Odds and Ends: MTU on A380; lessons learned; Alaska Air v Delta; GOL looking for airplanes; Boeing downgrade and upgrade

MTU on A380: The German company MTU, which is a key supplier on a variety of Airbus and Boeing engines, questions the potential market for an A380neo, according to this article from Reuters. Our Market Intelligence indicates Airbus is moving toward a re-engined airplane, although an Airbus official denied this to us this week. Reuters’ sources suggest work is ramping up.

Tapping lessons learned: The Puget Sound Business Journal has a somewhat different approach to the story earlier this week on the groundbreaking for the Boeing 777X wing factory. Steve Wilhelm focuses on Boeing’s tapping of lessons learned on the 737 and 787 programs.

Alaska Air v Delta Air: Months and months ago (almost a year), we were the first to write that hand-wringing over Delta Air Lines’ growth at Seattle, viewed as a major run at Alaska Airlines, was over-wrought. The growth was to support Delta’s growing international hub and while the growth came on many Alaska routes, Alaska’s dominance would prevail. A few months later, we pointed out that Delta’s growth was coming at the expense of Southwest and United airlines; Alaska was solidifying its position. (It also posted record 3Q earnings this week.)

The Puget Sound Business Journal has this story about how the three generations of the Boeing 737 is helping Alaska face off Delta.

GOL looking for planes: Brazil’s GOL is looking at the Boeing 737-7 and the Embraer E-195 E2 to renew its 737NG fleet, according to this Bloomberg report. Next week we’ll be taking another in our series of looks at EMB’s approach to the market with a discussion of the CASM Paradigm.

Boeing downgrade and upgrade: Credit Suisse yesterday downgraded Boeing from Outperform to Neutral (Buy to Hold) on the basis of 787 deferred costs and lower free cash flow. Wells Fargo reiterated its Hold rating. Zacks went from Neutral to Buy. Stern Agee reiterated its Buy.

70 Comments on “Odds and Ends: MTU on A380; lessons learned; Alaska Air v Delta; GOL looking for airplanes; Boeing downgrade and upgrade

  1. It’s no surprise that MTU is playing down the A380neo market – they supply parts for EA’s GP7000. EA has next to no chance of providing a new engine for the A380neo. Asking RR or one of their suppliers would likely produce a different opinion.

    I believe Emirates has yet to select an engine for it’s most recent A380 order (a small matter of 50 frames).

    • EK have already chosen the current GP7000 for the first 25/50 in the latest order. The next 25 (and possibly more) is likely to be powered by RR’s new engine.

    • Never going to happen. This is Clark up to his old tricks. Remember the A350 order? That was Clark winding up Boeing to get on and confirm that 777x would be built. When Boeing did,Clark cancelled the A350. Now it’s all about the A380neo and “might” relook at the A350. Never going to happen. He will blame Airbus for not moving fast enough on the neo,cancel the ‘extra’ 50 A380 and order the 747-8 and the A350 second time round-it’ll be 787-10.
      Clarks Airline are all powered by EA engines,why change? Makes no sense.
      More like Clark pushing Boeing to the limit on price. As for Rolls Royce? I would be VERY wary and get on with building the engines for the Dreamliner, A350 and A330 -taking care of my LOYAL customers.

    • Yes, 60 firm MAX 8.
      This is for smaller units Max 7 or E195-E2.
      Weighing commonality versus efficiency ?

  2. A380: Pouring money down the rat-hole though Airbus is pretty well stuck with the rat hole.

    Its not that there is no market for that behemoth, its just that its limited as we have seen.

    What you really want is a new wing and new engines and the latest generations (of technology ). All RR has to offer right now is the hopped up current tech (ala LEAP and not the GTF which comes latter. ). An NEO is simply the minimum needed to minimize the losses. 747 build on success (granted the last version is not) but had 5 versions and sold 2000.

    If you look at the so called “orders” for the A380, it includes 20 from Amedeaus (morphed from Doric ) of which they have not place nor ordered a single one and will be competing against aircraft that come off lease (I would like to see a list of leased vs owned, I know Emirates leases some of theirs).

    Add in 10 unidentified customer hmm, Qantas who will not take their 8 remainiang, Virgin will not take their 6.

    Transaero and its 4? LH not taking the last 2 currently, AF not taking their last 2, let alone options.

    Out of that list I can whittle a good number off the books and a number of questionable still. So in round numbers 290 or less firm orders.

    Going with a 1994 date of commitment, that’s 21 years of sales offering for a measly 290 at best.

    • “Its not that there is no market for that behemoth, its just that its limited as we have seen.”

      Well, Dubai is building a new airport that will have 400 contact stands, the majority of which will be A380 capable. Would that be around 250 – 300 A380 contact gates? It looks like they’re planning eventually to have a fleet of at least 500 A380-sized aircraft.

      The solution takes the form of a modular design consisting of adjacent triple plus-shaped concourses which optimise connectivity and passenger convenience. During the first phase of the development, to be delivered by the early 2020s, two triple plus concourses will be constructed. Each of these will comprise 100 contact stands, the majority of which will be A380 capable (Code F).

      Each of these concourses, comprising three nodes, will be connected by an automated people mover/train to a multimodal ground transportation facility, located at the west end of the airport. The train will welcome guests from various modes of transportation and transfer them in close proximity to their gate. The design also facilitates highly efficient minimum connection times for transit passengers.

