B777LRF From Luxembourg, joined Nov 2008, 998 posts, RR: 3 Reply 1, posted (9 months 2 weeks 17 hours ago) and read 28102 times:
You're asking if anybody has a crystal ball that'll see 20+ years into the future? Going to be pretty difficult, at a guess. Another guess, and it can't be anymore than what in engineering terms is called a WAG*, is that the A380 will land more than those 420 orders, and thus become profitable.
Whether or not it'll be more profitable than the 747 is impossible to answer. First of all you'll have to tell us just how profitable the 747 programme has been, and that in itself is going to be a challenge. Unless you're the CFO of Boeing Commercial Aircraft, of course, but if you are that you'd be unlikely to divulge such information on a public forum.
*Wild Arsed Guess
From receips and radials over straight pipes to big fans - been there, done that, got the hearing defects to prove
Tdan From United States of America, joined Nov 2011, 305 posts, RR: 3 Reply 3, posted (9 months 2 weeks 17 hours ago) and read 27877 times:
In a vaccum, no.
But if you look at technological advances, process improvements, capital expenditures, etc. that eventually benefit other new aircraft such as the A350 and beyond, there is a definite possibility that the A380 can be considered a profitable investment. The original 747 was considered an enormous investment that never seemed like it would make money. 40+ years after it was introduced, there are still new 747s being manufactured and delivered. Sure there were other improvments and expenses along the way, but the same basic design and structure continues to be used which is a huge cost savings for the future variants.
We will ride this thunderbird, silver shadows on the earth, a thousand leagues away our land of birth... -Captain Bruce
Stitch From United States of America, joined Jul 2005, 26686 posts, RR: 83 Reply 4, posted (9 months 2 weeks 17 hours ago) and read 27828 times:
Quoting virgincrew (Thread starter): So my question is, will the A380 ever be as profitable as much as, for instance the 747?
I don't see the total market for the A380 to be as large as the 747, but then I don't know how much money Boeing has made from the 747 program and probably won't know how much money Airbus will make from the A380 program, so I can't make any declarative statement as to whether or not it will be as profitable. The A380 may deliver less planes, but if it makes significantly more profit per delivery, it may very well match or exceed Boeing's profits on the 747 program.
N14AZ From Germany, joined Feb 2007, 2313 posts, RR: 25 Reply 5, posted (9 months 2 weeks 16 hours ago) and read 27734 times:
Quoting virgincrew (Thread starter): I've just read an article that says for the A380 to be profitable and for Airbus to just break even, they need to sell at least 420 aircraft !
As mentioned by Col above, this seems to be an old number. Airbus stated they will no longer officially discuss the break-even-point.
But let's say the current number is 700 airframes (just to mention a number). The total number of orders is 257 (80 airframes "already" delivered). So less than five years after EIS they already sold more than 30% of the number of airframes required to break even. Unfortunately, I don't have the crystal ball mentioned above by B777LRF but I could imagine there is a fair chance that they will achieve break even.
P.S.: with all due respect but didn't we have a very very similiar if not identical thread just some weeks ago?
brilondon From Canada, joined Aug 2005, 3168 posts, RR: 1 Reply 8, posted (9 months 2 weeks 16 hours ago) and read 27640 times:
This topic seems to come up every once and awhile. My standard answer is that it depends on the price that airlines pay for the aircraft obviously. There is probably a figure out there for their break even but it is a moving target. If they need to sell x number of aircraft to break even there must be time frame for the number of aircraft to be sold by. The number may be 420 but if they sell only 420 over say 30 years than is that going to break even for them? I don't know the answer to that as I don't have information regarding their financials and don't know how their back accounts are looking to bankroll this aircraft. The 747 on the other hand has obviously had a successful run and makes Boeing money so I don't see why the A380 won't make Airbus money.
spink From United States of America, joined Aug 2005, 145 posts, RR: 0 Reply 9, posted (9 months 2 weeks 16 hours ago) and read 27615 times:
Quoting virgincrew (Thread starter): So my question is, will the A380 ever be as profitable as much as, for instance the 747 ??
I think more than anything it will come down to production rate. At their current production rate, it will take 13 more years until they hit 420 frames. With current production rate, it will take them ~7 years just to clear out the backlog. Also the 420 number may be low because AFAIK that number is from Airbus in 2006 and I believe that they expected to make significantly more deliveries by now than they actually have. Depending on what their actual interest rates are/were, the break even number could now be significantly higher.
The A380 is a good plane but it is unlikely that they'll hit break even on it, if ever, at the current production rates. Now, discounting sunk costs, they are obviously making a profit on the planes they deliver (or they would simply not make them), but it will take a long time to make up the R&D costs, if ever.
max550 From United States of America, joined Nov 2007, 1111 posts, RR: 0 Reply 10, posted (9 months 2 weeks 16 hours ago) and read 27580 times:
These threads come up every so often and I can't help but wonder why it matters to anyone at this point. Airbus decided to build a VLA that would be the largest pax aircraft available, they followed through with it, and it will be available to airlines for a long time to come.
