Stratofortress
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Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:34 am

http://news.independent.co.uk/business/news/article2481069.ece

"Sir Richard, whose long-haul airline has placed a $2bn (£1bn) order for six A380s, said he feared the 555-seater aircraft would never sell in sufficient numbers to cover its development costs."


Even a buyer is doubting A380 viability. Are there any credible sources out there that expect A380 to be a financial success?

(Boeing and Airbus are not credible sources in this case because they will be selling their skewed view)
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jetjack74
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:42 am

Well, I think Branson is correct that the profitibility of the A380 is an unattainable dream unless maybe 500 more were ordered. But Branson is most likely speaking out of anger over the fact the A380 should've been well into it's second year of operating rather than still in the test and certification stage.
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WINGS
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:44 am

Quoting Stratofortress (Thread starter):
"Sir Richard, whose long-haul airline has placed a $2bn (£1bn) order for six A380s, said he feared the 555-seater aircraft would never sell in sufficient numbers to cover its development costs."


Even a buyer is doubting A380 viability. Are there any credible sources out there that expect A380 to be a financial success?

(Boeing and Airbus are not credible sources in this case because they will be selling their skewed view)

If Sir Richard Branson is so worried about Airbus, why doesn't he place additional A388 orders to help out.  Wink

One has to acknowledge that in doing so he will help provide work for the UK as they manufacture the Wing and Engines that will equip his 6 A388's on order.

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Wings
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Toulouse
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:44 am

I think these two quotes from the article are also interesting:

"Sir Richard praised the A380, saying it would be a highly efficient aircraft for Virgin, but he questioned whether it would ever pay its way for Airbus. "I think it will be a financial disaster because I can't see how Airbus will ever sell sufficient numbers of the aircraft," the Virgin chairman said."

"He was speaking as Virgin prepares to announce a major new order for wide-bodied aircraft, possibly as early as today. The choice is between the Boeing 787 Dreamliner and the Airbus A350, both of which are twin-engined aircraft."

So he is praising it from an airline perspective as he expects it to be a "highly efficient" aircraft for him.

The second quote is strange, has the 787 order not already been confirmed?
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na
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:46 am

Let it fly first. If it proves to be a fantastic product in service I expect many, many orders still to come. But I do not expect the A380 to become a cash-cow as the 747 has been.

I also think Branson is talking in anger here.
 
Toulouse
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 2:48 am

Quoting Jetjack74 (Reply 1):
Well, I think Branson is correct that the profitibility of the A380 is an unattainable dream unless maybe 500 more were ordered. But Branson is most likely speaking out of anger over the fact the A380 should've been well into it's second year of operating rather than still in the test and certification stage.

I presently tend to agree with you, but hopefully for the good of aviation, over the coming 20 to 30 years maybe we will see Airbus pull in sufficient orders for the A380. This aircraft needs to go into commercial service before I'd expect any/many other airlines to order it, so fingers crossed she'll turn out good in commercial service, and then I don't see why they won't gain the orders they need over it's life-span... that said, and as an Airbus fan, I do have my own doubt over the economic viability of this aircraft for Airbus, yet at least for us aviation fans it's a great a/c just for its huge size and the fact that it is the first ever "all" double-deck civil aircraft.
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WINGS
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 3:01 am

It's worth noting that despite the profitability of the A380 program is still rather grey, it is good to note that nearly all A380 customers have systematically praised the A380's performance and targets and all this after the A380 suffered long delays.

Singapore Airlines - Ordered 9 more.
Qantas - Ordered 8 more.
Lufthansa - True 3L/100km plane (plans to order more)
Thai - Keeps A380 order.
EK - World Leader.
Qatar - Plans to order more. etc........................

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cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 3:02 am

Quoting Jetjack74 (Reply 1):
Well, I think Branson is correct that the profitability of the A380 is an unattainable dream unless maybe 500 more were ordered. But Branson is most likely speaking out of anger over the fact the A380 should've been well into it's second year of operating rather than still in the test and certification stage.

I agree with your view. Hindsight is 20/20. When Airbus was proposing the Superjumbo to airlines in the late 90s, and when Branson signed in the early 2000s, he never once questioned the viability. In fact he was incredibly excited about the opportunity to offer bedrooms and whatnot.

With this report he is simply taking a cheap shot at Airbus while they are down. Maybe didn't offer him A350XWB's at the old A350 price, and that has upset him. Be that what it may, it does seem as though we have entered an era of vocal customer CEO's in the industry. We've had Udver-Hazy, Clark, Choon Seng, and now Branson criticize manufacturers in public.

[Edited 2007-04-24 20:03:55]
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MD80Nut
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 3:05 am

Quoting NA (Reply 4):
Let it fly first. If it proves to be a fantastic product in service I expect many, many orders still to come. But I do not expect the A380 to become a cash-cow as the 747 has been.

