A380 was success for Airbus, says new CEO

#AirbusID

May 22, 2019, © Leeham News, Toulouse: The A380 is a success for Airbus despite being forced by the lack of market demand to decide to close the program in 2021, well short of break-even sales.

Guillaume Faury

Guillaume Faury

Guillaume Faury, who took over as CEO in April from retiring Tom Enders, said at the Airbus Innovation Days pre-Paris Air Show briefing yesterday, that the A380 led the path to the successful development and production of the successful A350 and the transformation of Airbus into it is today.

Enders in February decided to end the program, which struggled for years to find buyers for the aircraft in an industry where airline preference shifted from bigger to smaller airplanes.

Faury, however, did not answer a question from Reuters’ aerospace reporter Tim Hepher that if Airbus considers the A380 a success why it refuses to repay German launch aid of more than $600m.

Focus of trade complaint

The A380 received launch aid from the Airbus member states of France, Germany and Spain when the program was launched in 2000. This aid, and aid and tax breaks for all other Airbus commercial jets, were the subject of a massive trade complaint by Boeing and the US Trade Representative in 2004 with the World Trade Organization.

Boeing claimed unfair subsidies harmed its sales. The WTO broadly in favor of the USTR (Boeing) on many of its complaints but also threw out some and declared others moot.

The USTR complained Airbus and the European Union failed to cure the illegal subsidies on the A380 and A350, the only remaining complaints when Enders decided to terminate the A380 program when the last of the orders were delivered in 2021.

Airbus took the position that under previous WTO rulings involving the A340, once a program is shut down, launch aid doesn’t have to be terminated.

Faury did not answer Hepher’s question about the outstanding German launch aid, which has become a political issue in elections.

How the A380 was a “success”

The A380 was an industrial if not a sales success because in 2006, problems in final assembly exposed the cultural and industrial mismatch between the French and German plants where the A380 is produced and assembled.

The two plants used different versions of a program that created the miles and miles of wiring for the A380. When personnel tried to connect the wiring in final assembly, it fell short—literally—by a few inches.

Wiring for the first several A380s had to be removed and reinstalled, a process that delayed the entry into service by nearly 18 months.

The industrial goof cost Noel Forgeard, then CEO of Airbus parent EADS, his job. Gustav Humbert, CEO of Airbus, resigned. Charles Champion, head of the A380 program and heir apparent to Humbert, was reassigned. French prosecutors filed insider trading charges against several Airbus executives, alleging they sold stock before making the A380 delay and industrial problem public. The execs were never convicted.

Enders was named CEO of Airbus. He restructured the French and German divisions eliminate, or at least reduce, the mismatches.

Lessons learned from the A380 debacle were applied to the A350 production, then in its infancy. Production was smooth. Processes emerging from the A350 program have been applied to Airbus.

There have been nearly 900 sales of the A350.

This transformation is what Faury meant when he said the A380 is a success for Airbus.

But Airbus’ apparent refusal to repay the launch aid led the USTR (Boeing) and the Trump Administration for WTO authority to impose $11bn in tariffs, mostly on European goods unrelated to aerospace. This is before the WTO now.

 

106 Comments on “A380 was success for Airbus, says new CEO

  1. The RLA is an issue. Should they repay on a failed (successful) product given that they overpay on the successful products such as 320, 330 and presumably the 350 in the future.

    I would say no but Mr Faury is shooting himself in the foot when he suggests that there are clear links between the 380 and 350 programmes. If so then it is presumably reasonable to roll up the outstanding Aid to the 350 programme.

    • @Sowerbob

      We’ve been through this before:

      https://leehamnews.com/2016/09/22/wto-slams-eu-airbus/#comment-169075

      Repayable launch investment (RLI)

      66. The UK civil aerospace industry receives assistance from the Government in the form of ‘launch aid’. ‘Launch aid’ is a misleading name, since it implies a straightforward subsidy, whereas the money is intended to be repaid to the Government with interest. A more appropriate term, and the preferred term used within the industry, is ‘repayable launch investment’ (RLI).148

      The DTI describes RLI in the following terms: “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”.149

      https://publications.parliament.uk/pa/cm200405/cmselect/cmtrdind/151/151.pdf

      So, it’s quite clear that the respective governments that offer RLI share in the risk.

      Here’s another link:

      UKGI takes a lead role for government in the commercial negotiations with industry for aerospace Repayable Launch Investment (RLI) contracts, to support the design and development of new aircraft programmes, such as the A350XWB aircraft with Airbus and GKN. This involves working with a wide range of officials from the Department for Business, Energy and Industrial Strategy (BEIS) and HM Treasury, as well as independent financial, technical and legal advisors. These are complex contracts to negotiate and construct – each being bespoke – and involve large sums of public funding. Securing agreement with applicant companies on RLI contracts involves intensive negotiations over key contract terms, including aspects such as target returns, levy rates, product definitions, security and contract duration.

      https://www.ukgi.org.uk/workcs/repayable-launch-investment/

    • if by “overpay” you mean actually honoring the contract made with what amounts to an equity investor (the government’s launch aid in those programs was structured similarly to an equity investor/risk sharing partner) then yeah…

      • I meant that from the government perspective there was both a chance to win if the payments exceeded the initial investment or to lose when the opposite occurs. Risk and reward. I wasn’t suggesting that these payments were not due.