The only concern for Airbus at this point is whether or not they continue receiving enough orders to keep the line open beyond the next 7 or 8 years. As long as they can keep the line running it no longer matters whether they break even on the project as a whole.
I'd also suggest you look into the company history at Airbus. In the mid-nineties when they started working on the A3XX they had never delivered more than 160 or so aircraft per year. They're now up to 500+ deliveries per year and have become a global giant on the level that Boeing and McDonnell Douglas were in the 90's. While there are plenty of other factors it's impossible to discount the A380's role in that success. They never would have reached that level of success by conceding the VLA market to Boeing.
Bottom line is that Airbus is a larger and better company than they were before they created the A380, regardless of whether the A380 project as a whole breaks even or not.
peterinlisbon From Portugal, joined Jan 2006, 226 posts, RR: 0 Reply 12, posted (9 months 2 weeks 16 hours ago) and read 27528 times:
That old chestnut again: "If it aint Boeing I aint going" . When I was 7 years old I used to think that anything that rhymes is obviously full of wisdom, but then I grew up. Maybe some of you should also consider doing that. I find it strange that so many armchair experts that are supposedly interested in aviation would choose only to fly on one type of plane and not want to experience all the interesting varieties of aircraft that are out there. Come on, live a little, don't turn into a grumpy old man already that doesn't want to experience anything new. If they were that dangerous I don't think that have the airlines in the world would be flying them. Yeah - maybe the A380 will be profitible one day, that depends on how many they sell and if any more expensive problems come up, the world economy, the price of fuel, airport expansion.... a lot of factors.
max550 From United States of America, joined Nov 2007, 1111 posts, RR: 0 Reply 13, posted (9 months 2 weeks 16 hours ago) and read 27426 times:
Quoting spink (Reply 11): While true, that doesn't mean they wouldn't of been an even larger and better company if they had instead invested in other planes instead.
No doubt, they still could have been larger and better through other investments, but I truly believe the A380 was their best bet at the time. I don't think any other (realistic) project would have garnered the same kind of publicity the A380 got over its 15-20 years of development.
Stitch From United States of America, joined Jul 2005, 26686 posts, RR: 83 Reply 14, posted (9 months 2 weeks 16 hours ago) and read 27379 times:
Quoting spink (Reply 11): While true, that doesn't mean they wouldn't of been an even larger and better company if they had instead invested in other planes instead.
At the time they started serious work on the A3XX program, there was nothing else for them to invest in. The A320 program handled the sub-200 seat market and the A330 and A340 programs covered the 200-300 seat market. The only area they didn't have a plane was the 300+ seat market, which was owned exclusively by the 747-400.
To those that say Airbus should have developed a large twin to compete with the 777, the A3XX and 777 programs were both designed around the same time. And Boeing developing the 777 was in no small part due to the threat of the A330-300, A340-300 and MD-11 programs to the 747-400 on shorter-range missions.
ScottB From United States of America, joined Jul 2000, 6358 posts, RR: 34 Reply 15, posted (9 months 2 weeks 16 hours ago) and read 27340 times:
Quoting Mortyman (Reply 6): The A380 was never ment to sell as many frames as the B747 has. The A380 was made for a different market.
Untrue. The original production plans for the A380 envisioned a rate of 48 aircraft/year. Assuming a production lifetime of 30 years for the A380, this would work out to 1440 aircraft -- nearly as many as the 747 has sold over its 40+ years of service. In 2001, Airbus predicted a VLA market of 1138 frames (this does include the 747) from 2001 to 2020 -- and it's reasonable to assume they expected the lion's share of that market by offering the newer product in the market segment. And it is virtually certain that Airbus expected to pick up many orders from airlines retiring 747's -- we're not talking about "a different market."
Quoting col (Reply 2): Yes the 380 will make money, the number of units to be sold to break even must be above 420 by now, but I am sure she will get there, it is just a superb aeroplane from a PAX point of view.
Extrapolating future profitability based on the quality of the on-board experience is a non sequitur. I find the 717 to offer a very pleasant customer experience, and yet Boeing likely lost a large sum on the program. The A380 will make money if enough airlines come to the conclusion that the A380 will be a profitable proposition for their fleets and place orders.
Quoting N14AZ (Reply 5): As mentioned by Col above, this seems to be an old number. Airbus stated they will no longer officially discuss the break-even-point.
