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Airlines Shudder At New Delay For Airbus Superjumb  
User currently offlineRevelation From United States of America, joined Feb 2005, 11918 posts, RR: 25
Posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9440 times:

From Reuters:

Quote:
"As the delay will disrupt the expansion strategies of a number of major airlines, the group's competitive position on wide-body aircraft could be adversely affected," the agency (Standard and Poors) said.

That's quite a sweeping statement, no?


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28 replies: All unread, showing first 25:
 
User currently offlineZschocheImages From United States of America, joined Sep 2006, 150 posts, RR: 0
Reply 1, posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9407 times:

I think that we all can agree that the latest delays put Airbus customers in a tight spot. With most of them planning route and capacity expansion with the A380, those will have to hold off. Plus now that the whole production line is backed up and the dominoes are falling, who knows what that will do for future orders. Say for instance, and airline that hasn't yet ordered the jumbo but was considering it, might now look at the timetable and decide to go with the 748 instead. Just a thought. Now to add another question, what Airlines haven't ordered the 380 but might be considering it?


Why fly with 2 engines when you can have 3?
User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 2, posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9358 times:

Quoting ZschocheImages (Reply 1):
I think that we all can agree that the latest delays put Airbus customers in a tight spot

This is the understatement of the year.

Quoting ZschocheImages (Reply 1):
Plus now that the whole production line is backed up and the dominoes are falling, who knows what that will do for future orders. Say for instance, and airline that hasn't yet ordered the jumbo but was considering it, might now look at the timetable and decide to go with the 748 instead. Just a thought. Now to add another question, what Airlines haven't ordered the 380 but might be considering

I will say that Airbus has a tiger by the tail here. Something positive better happen soon or the carriers that have placed orders are going to take serious action. Money and otherwise and if this thing gets delivered and is a flop well it isn't such a pretty picture for Airbus. Somebody better right the ship becuause it is listing.


User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9319 times:

Quoting ZschocheImages (Reply 1):
I think that we all can agree that the latest delays put Airbus customers in a tight spot. With most of them planning route and capacity expansion with the A380, those will have to hold off.

OTOH, those airlines knew what they were getting into when they ordered a plane that hadn't yet entered revenue service. They get the planes cheaper, but have to run the risk of something like this happening.


User currently offlineStitch From United States of America, joined Jul 2005, 29656 posts, RR: 84
Reply 4, posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9295 times:
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Quoting ZschocheImages (Reply 1):
Say for instance, and airline that hasn't yet ordered the jumbo but was considering it, might now look at the timetable and decide to go with the 748 instead.

While the A388's delays put future customer deliveries on the same level (or even behind) that of the 748I, these are "20 year purchases". For airlines (or routes) that don't need to worry about frequency and slot availability, the 748 may very well become the preferred option. But for those who have such issues, or who project robust traffic growth, the A388 may very well remain the better option, even if availability is constrained until the mid-2010s.


User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 5, posted (7 years 6 months 2 weeks 1 day 10 hours ago) and read 9270 times:

W/o the time to read through the 2,000+ responses to the A380 delays...

Does anyone know if FedEx and/or UPS has made a statement(s) on this topic?



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User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 4
Reply 6, posted (7 years 6 months 2 weeks 1 day 9 hours ago) and read 9238 times:

Quoting Joni (Reply 3):
OTOH, those airlines knew what they were getting into when they ordered a plane that hadn't yet entered revenue service. They get the planes cheaper, but have to run the risk of something like this happening.

Well said. While I don't think the airlines in question expected anything quite like what's happened, as you pointed out it's important to remember the risks the airlines take on in exchange for the various benefits of being "launch" customers.


User currently offlineDeltaDAWG From United States of America, joined May 2006, 742 posts, RR: 1
Reply 7, posted (7 years 6 months 2 weeks 1 day 9 hours ago) and read 9154 times:

While most airlines are looking at these a/c for the next 20-25 years in terms of route expansion or increased capacity I believe the Chinese carriers that placed orders for the 380 were anticipating the use for their upcoming '08 Olympics if I am not mistaken?

