Pontifications: A350 launch aid, Emirates and the A380, Bombardier and U-Turn Al

Hamilton (5)

By Scott Hamilton

March 5, 2015: A350 Launch Aid: Boeing and the US Trade Representative got in a big twist around 2006 when Airbus said it would accept more than $1bn in launch aid from Germany for the A350. At that time, the US and European Union had recently launched the international trade complaints before the World Trade Organization (WTO), but the A350 came after the complaint was filed and the WTO refused the US request to add it to the proceedings.

Germany, in a political snit, later said it would withhold part of the launch aid because Airbus hadn’t promised the number of jobs in connection with the program to Germany that politicians wanted.

This has now been resolved and Germany agreed to release the funds.

Long-time readers of this column know that I don’t like corporate welfare of any form, but I also recognize that as long as “Peter” does it, “Paul” must, too. Now that Airbus is more and more a true commercial company and not a predominately government-supported entity, I really, really don’t like launch aid.

But Washington State, where I live, ponied up $8.7bn in tax breaks (aka “subsidies”) to persuade Boeing to locate the 777X assembly and wing production here. The EU asked the WTO to look into these subsidies, the roots of which were found to be illegal in the earlier complaint case, and the WTO is doing a preliminary examination.

The entire topic of launch aid and tax breaks still gives me heartburn.

Emirates and the A380neo: First it was 100. Now it’s up to 200. Emirates Airline president Tim Clark has long said he’d buy 100 A380neos if Airbus builds them. Now he’s saying he’ll take up to 200.

No doubt critics Richard Aboulafia and George Hamlin will still say this is a dumb idea, especially since “only one” airline wants the airplanes. (We all have a good natured poking among us on this topic.) For Airbus, a sale is a sale and it now has a near monopoly on the Very Large Aircraft sector with the Boeing 747-8I all-but-dead. Our Market Intelligence indicates Rolls-Royce as yet is the likely the engine supplier. RR will pay for the vast majority of the research-and-development of the re-engining, meaning little investment by Airbus. For RR, the basic core architecture of the new engine will be applied to future, smaller engines so the R&D costs get spread around.

If RR is the supplier, the A380neo concept should be viewed in a much broader picture than skeptics have done so far.

On the other hand, if Engine Alliance finds a way to step up–a tall task, I think–then the business case of re-enginging the A380 becomes more problematic for the engine OEM.

In the meantime: Emirates is also ready to compete the A350 against the Boeing 787 for 50-70 aircraft.

Readers will recall that Emirates last June cancelled its order for 70 A350s, much to the glee of Boeing and embarrassment of Airbus. The cancellation, along with Emirates and other Middle Eastern airlines firming up more than 200 777X orders, gave Boeing a lopsided win in 2014 for widebody orders. With these anomalies in the past, this year will be interesting in the number of widebody sales. Year-to-date, Boeing has six and Airbus five widebody orders, so this Emirates competition is going to be hard-fought. While Tim Clark has previously said there will be no nexus between this and the A380neo order, Airbus will be in a position to offer a deal that has cross-connections, as will RR. Boeing said it’s not offering 100 747-8s to Emirates, but GE made the pitch. LNC considers it highly unlikely that Emirates will buy any 747-8s—EK will prefer the 777-9—so Boeing will essentially be going it alone with the 787.

I’ll place my money on Airbus winning the A350-787 bake-off.

Qatar and CS300: Akbar Al-Baker, CEO of Qatar Airways, says he’s no longer interested in the Bombardier CSeries because of the delays in the program. His on-off-on-off interest in the airplane makes his latest statement suspect, but Bombardier is better off without this mercurial CEO as a customer.

MAS MH370: It’s been one year since Malaysia Airlines System flight MH370 disappeared on a flight from Indonesia to China. I said then and I still believe now: this was a criminal act, not a hypoxia, not a mechanical failure, not a fire.

ISTAT: The huge conference in the US organized by the International Society of Transport Aircraft Traders is Monday and Tuesday in Phoenix. I’ll be there, reporting throughout the event.