        Interestingly Airbus lobbied (presumably successfully) to have the payments on the A320 wings to the UK government reduced on the grounds that the plane had been ‘too’ successful. Sorry I have no substantiation for that but it was reported in the FT at the time.

        • The usual twist and spin.

          Eahc program is separate, if you don’t meet the metric then you don’t get paid.

          Metric for the A380 was XXX. Probably 500-800

          There is no penalty for NOT meeting the metric.

          Your program fails you don’t have to repay. Plain and simple. The A380 program failed. And the incentive is to list as ridiculousness high as you can get away with as for numbers before you have to repay.

          Purely a crock. Call it what it is. Free Launch Aid. No risk.

          You can call a mouse an elephant, its still a mouse.

          • But there is the potential for the investor to generate substantial return. I see no problem with the concept of RLI given there is some degree of transparency and that it is not open to political interference and rule rewriting after the event.

            The opacity of the current arrangements does make it difficult to pass judgement but overall the investment (barring A300/310) has been a nice little earner for the investing governments net.

            I hesitate to compare but RLI to me is the best compromise form of government assistance and compares favourably to the state largesse that Boeing demands in tax breaks.

          • This seems to be the correct analysis. Of course the A380 is a success….financially for Airbus, that is, if they don’t have to pay anything back!

            But as far as name recognition, I think the A380 was certainly a success for Airbus as it extended their name recognition in people’s minds, and, like the 747, will be seen as an iconic aircraft, even if it wasn’t as numerically successful as the 747.

        • Doesnt seem be what you think it was an A320 wings

          GKN, the UK engineering group, is to take over the Airbus wing component manufacturing operation at Filton, near Bristol, for £136m.

          The UK government is backing the deal with £60m in repayable launch aid to support GKN’s investment at Filton in a centre to design and manufacture large-scale composite wing components for future generation jets for Airbus and eventually for other aircraft makers.

          https://www.ft.com/content/82c1d848-8310-11dd-907e-000077b07658

          • Not that, I had a great nugget of info in a short and sweet government response to a posted question. Simply it went along the lines that the ‘government acknowledged the significant volumes and income generated by the A320 programme and was willing to listen to possible adjustments to the original repayment terms.’ I was interested as i was looking for the commercial terms in relation to another bit of research. I think it was FT but I seem to have an atrophying brain nowadays.

  2. I agree the A380 did transform Airbus. Airbus is now a mean machine. The A350 is the means of transformation with regard to more efficient airplanes. The A350 is only going to get better and will lead into a new generation of narrow body that will continue the transformation.

    But it did come at a cost. Estimates vary, but the loss is at least $10 billion. In the airplane industry that is manageable provided it is not repetitive.

    Airbus should/must repay launch aid. It is a profitable company. There are no excuses.

    • RLI has stringent conditions attached.
      Whatever they are they must be fulfilled.

      I’d guess that they only look at the project invested in.
      They do not touch on fringe benefits ( or downers as may be )
      for other projects.
      This is not touched either by Boeing or US “feelings” in general
      or what posters here think.

      • At the time A380 rewiring, delaying the program 18 months, I heard 3 Billion total damage. No need to pump it up / rewrite history.

    • @Philip

      $10 billion?

      Is that what the 737 MAX grounding/crisis/catastrophe will eventually cost Boeing?

      • And prey tell what that has to do with the price of tea in China?

        In the political world its known as a deflection.

        10 billion with all the wiring harness and wing joint issues is low, more like 15 billion.

        • Well, the point was that that the two crashes and grounding could cost Boeing the equivalent of half (or more) of what an all new aircraft would have cost, and that the MAX has essentially ruined Boeing’s reputation. In contrast, the A380 has been named best aircraft in the world and is a hit with travelers, enhancing Airbus’ reputation and brand.

          So, what’s worse:

          Lose $10 billion on a great engineering project that has enhanced Airbus’ reputation and brand, while providing the path to the successful development and production of the successful A350 and the transformation of Airbus into what it is today; or lose $10 billion — on top of some $2 billion in R&D — on a catastrophic grounding that has ruined Boeing’s reputation and put the future of the company at risk.

          • Well a 25 billion dollar looser program is quite a costly billboard me thinks.

            And the subject is the A380 being called a success not an A/B contest of who mucked up worse on what.

          • To develop a successful product line you have to accept that some products and project will fail. You develop a new product under certain premises, do the best job you can and then the market decides.

            In my role of head of R&D and product management I consider myself very successful if half of the products and projects succeed, hoping that the failing ones will not be too costly in the end.

            If you try to play this game 100% safe, you chance of winning in the market are 0%. And I think that is the case with Boeing currently. It used to be very different. The 747 was probably the biggest gamble ever we have seen in this industry and it payed of really nicely.