      The build programme is underway and following the completion of phase one in the early 2020s the airport will be expanded incrementally, thanks to its modular design, to deliver capacity in timely response to increases in demand. Three runways will serve the first two triple plus concourses and the final master plan iteration provisions for up to four concourses and five runways.


      • Correction:

        It looks like Emirates) is planning eventually to have a fleet of at least 500 A380-sized aircraft.


        Assuming that Emirates will be content with just 200 A380 contact stands — while the rest would presumably be for other airlines — would mean an A388/A389-sized fleet of around 600 units (i.e. 2/3 of the fleet always away from Dubai).

    • TransWorld

      It wothwhile recalling that in the recession of 1969 and early 70s Boeing did not sell a single airliner to a US carrier and found itself about a billion dollars in debt.

      Things recovered and we all know the B747 when on to be a outstanding success.

      An A380neo with 10%-12% more fuel efficient gives EK and the other operating the plane a quiet, more spacious aircraft than the B777x – with the same (or better) fuel per seat.

      Given the increasing conjestion and expected growth most of the major carriers operating out of major hubs will be forced into operating bigger aircraft, but I also think the market for VLA will remain challenging and will not support both the A380 and B747 . Building a A380neo makes sense since it increases A380’s edge of the B747-8i and secures what VLA market there is for Airbus at a very modest cost and little risk given Tim Clark’s plan to buy the neo.

      FYI: A380-800 vs B747-8 Video http://www.youtube.com/watch?v=5QfK9VhAYJ8 makes interesting viewing.

    • I am sure you belive in the tooth fairy and santa clause as well.

      Under 300 sold in all those years, and you spin it into never never land.

      Math does not add up.

      • TransWorld
        When Lufthansa took delivery of the 6th A380 ‘named New York it issued a press release which contained the following statements:-

        “The Airbus A380 is the world’s most fuel-efficient aircraft, burning about 12 percent less fuel than other wide-body jets, and is approximately 30 percent quieter than the current generation of wide-body aircraft.”

        For the other major A380 operators (EK, SQ, BA, etc the maths do add up, especially EK. Check out Tim Clark’s many comments regarding its operating economics.

        As for the future I don’t expect a sales huge – but I do expect the program will eventually make money. The A380neo, if built, represents a modest investment for Airbus and gives the A380 (what most would believe) an unassailable edge over the B747-8i.

        Cheers, looking forward to meeting Santa at Christmas

        • The A380 already has a significant edge on the 747-8i in both range and ops costs (no matter what Boeing says). It can’t carry much belly freight but Emirate makes that work, others, belly freight is a big part of the revenue generation and you need the A380-900 to open that up. 747-8I can haul more belly freight and that helps a bit but not major enough to shift the long routes. A380 vs the 777X is the current game.

          You may not remember it but the first thing that Emirate complained about the A380 was no belly freight (all taken up by pax luggage ). They quickly stopped talking about it, but they were loudly demanding the -900 for a bit. Obviously the gold glitter was a lot less when they figured that part out.

          Its not that its economics do not work for some and on some routes, its do they work for enough on a lot of routes. So far sub 300 actually sold say no.

          And if something happens to change the Gulf States attraction? The world keeps changing. Turkey is challenge at least part of that traffic model and Africa is chipping away at the edges (Ethiopia, Kenya) Oil price drop or even chaos?

          You will find not disagreement form me that the 747-8 is going to cease producing in 4 years or so (maybe sooner).

          Boeing compromised on it in that the freighter operations did not want more range, they were satisfied with their route structures (i.e. hauling fuel to haul fuel vs freight and a stop in places like Anchorage). Switch pilots, optimize freight going to other places.

          A380NEO is not a whole new aircraft, but its not a trivial cost either. 4 billion or so.
          If you look at what the A320 has to go through with its new engines its not trivial either (a good move for sure but not trivial).

          Pylons change and I believe some wing optimization as well.

          Back the the numbers, so far only Emirates has bought it in large numbers, other operate have throttled back or in the case of Amadeus which is listed as firm, leased out none.

          How much did Amedeus put down? I doubt a penny.

          If you do the NEO and only Emirates buys it (or others opt to switch their CEOs to the NEO you still have put more money into a program that continues to loose money.

          In the end its supposed to be about economics though often is not.

          Like the Concord, the A380 is a technical success but will never return a penny to the bottom line and that money could have been spent on a true 777X competitor. Companies are not in business for tech success, they have to create financial success as well.

          Good luck with Santa, I found out he did not exist lo many years ago. I have seen a few pink elephants but I was deep into my drink at the time.

          • Where did you pull that 4 billion program cost for the A380 NEO? Let me guess thin air.

          • Outside the middle east, the A350-1000 will be the 777-X competitor. The love for this 777-9x by those who also like the the A380 means nothing if people follow your argument. There is no telling yest of the market for this 400 seater will rock. As of now, the majority of those are for Emirates who designed the 777-X and needs to replace its current 777’s and thise aotrher airlines who are chasing Emirates

          • Yes the 4 billion is from memory, I can’t atribute it

            Have any numbers different?

            Certainly I could be wrong but ……. get some contrary data?

    • If you want to be taken seriously and not just an A380 hating troll you should at least stop posting lies as facts.