Pontifications: From the Urban Dictionary:

The act of speaking out for the purpose of hearing oneself speak.
Posturing…speaking to people that don’t really care what you say one way or another since you’re speaking solely to front yourself as “someone in charge.” Speech or written communication that is generally pointless except to cast favorable light upon the speaker or author as if the message were a pronouncement from on high. Usually full of shit.
At least I have a sense of humor….

103 Comments on “Pontifications: A350 launch aid, Emirates and the A380, Bombardier and U-Turn Al

  1. What’s the verb: to pontificate?

    EK is known for choosing “best in class” aircraft. They have opted for the B777-300ER as mainstay. When replacing it with a -9X they would need a smaller supplement. The B787-9 is slightly smaller. I think availability will be the key, and how much each manufacturer can offer discounts. Both Airbus and Boeing are challenged by high production cost for their carbon fiber wunderflugzeuge, and we know that Boeing needs to recover 26bln USD deferred cost (money that has been rained on shareholders but that isn’t actually there).

    • I think it’s going to be an interesting Paris Air Show! I’m sure that’s were the formal go-ahead for the A380NEO will come, and if it was supplemented by an order for 70 or so A350 the Airbus salesmen could put their feet up for the week. (Not that they would!)

      • Paris Air Show will be interesting. If Emirates pushes range and fuel improvements too much it will be much cheaper to fly non-stop, not changing aircrafts in Dubai. LH and AF should push for an all new wing and 2hrs more range with full payload and an all new carbon wing with massive winglets or folding wingtips a la 777-9. Emirates will most likely want a small range increase, a stretch to 80m length and reduced MTOW with a new smaller wing.
        AIRBUS UK ows Airbus a new and better wing after the wing rib feet cracking issue.

  2. Have to agree that MH 370 was a criminal act.
    Consider that the 777 parted out was worth well over $200 million.
    As a young man I recall the “Great train robbery” in UK. A first of its kind at that time with everyone suitably amazed at its audacity.
    There are some very serious criminal minds as well as terrorists in our midst, and stealing an airplane for simple “gain” in my view has always been a matter of when rather than if.
    Maybe a spare part will show up at some point in time that originally belonged to MH370.
    The total failure to conclusively identify its whereabouts would suggest a very sophisticated deception, but for $200 million what else would one expect?

    • “Maybe a spare part will show up at some point in time that originally belonged to MH370.” I don’t think so, for MH370 is no longer on this planet. It has been captured by extraterrestrial beings who needed a large supply of DNA in order to carry out DNA experiments. 😉

    • Andrew: A criminal act in that one of the pilots (most likely the PIC) took over the aircraft.

      You are badly misguided if you think that you could land a 777 anywhere viable and not have it seen. Techno thrillers are fiction for a reason.

      As an aside:

      Simone Hardy did an interest look at its know flight patch and it passed over and or did a turn over Panang Island which is the home of the PIC. That is at least interesting.

      Hardy then goes onto a great deal of speculation that it was ditched which makes zero sense as the ELTs (two) would have gone off and those cannot be disabled other than by removing the batteries .

      MA former chief pilot also believes it was his acquaintance that did it (in the Anchorage ADN this morning, probably available elsewhere)

  3. Agree about MH370 being a criminal act. Not in the “somebody stole it for parts” sense, though, a hypithesis that I would respectfully regard as nonsensical.

    On the CSeries and QR: Al-Bakar certainly cements his reputation. I would tend to agree though that Bombardier should probably focus on less temperamental customers for now.

    A350/787 at EK: Any particular reason, Scott, that you’d give the A350 the upper hand here?

    A380neo at EK: Jaysus. 200 is rather a lot. It’s almost like they’re hell-bent on buying all the capacity that they don’t want their competitors to offer.
    Regardless, that statement sort of fits with Leahy recently stating that there’s no debate in Airbus’ executive circles any more that the A380 is here to stay.
    At 100 sales for EK alone (not even going with the new number) and with RR bearing the brunt of development cost, I would imagine that there’s a pretty solid business case for the A380neo. Provided Airbus can get a legally enforceable commitment from EK, of course 😉

    747-8i at EK: So suspicions about GE making the pitch were right. They’d obviously lose out if EK bought A380neos and swapped from EA to RR. Still don’t see the 747-8i happening at EK. EK rejected it quite a few times already and I don’t see how offering more frames of a type that’s definitely last off the line would make a purchase any more desirable than previously.