I agree. Once it enters service and proves itself in the daily grind of airline operations I believe we'll see more airlines order the A380. That's why I believe it's crucial there are no further delays in getting it into service. I hope everything goes smoothly when Singapore starts commercial service, I want to see the A380 succeed, like I want to see EVERY plane succeed. Big grin

I think reaching the 450-500 frame mark will be a challenge though. But I'd love to be wrong.

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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 3:19 am

Quoting NA (Reply 4):
Let it fly first. If it proves to be a fantastic product in service I expect many, many orders still to come. But I do not expect the A380 to become a cash-cow as the 747 has been.

I also think Branson is talking in anger here.



Quoting CygnusChicago (Reply 7):
With this report he is simply taking a cheap shot at Airbus while they are down. Maybe didn't offer him A350XWB's at the old A350 price, and that has upset him.

I would be extremely upset as well, if I had ordered this aircraft and delivery was becoming increasingly delayed. SRB has every right to be upset with Airbus.

However, Mr. Branson is only half correct on his Airbus financial theory. It is very much the truth that Airbus has FAR from enough orders to break even on the A380 project. But, as soon as the first few get to be delivered, and the aircraft gets more of a fair chance to prove itself as an economical, passenger friendly choice for commercial airlines, orders will surely pick-up, and Airbus may be able to dig itself out of this hole it has dug.

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airfrnt
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 3:54 am

Quoting WINGS (Reply 2):
If Sir Richard Branson is so worried about Airbus, why doesn't he place additional A388 orders to help out.

Because he is not suicidal. Or did you miss the fact that a ton of other carriers are about to start competing with him on his bread and butter routes making it much much harder to fill larger planes?

Quoting WINGS (Reply 2):
One has to acknowledge that in doing so he will help provide work for the UK as they manufacture the Wing and Engines that will equip his 6 A388's on order.

Sure, but I suspect Mr. Branson feels that he already gives enough money to Her Majasty's Government, and does not need to subsidize them any further.

Quoting WestJetYQQ (Reply 9):

However, Mr. Branson is only half correct on his Airbus financial theory. It is very much the truth that Airbus has FAR from enough orders to break even on the A380 project. But, as soon as the first few get to be delivered, and the aircraft gets more of a fair chance to prove itself as an economical, passenger friendly choice for commercial airlines, orders will surely pick-up, and Airbus may be able to dig itself out of this hole it has dug.

The business case for the A380 was unrealistic before the A380 took to their air. Now they have had a idle factory line, additional market fragmentation about to occur, a horrible currency imbalance, high fuel costs and two bickering governments on top of everything. Add in Boeing's ability to launch a majority composite frame Y3 with a similar or better CASM advantage over the A380 with a smaller seat count, and the A380 will be done.

The A380 is underwater. It may eventually break the surface, but it will never achieve the heights that it ought to have to justify the billions of dollars in investment Airbus spent in it. It already has cost Airbus it's lead in the Airline market. But hey, don't take my word for it, listen to Mr. Branson, or Mr. Udvar-Hazey, or Boyd, or Aboulafia.
 
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:02 am

Quoting Stratofortress (Thread starter):
"Sir Richard, whose long-haul airline has placed a $2bn (£1bn) order for six A380s, said he feared the 555-seater aircraft would never sell in sufficient numbers to cover its development costs."



Quoting Toulouse (Reply 3):
So he is praising it from an airline perspective as he expects it to be a "highly efficient" aircraft for him.

Well, between these views and the whole PER/HNL - London thing all being exactly what I've been saying, I've officially been outed...  Sad

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glideslope
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:07 am

Quoting NA (Reply 4):
I also think Branson is talking in anger here.

LOL, who is not these days? Sir Richard is going to cancel and grab some 748's. Watch closely.
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andessmf
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:15 am

There is a big difference in ROI between delivering 500 airframes in 10 years as opposed to 20 years. I have no doubt that the A380 will fly successfully in a commercial role.

However, the A380 freighter market is not there, at least for now, and we might not be able to figure out the list of airlines that could possibly order the A380, and what that final number would be.
 
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:15 am

Quoting Glideslope (Reply 12):
LOL, who is not these days? Sir Richard is going to cancel and grab some 748's. Watch closely.

Well, 6 A380s doesn't replace 13 744s.

Expect him to order 8 748is, and then see what happens, keeping his 2014 A380 deliveries on the table for a while. After all, SQ may want them...  Wink
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cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:43 am

Quoting AirFrnt (Reply 10):
The A380 is underwater... . It already has cost Airbus it's lead in the Airline market.

It's not the A380 that cost Airbus the lead in the Airline market. The lead was lost because they did not have a competitive response to the 787. That happened in turn, due to the fact that they'd finished the launch of the A340-500/600 and couldn't admit that it was possible to build a plane substantially more efficient than than the A330. Nothing to do with the A380 whatsoever.