            Airbus did place a big bet on the idea of this whale of a plane and the idea of slot restrictions. It did not work out quite as planed, but not as bad as some people here might think. And yes, learning new tricks for your R&D, production, sales and last not least improving your brand in the public was probably more than worth the cost.

  3. The launch aid came from the UK (£530mn) in addition to France, Germany and Spain.

      • No . Risk sharing means share in success or failure, many aerospace sub contractors work like that.

  4. So a major error in the development process led to faulty product specification and the following execs ‘walked’
    CEO EADS
    CEO Airbus
    A380 Program head.
    How many died because of this wiring goof up?

    • What are you talking about? This was an assembly related mismatch discovered during production, it was addressed before the planes left the factory.

      Some people seem just too eager to paint airbus planes with the same brush the 737 max was painted with.

    • Are we discussion the A380 or the 737?

      Title of the Piece is A380 a Success per Fleury.

      • All the details on problems and execs is from the story.. its not just the title .

  5. A380 a success? It was late in arriving, it had huge development issues, it never broke even, it didn’t pay back launch aid. It was terminated before its time. This is the description of a successful product? Well! This is easy to say for an incoming CEO when his predecessor will carry the blame.

    • Of course it was a success. It’s one of the most comfortable and amazing aircraft you can fly on anywhere in the world.

      Name another aircraft that has shower facilities for passengers, and bedrooms with double beds.

      Passengers love it. If you can fill it up, you can make a lot of money from small margins, and crush your opposition on a route.

      Profit for Airbus? Well, that’s a different matter.

      I suspect we will rue the day then the last one stops flying, may that be far in the future.

      • Well lets see, if I bought a ticket that allowed me to use the shower and bedroom, I would have to sell my house for one trip.

        You don’t get something for nothing. Either you get huge bucks for your shower and bed or you have poor economics.

        On the other hand, even non dense packed you don’t have enough routes it works on.

        Its an accomplishment there is no doubt of that, even without the beds and showers it is.

        The Titanic wasn’t going to be doing the Dover to Calais run though.

        I won’t miss it, I can’t afford those kind of flights (even in cattle class)

        Those who can afford it will and I am sorry for them, having had the joy of a whole business class row to myself in my long ago youth (747) it is realy nice going across the Pacific. Now that was just a row of seats not a bed (which I turned into one, not a lot to see in the dark over the North Pacific) – on the other hand I work for a living and have camped in hugely worse conditions so it was true luxury .

        I didn’t pay for it and it was a really bad trip getting out and rugged work there and I would have happily missed the whole thing. Coming back was a treat though.

        • The funny thing is that even in economy the A380 is great. It is an experience in terms of ride, noise suppression, and space that you don’t get elsewhere. If I had to fly in the back I would go out of my way to fly it. Unfortunately the A380 was culled by densification which takes a 777 which had a great cabin and replaced it with 10 across (as an example).

          Sad for the travelling public, it will be missed when it has gone.

          • Having done cattle on a long 747 flight that I can appreciate.

            While you can go dense on a 777, you can’t do that on an A380 on most routes as there is not enough pax to lift (at least at any given hour)

            So you are stuck in between and with the economics.

            MA is going to try to do a high grade Haj with it in standard configuration and its not going to work either.

            They go low and they are competing with old dense packed aircraft.

            High quality and how many that can afford that rate?

  6. The A380 just started the transformation. The logistics and tied up capital on the A380 manufacturing program is quite big, one can see the time between first flight and delivery as one example. All the different allowed customisations of interiors that can take immense time to get all the bits arriving and thru quality before completion and final Customer acceptance flight. The A380 new databus Aviation Full Duplex became the standard for the A400M and A350 and is the main gain from the A380 I think. One can wonder after the RR Ultrafan testflights on the A380 if there will be a reengine company for the A380’s like the Gamma Corp for the DC-8-60 series to DC-8-70 series. Maybe Fabrice Brégier could do it and John Leahy sell it…

    • Use of GLARE, big inflight entertainment upgrade, quiet aerodynamics, quiet engines; all worth adding to the list too

      The Ultrafan test flights are frustrating, because one can clearly see that an A380 with 4 of them would be a phenomenally successful aircraft. I can only imagine that it’s the cost of paperwork and admin that stops it, well, just happening.

      • BA can’t make an A380 work unless they get it for an estimated 100 million.

        Its not the economics, its the lack of flexibility for a 300 million dollar asset that can only be used on limited routes.

        All the rest are just incremental advances.

        The 787 is what kicked the new age in and is still the highest tech bird out there (A220 with its metal fuselage misses it though for good economic reasons for that class)

      • A380 with 4ea ultrafans might open up routes with full payload that are marginal or impossible today with 777-200ER/A350ULR. Like Singapore to US East Cost. Dubai to South America, Sydney/Melbourne to LHR. A 12-17% fuel consumption reduction makes wonders for these ultra long range flights. Still you need approx 200 Aircraft to convert to make a good return on investment and a common Engine/nacelle with the A350neo. 4ea Ultrafans with nacelles will probably cost approx 100MUSD if you buy them, RR might allow a swap on Aircrafts with 4ea run out T900’s continuing a Power by the hour program with a 20% price hike for 15years.