    • If Airbus does the A380neo, I believe Airbus will tie A350 in somehow to the deal. Boeing can’t compete on a “global” transaction.

      • Thanks. I agree Boeing probably couldn’t, but then again, if we’re talking about 50-70 787/A350 and ~70 A380neos (for starters) I would think the order at stake in each category is big enough to warrant quite attractive discounts (as good as anybody else is going to get that issues an RFP for 50-70 widebodies) even if EK split the orders, giving Boeing the 787 and Airbus the A380neo. However, especially Boeing will have every incentive to generally price very competitively to at least avoid Airbus bagging the whole lot (
        120+ planes). Will be interesting to see what happens, in any case.

      • Scott, in terms of the A350 vs the 787-10, can you explain why a EK, a smart and global airline, would save money just to buy an aircraft that doesn’t satisfy his requirements? I get your point but I can’t see why saving money in the present helps your future.

    • Boeing only advantage will be the deal will come in so low Airbus makes no money on it, just keeps the A380 lines going.

      • Dream on! 😉

        Though I think that Boeing has gone for “cosmetic” achievements with their options centric 777x sales.

  4. Grammar Nazi:
    pontificated posturing on some misexpression over details 😉

    here: RLI
    Reimbursable Launch Investment.
    As receiving partner you really have to do something with that money. ( No chance of swapping tax gifts directly into profits to bolster shareholder value )
    As giving partner a risk/profit oriented investment.
    a successfull investment object will give more profit.

    There is an interesting short SF story around from Larry Niven : “Grammar Lesson” deliberating on propper grammar.

    • Ewe:

      that’s a fair statement on FLA (Free Launch AID!) , be it every actually returned or not, maybe even better its spot on!

      At least there is a societal return and benefit.

      • You obvously have a bunch of links at hand that
        point to due but unpaid moneys ?
        Please share.

  5. If the A380 is truly going to breakeven on unit production soon then continuing and a relatively modest NEO investment is a no brainer. The sunk costs are not relevant to any decision much in the same way that the B787 sunk costs are long gone. All they need (I say all!!) is to keep the line ticking over at 30 frames a year for the next 7/8 years and allow the learning curve benefits to come into play.

    A gains the VLA market unopposed to augment the A350/330NEO and has a pretty strong line up in both the up to 8,000 mile slots and in the medium range 2,000-6,000 mile slots

    You add the commonality benefits (cockpit/ RR/ maintenance) and it appears a winning combination providing the unit competitiveness stacks up against B787/B777x

    • The problem by launching a NEO is there will be probably some conversion from CEO to NEO and this will be create a production gap issue. It is not clear if Airbus can maintain a production rate of 30 frames/year.

      Also, a NEO will “shift” further the learning curve and thus will increase unit production cost (new wing structure, new pylons, new nacelles, new engines, etc.)

      • I fully agree regarding both points and questioned the second point (re 30 frames per annum) in my post. My perspective is to consider the status quo and say that Airbus may be in a better position going forward. A couple of tweaks to their offering (A380NEO and A350-1100) and they have Boeing bookended in terms of capacity and range.

        To me the fundamental issue will be just how good the individual offerings from both OEMs are head to head. By all accounts there is not a bad aircraft amongst them but as time goes on a victor tends to emerge (historically A330 to B767, B777 to A340, A380 to B747 etc etc) from the competition and clears up in a segment. So the individual qualities of a aircraft sub variant are almost everything.

        If however we are talking a level playing field Airbus appear in the ascendancy.

      • The A320neo is not a new aircraft. It is an old aircraft with new engines. Initially I thought Airbus would open the Mobile facility with the neo because in my mind it did not make sense to start with the ceo and switch later on to the neo. But today I have to admit that the difference between the two is not that great, except for the engines. So it shouldn’t be to hard for the Mobile workers to make the switch when time comes.

        • Yet airlines are running away from being the launch customer for a really new aircraft like the CS300 !
          The engineers dont get to buy the planes, airlines do and customers seem to like new old planes, even Delta likes used old planes.

    • The A380 has to be made at a rate of 4 a month to return any profit.

      And the last figures were north of 550 hulls to actually return any profit.