As to the Superjumbo - yes, currently it does not look like it will break even. While many argue it was a mistake - and from a pure single project ROI point of view it was - it still is a measure of success. Those 142 orders (or whatever the current count is) would have meant at least 142 additional 747 or 777 orders for Boeing. In addition, it is forcing Boeing to divert resources to the 747-800, which like the A350, is a plane they don't really want to have to build.
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 4:57 am

Quoting WINGS (Reply 2):
If Sir Richard Branson is so worried about Airbus, why doesn't he place additional A388 orders to help out.

Because he perhaps doesn't want to be seen throwing good money after bad?  stirthepot 

Quoting AirFrnt (Reply 10):
The business case for the A380 was unrealistic before the A380 took to their air. Now they have had a idle factory line, additional market fragmentation about to occur, a horrible currency imbalance, high fuel costs and two bickering governments on top of everything. Add in Boeing's ability to launch a majority composite frame Y3 with a similar or better CASM advantage over the A380 with a smaller seat count, and the A380 will be done.

Well, I find it increasingly hard to argue with this. I will say however, that until the Y3 appears, the A-380 may yet see break even, even if only in about 3-4 liveries that ever place substantial orders. I dont think there will ever be a 380-900.
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flysherwood
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:00 am

Quoting CygnusChicago (Reply 7):
Be that what it may, it does seem as though we have entered an era of vocal customer CEO's in the industry. We've had Udver-Hazy, Clark, Choon Seng, and now Branson criticize manufacturers in public.

The CEO's you sight have criticized Airbus in public. I haven't heard them do the same about Boeing. I do not think any of the criticism is aimed at the quality of the product or the product itself. It is aimed at some of the ineptness of the top management of Airbus in the past and present.

Quoting CygnusChicago (Reply 7):
With this report he is simply taking a cheap shot at Airbus while they are down.

Have you ever heard Mr. Leahy act humbly in public about the situation that he put his customers in? If you listen to what he says, he still acts like Airbus management is doing a hell of a good job! Maybe Mr. Branson doesn't like the arrogance of Airbus management. I do not see where it is a cheap shot. When management screws up like they did with Airbus, they need to hear this kinds of criticism in order to ensure the listing ship is righted. Otherwise... Sad
 
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:23 am

Quoting CygnusChicago (Reply 15):
Those 142 orders (or whatever the current count is) would have meant at least 142 additional 747 or 777 orders for Boeing.

I am not sure spending $15billion to keep customers from ordering a competitors product can be measured a success in any way, shape or form.

Quoting CygnusChicago (Reply 15):
In addition, it is forcing Boeing to divert resources to the 747-800, which like the A350, is a plane they don't really want to have to build.

If by now, Airbus has not figured out that the A350XWB is the airplane that they absolutely have to build and to build right, then the game is OVER!!! Are you really proposing that the A350XWB is only being built because they have to? The future of Airbus is at stake with the A350XWB!!!  Angry
 
trent900
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:45 am

Quoting Jetjack74 (Reply 1):
But Branson is most likely speaking out of anger over the fact the A380 should've been well into it's second year of operating rather than still in the test and certification stage.

Considering it was VS who pushed their EIS date back this is a strange thing to say.

D.
 
andessmf
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:46 am

Quoting Flysherwood (Reply 18):
Quoting CygnusChicago (Reply 15):
Those 142 orders (or whatever the current count is) would have meant at least 142 additional 747 or 777 orders for Boeing.

I am not sure spending $15billion to keep customers from ordering a competitors product can be measured a success in any way, shape or form.

81 orders + 54 commitments for the 748 = 135 possible total orders in less than two years.

A380F is not happening in the near future.

I don't believe Boeing is losing too much sleep over the A380 at the moment.
 
cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:51 am

Quoting Flysherwood (Reply 17):
The CEO's you sight have criticized Airbus in public. I haven't heard them do the same about Boeing

You're incorrect on that. One of the four - Choon Seng - gave the 748i quite a viscious public lashing. I don't raise the point of outspoken CEO's to provide fodder to partisan A vs. B arguments. The point is simply that Airline CEOs are becoming more publicly critical of manufacturers and there offerings.
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AirSpare
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 5:52 am

From the article-"Sir Richard said it was possiblethe crops could be grown in Africa, "

Cool, he is going to save displaced persons to grow jet fuel, saving the world and Miami too, way to go dude.

Actually, the article is interesting as you have rick talking about A almost like a financial analyst. If he said these things on any company, the stock would have taken a 3% hit.
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474218
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:02 am

Quoting CygnusChicago (Reply 7):
With this report he is simply taking a cheap shot at Airbus while they are down.

Why is this a "cheap shot" is he not in titled to his opinion? No matter what you think of Sir Richard, he does know business and in his opinion the A380 will not sell enough airframes for turn a profit, hardly a "cheap shot".

Quoting MD80Nut (Reply 8):
I think reaching the 450-500 frame mark will be a challenge though. But I'd love to be wrong.