If it is correct then do they have a grievance with Airbus that could incurr compensation? Did they write some sort of clause into the purchasing agreement?

Is this correct, any insights?

Thanks



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User currently offlineRevelation From United States of America, joined Feb 2005, 11918 posts, RR: 25
Reply 8, posted (7 years 6 months 2 weeks 1 day 9 hours ago) and read 9142 times:

Presumably it is a calculated risk, and a big part of that calculation is how much faith you have in Airbus in delivering on time and on budget, with some tolerance for minor slipups on time and budget. However, these slipups are unprecidented in the airplane manufacturing space, thus many customer's faith in Airbus is being severly tested.

See the thread

A380 Delays - A Perspective (by DfwRevolution Oct 3 2006 in Civil Aviation)

for some perspective on delays.

Think of it in your own life. Suppose you put a deposit down on a new car, expecting it to be delivered in two years. You are planning for your family to grow, so you decide the larger new car is worth waiting for, and you feel your old car will do till then, but not much longer. But then you get informed of one six month slip, then another, then a one year slip, and you are reading in the paper that the manufacturer is having problems making your new car, and you are finding you are spending a lot in gas and maintenance to keep your old car running longer than you planned. Meanwhile, the car dealer is collecting interest on your deposit, and offering you a price break if you lease an inferior car till the new one is delivered. How happy would you be?



Inspiration, move me brightly!
User currently offlineKen777 From United States of America, joined Mar 2004, 8044 posts, RR: 8
Reply 9, posted (7 years 6 months 2 weeks 1 day 9 hours ago) and read 9092 times:

I think airlines considering the 380 will simply wait a while to see how things shape up. They will certainly want to see strong operational performance before ordering so that puts any order several years away.

These potential orders, by the way, may be more difficult for Airbus to pull in. Airbus cannot really afford to offer launch pricing anymore while Boeing can - at least for a while.

Besides the current delay problems Airbus is also facing the potential of some major strikes by workers as they try to reorganize, shifting production between France and Germany AND increasing their outsourcing. I see that as another potential battle front that can impact Airbus' ability to deliver on existing orders and hurting future orders. Airlines are probably going to look at how things develop on this front - they have a lot to shudder about.


User currently offlineKatekebo From United States of America, joined Apr 2001, 702 posts, RR: 6
Reply 10, posted (7 years 6 months 2 weeks 1 day 9 hours ago) and read 9028 times:

The big issue will be Airbus capability to fund A350 development and launch it on time to be a meaningful competitor for the B787 and B777. While the A350 may be a great aiplane, if it comes too late to the dance, all the pretty girls will be already taken.

Yesterday Airbus hinted that they may have issues with their cashflow due to A380 delays. They first have to fix the A380 problems, pay BAE, and very little free cash (if any) will be left to support a full scale development of the A350. I think a one-year, and more probably a two-year delay will be inevitable.

Of course, their is always the possibility of Government help within or even beyond current agreement. I think that if Airbus gets into real trouble and its long term viability is at risk, EU government will jump in to the rescue - there is simply too much pride involved to let Airbus fail as if it was just another company.


User currently offlineSeeTheWorld From United States of America, joined Dec 2005, 1325 posts, RR: 4
Reply 11, posted (7 years 6 months 2 weeks 1 day 8 hours ago) and read 8898 times:

Quoting Joni (Reply 3):
OTOH, those airlines knew what they were getting into when they ordered a plane that hadn't yet entered revenue service. They get the planes cheaper, but have to run the risk of something like this happening.

Being continuously misled and not effectively communicated to is NOT WHAT THESE AIRLINES SIGNED UP FOR, regardless of the price.