      Lie 1# Boeing has not sold 2000 747’s but only 1536. Out of these only 118 are 747-8’s.

      Lie 2# Airbus has sold 318 A380’s not “290 at best” like you claim.

      • You are correct, I picked up a figure someplace and the 1536 is the correct figure.
        That is actually produced.

        I would add another 42 roughly for production that seems firm. Something around 1600 total, that in 45 YEARS in an environment of no comparable aircraft and Boieng could charge the limit. A380 has sold for less than half its list value.

        On the other hand you list 318 for the A380 when in fact they have made 143.

        The 318 has shaky orders in it.

        Airbus business model was based on the 747 and no competition when in fact the world has changed and there are aircraft that can fly as far with fewer people and competitive economics.

        Valid criticism is not being a troll and I have posted such for many years, how about you?

        As far a technical achievement delivering what Airbus said it would the A380 has done that (sans the belly freight upset and that’s the airlines fault for not figuring that out)

        It was also advertised as a fling palace and reality has set in and Airbus is pushing more seats. Not what the touted it as with hot tubs and swimming pools in the air. Reality rears its ugly head.

    • I agree with Trans World, in that Airbus wanted a status symbol as well as a competitor to the 747 which was already out of date. The 777 was the new
      model. Airbus should have built a competitor to the 777 not the 747! The design of the A380 was for max passengers (more money than freight) in a world where passenger numbers would continually grow. Unfortunately that did not happen,plus all the added cost of the wiring mixup plus years in delays,by the time the market does move in the positive side the A380 will be out of date.
      Oh and I’m not American,I come from the UK and still believe in economics!
      Four engines is always going to struggle against two,especially when its difficult to fill the A380 to the brim.

  3. 777X Wing Factory:
    Wow, I think Shanahan set a world record for spin BS in that Puget Sound article. “We didn’t have the skill set to build it?”

    Mitsubishi did? So you can design it but not build it? And all that time spent in the military divisions of Boeing with that amazing synergy where they did build composite stuff did not pay off?

    Time to dig a new Septic tank the size of the wing plant, the system just was not designed for that kind of through put.

    • And just when you thought that Boeing management could issue a communique that didn’t bash their own workforce. Unless he means that the missing skillset was managerial competence of the 787.

    • Never going to happen. This is Clark up to his old tricks. Remember the A350 order? That was Clark winding up Boeing to get on and confirm that 777x would be built. When Boeing did,Clark cancelled the A350. Now it’s all about the A380neo and “might” relook at the A350. Never going to happen. He will blame Airbus for not moving fast enough on the neo,cancel the ‘extra’ 50 A380 and order the 747-8 and the A350 second time round-it’ll be 787-10.
      Clarks Airline are all powered by EA engines,why change? Makes no sense.
      More like Clark pushing Boeing to the limit on price. As for Rolls Royce? I would be VERY wary and get on with building the engines for the Dreamliner, A350 and A330 -taking care of my LOYAL customers.

  4. Ak Airlines:

    Having watched Alaska Airlines form the days it was called Alaska Scarelines to its current position has been interesting.

    Once they settled in on the 737 as the mainstay they have done well as a business, if not always for the people working for them.

    They had a period I refer to the dark days when you were almost guaranteed to have a cancelled flight and that was the direct impact of terrible relations with their employees.

    What I do wonder is what the 737MAX is going to do to the single fleet type. It is significantly different than the current fleet and that commonality is going to be severely diminished. Unknown how reliable the LEAP engines will be but as good as the current CFM

    And regardless of what anyone says, Delta would like to eliminate Ak airlines, preferably by buying them out. Ak benefits in that its not the main focus of a large hungry predator, its just one of the side dishes that Delta wants, at some time it may become the focus. Delta fails a lot on their erratic track record in serving the Alaska market (though no longer the only market for AK Airlines). they pulled out during the last Volcano and AK continued to fly when possible.

    I did have to laugh about the CEO saying how improved the new seats were for the customers. Yea right, worst ones I have been in.
    Last time my trip down was AK and back was American I believe, much better seat and leg room.

    Its not about the customers, its about maximizing profits, I get that but to expect me to believe otherwise is sily.

    Time will tell how it evolves.

    • A380:

      The economics of the A380 were based on at least 4 a month and freighter market, neither is happening.

      Even at 30 a year it does not add up.

      As Boeing found with the 747, 1 a month is about it. As noted they also found a nasty dip, that will occur again at some point which the A380 will fall into. Fuel prices are going down and there is getting to be far too much capacity being built.

      You can bally hoo it all you want, The A380 while a technical success is not going to make any money. Break even is always a few years down the road and the more you put into it the farther it is (pure economics says cut your losses, image and European politic says you can’t)

      I am not against Airbus, I admire what they have done the last few years, but current management inherited a white elephant and are trying to deal with it. NEO or not, its never going to be a commercial success. The last best analysis said they needed to make 600 to break even and that was before the wing rig issue let alone a few more billion into an NEO. So we are 20 years away at best and no ROI in sight.

      And note that Boeing did not have launch aid for the 747, A380 did which will never be repaid, so its the single largest subsidized aircraft in the world and still won’t make money, something to think about. Free money, no interest and it still is a money looser.