  7. I believe in sticking to the T&C, so for me if repayment is not due on the A380 due to the A380 not reaching the repayment threshold then there should not be any repayment. However, if any of the governments feel that eg Airbus misled them over market forecasts or was insufficiently diligent and there is scope for legal redress against Airbus to recover some or all of the loans then I hope they would act upon this.

    Is the concern only from the German government?

    Also, is it a sort of quid pro quo related to the way that governments have been willing to renegotiate at added cost to help Airbus with the poor management of the A400M?

    • Its not a LOAN if you can automatically get out from under it by failing.

      A loan is if you fail, the owneee comes and gets your assets.

      I havn’t see Germany, UK and France seize Toulouse.

      • And you are correct, it is not and never (as far as I can recall) has been a loan. It is a Repayable Launch Investment, Investment being the key word. Perhaps you are unaware of this?

        • If its repayable (and with interest) its a loan.

          If its not its a gift.

          I am more than happy to hold my hand out.

          I have a Super Sonic 800 seat Aircraft I think I can build. I am really really sure a 1000 will be built.

          Heck, I am cheap, give me 5 million and you will never hear from me again!

          • TW you take the concept of being obtuse to an art form. It is not a loan. It introduces a long-term source of finance that reflects the high risks and long Time horizons that impact almost uniquely on the aero industry.

            RLI has encouraged Airbus to develop new technology aircraft that would otherwise not be financeable. On the other hand tax breaks for Boeing are dropping straight to the bottom line whilst still encouraging them to focus on grandfathering, great grandfathering and working back through the family tree to Lucy.

            The design of support to respective aero industries is fundamentally different. If it is needed, a big if in my opinion, I am far happier with the Airbus model than the browbeating state aid casino that Boeing plays at

          • That is incorrect. If what you write was true then all equity investments would be gifts, which clearly they are not.

            Regarding RLI, I recommend simply doing 10 minutes background reading on royalty financing to understand how (and how widely) it is used and how it differs both from a loan (ie it is not a loan) and equity (ie it is not equity). It is a useful and flexible tool.

      • It is a loan with such long replayment time no bank spreadsheet covers it, so goverments all over has stepped up to support its high Tech industry with this system, especailly if they do not have a big military Aerospace industry that can buy machinery and equipment for defense Money. Just look at countries like South Korea, Japan, Belgium, Norway, Italy, Mexico, Turkey. Look how much goverment Money all over the World went into the 787 and its parts and boxes manfacturing. Almost like the F-35 in the US where every state make bits for it and every prospective forigen buyer also making “High Tech” parts for it also with goverment money. So Commercial Aerospace industry is treated like defence programs with its own logic and goverment Money.

        • Again, if its structured such that its not a loan at commercial rates then its not a loan.

          You can’t have it both ways.

          If its a loan then normal rate and conditions apply if its a gift then they don’t and you can’t argue it is.

          The sun comes up in the East or it does not.

          Repayable means repay or it does not.

          • Some RLA programs become quite profitable for the goverments by time, still no bank would touch them. I think they started on a bigger scale when GE took in Risk and Revenue Sharing partners for the CF6-80C2, (rumors has it that the CF6-80C1 was a dog) and they needed partners with money pretty quick. So the very good military engine manufacturers around the world including RR got the RLA money from their goverments and partnered with GE, the CF6-80C2 sold way more than expected and all goverments got a nice return that just grew and grew. Boeing tried the same with the 787 but with some less skilled suppliers to known results.

  8. From a socialist perspective I suppose any big program is a success. The Tristar similarly was a great win for Lockheed; it allowed them to focus on military aircraft moving forward.

    • Yeah, the practice of privatising profits and socialising losses has long been practiced in America. Typically, the top management of failing American companies that are “too big to fail,” are awarded multimillion-dollar bonuses despite accepting money (i.e. hundred of millions/ billions) from the U.S. government — exemplifying the support rich American receive from the U.S. government at the expense of ordinary citizens.

      https://bit.ly/2wcxSjN

      • That is actually spot on.

        As for the Tri Star a success that put Lockheed into government aircraft, phew weed that is a stretch and not a 747-8 stretch.

        Tri Star: 1970

        C5: 1968

        C141: 1963

        F: 104 (particularly a wonder in its CAS role in the Luftwaffe)

        U-2

        C-130:

        • Yes, and Boeing is also “too big to fail”. If the MAX crisis/disaster would bring Boeing down, I’m sure Uncle Sam would step in.

          • And that has what to do with the A380?

            Tell me Airbus would be allowed to fail?

            Well and with a straight face to, no laughing allowed.

            Can I get a bid on an A400?

          • @Transworld
            May I remind you that the first 120 C-17 cost US taxpayers $39.5 billion in 1992 (well over 300 a piece). A400M was at €152.4m in 2013.

          • Very tricky.

            Ok, 25 billion divided by 80 delivered so far is 312 million per copy.

            When the end flyaway cost was 200 million US vs 175 Million for a vastly less capable A400.

            Whose spoofing who here?

          • Transworld, you just can’t stop spouting patently wrong information, can you !?