Quoting Revelation (Reply 8):
Presumably it is a calculated risk, and a big part of that calculation is how much faith you have in Airbus in delivering on time and on budget, with some tolerance for minor slipups on time and budget. However, these slipups are unprecidented in the airplane manufacturing space, thus many customer's faith in Airbus is being severly tested.

Exactly.

Quoting Katekebo (Reply 10):
Yesterday Airbus hinted that they may have issues with their cashflow due to A380 delays.

Based on their past misleading statements, a "hint" suggests they have already liquidated?!?!


User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 4
Reply 12, posted (7 years 6 months 2 weeks 1 day 8 hours ago) and read 8796 times:

Quoting SeeTheWorld (Reply 11):
Being continuously misled and not effectively communicated to is NOT WHAT THESE AIRLINES SIGNED UP FOR, regardless of the price.

Seems airlines like Lufthansa are content with being misled and not effectively communicated to - they've publically stated that they are going to stick with the A380 regardless. Look at what happened with SQ - they were jumping up and down about the delays and then turned around, purchased more A380's, took out more options, bought some A350's, and got a deal on leasing A330's for the interim. They went from jumping up and down foaming at the mouth to "delays are frustrating, but necessary." Does not sound like they are really much concerned.

As for the car analogy, I don't think it works except, perhaps, in the case of a taxi driver who makes money from the car. But in keeping with the analogy, I think on the surface we're talking about throwing a fit over the stereo - perhaps the indash DVD player keeps getting stuck because the bezel doesn't fit quite right and whether we have room for a 16" subwoofer or will have to make do with dual-12". Of course, that's just on the surface.


User currently offlineAirFrnt From United States of America, joined Jul 2004, 2822 posts, RR: 42
Reply 13, posted (7 years 6 months 2 weeks 1 day 8 hours ago) and read 8723 times:

Quote:

"As the delay will disrupt the expansion strategies of a number of major airlines, the group's competitive position on wide-body aircraft could be adversely affected," the agency (Standard and Poors) said.



Quoting Revelation (Thread starter):

That's quite a sweeping statement, no?

That's a bad bad statement from Airbus's point of view. Access to cheap capital is everything for large self funded (ie, not government) engineering companies. Airbus can do okay with a "A-" or "BBB+" credit rating, but might be in very serious trouble below that.

Quoting Katekebo (Reply 10):
The big issue will be Airbus capability to fund A350 development and launch it on time to be a meaningful competitor for the B787 and B777. While the A350 may be a great aiplane, if it comes too late to the dance, all the pretty girls will be already taken.

Yep.


User currently offlineOldAeroGuy From United States of America, joined Dec 2004, 3423 posts, RR: 67
Reply 14, posted (7 years 6 months 2 weeks 1 day 7 hours ago) and read 8649 times:

Quoting Khobar (Reply 12):
Look at what happened with SQ - they were jumping up and down about the delays and then turned around, purchased more A380's, took out more options, bought some A350's, and got a deal on leasing A330's for the interim. They went from jumping up and down foaming at the mouth to "delays are frustrating, but necessary." Does not sound like they are really much concerned.

That was in July. Now the first SQ A380 delivery has slipped from Dec '06 to 4Q '07. I don't think that the mood at SQ today is one of unconcern.



Airplane design is easy, the difficulty is getting them to fly - Barnes Wallis
User currently offlineSeeTheWorld From United States of America, joined Dec 2005, 1325 posts, RR: 4
Reply 15, posted (7 years 6 months 2 weeks 1 day 7 hours ago) and read 8517 times:

Quoting Khobar (Reply 12):
Seems airlines like Lufthansa are content with being misled and not effectively communicated to - they've publically stated that they are going to stick with the A380 regardless. Look at what happened with SQ - they were jumping up and down about the delays and then turned around, purchased more A380's, took out more options, bought some A350's, and got a deal on leasing A330's for the interim. They went from jumping up and down foaming at the mouth to "delays are frustrating, but necessary." Does not sound like they are really much concerned.

