they are having, I don’t see it coming any earlier.

    Rough guess would be that once they have A350 family and NEO all sorted out, an A380 stretch would be the next project. This is assuming that Boeing doesn’t come up with something that upsets their plans.

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