          • Ahh, the classic don’t present facts just accuse…. sadly for some I can add and divide.

            Tell me where my math is wrong?

            So costs on the C-17 are listed at 120!

            Otherwise to date the A400 costs as much as the C-17 and vastly less capable. So lb for lb carried the C-17 is worth 374 mill a copy.

            Touted as an over-match match fore the C-130 at Herc prices and now even at so called production priced twice as much.

            Production of the C-17 was 220 (vs 80 for A400 so far) So that is right how?

            So yes, until its equal that is the cost you are stuck with.

            Touche as the French would say.

  9. What launched the A350 was the 787, NOT the A380.

    The A380 was nothing remotely technically advanced. It was an extension of the same construction that the 747/A33 used with a few modified bits.

    This guy has a bright future with Boeing.

    • In contrast to Boeing and the 787, Airbus was able to re-use and improve upon many of the developments, technologies and industrial processes that were undertaken for the A380, for the A350 — including lessons learnt. A380 systems re-used on the A350 include IMA; AFDX, -double-hydraulic/double-electric (2H/2E) flight-control architecture and the variable frequency electrical generation system philosophy; 5000 psi hydraulic system — just to mention a few of the innovations brought forward by the A380. Only with the 787 did Boeing introduce similar systems.

      In short, the A380 is basically a double deck version of the A350 where the composite fuselage and composite wing have been swapped out with an aluminium fuselage/wing….

      • Yep, very modern tech package with old tech stuffings

        If you have your head in the past then that works and I admire the scrounging Airbus can do.

        What do they scrounge from for the next one?

        • “Yep, very modern tech package with old tech stuffings”

          Nonsense.

          Now, with Airbus today having around 50 percent market share of the LCA market — they don’t really need RLI, but they probably won’t refuse it as long as Boeing is heavily subsidised by the U.S. government

          Also, as major stakeholders in Airbus, the governments of France, Germany, Spain and the UK likely want some influence on how the company is run. One way of doing it is by granting RLI loans by taking on a risk sharing part of an all new programme.

          What you don’t seem to grasp, though, is that Airbus has more of a stakeholder approach to how it’s running its business, whereas the raison d’être of Boeing seems to be to maximise stockholder wealth.

          Much of research in economics in the more than two centuries since the publication of The Wealth of Nations in 1776 has been concerned with understanding when the invisible hand of the market works and when it does not. The requirements for it to work are strong. These include perfect and complete markets so that there are no transactions costs or other similar frictions. There must be no missing markets or externalities such as those arising from pollution. Everybody must have the same information so that nobody has an unfair advantage over others. Markets must be perfectly competitive. These are strong requirements and are unlikely to hold in most economies. The key question is whether such deviations are sufficient to invalidate the basic insight of the invisible hand of the market. In the U.S. and U.K. it is widely agreed that this is not the case and it is accepted that firms’ objective should be to create wealth for shareholders.

          In many other countries there is no such consensus. Japan is perhaps the most extreme example. Instead of focusing on the narrow view that firms’ should concentrate on creating wealth for their owners, corporate governance has traditionally been concerned with a broader view. One way of articulating this view is that corporate governance is concerned with ensuring that firms are run in such a way that society’s resources are used efficiently by taking into account a range of stakeholders such as employees, suppliers, and customers, in addition to shareholders.

          “Hiroshi Okuda, chairman of Toyota Motor Corporation and of the Japan Federation of Employers’ Associations, told the assembled money managers that it would be irresponsible to run Japanese companies primarily in the interests of shareholders. His manner of doing so left no doubt about the remaining depth of Japanese exceptionalism in corporate governance.

          … Mr Okuda made his point by telling guests what Japanese junior high school textbooks say about corporate social responsibility. Under Japanese company law, they explain, shareholders are the owners of the corporation. But if corporations are run exclusively in the interests of shareholders, the business will be driven to pursue short term profit at the expense of employment and spending on research and development.

          To be sustainable, children are told, corporations must nurture relationships with stakeholders such as suppliers, employees and the local community. So whatever the legal position, the textbooks declare, the corporation does not belong to its owners. No matter that all the research shows that stock markets respond favourably to higher research and development spending. Nor that the audience consisted chiefly of long-term investors, such as pension funds. The chasm between Japanese and Anglo American views on what companies are for and whose interests they serve could not have been clearer. “In Japan’s case,” said Mr Okuda, “it is not enough to serve shareholders.””

          http://finance.wharton.upenn.edu/~allenf/download/Vita/Japan-Corporate-Governance.pdf

        • There is no such things as a Variable Frequency Generation system.

          A VFD, ala Inverter takes power and converts it to other frequencies and or power levels.

          The A380 was not remotely close to an all electric that the 787 is.

          I have been working with Inverters for 30 years, nothing new about those. GPUs went that way some time ago where they had source electrical power.

          The A380 went bleed air for its A/C unit. 787 used electric motors (one moving part) – you have to not only cool the bleed air you have to have large pipes to funnel it around the aircraft. 787 can route its energy needs around anything easily.

          Nor does the A380 have electric brakes.