      • Why are you so obsessed with total program break even? That’s gone, history, a thing of the past. Not relevant once you’ve sunk all development costs – for any aircraft program – even the 777 – regardless of whether you’re making a profit or not.

        What matters now to Airbus is whether to invest in the upgrade and how it will affect the program’s profitability from now on compared to no upgrades. Those are the decisions the current management will have to work on. They at least have a clearer idea of what expect in the future.

        • You don’t stay in bussiness if your ROI is negative.

          If you don’t think those un-recovered cost matter you simply do not have a clue as to how a bussiness is run.

          • “If you don’t think those un-recovered cost matter you simply do not have a clue as to how a bussiness is run.”

            – Just want to know, what qualifies you to make the above remark?

            Just because the 747 program has netted Boeing a positive ROI up to now, that is not going to have an influence on the decision to invest in upgrades in the future. As I said, this for any aircraft. Aircraft programs are terminated not because of past successes or lack of, but future estimates. There’s a reason why the DC-3 program is still dead, while the 777 went on to become successful despite a poor start in its first iteration.

          • A question in that 747 context:
            Does Boeing book the -8i/8f as standalone or into the general 747 accounting block?
            context : by Boeings own words the 747-8i/8f is in a forward loss position over current and potential future sales.
            Perspective would change significantly if “loss” is over just the -8 _or_ over the whole 747 project.

            “Because the 747 program is in a loss position, costs associated with the factors above will be immediately recorded in the third quarter for future 747-8 deliveries.”

            Boeing wording tends to be very carefull if sometimes obfuscated, note the differentiation 747 versus 747-8 later on. One sentence but two separate pronouncements.

          • “– Just want to know, what qualifies you to make the above remark?

            Just because the 747 program has netted Boeing a positive ROI up to now, that is not going to have an influence on the decision to invest in upgrades in the future. As I said, this for any aircraft. Aircraft programs are terminated not because of past successes or lack of, but future estimates. There’s a reason why the DC-3 program is still dead, while the 777 went on to become successful despite a poor start in its first iteration.”

            Hmm, because I have managed not to go bankrupt?

            747 will never be upgraded again, market is not there for it. They blew the last upgrade and it will cost them (though it may not have had a future anyway).

            DC-3 was the end of the tech road for that era. I would not say dead, just its time was done. A380 was an artificial creation enabled by free launch aid.

            You still have to have a realistic assessment of what the market is and where it is going.

            The disagreement is does the A380 have a future in which it returns money to Airbus so they have money to launch future projects?

            I don’t disagree that Boeing is going the way of Airbus in free money (they go about it differently) I am against that for anyone.

          • Hmm, because I have managed not to go bankrupt?

            Troll statement.

            I would not say dead, just its time was done.

            ??? I shall remember this line.

            You still have to have a realistic assessment of what the market is and where it is going.

            We are in complete agreement.

            The disagreement is does the A380 have a future in which it returns money to Airbus so they have money to launch future projects?

            It’s a good question. But I’m pretty sure you and I, both, don’t have all the information to develop a firm conclusion.

            I’ll leave the launch aid discussion for another time.

      • Fuel prices going down? What could be better for the a380 (and global trafic) ?

        • Lower fuel costs favor older aircraft as the percentage of the business cost goes down.

          At some point (claimed $70 a barrel by Boeing I believe) then it become low enough that even an A340 can be competitive.

          Ergo, the on going argument between Boeing and Airbus as to which of the aircraft have better cost advantages as a percentage that reduces as the cost of fuel goes down.

          Then the cost of the aircraft can be significant. Delta has done a lot of that with the single aisle fleet, picking up cheap older aircraft that suit certain routes. Not nearly as fuel efficient but the overall cost is a wash or lower (and simpler to maintain aircraft )

      • The A380 is the Flagship of all prestigious carriers and they use it to compere with each other. I would call it a success. Everybody wants to fly in it. Nobody cares about the 777 which is an ordinary airplane that everyone has. Furthermore passengers dread that cramped 10 abreast seats monster plane full of people, dirty bathrooms, etc.

        • Really? So, How about Cathay Pacific? JAL? ANA?

          Malaysia has 6 and those may be on the market soon. A classic case that was a disaster for the Airline. Qantas on the verge as well.

          You don’t make money on prestige, Titanic carried a lot of below the decks passengers just like the A380 does. Someone has to make it pay.

          Concord was shutdown because it made no money despite the high fares (not enough riff raff) . A few prestige suits aside, what pays for the operation is lots of lower fares, not the luxury suites.

          • At first blush not a single statement in your post appears linked to reality.
            I like to see at least half of them proven with factual links.

        • Uhhh…no. If it was such a flagship, every carrier would have one.

          I really find it funny that people assign the “prestige” moniker onto the A380 when it is just a bigger bus in the sky, just like every other jet plying the commercial routes. If any bird get the “prestige” moniker, it was the Concorde, and look what happened to that. If people can get to their destination cheaper on an A330 or 777 than on an A380, take a wild guess what they will do.

          And Jose, you are completely off your chair if you think only the A380 is the plane that doesn’t have dirty bathrooms, etc. Or won’t be modified to fill it to the brim with as many passengers as possible. But hey, at least with the A380 I can get a complimentary shower right at my seat on the lower deck, so that counts for something.

  5. I guess the A380 will be produced in updated versions until at least 2030 at 30-40 per year. Most likely with part of the US opinion makers kicking & screaming it shouldn’t exist. The train passes by while dogs bark in the distance..