Whether or not the A380 makes it to break-even, it is unlikely to ever achieve a commercially acceptable return on invested capital.
ebj1248650 From United States of America, joined Jun 2005, 1932 posts, RR: 2 Reply 16, posted (9 months 2 weeks 15 hours ago) and read 27088 times:
I've mentioned this before and it bears repeating. Boeing initially thought the total production of 747s would be something on the order of 500 to 600 airplanes. They didn't expect the airplane to do as well as it has done. Could the A380 suprise its developers as well. Time will tell. The airplane appears to have great passenger appeal and that's a huge plus for an airline that's considering buying the plane. There's no doubt in my mind that Airbus will work to improve the airplane and it wouldn't come as a surprise that newer versions, perhaps beyond the anticipated A380-900, will be created and offered to airlines. At this point it's fair to say it's just too soon to try to determine whether the airplane will be profitable.
n729pa From UK - England, joined Jan 2011, 262 posts, RR: 0 Reply 17, posted (9 months 2 weeks 14 hours ago) and read 26956 times:
I think it will, and I think it will sell 500+ frames or more in time.
Similar questions were probably asked in the early 70s about the 747, at the time there were a number of US carriers who had bought it and were probably thinking we made a mistake,and with the fuel crisis and economic gloom then, who would have thought come the late 70s orders would be back to what they were on launch. It's worth remembering that the 747 gained a lot of new customers from 1975 onwards....ME, RJ, IR, IA, KU, SV, CX, NZ, NH, TG, MS, CV, PK, PR, GA, CI, CA, UT of the top of my head and that's before we mention the 2nd or 3rd wave of orders from some of the launch customers.
I think as airports get more congested, more green taxes applied and stuff, the A380 will represent the most cost effective way of moving people about. As the world population grows, the demand will continue to grow in time, and places like LHR, LAX, JFK or AMS etc get more congested what is the answer? Most Western populations will not put up with a large airport becoming even larger on their doorstep, less of a problem in the Far East, they tend to just do regardless, so if you can't make the airports bigger or increase the number of flights, what else can you do......make the planes bigger. That's a slightly simplistic way of putting it I know, but you will hopefully see the point I'm making IMO.
I can seriously still see people like CX taking it on, either NH or JL, TK, 9W, maybe Asiana, maybe even KLM who knows. I'm sure there are several carriers out there who will in the next decade take on the A380, that today we wouldn't even conceive them doing it, in the same way that in 1972 say, we wouldn't have associated Thai or Cathay or ANA with the 747 another 10 years further on. Who knows if Iran for example comes in from the Cold, Vietnam becomes the hottest spot to visit in SE Asia or KLM take it on (what are they going to replace their 744s with?)....exciting times I think.
spink From United States of America, joined Aug 2005, 145 posts, RR: 0 Reply 20, posted (9 months 2 weeks 14 hours ago) and read 26751 times:
Quoting n729pa (Reply 17): Similar questions were probably asked in the early 70s about the 747, at the time there were a number of US carriers who had bought it and were probably thinking we made a mistake,and with the fuel crisis and economic gloom then, who would have thought come the late 70s orders would be back to what they were on launch. It's worth remembering that the 747 gained a lot of new customers from 1975 onwards....ME, RJ, IR, IA, KU, SV, CX, NZ, NH, TG, MS, CV, PK, PR, GA, CI, CA, UT of the top of my head and that's before we mention the 2nd or 3rd wave of orders from some of the launch customers.
One thing that is important to remember about the 747, when it was released, was that not only was it a significantly larger plane but it also was a significant increase in range which likely contributed to its sales.
goosebayguy From United Kingdom, joined Sep 2009, 220 posts, RR: 0 Reply 22, posted (9 months 2 weeks 12 hours ago) and read 26008 times:
Back in the '70's Boeing had a break even of 400 for the 747. Seems pretty similar to the 380? Boeing looked to be falling short when the fuel crisis hit. 40 years later its a great success and I see no reason for the 380 to do the same. China will probably take some high density internal routes and use the 380. Emirates have been the first airline to see the potential and I think we will see many others following their lead. British airways could use 50 easily in the next decade.
ASA From Bangladesh, joined Dec 2010, 380 posts, RR: 2 Reply 23, posted (9 months 2 weeks 12 hours ago) and read 25962 times:
Quoting max550 (Reply 19): It's also worth noting that by the time the 747 had been in-service for 5 years (about where the A380 is now) Boeing had 252 orders for it. So to judge the A380 already is a bit premature.
SEPilot From United States of America, joined Dec 2006, 6256 posts, RR: 39 Reply 24, posted (9 months 2 weeks 11 hours ago) and read 25301 times:
Quoting max550 (Reply 19):
It's also worth noting that by the time the 747 had been in-service for 5 years (about where the A380 is now) Boeing had 252 orders for it. So to judge the A380 already is a bit premature.