          The A380 has a hugely complex and multi redundant tube system (3) to get all that hydraulic to where its needed.

          The 787 just runs a wire to a local very small hydraulic motor.

          • 787 has 3 hydraulic, 2 electric subsystems.
            You are well below the event horizon of “knowledgeable”.

          • I didn’t say the 787 had no hydraulics systems.

            The 787 has a lot more of electrical systems (replaces some hydraulics and some bleed air) , in power design you would call it two parallels s system

            I suspect the APU can be connected to either Bus.

            It also meets the redundancy requirements so it gets messy there as well

            Each engine as well the eh APU crank out 600KW.

            We supply 60 KW to any other aircraft on the ground.

            787 requires a vastly large ground power setup.

            I have GPUs for the never to be seen A380 and those were 90 KW each.

          • @TW

            I never thought that this forum would reduce itself to how big is your…. power crank

            Bye

  10. Airbus intentionally overestimated the market for the A380, which was 2-3 times what Boeing was estimating. This allowed them to pay back less on each delivery. The rest was “oh, well, you all knew the risk…”.

    • Sort of right.

      Airbus likely set the target at 500-800 (likely 800)

      Payback was North of 500 last I saw an analysis .

      It never paid anything back. Under 250 to be built?

      Free Lunch Aid by any other name is still free lunch.

      • As usual, you don’t seem to know what you’re talking about. A380 RLI repayments to the respective governments — i.e. principal and interest payments –have been paid by Airbus since the first A380 delivery to SQ in 2007. The issue here, is that due to the termination of the programme, the risk-sharing governmental partners won’t recover what remains of the RLI debt.

        69. RLI payments are made for eligible development costs to companies in the early years of a project. Repayments, when paid, are usually based on a per-aircraft or per-engine levy. These are set at a level to achieve the repayment of RLI with a target rate of interest and within a specified period of time.

        https://publications.parliament.uk/pa/cm200405/cmselect/cmtrdind/151/151.pdf

        • I don’t believe that is correct but will pursue.

          So what is this rate of payment and how come you have to have 500 made before it starts?

          There is a massive logic bust there.

          • By definition ‘risk sharing’ means you share in its success or share in its failure. They seem to have a bit of both , and the result of termination means no more payments and definitely no repayment of any outstanding money.
            Repayable in this context seems to mean as a risk share not as a loan

          • When was the last time a bank did “risk” sharing.

            Venture capitalists yes..

            Governments? hmmmm

            So no matter how you slice it, it is Free Lunch Aid.

            Call it what it is. I am good with that. Alternative facts not so much.

            Ahh but the rub is that the WTO (useless thing it is) disagrees its legal.

          • Transworld , you must know all about US style home loans– the ones where the buyers walk away , leave the house to the bank., ( the security) The loan isnt repaid if the house value is less than loan amount.
            That is clearly a non repayable loan – US style, as non recourse loans for housing arent very common in most other western countries.

    • Do you have evidence to support this claim? Would be interesting to see, if you do. Would also be something the RLI governments should act upon if true.

  11. The WTO should not assign damages from RLI (or whatever) as “moot” once a Program is cancelled, because it’s not future damage that is the issue. It’s the damage already incurred through the loss of 747 sales and having the A350 compete against the 777 that is significant. The fact that Boeing has done well in spite of this damage does not minimize the damage itself.

    • Agreed. What more sales would Boeing have had with the -400 or the -8 if the A380 was not there.

      MRLI (Maybe Refundable Free Lunch Aid)

      250?

      And now they argue they should not compete in the NMA, where was that when they wanted the VLA segment?

      OV-O99 create his own alternative facts.

  12. The A380 is a success. It will continue to fly millions of passengers for years to come in a safe comfortable environment. Much like the Concorde was a success. Both are amazing examples of what can be done in aerospace. The A220, if they shut down the program today, will have been a tremendous success. In an era of mediocrity, a relatively small Canadian company created a plane heads above the competition. By being more fuel efficient, requiring less maintenance and by spewing less pollutants into the atmosphere it is one of the best planes in the air. Now, what conspires to make these products less prolific and less available to the mass of travelers, that’s a different subject.

  13. It depends on what you want to call a success. Technical does not cut it.

    If it fails financially its a failure no matter how whiz bang it is (Hudson)

    I once saw the coolest multi speed bike front sprocket setup, you could vary it infinity form high to low. Cost a ton and cheap derailleurs continue to rule.

    Technical vs practical (ie make money on it) .

    Or to paraphrase a famous statement:

    With any more victories like that we will soon loose the war.

    • “With any more victories like that we will soon loose the war.”

      Development costs for A350 are estimated to be about $15 billion. I estimate still less than deferred production costs for 787 today.

      Can Boeing sustain another 787?

      • The accurate comparison is the A380 vs the 787.

        A350 is lessons learned and we have yet to see an all new aircraft from Boeing to compare.