    Potential, even likely, future operators next the current 20 customers; Iberia, KLM, Aeroflot, ANA, JAL, Cathay, China Eastern, Air China, Garuda, United Airlines, Delta, American, LAN, Aero Mexico, South African Airlines, Turkish Airlines, basicly all larger network carriers.

  6. Forget the -800neo, move on to the best value. -900 4m stretch, new engines and 767 size or bigger sharklets.

  7. It’s not a matter of US members who are critical of the A380. People with an opinion, regardless of their origin, are critical of it. The A380 as I see it will continue to be refined beyond the NEO (version 2.0), maybe a 3.0, but like others here have voiced, the money poured into it won’t make it suddenly appealing to attract buyers. The NEO, when it’s become available will provide ___% improvement but how many others besides EK will buy it?? It brings up the scenario of would an OEM build a plane solely for one or two carriers. BA did it for CO and DL with the 764 but outside EK, no one else is stepping up to the A380 NEO plate.

    Iberia is an IAG cust so no., KLM could be a candidate if they want to replace their 744’s with A380’s but based on their widebody fleet makeup it seems as though they are not fond of Airbus , Aeroflot don’t have anything that the A380 would or could replace, ANA just bought the 77x and retired the 744 so no, JAL retired their 744’s and bought A351’s so no, Cathay already said they won’t buy into the VLA sector, China Eastern is investing in their 77W’s , Air China has 748’s coming online and if they wanted to buy A380’s they would have already, Garuda is too poor, United Airlines, Delta, and American Airlines are not buying anymore quads, ever. LAN don’t have a route network that could support an A380. Between LAN and TAM their largest aircraft is the 77w. Aero Mexico could not support an A380. It’d be like WN tring to buy a 77w, South African Airlines is a possibilty. Turkish Airlines is another possibility.

    • “It’s not a matter of US members who are critical of the A380. People with an opinion, regardless of their origin, are critical of it.”

      The problem is that the vast majority of the “people with an opinion” (ROTFL!) living outside the US much prefer the A380 to anything else flying. For example, why would the inaugural service of the A380 to DFW make big headlines in India?


      • The TV station broadcasting the news was a Indian promoting an Indian travel agency who has operations in the DFW. It’s in their best interest to do so. That’s why.

        • Not to mention its not what people like or what they want, its what makes money for the airlines. If that happens to cross that’s nice, but typically the competition such that its purely a matter of economics and the choice better service tips the balance.

          So far, the bulk passengers won’t (or can’t) pay for better, they take what they is there be it an A380 or a 737. Any time I travel I make that decision between first class which I can’t afford and cheap seat with poor legroom that I can. Its uncomfortable but not disabling so I can handle it on 3 hour flights.

          When my wife travelled we got her extra legroom, that’s a health issue in that crippling her up on a flight makes the trip a waste.

          Airlines simply do not care, an aircraft is a money making machine and they balance out the good seats and class seating vs the bulk passengers that pay for the fuel and the belly freight they carry.

          Its not the flying I grew up with but it is the flying that has become todays norm.

        • Whether or not the tv station helped an Indian travel agency with some free advertising is irrelevant, the main story was the start of EK A380 operations into DFW, and not the travel agency. However, the point here was that EK seems to be getting a lot of extra free advertising all over the world when they replace a 77L or a 77W with an A380. In this case from India — and incredibly, we’re not even talking about a direct flight. There appear to be much less hoopla, though, whenever EK, or any other A380 operator, open up a new destination with another type of aircraft.

          • The lesser product needs more advertising.
            LH does more advertising for its 748i than for its A380.
            The world is full of breathless “777 best super everything” injections. Even the quips of “private” posters read like professional PR statements.
            A lesser product would not garner so much attention
            full of negative connotations.

      • OV-99 firmly belives in press releases to validate his views.

        I believe in facts.

        In the long run you get bit by optomistic projections

        • If you’re talking about the link that I provided earlier to Dubai Airports 2050 — http://dubaix.ae/ — what exactly are the “facts” according to you?

          The fact of the matter is that Dubai, which is already the biggest aerotropolis in the world, plan to expand and build an all new one that is forecasted to have a passenger demand that could exceed 190 million passengers a year by 2030, expected to climb to over 260 million by 2040 and go as high as 309 million by 2050.

          Hence, it’s not surprising that some “US members who are critical of the A380” — people that supposedly have an opinion — seem to have very limited knowledge and a clear lack of insight into what’s actually going on. I’d suppose that the sheer number of the planned 250 – 300 A380 capable contact stands at one aerotropolis is just too much to fathom for these people. It’s not like it used to be — that’s for sure.


          In the age of the Aerotropolis, the most competitive firms and cities will be those that connect their products and people faster and more efficiently to the global marketplace. Aviation is the 21st century physical Internet offering them speedy, long-distance physical connectivity using airports as its routers.

          China, India, South Korea and other Asian nations recognize this and are investing heavily in their airports and aerotropolises as competitive tools for 21st century global commerce and trade. So are nations in the MiddleEast. Many of their airports are far more modern, attractive and efficient than those in the West where aviation infrastructure investment lags. For example, the World Economic Forum ranks the quality of U.S. aviation infrastructure 31st in the world, tied with Thailand and behind such nations as Malaysia, Panama, and South Africa.