Airbus has publicly stated they have to sell 420 A380 before they will start making a profit on the program, so I tend to agree with Sir Richard the A380 will be a financial disaster to Airbus.
 
redflyer
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:07 am

Quoting WINGS (Reply 6):
it is good to note that nearly all A380 customers have systematically praised the A380's performance and targets and all this after the A380 suffered long delays.

Not trying to be disrespectful, but the way you wrote your comment, you make it sound as though the one (performance) is tied into the other (delay). Are they not exclusive of each other?

Quoting WestJetYQQ (Reply 9):
But, as soon as the first few get to be delivered, and the aircraft gets more of a fair chance to prove itself as an economical, passenger friendly choice for commercial airlines, orders will surely pick-up, and Airbus may be able to dig itself out of this hole it has dug.

I think that is a common misperception; that once it's in service the orders will pick-up. While they may pick up some, the dearth in orders is more likely a result of other factors, such as lack of demand (orders for the A380 dwindled to a trickle within the first 3 years after launch). And that goes to the heart of what a lot of people have said; that the A380's business case is simply too weak.

Quoting AirFrnt (Reply 10):
The business case for the A380 was unrealistic before the A380 took to their air. Now they have had a idle factory line, additional market fragmentation about to occur, a horrible currency imbalance, high fuel costs and two bickering governments on top of everything. Add in Boeing's ability to launch a majority composite frame Y3 with a similar or better CASM advantage over the A380 with a smaller seat count, and the A380 will be done.

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airfrnt
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:08 am

Quoting CygnusChicago (Reply 15):

As to the Superjumbo - yes, currently it does not look like it will break even. While many argue it was a mistake - and from a pure single project ROI point of view it was - it still is a measure of success. Those 142 orders (or whatever the current count is) would have meant at least 142 additional 747 or 777 orders for Boeing. In addition, it is forcing Boeing to divert resources to the 747-800, which like the A350, is a plane they don't really want to have to build.

Not sure where to start here. Both the 744 and the 777 are well past break even, so it would have been gravy for Boeing. Boeing is being forced into building the 748, but bear in mind that the 748 will cost 1/3rd to 1/4th of what the A380 is costing. Airbus is being driven into the A350, which could easily cost as much as the A380 or 777. On top of that Airbus needed the 80+ orders the 748 has much more then Boeing needed the 140 orders the A380 has.
 
tootallsd
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:12 am

Quoting Flysherwood (Reply 18):
Quoting CygnusChicago (Reply 15):Those 142 orders (or whatever the current count is) would have meant at least 142 additional 747 or 777 orders for Boeing.
I am not sure spending $15billion to keep customers from ordering a competitors product can be measured a success in any way, shape or form.

In point of fact, it would have been cheaper to buy 748is, slap an Airbus 4 Engines 4 Long Haul Logo on them and GIVE them to the A380 customers than developing the damn thing.

Is it elegant engineering -- yes! I fully agree. But is it a commercial success -- no, no matter how you look at it, this is the second disaster for Airbus.

As noted by CygnusChicago, the first problem was with Airbus' response to the 7E7. It has been a while since Airbus was not leading the commercial airliner space and I think they had forgotten how to do it. So rather than getting out the flipcharts at a nice resort near Nice and having a management retreat to consider appropriate responses, they chose a year or two of ridicule followed by designs so lame they could only capture <20% of the orders going to Boeing and covering little or no new ground (technology).

Boeing meanwhile moved ahead. The still say 787 rollout will happen 7/8/07. There is no reason to doubt this - except for the inherent complexity of such a large commercial article.

Some here assume that Airbus has 20+ years to sell A380s to make up its development costs and earn profits. Will the entire world stand still in the meantime? No, I think not. It is entirely possible for Boeing to have an A350XWB competitor available that replaces the 777 early in the deliver cycle of the 350. It is entirely possible for Boeing to offer an airliner that is between 748i and 380 in size with 787 style-economics -- that would undercut 380 future sales dramatically. And it is also possible that Boeing and or the Chinese / Brazilians will have a 320/737 replacement before Airbus has the same.

If Airbus continues to execute as poorly as they have in the past three to four years, these future potential competitive threats will continue to erode the value of the company and its ability to compete.
 
cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:16 am

Quoting Flysherwood (Reply 18):
am not sure spending $15billion to keep customers from ordering a competitors product can be measured a success in any way, shape or form.

Depends on what you're measuring success by. Airbus has always been concerned by the bundling effect that was costing them A32X and A330 orders. They weren't the only ones - MD also complained about this. Airbus did something about it. You can debate a number of alternative strategies, but the fact remains that the A380 has drastically reduced 747 margins, locked up 142 widebody orders directly, and resulted in bumper A330 sales. Is it worth $15bn? Who knows? I'm sure a lot of people said the same about the 747 and the A300. Time will tell.

Quoting Flysherwood (Reply 18):
If by now, Airbus has not figured out that the A350XWB is the airplane that they absolutely have to build and to build right, then the game is OVER!!! Are you really proposing that the A350XWB is only being built because they have to? The future of Airbus is at stake with the A350XWB!!!