      At best it breaks even and is not a deficit.

      Also you have just ruined the market for the CEO version

      No reason not to sell to Emirates, but what if the house of cards falls?

      • “The A380 has to be made at a rate of 4 a month to return any profit.”

        That is a patently false claim.

        “And the last figures were north of 550 hulls to actually return any profit.”

        Source? (with links)

        • I have not saved the links so I can’t track back (yes I should have per MH370 as well)

          It is not false. Airbus intent was 4 per month, that’s in the record if it can be found.

          Airbus as I recall quit calling break even as it went up past 300 or some such. Industry experts felt at the time (and before the wing crack) that it was around 550.

          I stand by my numbers

          • FWIW Airbus at one point did say B/E was around 425. However, as more delays and costs were encountered subsequent to this figure, Airbus declined any further clarification.

          • Two completely different issues are being muddied here. Firstly we have breakeven on units produced and secondly we have the covering of projects costs involved in R and D. it is not helped that Both A and B have very real reasons to hide the failure of programme management. Airbus on the fundamental issue of project development of a product with limited market appeal in the A380 and Boeing in the acute problems with managing the B787 programme.

            This means that re-couping the original investment on both programmes is highly unlikely and both OEMs are unwilling to say that in so many words.

            It appears that both programmes are edging towards breakeven on production costs and that is a good thing but both are also a mile away from chiselling away at the massive R and D that was incurred.

            My view is that the A380’s $18bn is predominantly lost and as for the B787 $26+bn we are looking are looking at a long, long haul to get to anywhere near.

            But let them live long enough in the marketplace with supposedly no new investment for a while and perhaps it all works out for everybody. That seems all too convenient

          • “This means that re-couping the original investment on both programmes is highly unlikely and both OEMs are unwilling to say that in so many words”

            Hm. Enders said the following less than two weeks ago
            “A380 will finally be cash positive on a per unit basis during 2015, “definitely not on a program basis” said Tom Enders. “That would be in our dreams but we are humble people, not dreamers”

            That’s as clear and un-spun as it’s going to get from a CEO these days. I don’t necessarily agree with Enders on everything, but I do appreciate very much that, contrary to his predecessors and most of his colleagues in any business, he is usually quite straight-talking.

  6. MAS MH370:What do you mean by criminal act? Is suicide(Pilot) still a criminal offense in America/Malaysia,especially when you take so many innocent people with you?

    • Interesting question. But afaics irrelevant here.

      My expectation is a “stateful” perpetrator.
      .. and there is only one around who has a real knack for going overboard in that respect.

    • Hijacking, whether by pilot or cockpit intrusion, is a criminal act. Yes, suicide-murder is a criminal act.

      • The eratic operation after the ACRAS and Transponder went off and during the turn South West would indicate something occurred in the cockpit.

        The fact that the aircraft was recovered says it was an experience 777 pilot that did that, trying to recover an aircraft that is in unusual attitude is hard enough let alone on at night let alone one you have not flown.

        It would take a 777 pilot to do that.

  7. The A380 will not become truly successful until American companies start buying it in great numbers. But exclusive Rolls-Royce engines would make it look more than ever like an all-European aircraft, even if it isn’t. I can understand that the President of Unite-States would want to fly in a 747-8 instead of an A380. But what is more difficult to comprehend is why no US airline wants it.

    • Few European airlines want the A380. Air Austral will probably cancel the A380. The airline just ordered 2 787. It is a very small airline, it can’t afford both 787 and A380. Also, Virgin seems not very interested in the A380. The reception of the aircraft was delayed several times and Richard Branson seems more interested in the 787 than the A380.

      Air France want to cancel the last 2 A380 and Lufthansa already reduced its order from 17 to 14. If British Airway, Air France and Lufthansa were not pressured to buy the A380, they would probably not buy as much aircraft.

      • Air France, Lufthansa and British Airways did not buy the A380 because they were pressured to do so. They ordered it because they were large European airlines who needed this kind of aircraft for their international network. And if Airbus comes out with a neo version they will probably order more of them as it will be a very competitive aircraft, provided the operator has the means to acquire it in the first place. I believe most US airlines have now recovered from the slump they were in in recent years and it is time for them to start ordering a few A380s, especially if a neo version is to be produced. My understanding is that the Airbus lobby is not as strong in the US as the Boeing lobby is.

