Airbus May Be Making the World’s Fattest, Most Expensive Turkey

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When passengers on Air France’s Flight 006 land at New York City’s Kennedy Airport from Paris on Thanksgiving Day they may also have the distinction of arriving on one of the biggest turkeys in aviation history, the Airbus super jumbo A380. Airbus has no new orders for the jet this year, and Lufthansa recently canceled three A380s—it had ordered 17—which typically have 500 to 525 seats. Airports are required to build special gates just to board and unload that many passengers. Air France/KLM, which launched its A380 service with much fanfare, doesn’t want any more as it continues to restructure. Orders at Virgin Atlantic (6) and Hong Kong Airlines (10) seem vulnerable while an option taken by finance firm Doric Asset Finance for 20 of the big birds hasn’t been converted to a firm order.

No U.S. carrier has stepped up to buy the A380 and none likely will. “The A380 is, by definition, an uneconomic airplane unless you’re a state-owned enterprise with subsidies,” said Delta ceo Richard Anderson in a recent speech. He’s making a reference to Emirates and Singapore Airlines, who own about 45% of all planned deliveries. Emirates has 35 A380s operating out of a total order of 90. According to aviation expert Richard Aboulafia, vice president of analysis at Teal Group, there have been 167 net A380 orders over the last decade. Airbus planned to build 30 A380s annually but the current rate is less than 17 per year. “The people who are in the order book are the order book,” Aboulafia says, meaning the potential to add new orders is limited.

As things now stand, it is unlikely that the A380 will produce anything but a write-down for Airbus and its parent company EADS (soon to be called Airbus Group), which invested something on the order of $25 billion to get the first A380 airborne. The jet lists for about $400 million, but you can make them an offer: the going rate is somewhere north of $200 million.

(MORE: How the Airlines Put the Squeeze on Passengers)

Passengers seem perfectly happy with the A380, which has the coolest takeoff feel—it’s like being in an elevator, not a jet— since the supersonic Concorde. (Some versions have what has been called the world’s most luxurious accommodations.) But, for operators, the A380 was launched in 2000 to solve a problem that never materialized. Planners perceived an air travel corridor that was going to be so cramped with traffic that jumbos would seemingly have to play a role. But global deregulation, which has allowed more airlines to fly transnationally from more places, eliminated some of the need for collecting large amounts of passengers in one hub like Paris or Frankfurt and then sending them on to other big hubs.

Airbus hasn’t given up on that notion. Canceling orders may be fashionable now, said its COO for customers John Leahy, but just wait two years when the skies are even more crowded and see who needs what. In the Airbus view, the world will need 1711 very large aircraft over the next 20 years, in part because traffic will double in 15 years.

Airbus is absolutely rocking in other aircraft categories. The company now has 725 firm orders for the A350 XWB, a twin-aisle, long-range aircraft that is undermining its big brother. The A350 helped Airbus crack the code in Asia, winning an order of 31 A350 XWBs from Japan Airlines, once a Boeing captive. It was a huge victory for the Europeans. “It’s not about capacity, it’s about range and economics,” says Aboulafia. Similarly, Airbus has a ton of orders for its single-aisle jets, including the new A320neo, the most fuel-efficient version of that model yet. Airbus grabbed 1,062 new orders this year, putting it ahead of its great rival Boeing, and a record backlog of nearly 5,300 jetliners, or about eight years of production. It’s going to be busy in Toulouse for some time.

11 comments
Hae-SongPak
Hae-SongPak

I don't believe that it's the biggest turkey, that title belong to the Boeing 747-8I two customers for 40 aircraft. The A380 will still garner sales in years to come due to Boeing not wanting to touch that market after the failure of 747-8I. As well the use of Richard Anderson as a quote for your article was very unwise. Richard Anderson has been known to be biased person who'll pull strings to get what he wants. Neither Emirates nor Singapore Airlines are state owned and I think Richard Andersen is jealous they are in fast growing regions with profitable business models and a cooperative workforce. Give credit where credit is due.

ITR
ITR

such an interesting article from a 'partial' probably american author.
I was wondering : how many B748did Boeing sell again? I rest my case.
Let the passengers talk and see how they feel about the A380

duncanspence
duncanspence

What sort of journalism is this "but you can make them an offer: the going rate is somewhere north of $200 million"- could the writer please provide some context.


RDC
RDC

Thanks for an Interesting article though the headline words "fattest" and "turkey" appear slightly more emotional than analytical..  I'd also question "Most Expensive" if the aircraft is (as you write) available for US$200m, which appears to be significantly less than the 747-8 list price.

My data shows a different story to the author's. I know a little bit about the A380 since I have flown it for 5 years and have had some interesting experiences on the great bird that have only proved its utility.  In fact I just published a blog on this topic entitled "AVIATION NOW AND TOMORROW – AIRBUS A380, STORM PETRELS & SUPER SONIC CARS (SSC)"  at http://qf32.aero/2013/10/20/a380-about-to-commandeer-new-space/  .   

The A380 becomes extraordinarily efficient when flown over its "sweet spot" range with increasing numbers of seats (which is what (conveniently) the A380 would have if configured with the relatively squashed seat pitches that I see in the USA).   I have about 1,000 data sets of performance comparisons between the A380 with many other key brands, but have saved them for a future book.  

Like every modern aircraft in the sky, the A380 is unbeatable when flown with full seats and freight over its "sweet spot" range.

Best Regards,  Richard de Crespigny, Captain A380.

aardman
aardman

Flew on an A380 on a transpacific flight.  Best economy class long haul flight I've ever experienced.  Will always try to catch one whenever I go that route.

RobertPhoenix
RobertPhoenix

I'd love to see some numbers to support the Delta CEO position "The A380 is, by definition, an uneconomic airplane unless you’re a state-owned enterprise with subsidies,”

All the indications are that A380 can be very profitable - if you can fill the plane. Maybe that is Delta's problem.

You only have to land at a slot limited airport like Heathrow to see how many A380 there are.


emeraldseatown
emeraldseatown

@Hae-SongPak But a 747 variant cost Boeing practically nothing to develop, so those 40 aircraft probably cover the break-even costs already.

MysterMrine
MysterMrine

@RDC  your argument about the "sweet spot" can be made for virtually every aircraft produce . . . so what is your point in regards to the uniqueness of the 380?