Again, you're missing the point. Yes, Airbus feel they HAVE to build the A350XWB. But they really wish they don't. They had no replacement strategy for the A330, they'd just finished the A340 update and were working on the A320E and A320RS. The last thing they want post A380 EIS is to spend $10 billion on replacing one of there youngest model lines.
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JAAlbert
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:19 am

Why do the airlines care whether or not Airbus makes a profit on the 380? The plane appears to meet, or even exceed, the requirements of a small number of airlines who need very large aircraft and so far guest passengers have given the plane rave reviews.
True, if Airbus were hit with a financial drain so severe it threatened its existence, I could see the airlines being very concerned. But even if the 380 were to fail financially, I am sure Airbus will survive as a vigorous competitor. So really, other than a topic of interesting convesation, as long as the airlines are getting the planes they need, who cares whether Airbus is making money on them?
 
cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:22 am

Quoting 474218 (Reply 23):
Why is this a "cheap shot" is he not in titled to his opinion? No matter what you think of Sir Richard, he does know business and in his opinion the A380 will not sell enough airframes for turn a profit, hardly a "cheap shot".

It would have been an insightful comment from a keen businessman if he had said this four or six years ago. Then we could praise his foresight. Instead, six years ago, he was begging for this plane. Now, that we know the magnitude of the production problems, he says this. It's a little like remarking "watch out for that step", thirty seconds after someone trips over it.

That the financial ROI of the A380 is in jeopardy is not in doubt. I just find it a little pointless when someone states the obvious, and it then gets reported as though he is an oracle.
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JAL
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:31 am

While it's too early to speculate on the viability of the A380, one has to wonder given the lack of new customers recently. Both ANA and JAL have said no to it as has CX. With regards to the US airlines, none of them seems intrested in the new jumbo jet.
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bigjku
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:41 am

Quoting AirFrnt (Reply 25):
Boeing is being forced into building the 748, but bear in mind that the 748 will cost 1/3rd to 1/4th of what the A380 is costing.

I would dare to say they were not forced into as opposed to they sort of fell into the opportunity. The A380 was struggling and they saw an opportunity to take the cargo market whole and get some part of the passenger market. They went ahead and took it. In doing so Boeing protected the freighter market for all 747 models through the 747-8 and the driving out of the A380F.

I would not say they were forced to do it at all. Engine technology let them get competitive with the A380 cheaply, realtivly that is, and they saw a chance to hurt Airbus with a plane that could compete with passengers and dominate the freight market.
 
deltadc9
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:41 am

Quoting CygnusChicago (Reply 15):
In addition, it is forcing Boeing to divert resources to the 747-800, which like the A350, is a plane they don't really want to have to build.

With regard to the 748 you are 110% wrong. The 747 carries 50% of all air freight and with 250 flying, there is nothing to replace it but the 748 and conversions. Either way, this pretty much ensures the 747 program will remain a cash cow even AFTER Y3 is flying. You will see new build 747s at least as long as new build 380s if not longer. It is the B-52 of commercial aviation. Boeing has always worked very hard to maintain this highly proifitable program for a reason.

Why would they not want a cash cow that has seen 20% margins in the past to continue rolling off the line? Your comment makes ZERO sense.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
flysherwood
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:52 am

Quoting CygnusChicago (Reply 27):
. They weren't the only ones - MD also complained about this. Airbus did something about it. You can debate a number of alternative strategies, but the fact remains that the A380 has drastically reduced 747 margins, locked up 142 widebody orders directly, and resulted in bumper A330 sales. Is it worth $15bn? Who knows? I'm sure a lot of people said the same about the 747 and the A300. Time will tell.

They have lost $6 billion in the process of being so SUCCESSFUL. Drastically reduced the 747 margin? With a totally new design? The 747 has made money hand over fist for the past 30 years and you are going to use a new clean sheet design just to reduce the margins of your competitor and invest $15billion in the process? Are you sure you are not Messr. Forgeard posing as CygnusChicago? Wink

And exactly how did the A380 contribute to bumper sales of the A330? You mean the units that they sold as compensation for the delays on the A380? If so, I suppose you believe that there are tremendous profits in those sales?  Yeah sure
 
XT6Wagon
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 6:56 am

Quoting JAAlbert (Reply 28):
Why do the airlines care whether or not Airbus makes a profit on the 380?

because it has hurt them directly in the fact that Airbus instead of developing the planes they need, have instead blown ALL the progress they have made since day 1 . Its burned everything Airbus has and is, such that its very possible the next mistake, small or large will put Airbus under.

The A380 isn't the 720 of its day. Its not the A310. Its not the 767-400.... Its a L1011. Its a MD11. Its one of those mistakes that CAN end a airplane maker. The Jet age is littered with examples of planes that were far more successful in screwing the airlines that operated them and putting the maker under than anything else.