        • Frankly do we still expect airlines in Europe and the states to be pressured into buying from a respective OEM? Historically this may have been the case, eg LH/AF to Airbus on all early models or as I remember the Central and East European Flag carriers post wall who interestingly all ended up with identical 737 offerings around 1994-8.

          Now you only have to look at the fleets of all large carriers to see that such an issue is not a key parameter when buying aircraft. There seems to be an implicit suggestion that European operators are run as nationalised industries and not as commercial operators. I don’t think that is true.

          Regarding the success of the A380, we will have to wait for 10++ years to even have an outline idea as to whether it will ever re-coup a significant proportion of its initial outlay. That doesn’t matter from today’s starting point as it has already been designed and built. All Airbus can focus on is getting new orders unless they believe that it is taking sales from another Airbus model.

          • “There seems to be an implicit suggestion that European operators are run as nationalised industries and not as commercial operators. I don’t think that is true.”

            It was certainly the case in the past but is no longer true. But it will take some time before a majority of people comes to term with that.

          • And the EU airlines that have bought it only BA is doing well.

            How can you buy more A380 if what you have barely works or not at all?

            And then buying an all new version with new engine introducing a new sub fleet into BA (IAG)

            And an NEO with the 900 combo really makes things twisted.

            Better fuel economy and a much large version that barley works as is (it works for Emirates, maybe Singapore, IAG good, but anyone else ordering more?)

            MA was a huge mistake, Thai? hmm , Lufthansa (no more), AF, nope, US Airlines? No. CP no so far, Japan, no etc. Various hold and cancellations.

          • I find it interesting that LH does its VLA advertising predominantly with their 748s.
            In my intepretation a sign that the A380 demand has no absolutely no need for a lift up.

            Same goes for all other A380 users. Load factors well above (their ) average.

            I would not be surprised of LH scoops up some the A380 orphans. Would be in character.

          • Boeing often provides advertising money for customers. Airbus does not.

    • The 777-300 is generally thought of as a pretty successful aircraft, and how many US airlines fly it? The aviation industry is no longer US-centric.

      • That’s a good point. But as US airlines gradually emerge from their near-death experience they will start ordering 777s and hopefully A380s. First there was the LLC assault, then there was 9/11 and after that the Great Recession (or the Great Fraud). All the US airlines went through restructuring on an unprecedented scale. That made them stronger in the end but for a while they were all very weak. We are accustomed to see the US lead the world. I don’t know what’s happening to this country but I remain confident that eventually the US will once again show its might. It’s just a matter of time.

    • They don’t think it works for their route structure.

      AA, DA, UA do not own the entire aviation sector in the US like Emirates does

  8. The A380 NEO decision comes down, I think, to Emirates making a credible commitment to it. Costs will be covered if they do, because Rolls Royce can sell engines they wouldn’t otherwise be able to sell and because they can cover any additional costs in a higher purchase price, offset against fuel savings. On the other hand if Emirates don’t commit, the A380 is dead.

    Surely not pontificate. I would say, inform, challenge and entertain.

    • “If Emirates don’t commit, the A380 is dead.” Airbus would not let the A380 die just like Boeing did not let the 747 die (until recently). So Airbus has no choice but to produce the neo even if it does not make economic sense. Any descent accountant would shut the whole operation down, but that is not the way things work in this business. The A380 is the pride of Airbus just like the 747 was the pride of Boeing. So what I think is going to happen is that Airbus will make the A380neo and it will be relatively successful. The low oil prices are not favourable to the A380 right now but the number of travellers is increasing every year and so is airport congestion.

      • And Emirate will keep buying the CEO if the NEO is not done as that’s the best option

        777-9 may have better economics but not the number of passengers.

        Not as good, but then Emirates is out for Emirate not the good of Airbus (well unless they manage to sink them and then…)

        there is a reason that most ops that did take the A380 only took 10 or so and some of those are on hold and or effet9vely cancled

  9. FWIW – Perhaps the pontificator in chief might consider the effects re the Emerites of the ongoing/coming/ civil wars in the mideast and the role the U.S is or is not playing. If we flip off some factions, they might just decide to spend their petro dollars elsewhere.