But as a percentage of the total airliner market that was a lot more, and a much greater proportion of those ordered had been delivered. In any case, I'm quite sure that not only is Airbus way behind where they expected to be in terms of production, they are way behind where they expected to be in terms of orders. The projections Airbus released when they launched the A380 would have them making at least 50 per year by now; they are not close to that (and production rate has a very big effect on cost per unit, and . And quality has nothing to do with profitability; look how many quality car companies have gone out of business (Packard, for example.) I cannot see how with present rates of orders and deliveries that the A380 can ever be profitable. It is being carried by the success of the A320 and A330; and as long as Airbus does have successful lines and makes an overall profit there is no real problem with that. The question will be how long they can keep the line open and how many improvements they can afford to make on it. I do think the A380 will get the lion's share of VLA pax orders for the foreseeable future, but the question is how big that market will be. So far it has been very disappointing, and if the economics of the 787, 777, and A350 continue to be improved it is unlikely that Airbus will be able to afford to keep the A380 apace with them. It HAS to offer significantly better CASM than anything else or there is no business case for an airline to buy it. And if it cannot sell enough to be profitable Airbus will have a very hard time justifying putting more money into it. It doesn't matter how much passengers may love it; they loved the Concorde as well, but that did not save it.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
25 ikramerica: Airbus's only goal at this point is to make the A380 cash-flow positive as each aircraft is delivered. Whether it will ever return it's investment mon
26 TheSonntag: With the A380, Airbus killed the monopoly Boeing hat in the VLA area. It was at this point Airbus finally became a full-scale manufacturer. So while t
27 astuteman: One inevitably goes with the other of course. They predicted they would sell 750 in 20 years which is c. 38 per year (that is what the business case
28 WingedMigrator: That's precisely it, you see? The A320 and A330 are carrying Airbus 15 to 20 years after EIS. Ten or 15 years from now it will be the A380's turn to
29 SWALUV: There was a post earlier called, Future of The A380? that should help! You might have to search for it.
30 SEPilot: Airbus became a full-scale manufacturer with the A330/A340. By the time they launched the A380 sales of the 747 had slowed to a trickle; the A340 and
31 EPA001: They had a sound business case when they launched the A380 with a break-even on 250 copies. That the production had some very major setbacks was of c
32 rotating14: I think a lot of the A380's future is dependent of what the market wants. Right now the market calls for the A380 but if the "trend" of smaller twin j
33 SEPilot: This is exactly my point, and you have made it better than I did. When the A380 was launched Airbus was predicting a rosy future for it, but Boeing (
34 rara: Let's not forget that the 747 was, for the longest time of its history, an aircraft without a competitor. Any manufacturer that's worth its money wil
35 Stitch: A 2011 delivery A380-800 is worth around $200 million and SQ's first A380-800 is worth about $170 million. If LH wanted to flip their two 747-8s righ
36 WingedMigrator: That is not only a vague statement, but it is flat out wrong. Today the A320 delivers at a rate of ~400 frames a year, but the first 400 took SIX YEA
37 FLALEFTY: The A380 is a fine plane and will still be in production beyond 2020. However, the business case for the 748 is weak and getting weaker. I see the 748
38 glideslope: Mathematically impossible. Even after they redesign the wing spars.
39 cmf: The predicted the VLA market to be bigger. They did not predict to have 100% of it. Of course, but how many sales do you think are needed to justify
40 777atech: The idea behind the A380 was pretty basic; build a state of the art airplane that can carry loads of people, more economical and comfortable than anyt
41 NWAROOSTER: The repairs and rework of the main wings on the A380 is going to add a few more aircraft to the break even point. It also may scare away a few more sa
42 thegeek: I would say that the A330NG was CLEARLY, with the benefit of hindsight, something they should have invested in. They just misread the market. They di
43 Stitch: I think the A380-800 was one of the reasons why the 747-400 sales ended and the 747-8 not making much headway.
44 thegeek: I think the 777-300ER had a lot to do with it too. If there was no A380-800, the former plane would still have ended the 747-400 in the pax market IMO
45 Stitch: Between the 777-300ER and A340-600, I do agree the 747-400 was only going to sell on capacity if there was no A380-800.
46 redflyer: "Profitable investment" in your example is in hindsight only. That is not what the underlying investment benefit was when the project was originally
47 kanban: and with their manufacturing process, those will be only those a/c already on the books today.. The 8F wi needed, the 'I" is just a spoiler. From a c
48 goosebayguy: The 747 had very hard times back in the 70's. As we all know it was the military division that kept the civilian side of Boeing going. Airbus are work
49 astuteman: Indeed Which is true for any improvement. The A380 has already been improved, and so have its power plants. They absolutely didn't Correct I claimed
50 solnabo: This is the A model of the 380 program, in 10-20 years we might see -900, Freighter, -R etc. Cheers