Given that there is only two major makers left, its very much to an airlines intrest to see Airbus and Boeing do well, since they are the ones that pay if one fails.
 
flysherwood
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:17 am

Quoting CygnusChicago (Reply 27):
Again, you're missing the point. Yes, Airbus feel they HAVE to build the A350XWB. But they really wish they don't. They had no replacement strategy for the A330, they'd just finished the A340 update and were working on the A320E and A320RS. The last thing they want post A380 EIS is to spend $10 billion on replacing one of there youngest model lines.

No manufacturer thinks that they can sit still and not respond to innovation! If they did, they would be finished. You are actually missing the point. Airbus made the mistake of building an aircraft that they have only been able to sell 142 units of. Had they actually taken in the marketplace, post 911, post SARS, and seen the fragmentation of the industry as Boeing had foreseen, they would have stopped or at least postponed the A380 ala what Boeing did with the Sonic Cruiser and realized that the A330 needed to be better. But because of simple HUBRIS and sheer arrogance, they kept on going. And who knows, had it made its EIS on time, things might look better but as it stands today, it is the largest disaster in aircraft production history!!!
 
vv701
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:21 am

Quoting AirFrnt (Reply 10):
Sure, but I suspect Mr. Branson feels that he already gives enough money to Her Majasty's Government, and does not need to subsidize them any further.

The Virgin empire of around 140 different companies has its ultimate home not in the UK but the Virgin Islands. At the time of the 'dirty tricks' allegations by VS against BA Stephen Murphy (the Virgin Finance Director) was quoted as saying 'It [locating the Virgin holding trusts in the Virgin Islands] was done to protect Virgin and Richard from investigation and damage by BA'. However history shows that the trusts controlling the Virgin group of companies was set up more than 20 years earlier and ten years before the first passenger boarded the first Virgin operated aircraft at LGW.

The parent company of the Virgin owned part of Virgin Atlantic is Virgin Travel Ltd which is owned by offshore trusts. The real reason for establishing the controlling interests in VS and most if not all of the other Virgin companies offshore was, of course, to minimise UK tax liability. So some may think that SRB does not give enough money to Her Majesty's Government.
 
andessmf
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:33 am

Quoting JAAlbert (Reply 28):
as long as the airlines are getting the planes they need, who cares whether Airbus is making money on them?

Investors in the company.
 
keesje
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:38 am

Quoting Stratofortress (Thread starter):
Even a buyer is doubting A380 viability. Are there any credible sources out there that expect A380 to be a financial success?

Well lets look:


- more then 1400 747 were sold in 40 years, despite doom scenarios in 1969-70.

- 600 of them will have to be replaced in the next 20 years

- air traffic is supposed to tripple in the next 20 yrs according to Boeing (lifting its VLA forecasts)

- fuel prices will continue to rise

- 80% of all long haul traffic is between hubs

- A388 is first of a new family with new versions (size / range / function/ cabins/ engines) to be developped over its live span

- airlines praise it technical excellence & performance

....

500 ships ? yeah, count me in.

"Never mistake motion for action." Ernest Hemingway
 
ncelhr
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:44 am

Quoting JAL (Reply 32):
While it's too early to speculate on the viability of the A380, one has to wonder given the lack of new customers recently. Both ANA and JAL have said no to it as has CX. With regards to the US airlines, none of them seems intrested in the new jumbo jet.

Nobody can predict what the state of affairs will be in 10 year's time. Whilst I don't see ANA or JAL purchasing A380s since they are part of the JADC with strong ties to Boeing, US airlines may well have to revert to less frequencies & bigger jets to fly people in the US in light of the conjestion problems re-appearing at US hubs.

Quoting XT6Wagon (Reply 36):
The A380 isn't the 720 of its day. Its not the A310. Its not the 767-400.... Its a L1011. Its a MD11. Its one of those mistakes that CAN end a airplane maker. The Jet age is littered with examples of planes that were far more successful in screwing the airlines that operated them and putting the maker under than anything else.

(1) Airbus has the Best banker of them all - Europe.
(2) Since there are only 2 manufacturers left, I believe that airlines will do all they can to support Airbus should any such kind of doomesday scenario come up. A monopoly is just bound to kill Air travel.
(3) Who knows, Boeing might even support Airbus to keep them as a sparring partner.  Smile

The alarm bells have been ringing but it seems that since the latest reshuffling at Airbus, they were heard, and rumours of Airbus death, IMHO, are greatly exaggerated. Airbus has learnt a lot in the A380 debacle and those mistakes are definitely not going to happen again in the development of the A350. They have also learnt a lot technically and are bound to put all of the lessons into practice.

That said, I concur that Boeing is probably learning a lot in the building of the B787 and those lessons will be of great use in the development of the successor to the 737.