    • Emirates will do what they think is best for them and taking over the world.

      How that plays out will be interesting.

      Long term they still have to break even.

  10. Go optimal with a -900 new engine, or shut down the line in 2020. Just a new engine is a half hearted compromise.

  11. “Akbar Al-Baker, CEO of Qatar Airways, says he’s no longer interested in the Bombardier CSeries.”

    I don’t understand how this suddenly became news. Was Al-Baker answering a question from a journalist and the latter was misinformed about the whole situation and wrote a story like if this was something new? Or to be more machiavellian, was this somewhat orchestrated by powerful lobbies to disparage the CSeries?

    My understanding is that Qatar dropped the CSeries when it acquired the A319 from Airbus and later converted the order to the A320. And I have a least three conspiracy theories to explain this decision, each more attractive (if not valid) than the other.

    1- Qatar used to CSeries to lobby the Canadian government to authorize Qatar to fly to several Canadian cities and not be restricted to Montréal.

    2- Qatar had been using Bombardier to obtain better terms with Airbus.

    3- Qatar cancelled the CSeries to acquire the A319 in exchange for the support of France to obtain the World Cup in 2022.

      • I am glad you figured that out Bernard, for this ordering was indeed intentional. I put it up the way I witnessed the situation developing over the years.

        • Agreed on all three counts. Plus of course that Qatar Executive stopped buying Bombardier and switched to Gultstream

  12. This is a response to Normand. BA has London hub, LH has FRA and airfrance has paris. Delta has 4 hubs and adding seattle. AMR has six hubs for international flight and UNITED has SFO, LAX, IAH, ORD, IAD, DEN and EWR. Also the American airlines are twice or more bigger than the European airlines. At one point the EU airlines were all government own. They were only divested in the last 20 years or less. Airfrance is still partially government own.

    • Twice or more bigger? AA revenues are $40B, almost identical to LH. UA and DL are close behind, but even AF/KL is at $34B. (Comparing by number of pax will be much different though as the US airlines do huge short-haul business.)

      And while UA has seven hubs, there are big size differences. ORD has 600 flights/day, LAX has 200. For daily TATL/TPAC flights:
      ORD: 14
      DEN: 1
      IAH: 7
      LAX: 6
      EWR: 36
      SFO: 13
      IAD: 16

      What this says to me is that the A380 could make sense in EWR, which has multiple multi-daily TATL/TPAC routes, and a highly congested airspace. SFO or ORD could be a possibility, but other hubs make no sense for an A380 route.

      • Yep, and do you buy a few A380s for the routes that might work or run the averages where you can use the 777s on all the high need routes?

        Ergo, that’s why US airlines not buying it.

        Its not that it doesn’t work on a few routes possibly, it just does not work on a lot of routes.

        Emirates is in a pretty unique geographic position as well as owning the entire aviation sector in the country, that’s not to be repeated and it cold blow up either politically with where they fly to and form or society wise.

    • Well, from my point of as a regular LH customer Lufthansa has two hubs: FRA and MUC, if you count Swiss and Austrian Airlines as airlines owned by Lufthansa, it’s four with ZRH and VIE …

  13. So it’s clear that there’s quite an effort coming from GE to try and win a place on the new 50-70 regional order from EK.

    EK have said that RR has a good chance at winning back the lost business when they cancelled the A350 order last year, since they power both the A350 and the 787.

    While RR can offer a very strong package combined with the A380neo, perhaps GE’s desperately trying to combine 100 747-8 with the 787 as a counter-bid? This is business for around 1000 engines.

  14. If the EK requirement is the replace non ER 777s the serve the Indian subcontinent and Europe, the 787-10 has a good chance IMO. With GE or RR engines.

    If the requirement is to replace the A340-300, A340-500 and 772ER the A350 has a better chance.

    As a one for one replacement of the A332’s EK succesfully use(d) to open up new long flights, the 787-8 seems to be the best match, or maybe the better 787-9.

    I think Airbus told them to redistribute/sell the former EK A350 slots if they don’t make up their mind before a certain date.