I highly doubt any airline that ordered the A380 is "content" with the way Airbus has handled this situation. Whether they take an particular action or not or say something or don't is irrelevant.

When you get to the airport and the check-in agent tells you the flight is ontime (and he or she knows that it isn't) and then you get to the gate and are told the flight hasn't even left its origin, I doubt you are "content." You are unlikely to cancel your flight, and you may not even say anything (some would and some wouldn't), but I highly doubt you're "content."


User currently offline727200er From Canada, joined Mar 2004, 318 posts, RR: 0
Reply 16, posted (7 years 6 months 2 weeks 1 day 5 hours ago) and read 8411 times:

What I think is interesting, is what this has done for the 748. The 748 originally looked like it was coming late to the party, but now it might in fact be right on time. Some airlines, and BA comes to mind here, who haven't ordered the 380, might have quite a good case here for becoming launch customers. They would be getting thier new aircraft for a good deal, and around the same time as others are getting the 380. This just might be quite an enticement. Time will tell.


"they who dream by day are cognizant of many things which escape those who dream only at night" - Edgar Allen Poe
User currently offlineLehpron From United States of America, joined Jul 2001, 7028 posts, RR: 21
Reply 17, posted (7 years 6 months 2 weeks 1 day 5 hours ago) and read 8409 times:

Quoting Revelation (Thread starter):
"As the delay will disrupt the expansion strategies of a number of major airlines, the group's competitive position on wide-body aircraft could be adversely affected," the agency (Standard and Poors) said.

If every airline that has ordered an A380 is competting with each other, then if all their strategies of expansion are postponed, what loss will they experience other than scheduling for the temporary vacume of not having A380's? No one is getting Superjumbo's before them.



The meaning of life is curiosity; we were put on this planet to explore opportunities.
User currently offlineN328KF From United States of America, joined May 2004, 6482 posts, RR: 3
Reply 18, posted (7 years 6 months 2 weeks 1 day 5 hours ago) and read 8395 times:

Quoting Lehpron (Reply 17):
f every airline that has ordered an A380 is competting with each other, then if all their strategies of expansion are postponed, what loss will they experience other than scheduling for the temporary vacume of not having A380's? No one is getting Superjumbo's before them.

I have said this elsewhere, but: Time is not on the side of the A380. As the last of the conventionally-designed large (>DC-9) aircraft, the longer it takes to see EIS, the closer it gets to having its operating cost and CASM advantage decimated by the likes of the 787-9/-10, A350XWB, and after a few years, Y3.

[Edited 2006-10-04 21:28:39]


When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' T.Roosevelt
User currently offlineStitch From United States of America, joined Jul 2005, 29656 posts, RR: 84
Reply 19, posted (7 years 6 months 2 weeks 1 day 5 hours ago) and read 8395 times:
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Quoting Lehpron (Reply 17):
If every airline that has ordered an A380 is competing with each other, then if all their strategies of expansion are postponed, what loss will they experience other than scheduling for the temporary vacuum of not having A380's? No one is getting Superjumbo's before them.

If some of their A380 competitors are able to field smaller planes in the interim, they can grab traffic now and try and lock them in so when the A380 comes on line, their A380s are full while their competitor's are not.

Also, competitors who were not planning to compete on raw capacity with the A380 could make some inroads at gobbling up the excess traffic if they have seats available while their A380-waiting competitors do not.

And competitors that launched direct routes with smaller planes to bypass the A380-centric hubs could attract and keep customers even after the A380s arrive on the scene to offer lower prices, but less convenient service.


User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 20, posted (7 years 6 months 2 weeks 1 day 5 hours ago) and read 8382 times:

I smell some 747-8, 787-10, and 777 orders coming.......