          The U.S. has targeted a mere US$2 billion to its airports as part of the President’s $50 billion infrastructure stimulus package. China, on the other hand, plans to invest nearly US$240 billion in its airport sector during the next five years, including 56 new commercial airports. India is building 20 new airports and modernizing 58 others. The Middle East is experiencing a similar airport infrastructure boom, investing some US$104 billion over the next few years.


          • Plans are not facts

            PR is not facts either.

            Actuall money commited and spent is.

    • Rotate …. ROTATE!!!

      “but outside EK, no one else is stepping up to the A380 NEO plate.”

      QATAR has already expressed an interest in buying it – see article in Plane Talking.

      • Back to I don’t contend no one will buy it, they will buy it in very limited numbers and the data suggest 1 to 2 a month production long term vs the financiall model the A380 was based on of 4 a month and freighter sales.

        That’s Airbus financial model and numbers not mine. You can spin it any way you want, nothin has changed except it keeps geeing more and more numbers needed to break even which means more numbers still based on their data to make money. Making money is what its all about, not big airplanes flying around in the sky with your name on them.

        i.e. the further you deviate from the model the worse the losses get, the further break even is (and keep in mind, break even means you start to replay the cost of the aircraft in the first place, you do not make money until all the cost have been paid).

        The secret number is around 1200 by some accounts tht they fed the various charities that gave them launch aid (i.e. they will never have top pay that back). Fine if welfare is the goal, but supposedly its not.

        Boeing is in trouble with the 787 for the same reason, the hosed the outsource, fasteners and had production centers all over the planet to tryi to deal with. It cost them hugely (including buying out Charleston Chance Vought operation). Boeing has to make over 1000 of them to repay the costs and break even is elusive where that even starts which keeps shifting to the right.

        The tech part of the 787 like the A380 (for the most part for both) is sound. It’s the production mistakes that’s the issue for both though the 787 eventually should pay for itself, the A380 is not going to.

        The A380 model also had the stretch in it, no longer on the table, if few are buying the short version, fewer still (Emirates) will buy the long version. More billions for a versions that the base model is not paying for let alone a limited longer version that just adds to the red ink.

        • I think the stretch is a good decision. For about 50 more passengers at $600/day mostly profit, so about 10 million a year extra income per aircraft. In 20 years that’s 200 million. So maybe the stretch alone costs an additional premium of 10 million per aircraft, it’s an easy return on investment.

        • Transworld, thanks a really good reply – but I would point out:

          a) Your comment ‘A380 vs the 777X is the current game’ is overly simplistic. The A380’s two full-length decks total 557 square metres, while the B777-9 has only 364, so the B777 – only in terms of CASM are they comparable.

          b) Set aside John Leahy/Airbus sales pitch and check out the actual and projected population growths thats occuring around the world’s superhubs, and because of congestion this is causing flying between major hubs ports will increasingly belong to the big planes. Most of these superhubs, unlike Dubia, serve centres of growing population and economic activity and the traffic travelling between them is also growing. Dubia is a special case as this port was built to operates as a global superhub and not for UAE’s indigious population so most of the 66 million passengers handled last year are transit. In this role it rivaling Heathrow as the busiest international hub.
          Note, EK would find impossible to substitute 777s for their A380s without remodelling the port and remember there are only so many take offs and landing possible in 24 hours.

          c) I apprieciate a second GFC could happen and take heed of your comment about ‘the world keeps changing’ but both you and I have to take note of established trends in making future projections. I believe the A380 has a viable role to play in flying people between these from these congested superhubs over the next 20 years or so. Sales will never reach the 1500 for the 747, but I do expect the to reach 700+.

          d) You mentioned that ‘Emirate complained about the A380 was no belly freight (all taken up by pax luggage ). Last year I flew the A380 from AKL to MAN/UK. On the outbound journey I flew in economy and was given a checked baggage allowance of 30 kgs – 10 kgs more than ANZ and most of the other carriers operating that route.

          Cheers Bernie

          • Benie,
            The A380-800 was not optimized for belly freight, what Emirates allowed etc I don’t know but it was a very loud complaining when they went into service and then they got very quiet. they were demanding the 900.

            How much they allow to attract passengers I don’t know, you can bet everyone is madly balancing the various costs vs generating business for all aircraft types.

            Only time will tell how the uptake of passenger in one big flight vs smaller twins breaks out but again, so far its not been a huge movement. Some yes, but not a big rush either.

            Even if Airbus makes 700 A380s, that is close to if not below the current break even (the original number was 250, they kept moving it up and now won’t report one and I have not seen anyone else asses it).

            Emirates is in business to make money (at least supposedly) and they negotiate the best deal for them. Airbus is supposed to make money as well and they should be making those same decisions. If Emirates gets what it wants and it cost Airbus, then that is Airbus problem. Its a complicated dance. I think Airbus did a lot of spin on the A380, but boiled down it was, build it and they will buy. That has not proven true so far in the numbers they did the match on.

            550-600 to break even was the last assessment I saw and that was before the wing rib problem and the NEO costs. I don’t consider the wing rib a show stopper, but it did cost them a lot of money. It was unnerving that they only caught it as a result of the engine blow up in Singapore and found doing the damage assessment.