    • I doubt Airbus is telling Emirates anything, the tail in this case is wagging the dog. Airbus is entirely beholden to Emirates on the A380 and as Scott has noted, huge leverage to throw in A350 deal at a great bargain.

      Emirates will bend and twist it all to suit themselves.

      How much Boeing gets just depends on how much Emirates wants to keep Airbus on the hook vs the deals it wants to get out of Boeing.

      And a calculation on how much they can compromise on the best fit vs a good deal on 787 vs the A350. k

      Not having my fingers on the financial analytic that alone takes I would not guess.

      • How fast can Emirates take A380s per month? (NEO or CEO or -900)????

        And if they can’t take 2 or 3 a month where does that leave the production line if they can’t take those without filling orders?

      • Last year Emirates had 70 slots for the most popular aircraft in the segment that was smoothly completing certification. When an angry Al Maktoum didn’t get what he wanted and cancelled, probably some swearing took place in the fleet planning department. Airlines contacted Airbus to fill up the slots, for using them to e.g. overfly Dubai from Europe. Clark almost immediately announced he was “happy to sit down again”.

        • But how many A380s can Emirates absorb a month?

          Sometimes a simple question like that can show what an issue the A380 really is. I.e. one customer seldom if ever can take all production and production needs to stay at X number to be economic.

          So X number production and how many you can take might answer things and can you take those month in and month out for the whole order (say e a month, for 200 that’s 6 years or so?)

          You need routes to put them on, you need some retired etc.

      • Emirates business dances around the A380.
        Nothing less will do.

        And only Airbus sells A380.
        Afaics a rather matches “squeezing game”.

  15. What I am failing to get is the core for the A380NEO would seem to be a conveiron but pushed core per the LEAP

    The next engine which seems to be the wave of the future (GE aside and stay tuned on that ) is a GTF.

    Seems like kind of a dead end move to do the one when the other is on the horizon and much greater growth potential at a much lower cost.

    You can only push materials so far, tech is far more expensive as are the maint and repair procedures.

  16. Regarding Emirates and the A380neo… I think there is a good business case for Airbus to do this… Especially if RR are the main funders. 100-200 aircraft”would keep airbus happy for many years… Having somone pay to upgrade your aircraft will also keep Airbus happy.

    With the a380… Keeping it going would be my priority as it IS before its time, and will have it’s time.

    I’m still surprised AA/BA, UA/LH, DL/AF don’t split the 2 decks between them offering ‘their own’ cabins and staff on each floor so passengers get to fly on the airline they book… And the ‘alliances’ get the economy of true co-purchasing, sharing etc. An odd idea perhaps… But with lessors entering the fray… And approved transatlantic type alliances… Quite possible.

  17. EK can launch the A380-900ne. They just need to share the development cost with Airbus and RR by throwing in several billion. This, on the stipulation that for every aircraft sold to some other airline they get xx dollars return on their investment.

    • Emirates may allude to ordering a lot (and order 100) but they will never pay Airbus to change the A380.

  18. Not a number cruncher, but If EK does indeed place 200 A380NEO orders, surely that should about cover all of it’s developmental costs, even if you’re looking at a 60% discount.

    • Personally, I am not that optimistic if you consider the additional development cost (2.5B $) and the additional production cost. Airbus need a production rate of 30 frames/yr in order to make money. If a NEO is launched and if there are some conversions from CEO to NEO, Airbus might reduced its production rate and loosing money.

      Furthermore, the NEO will be probably more expansive to manufacture and shift the learning curve. All cost must be considered not just direct development cost.

      • There’s not too much in the way of additional production cost, most of which will be borne by RR.

        $2.5 billion is a bit on the high side of a simple re-engine program. But spreading this over 200 EK frames alone would mean a premium of $12.5 million per frame or less than $1.05 million per frame per year over a 12 year EK life. This is still nowhere near the cost savings per year from a 10-13% fuel burn reduction and I’m sure EK will gladly pay for the development.

        • Airbus will probably need to modify the wing, pylons and nacelles and find a better solution to crack problems.

          • The “crack problems” already have a permanent solution certified and in place and all new builds come with it.

            The wing mods, pylon and nacelles all come as part of the same development package in any re-engine programme be it the A380, A320 or A330. You can’t do a neo without those.