    • With say 280 A380s to be built and looking at the 2018 ‘list price’ of $445 mill, that gives $125 bill of ‘1st order estimate’ of revenue. But no none pays list price and the price back in say 2008 was less., so second estimate of revenue would be $75 bill. Lets say development costs were $15 bill, that leaves $60 bill to cover production cost, suppliers ( incl RLI) and margin. Even allowing for a 12% margin on production cost that would provide $7.2 bill return, may even have been $10 bill? Revenue could still be coming in over the life of the fleet.
      The development is a sunk cost , some of the cost of the buildings and fabrication may be recovered ( the Hamburg A380 assembly building is now a A320 FAL, maybe the wing assembly jigs could be another use ?)

      • A380 came in at 25 billion roughly after all was said and done.

        Agreed buildings can be re-used, the wing jigs not, the building maybe yes (if you really need it but A350 is accommodate )

        Offset the bldgs by the size needs of the A380. Nothing needs bldgs that big.

        You also need to take that 25 billion and put it in some kind of investment and what the return would have been.

        Flurry is not arguing either

  14. Is it a joke? I hope so.

    But I heard so many lies from Airbus during their press conferences during the last 25 years at the Paris Air Show, NBAA, HAI Heli Expo, AIAC CAS,…

  15. You can very convincingly contend Airbus would not have been able to do the A350 without the reorientation post A380 mis match production debacle.

    I would call it 40% on that and 60% from Boeing’s muck up of the 787 as factors.

    So for 25+ billion you learned hod to make a modern aircraft and that is a success.

    At least Boeing made the 787 a success and one that will be so for 20 more years.

    • So what about that Airbus got the A380 and A350 for $37bn whereas Boeing got the B747-8 and the B787 for $43bn. So who got the better deal? There is a legacy to the A380 that just does not exist for the B747-8 in terms of infra that can and will be re-used. Also process, skills, confidence etc have brought Airbus from no2 to parity. In the wider context there is something to say that the A380 has transformed the company dramatically over the past 20 years and mostly for good.

      It still failed commercially….

  16. This article is about Mr. Gillaume Faury, and what he has said about the A380. He is entitled to his opinion.
    Airbus makes good equipment, just like Boeing. Neither is perfect.
    However I remember when he was head of the Airbus helicopter division and the H225 crashed in 2016. His opinion at that time was it was not an H225 problem, it had to do with maintenance that was not performed correctly, or something to that effect.
    Until they found the defective bearing.
    Airbus had two sources for the bearing, and all of a sudden the solution to getting the H225 was to use only the bearings from the other supplier. It seems they had quality problems with the first vendor previously.
    I say this because I still have yet to read of an acknowledgement of fault by Airbus in the H225 crash.
    So Mr. Faury opinion on the A380 being a success is just his opinion.
    Just like his denial of accountability for the H225 was an opinion.
    If he wasn’t currently the CEO of Airbus I wouldn’t bring it up.
    These words are just my opinion.

  17. Boys, boys, too much back and forth sniping and going off topic. I see the A380 as a failure regardless if passengers like them as that does not make for a successful aircraft. It is very limited to the routes and airports it can utilize and with ups and downs in the world economies, all it would take is another terrorist airline attack to cause air travel numbers to plummet.
    It had a short run and a low number of frames sold and already some carriers are returning them to the lessors and a few have been scrapped. It came down to being too large like the 1959 Cadillacs which then saw later models reduced in size. It seems the 747 was the largest practical size aircraft that sold very well over many decades. Just my 2 cents worth.

    • Other than terrorist part and it affects all aircraft well put.

    • The Brits say things so well I am not ashamed to be a plagiarizer.

  18. I keep seeing people suggesting that adding more seats, winglets and/or re-enging the A380 would restore its appeal. Why? The aircraft is too big as is, and no airline besides EK can fill them on more than a handful of routes. Having the best seat-mile costs is clearly not the be-all and end-all.

    The A380 has a similar problem to the 747-8 and A340-600 in having fairly efficient engines but 4 of them. Combined maintenance bills are astronomical (as they are on the GE90, btw). Not to mention the airframe heavy checks and LG overhauls — many of these items will fall due at or close to lease expiry.

    And then the liquidity nightmare for any investor: an A380 coming off 1st lease with nowhere to go. Reconfiguration costs are prohibitive, and Tier 2/3 carriers do not have the networks to fill such a large a/c. Too much risk for an ACMI operator to have on its books. Once it bleeds enough value, yes, maybe Hajj charters and the like. But not much else and no P2F either.

    In summary, both physically and financially, it is a white elephant. Passenger appeal really is not relevant here.

    GM

    • I have made those points a number of times.

      Its not the efficiency its the lack of flexibility.

    • Well, hes using the metrics from new companies like Uber ( lost billions never made any money) ,Tesla and even Amazon ( lost massive amounts of money to get where where it is).
      Even Boeing has spent unbelievable amounts of money to make the 787 a ‘success’ , and then found out the tech wasnt scalable down for the 797( it was scalable up for the 777X wing but had to do production itself)

  19. Rule of thumb, given comparable ranges and passenger economics, don’t bet against the smaller more flexible aircraft.

    This has been true now since the 777. Thats why the 777x vs A350 matchup will be so interesting.

