I don't understand manufacturing financials all that well but it's hard to see them announcing a definitive end to the program when they can likely hold out another 5-6 years for EK and hope that in that time a new business case materializes where a NEO in some form becomes viable. I say hold out as long as you're producing backlog and something may click to transform the base product into something altogether new and vastly more efficient in CASM and/or cargo capacity.
Arguably a backlog of five to six years doesn't give a lot of time to make a decision about a hypothetical A380neo project given that development would likely take three or four years. It'd be hard to fill a potential production gap since the product doesn't sell well as things stand and the existing model becomes impaired once the new one is announced. Besides that, it doesn't look like the necessary engines will go into production for a neo to reach market in six years; those are probably going to be tied to reengine projects for the 787 and/or A350. I cannot see RR making the business case for the Ultrafan solely for the A380neo.
Does EK want 6 per year for 5 years, I recall they prefer just 4 per year so. How efficient is the 380 line at 6 per year?
I think EK is stuck taking six per year if they want the line to stay open, unless another customer can be found. They took eight in 2018, but it seems like they strung the deliveries out as late as possible; four of those eight were delivered in the last month-and-a-half of 2018 and three of the deliveries earlier in the year (excluding the frame originally meant for BC) took nearly a year-and-a-half from first flight to delivery (about a half-year is more typical for the program). They're very vocal about wanting the program to continue but seem more reluctant when it comes time to taking delivery. Then again, the boosterism for the A380 might be about securing good financial terms for loans or leases..
Also I don't get why BA shows no intention to order more. It's most useful to them and they just aren't taking it.
As the largest slotholder at LHR, BA's need for the A380 is far less acute than one might think. It's helpful in high-volume long-haul markets where frequency is relatively unimportant due to constraints on economically viable schedule choices or limited competition, but there are fewer of these markets than one might think. In NYC-LHR, schedule matters so it's logical to use smaller aircraft; moreover, they're probably better-off spilling some lower-yielding traffic in peak season due to constrained capacity rather than flying half-empty A380s in the winter.
No the funniest was noting that Virgin Atlantic canceled there order. They were a launch customer, we already knew years ago they would never take them. But Airbus left them on the books?
I think that VS order stuck around for so long simply because there was little reason for the customer to cancel (little to no firm financial commitment) and it made the vendor's order book look stronger.
Airbus may not have much choice. It has to comply with IFRS15 rule changes that are stricter when it comes to what can be counted as an order as well as how to disclose the value of the backlog. It delayed this in April and said it would do so by its 2018 year end disclosures.
That seems like a huge step forward for financial transparency. Both of the large vendors are guilty of booking some very dubious "orders" which ultimately fell apart.
Last edited by ScottB
on Thu Jan 10, 2019 7:41 pm, edited 1 time in total.