Monday, August 18, 2014

Airbus A380 a ... not a success

Airbus introduced the giant-jumbo-mega A380, so it could rule the world of commercial aviation. But the bet wrong on the market and its sales are slow. The A380 program is unlikely to pay for its development costs.

It is a great aircraft and a marvel of design and manufacture.

Airbus bet that people would want to fly their mega marvel so much that they would choose to fly through major hubs like LAX, JFK, Frankfurt, Tokyo, Bangkok, etc. Versus a flight from closer to home, like to Tokyo from San Diego and Boston. Wrong. In fact, people will pay more to avoid a connection! On the other hand Boeing went for more flights by smaller aircraft and developed the 777 and 787 Dreamliner.

Airbus has sold 318 and deliver 138 to date; about 124 are in service. None has been lost due to accident or other cause. So they have a backlog of 180 aircraft. They can continue a comfortable delivery rate of 25 per month for seven plus years. That might be OK if they were expecting future orders, but industry followers don’t see much there.

And the current order book has one unusual risk - almost half the total 318 orders for for one airline. Emirates has ordered 140. Amazing!! But if Emirates gets in trouble the risk to A380 sales is huge. You know, spread your risk. (Not that they should turn down any order.) But it is a big risk for Airbus.

Seattle Times Read it.

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