  20. Reimbursable:

    verb: (used with object)
    to give back or restore (especially money); repay.
    to make repayment to; reimburse.
    verb (used without object)
    to make repayment.
    noun
    an act or instance of refunding.
    an amount refunded.

    Anywhere in that say maybe?

    • RLI: Reimbursable Launch Investment

      Predictably, you do only focus on the first word in the acronym.

      Now, let’s take a look at the last word in the acronym and what that word means:

      To invest is to allocate money in the expectation of some benefit in the future.

      In finance, the benefit from an investment is called a return. The return may consist of a gain (or loss) realised from the sale of property or an investment, unrealised capital appreciation (or depreciation), or investment income such as dividends, interest, rental income etc., or a combination of capital gain and income. The return may also include currency gains or losses due to changes in foreign currency exchange rates.

      Terminology and risk

      An investor may bear a risk of loss of some or all of their capital invested. Investment differs from arbitrage, in which profit is generated without investing capital or bearing risk.

      Savings bear the (normally remote) risk that the financial provider may default.

      Foreign currency savings also bear foreign exchange risk: if the currency of a savings account differs from the account holder’s home currency, then there is the risk that the exchange rate between the two currencies will move unfavorably, so that the value of the savings account decreases, measured in the account holder’s home currency.

      In contrast with savings, investments tend to carry more risk, in the form of both a wider variety of risk factors, and a greater level of uncertainty.

      https://en.wikipedia.org/wiki/Investment

  21. Doesn’t matter what dictionary you use.its the contract which defines what it means. I’m pretty sure you aren’t a contract lawyer or even have a detailed knowledge of the various EU launch aid provisions or even similar US deals.

    • I assume you are neither, though you are correct.

      What I am is highly experienced in dealing with BS.

      EU BS is no where near the level of contractor BS. Light weights.

      So its Free Lunch Aid and as noted, that is well and fine but to get around WTO they try to wrap it in a package that says its not. Bull

      So why don’t they just tell the WTO to pack sand? Because its the EU. We pretend to follow the rules while were violate them worse than Nanking in 1939.

      If you are going to be a hypocrite do so and wear it proudly.

      Sometimes I feel like Reimburse and sometimes I don’t.

  22. if it would be so easy…..actually the A380 did force the necessary change in Airbus structure. It was before the desaster a very political company, strictly run buy nationality and other politics.
    Now it’s a way more integrated company, better porcesses and better products.

    But it must not be unsaid that it’s more to Boeing failure Airbus is still in the game.
    To counter the A380 Boeing did launch the B748, which was a misteak. They did bring the B787, but they just fucked up, were late and way over budget.
    If Boeing wouldnt have done the B748 and then had the issues with the B787, the A330 revenue would have been gone for Airbus, and Boeing would have had the chance to follow up with a B737 sucessor on a clean sheet- Airbus would have been toast.

    Now the situation for Airbus is comfy, maybe to comfy and they will loose ground again beeing to comfortable?
    You have the most modern single aisle A220, you have the biggest and best selling single aisle A320neo with the A321neo beeing a killer, your A350 beeing the most modern wide body selling well and the A330neo is selling mediocre but still well enough to force Boeings B787 price down.

    The development part looks also very clear:
    You push your existing products – develop the A220-500 , push the A321neo to a range limit (and if possible stretch it once more to like 49m and a A322), develop the A350-1000 stretch close to 80m. By mid 2020ies, a A350neo dev. will start, with the new RR ultrafan.
    You have to watch the MOM gap if Boeing goes for it, maybe you will have to do something wiht your A330neo design.
    And after this is settled and done, the A320neo sucessor is on the list.
    Production is key, Boeing is still outproducing Airbus.

    But overall, I like the perspective of Airbus, having 2 very sucessfull families and 2 okay running, while Boeing is in trouble with it’s bestseller and still a 40% dog, it’s B777x not selling well (same level as A330neo) and the B787 still sitting on a lot of deffered cost.

  23. Congratulations to Leeham with your new editor. “Transworld”. Of the last 5 articles with 356 posts, he stands for 102. About 28%. 😊

    • Yes, a limit on 3 comments per article per author would be appreciated and that each comment should be of Technical content. ( i.e. not Ford v/s Chevy talk)

  24. One very good point Faury made is how hard estimating aircraft demand is. Sure the A380 estimate was off by 50% but that is pretty good compared to an almost 1000% error for the A320 series. Very few of these estimates seem to be even close.

    • Boeing does well with its estimates.

      Frankly the initial A320 or even early 737 estimates were relativistic but so was the huge growth in air travel.

      They have had good data for a long time now.

      The A380 should have had that data as well and historically the 747 only sold about 1600 over a vastly longer production.

      The end trend was down not up. You can add in that Airbus now insists a A330-300/900 dense packed is a VLA.

      The general take is that Airbus expressed excessive exuberance with a botique project to try to prove they were better than Boeing.

      Simply keeping going the way they had was more than enough proof, but Airbus at the time was very sensitive. That makes for really bad business decisions.

      You can add in to get the Free Lunch Aid it is in Airbus benefit to overestimate to reduce payback.

      Their original ones were conservative, now they know how to game the system much much better.

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