            Right now the sales numbers say its limping along (and production not being ramped up past the current 30 a year says they expect it to stay that way) That may change for the better or it may stay the same or get worse. A lot of airlines are not getting into it which says they do not feel they can make it work.

            All that money tied up that is making no return means you are not competitive in other areas.

        • TransWordl, can you confirm the 18 A380 customers, the 318 on order and 5 years backlog?


          Many operators have reported higher load factors, lower cost per seat and passengers choosing A380 flights over others, paying extra.

          The decade of A380 criticism and how it just isn’t gonna work is starting to show Statler and Waldorf signs because the point to point miracle proved to have twice the problems, airlines continue introduce and passenger keep selecting the A380. They just won’t understand..

          • The undertone of the http://www.dnaindia.com/money/report-fliers-flock-to-singapore-airlines-emirates-after-launch-of-airbus-380-2019251 article suggests that the hype is about the A380 being allowed to fly into India, coming from an Indian sponsored website. Not to be splitting hairs but a Japanese travel agency or a Russian website would not be so enthused about load factors and traffic up tics in India, unless you’re from India and have an Indian interest. Pretty Simple.

            The 18 or so customers that Transworld was referring to were the ones you provided sans one, but there’s more. It’s a safe bet that Virgin won’t take their 6, the A380 for the Kingdom Holding Co. was made but sold to an undisclosed buyer. Since it was almost 12 tons heavier than the current version flying, I’m convinced no airline bought it and it made it’s way back to Airbus. Air Austral has been doesn’t even have a tentative delivery date on their A380’s, further cementing the notion that it won’t take them. Moving the 10 from Hong Kong to undisclosed make no sense to me since nobody as of today is on record ordering 10 and wishing to be “undisclosed”. So in reality there are 15 A380 customers.

        • “The secret number is around 1200 by some accounts tht they fed the various charities that gave them launch aid (i.e. they will never have top pay that back). Fine if welfare is the goal, but supposedly its not.”

          Come on, 1200 is a wildly exaggerated number, but together with your unsurprising welfare claim, it sadly demonstrates that you’re not really interested in a serious discourse.

          • Ok, get me the number that Airbus and Germany, GB, France and Spain said they had to reach before Airbus has to repay the launch aid? Interest free loans and not loans, they are welfare, subsides etc.

            Come back when you have it.

            The 1200 is from Av week sources reported over the years as the best they can find out.

            If its not free lunch then why is that figure not published? That tells you it is high.

            Until you get me a number and we see how realistic it is or is not, then you have no leg to stand on discussing that part of it.

          • @TransWorld

            So, why don’t you provide a link to those AW&ST “sources” claiming that the A380 supposedly will have a break-even quantity of 1200 units?

            Of course, you won’t be able to do that since you seem to be confusing the original break-even figure for the A380 with the number of 787s that Boeing apparently needs to sell in order to break even.

            So, isn’t it quite embarrassing being a troll when you haven’t even got your facts right?

            Now, as for break-even, it’s the original break even figure for the A380 that partly determines the repayment of the reimbursable launch investment loans.

            Source A:

            According to Forgeard, this also meant the provisional break-even target was 250 sales, asuming a relatively benign flight test effort and smooth entry-into-service from the first quarter of 2006 onward.


            Since reimbursable launch investment loans has to be be repaid within 17 years at a rate of return at least marginally above the cost of government borrowing, it’s immaterial to the respective government’s RLI loan terms if the actual break-even target is higher than what was originally targeted.

            Source B: UK government.***

            Direct support to be repaid within 17 years at a rate of return at least marginally above the cost of Government borrowing.

            BTW, where were you last year when there was a quite a long discussion thins blog about the A380 and RLI ?



            *** http://webarchive.nationalarchives.gov.uk/+/http://www.dti.gov.uk/aerospace/launch-investment.htm


            Launch Investment is a UK government investment in the design and development of civil aerospace projects. It is repayable at a real rate of return, usually via levies on sales of the product. The government shares in the risk, as the company may not achieve sales at the level or price forecast. Launch investment is available only to the aerospace sector as outlined in the Civil Aviation Act 1982.

            Projects supported in the past include the Airbus A320 and A330/340 as well as Rolls-Royce Trent family of engines. In 2000 the government announced a launch investment partnership to support the wing for the Airbus A380 and an investment in the Trent 900 engine for the same aircraft, which is expected to enter into service in 2006. All these projects have either repaid their expected return or are course to do so.

            Launch investment projects are characterised by high costs, long payback periods, and a large number of private sector investors. Aerospace projects are highly international, and so launch investment enables the Government to secure valuable projects for the UK that might otherwise be carried out elsewhere.

            The provision of launch investment is entirely discretionary. There is no formal scheme, promotion or budget for launch investment. Each application is considered on its merits against a range of established criteria and also, by the Treasury, against public expenditure constraints.

            An applicant must demonstrate: that the project is technically and commercially viable; that Government investment is essential for the project to proceed on the scale and in the time-scale specified in the application; and that government will recoup the investment at a real rate of return.

            The Government undertakes an assessment of:

            · The company’s business case and its claim it cannot be funded by alternative means.

            · The technical viability of the project and the potential market; and

            · The wider benefits to the economy, which can include the spin-off of new technologies or production methods with wider applications in other sectors, or transferable improvements to the skill base.