One Nation Under God
User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 4
Reply 21, posted (7 years 6 months 2 weeks 1 day 4 hours ago) and read 8313 times:

Quoting OldAeroGuy (Reply 14):
That was in July. Now the first SQ A380 delivery has slipped from Dec '06 to 4Q '07. I don't think that the mood at SQ today is one of unconcern.

Has SQ cancelled their order? Have they backed away from their non-binding commitment? What has SQ actually said about these latest delays: "The delays are disappointing." How...tame.

Quoting SeeTheWorld (Reply 15):
When you get to the airport and the check-in agent tells you the flight is ontime (and he or she knows that it isn't) and then you get to the gate and are told the flight hasn't even left its origin, I doubt you are "content." You are unlikely to cancel your flight, and you may not even say anything (some would and some wouldn't), but I highly doubt you're "content."

If, as Airbus is doing, they offered me lunch or dinner, drinks, access to their lounge, and upgrade my seat, I wouldn't be too upset. Or if they offered to book me on an alternate flight and upgraded my seat, that works for me, too. And if they said "too bad" and offered me nothing, and I really had to be at my destination sooner rather than later, I'd book a different airline and accept the consequences of that choice, assuming my ticket was non-refundable.

In this context, "content" is a relative term. I don't mean the execs are all sitting happy about the situation - I do mean that they are content to maintain the status quo as long as Airbus makes it worth their while (compensation, incentives, etc.). SQ apparently is satisfied with the performance figures they've been shown - that means SQ's forecasts regarding the aircraft are still in effect or maybe even better than expected now that oil is dropping in price even if it all comes together later than planned.


User currently offlineAogdesk From United States of America, joined Jun 2004, 935 posts, RR: 3
Reply 22, posted (7 years 6 months 2 weeks 1 day 4 hours ago) and read 8261 times:

The last public commentary that UPS made on the A380 delay was that they were assured by Airbus that the deliveries would be made on time. I'm speculating, but I think they'll probably revise that to something a little demanding such as "We're evaluating all of our options".

User currently offlineBoomBoom From , joined Dec 1969, posts, RR:
Reply 23, posted (7 years 6 months 2 weeks 1 day 3 hours ago) and read 8150 times:

The considerations don’t stop just with price and penalties, however. There’s the longterm matter of the wiring fixes.

“The first 20 airplanes or so might be considered the ‘A’ model,” this customer says.“The question will be whether anyone wants to take these models with all the wiring issues and bugs.” Instead, this person says, airlines might prefer to take an A380 three years into production, after all the bugs have been worked out. Taking an early-run airplane might invite complex maintenance issues over the wiring installations.

Another airline executive, whose company has not ordered the A380, made similar observations. In addition to the potential maintenance issues, this executive also raised the specter of what will be necessary if a leasing company re-leases an A380 that has different wiring requirements.


http://www.leeham.net/filelib/ScottsColumn_3_10032006.pdf


User currently offlineSwissy From Switzerland, joined Jan 2005, 1734 posts, RR: 4
Reply 24, posted (7 years 6 months 2 weeks 13 hours ago) and read 4710 times:

Quoting Lehpron (Reply 17):
If every airline that has ordered an A380 is competting with each other, then if all their strategies of expansion are postponed, what loss will they experience other than scheduling for the temporary vacume of not having A380's? No one is getting Superjumbo's before them.

You are right on the money..... sure these airlines are frustrated, sure AB upper management f.... up large, but it does not change the fact they need the 380 more than ever.

Cheers,


25 Revelation : I agree, but I will also point out that there seems to have been a 777-300 buying spree in the Asian market, and seeing as to how most of these will
26 Zvezda : Rubbish. There has never been a set of delays like this in the history of commercial aviation. No, in those cases the A350-1000 or B787-10 would be a
27 OldAeroGuy : I doubt that this is SQ's final word on the subject.
28 Tifoso : And that's probably all that you will hear. SQ really wants an aircraft the size of the A380 to be able to increase capacity to destinations such as
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