          • The way I see it is that retaining the CEO means halting production around 2020 as the current orders (less cancellations) complete. I believe Airbus will do anything to retain the production capability for A380 and all the infrastructure so expensively built up providing they are breaking even per unit. A NEO drags the A380 up to 777x levels of efficiency and as such breaths life into the project. 100 extra aircraft to EK allows Airbus to get well like so many previous programmes by extending the life of the project Airbus is buying time for luck to come into play. Remember B747 looked dead and buried in the late 70s as DC10 and L1011 looked like good bets but circumstance and time left it the top dog that eventually rolled into profit in the 80s and 90s.

          • @sowerbob

            I agree with that. Airbus will need to work out how to produce the A380 profitably at lower rates. That would be as important a part of the NEO program as the design improvements

  19. TransWorld:”The next engine which seems to be the wave of the future (GE aside and stay tuned on that ) is a GTF. Seems like kind of a dead end move to do the one when the other is on the horizon.”

    I don’t think a large GTF engine is on the horizon anymore. There is a new CEO in charge at United Technologies and he quickly rejected any future development of the GTF engine. My understanding is that the UTC board put him there with the specific mandate of maximizing shareholder value and not to invest in exciting new technology.

    • RR is moving to the GTF as the second engine they are developing, 2025?

      And a GTF in the A380 thrust range is more doable (I would think) than a 777 size engine.

      Ergo, why do an NEO now, wait for the better engine with more upside.

      Combine GTF with the full suite of current exotic tech and …..

      • Or maybe more accurately, as it all ends up GTF, it would seem they could get the whole thing done by 2020.

        Just seems a bit odd to come out with one engine type and then move into a GTF setup.

        Up the schedule or wait until its all a complete package.

        Emirates can wait a bit,

        • You don’t do a new core engine and graft on a brand new LP turbine driving a brand new gearbox driving a brand new humongous fan with “flappy” blades in one go. ( Nobody will ever want to do a 787 again 😉
          RR needs the Advance Engine to have a leading edge and mature core later on.

          • And P&W did what with their small version?

          • But doing a very conservative approach.
            One reason why there is much leeway for large post EIS pips.

      • A GTF in the 380 thrust range ?. Why would you when you have the 3 spool Trent range which gives the same result , ie a slow front fan and faster compressors.

        Anyway, they only have just jumped up from the 10,000lb thrust range to the 30,000lb range for the GTF.

  20. I agree that the 787-10 would be a superb “regional” plane for emirates. But then again, so would the a330-900. Any chance that Emitstes could bag an A 330-900/A350/A380Neo deal?

    • The same outfit that has nothing smaller than a 777?

      Heavens forbid.

      Well I guess they have to take on the next layer down so why not.

      • “The same outfit that has nothing smaller than a 777?”

        Beg your pardon?
        They have 21 A330-200.

    • Actually, I think the A350-1100 would be the perfect regional aircraft for Emirates. As big as the 777-9X but more economical if you don’t need the range.

      It doesn’t exist yet, of course.

      • I can imagine an A350-1100 with RR Advanced/Ultra engines.

        That would offer RR to sell more engines and Airbus can offer a NEO for A350s.

        Airbus has the engineering capability to cover two NEO programs at once.

  21. I like how you actually have “U-Turn Al” as one of the tags. 😀

  22. Say Emirates gets its way, all the other Airlines that have the CEO are non competitive. That will make for a lot of happy campers

    • ……And are given an incentive to open their chequebooks once more. Does suggest early a380s will end up ‘being chopped up in the desert’ relatively soon (c2025 onwards) if fuel prices stabilise high or alternatively will soldier on if they stabilise low. I think we call it progress.

      The fundamental advantage of the a380 still remains, comfort. To a semi regular flyer at all levels, economy through premium to club, I look forward (?) to an a380 flight in a way that I would not b767 or b747. Quiet, stable and spacious

  23. Forget the a380neo. The advance engine is too heavy and engine alliance will never do the 5% improvement bucause it will be “cost prohibited” . they will do a 1.5% improvement and the adition of winglets will another 3.5 percent plus an 11 abreast will add 35 seats in the 517 seat EK layout for a total of 9.7 improvements that’s all it can happen to the a380

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