All in all, I feel the winners will be the airlines and ultimately, the passengers. Minds are being challenged both sides of the Atlantic, the market is ever so dynamic and both manufacturers are coming up with technological marvels. I really think that we, the passengers, are about to see Air Travel in an entirely new light pretty soon, and frankly, I am very excited about it, whether on a B787, A350, A380 or B748!
 
flysherwood
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 7:52 am

Quoting Keesje (Reply 38):
500 ships ? yeah, count me in.

As they say "...hope springs eternal!"  Wink
 
Curmudgeon
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 8:11 am

Quoting Keesje (Reply 38):
- more then 1400 747 were sold in 40 years, despite doom scenarios in 1969-70.

Against what competition though? The 747 was remarkable for its range as well as its size, and was replacing 707/DC-8 aircraft, and the L-1011 and DC-10 were not direct competition on many routes. Many of the 1400 airframes were replacements for 747-100/200/300 aircraft. There aren't that many classics still flying with major passenger airlines. There are many 747 freighters in this group, not the A380's demonstrated forte. This is 35 airplanes/year...so far the A380 has sold 22 airplanes/year.

Quoting Keesje (Reply 38):
- 600 of them will have to be replaced in the next 20 years

Granted. A350/777/B748/Y3/A380 will take care of that, but not in equal measure

Quoting Keesje (Reply 38):
- air traffic is supposed to tripple in the next 20 yrs according to Boeing (lifting its VLA forecasts)

How much of this is going to be long haul? I think the bulk of this is going to be in China/India (which may be a plus for the A380 in fact)

The projections are pretty rosey, and do not seem to allow for any downturns in economies, geo-politics, plague, energy prices, CO2

Quoting Keesje (Reply 38):
- 80% of all long haul traffic is between hubs

Yes. Without saying as much, you are advancing the congestion relieving effect of VLAs. I think this happens to be a good point in theory, but I also think there are cheaper and more effective ways of doing this. Buying VLA aircraft means that an airline will be confined to large hubs...losing flexibility and adaptability.

Quoting Keesje (Reply 38):
- A388 is first of a new family with new versions (size / range / function/ cabins/ engines) to be developped over its live span

This may be more of a theoretical advantage. It is the last of the metal airliners, and may not have the legs for a long run against the expected better costs of the carbon airplanes

Quoting Keesje (Reply 38):
- airlines praise it technical excellence & performance

They mean it. It's probably the greatest thing since sliced bread. Seriously. But I also seem to recall quotes like that about many airplanes. Concorde comes to mind.

I had a look at the orders just now, and the options list. Then I had a glance at the world's top 100 airlines, and I can't for the life of me concoct a scenario that allows for the sale of another 100 airframes. Even 50 was stretching it.
Jets are for kids
 
EMBQA
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 8:19 am

Quoting Stratofortress (Thread starter):
"Sir Richard, whose long-haul airline has placed a $2bn (£1bn) order for six A380s, said he feared the 555-seater aircraft would never sell in sufficient numbers to cover its development costs."

OK... so I said the same thing a few weeks back and was given a two week vacation by the moderators...!! Sir Richard... now its your turn...!!
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
ChinaClipper40
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 8:26 am

Quoting Toulouse (Reply 5):
[The A380] is the first ever "all" double-deck civil aircraft.

Not really. The late 1940s French-manufactured Breguet 763 "Deux Ponts" civil airliner holds fair claim to that distinction, I believe. It carried 59 passengers on its upper deck and 48 passengers on its lower deck. At least, that's the configuration in which Air France flew it in regular passenger service, if memory serves me.

ChinaClipper40
 
XT6Wagon
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 8:36 am

Quoting Ncelhr (Reply 39):
(2) Since there are only 2 manufacturers left, I believe that airlines will do all they can to support Airbus should any such kind of doomesday scenario come up. A monopoly is just bound to kill Air travel.
(3) Who knows, Boeing might even support Airbus to keep them as a sparring partner.

Oh yes, Boeing very much doesn't want Airbus to die. They just want to kick Airbus into a corner and leave it there. Killing Airbus leaves them open to a fresh new rival with no liabilities and something to prove. An emasculated Airbus can clean up the scraps Boeing doesn't want while leaving the best meat for Boeing.

Of course the whole trick is trying to achieve that magic balance. I think Boeing will jump for joy if the various EU nations help them by propping up Airbus every time it falls... since then its much easier to just keep pushing just hard enough that it falls just a bit every cycle.

The dangerous thing is right now Boeing is on track to revisit a size class every 12-14 years, and have a fresh new major model revision of some kind every 4-4.5 years. Airbus CAN'T fight that with a 6 year cycle period since giving up a size class will abandon enough market that Boeing can punish Airbus by taking profits from the gaps and discounting off on the frames that do compete. It is their best chance though as doing a narrowbody and a midsize only would let them fight much better than the silliness that arrived with trying to fit the A380 into their product cycle only on a 8-10 year program completely demolishing the chance to get a A330NG/A350 to fight off the 787 and a A320NG/replacement to match time frames with the 737RS.