            If it is decided to support an application, the government will provide the minimum support required for the project to go ahead.

            The DTI closely monitors the progress of a supported programme. Payments are linked to actual expenditure by the company and to the achievement of specific technical milestones. Information is required on the development and commercial position of the project and the financial position of the company.

            France, Germany, Spain, Netherlands and Italy have some form of launch investment. The US supports its industry by indirect measures, in particular the R&D programmes run by NASA and the Department of Defense. A range of international agreements exists to regulate financial support given to industry by governments, and these apply equally to launch investment. Any offer of launch investment must therefore be consistent with the UK’s international obligations.

            Principally, these are the European Union’s State Aid rules and the EC/US Agreement on support for large civil aircraft. This 1992 Agreement, covers aircraft with a capacity of 100 or more seats manufactured in the EU or the US. The Agreement recognises the two main types of support as direct support (such as launch investment), and indirect support (such as the R&D programmes run in the US). The main provisions are:

            · Direct support limited to 33% of total development cost of a project;

            · Direct support to be repaid within 17 years at a rate of return at least marginally above the cost of Government borrowing;

            · Indirect support limited to 3% of the annual commercial turnover of the civil aircraft industry in the party concerned;

            Transparency on both direct and indirect supports.


  8. I do not understand US airlines’s aversion and incessant stubborn attitude toward the A380 ridiculing it as the a turkey, elephant or whatever. For god sake, we are flying DC-9’s, 757’s, and 1960’s fuselage 737’s as we see world leading airlines increasingly flying A80’s and out of the country right in front of our noses loaded with passengers who are being served full menu-based course meals even in coach.

    It would be interesting to see if Air force One will be ever be a twin jet. I bet you it won’t.

    • Jose,

      When I refer to it as a white elephant, I am talking financially .

      What people do not get is if an A380 landed in Anchorage I would be there if at all possible to see it. Its an amazing aircraft and a technical wonder in its own right.

      What the pie in the sky types do not get though is the airline business is about making money.
      Emirates blends some prestige with that, but those people that can pay the suite prices probably can get a business jet flight and not have to mix with the rest of us. Its a limited area, call it icing on the cake, its the bulk passengers that pay the fuel and cost and make some money.

      Malaysia Airlines is not to the best of my understanding,

      Its back to, can you sell enough to make the program a financial success? I continue to think not and the numbers agree to this point.

      I watch Alaska Airlines fly a lot of frequency with 737s vs. getting an A330 or 767, it works for them not on one route but flexibility on all their routes. They do move the various sizes of 737s around to deal with lulls or jumps.

      If the Airports get crowded will they turn to more flights bvs one big one?

      So far its a mixed bag. A few 777s/747 flights have been replaced with an A380.

      they are still making 4 times as many 777 as A380.

      US Airlines do not feel that the A380 works for them and their routes and have the discipline not to get stampeded into it. I think Malaysia got stampeded into it and are sorry. Thai have not heard from them in my readings anyway.

      JAL and ANA are not taking it, so far CP not. Each is assessing what works.

    • They have an aversion to it because their business model, as it currently stands, can’t support the aircraft. Delta has said they can’t operate it unless because it is uneconomical for them to do so (unless they are a state-run airline, in Richard Anderson’s words). They exist to make money, not fulfill some aviation geek’s wet-dream of flying the biggest passenger plane. If they place doesn’t make sense to them, they won’t buy it.

      Now, I’m not saying they are the smartest dudes in the room, but for now, they have no place for the A380 in their fleet. Do you think Delta has enough demand to operate the A380 from ATL to NRT? I don’t know, but if they did, we’d hear about it.

      And the Presidential Plane (AF1 is only assigned when the President is aboard; if President Obama boarded a Southwest 737, it would be AF1) is NOWHERE comparable to commercial airline operations. Your comparison is inherently flawed as the mission and requirements are not in the same galaxy.

      • ” If they place doesn’t make sense to them, they won’t buy it.”

        That’s correct. And if they think replacing their existinfg VLA’s ater 40 years with new ones in their booming Asia business, they’ll order it. Simple as that. They exist to make money, not fulfill some national geek’s wet-dream of avoding aircraft not from here.

        “So far its a mixed bag. A few 777s/747 flights have been replaced with an A380.”
        That’s correct too. From the back of my head, AF, BA, LH, SQ, MH, Thai, QF, Korean,Asia,China Southern? Not on EK, QR and Ethihad though.

    • I’ve thought about that.

      US airlines like the political parties have from the outside miniscule differentiation.
      One line of guessing is that an A380 would provide an attack vector by way of underhanded market shaping for the competition to leverage. ( compare to the “market shaping” that targeted Concorde after the homegrown SST projects did not go anywhere.

  9. Just a reminder that a few of you can getting a little snarky toward others. Careful.

  10. A lot of very knowledgeable commentary above….Anyone have a reasonable expected timeline for the adoption of new turbine engines for the A380. I’ve read anywhere from 2020-2025 – for the A380 NEO.

    • The A380neo is a Jim Clarks buying gimmick,it that its a weapon against Boeing he will use to get his future Boeing aircraft cheaper. He wont buy the neo,stating instead, Airbus took to long to go neo and will cancel the ‘extra’ A380’s, then buy Boeing, keeping all his engine maintenance the same engine.

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