Think of it, The A320NG/RS will arrive in 2020, just when Boeing can drop a 787NG on Airbus to decimate the midsize class again. 2024 the 737RS will get a 2nd generation model. 2028 can see the SECOND generation Y3 and Airbus expects 20+ years out of the A380 sales? SAY WHAT? Mind all of this will be "on sale" 4 years before the hardware hits customers hands so the A320NG/RS will arrive about the same time that the 737RS will go on sale for its SECOND generation. Obviously this is the "worst case" for Airbus, but it shows just how powerful a 4 year cycle can be as you can take your current product lead and then run with it.

Its not the 18-20 Billion that the A380 program will end up costing Airbus that is the issue, its the disruption to the life-cycle of the programs they had that WERE fighting the good fight, and doing well at it. In appliance terms it would be like Kenmore dropping all their "SEARS" grade appliance R&D to aim for the industrial kitchen market. You CAN'T abandon your core supporting market(s) in silly ventures and hope to do well.
 
Blackbird1331
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 8:40 am

If it is not going to sell, then why buy it? To support it in the future will cost an arm and a leg, and who will buy it used? And what would it cost to convert it from a passenger jet to a freighter, and then support that model? This decision coming from a CEO? Too many negatives have surfaced over this model. If I had the money to buy one, I would not.
Cameras shoot pictures. Guns shoot people. They have the guns.
 
highflyer9790
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 9:00 am

This is a tough one. people will jump and say VS wil take the 747-8I, but i say they MAY cancel their A380 order..foggy.
121
 
cygnuschicago
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 9:23 am

Quoting Flysherwood (Reply 35):
...they would have stopped or at least postponed the A380 ... And who knows, had it made its EIS on time, things might look better but as it stands today

So which is it - they should have posponed it further than late 2007 (according to the first part of your post), or they should have introduced it sooner (in 2006, as per plan) according to the latter part of your post?

Quoting Flysherwood (Reply 33):
And exactly how did the A380 contribute to bumper sales of the A330? You mean the units that they sold as compensation for the delays on the A380?

According to the reported 2006 sales figures the A330 had a bumper year. Sure, most were sold at discounted prices, and it is probably sound specualtion to assume in most cases this was delay compensation. Again, every one of these frames is at least one 767/787 not sold. Was this planned? no. Is it a position Airbus would like to be in? no. Is it a good response to a strategic challenge Airbus is facing? absolutely.

As to your comment on it being the largest aircraft disaster - big on hyperbole, short on fact. It may yet turn out to be that, if all airlines cancel. But as it stands Concorde, the 2707 and the TU-144 are probably the three biggest. Then of course we have the Comet 1, the Convair 990, the Mecure, and so many others....

I understand that a lot of posters on this board have a vehement hatred of the A380, in most cases because it is foreign. Boeing is based in my home town, I love them, but as an aviation enthusiast I feel to understand this irrational hatred. Anyway, this discussion is drifting away from the original post on Branson's comments, and turning into an A vs. B, which is not my thing. Have fun!

[Edited 2007-04-25 02:32:45]
If you cannot do the math, your opinion means squat!
 
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glideslope
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 9:41 am

Quoting DAYflyer (Reply 16):
Well, I find it increasingly hard to argue with this. I will say however, that until the Y3 appears, the A-380 may yet see break even, even if only in about 3-4 liveries that ever place substantial orders. I dont think there will ever be a 380-900.

How could that be possible? It must be at or above 500 frames by now? They will never sell that with the 380F DOA.
To know your Enemy, you must become your Enemy.” Sun Tzu
 
777ER
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RE: Branson Warns Of Threat To A380 Maker

Wed Apr 25, 2007 10:19 am

Quoting Toulouse (Reply 3):
The second quote is strange, has the 787 order not already been confirmed?

We knew about this order, most likly before any media did

Quoting Keesje (Reply 38):
- 600 of them will have to be replaced in the next 20 years

Yes, but that 600 will be shared among the B787/A350, B773/A346, B748/A380. Not all airlines that operate the B744 will want or need the A380. About 10-20% of the curent B747 operartors will need A380 size, while the rest will go towards B748, B773, B787, A350 and A346. I can see Boeing winning a good share of that 600

Quoting Keesje (Reply 38):
- air traffic is supposed to tripple in the next 20 yrs according to Boeing (lifting its VLA forecasts)

Yes, but not everyone will want to go via a hub then, if they can go direct on a B787 or A350. Another example of where the A380 misses out.

Quoting Keesje (Reply 38):
- fuel prices will continue to rise

With the current level of fuel prices, this will also benefit the B787 and A350 better then the B748 and A380, and will make the B787/A350 more attractive to airlines compared to the A380

Quoting Keesje (Reply 38):
- 80% of all long haul traffic is between hubs

But when those numbers rise, more and more pax will avoid hubs as much as possible and will use the twin jets more for direct flights

Quoting Keesje (Reply 38):
- airlines praise it technical excellence & performance

And airlines praise EVERY new airliner they purchase, so nothing new here
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