SWALUV
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Future Of The A380?

Fri Apr 13, 2012 8:19 pm

Hi,

First Time Posting on the site. As I was browsing around, I came across this:

"The break-even for the A380 was initially supposed to be reached by selling 270 units, but due to the delays and the falling exchange rate of the US dollar, it increased to 420 units."

With the price of 1 A380 costing about 389.9 million dollars, I have a few questions.

- Will we see Airbus ever make there break-even point?
- With the rising cost of fuel prices, will we see any more orders for the A380?
- Will we see a new version (maybe a NEO) of the A380?
- When will the cost of fuel, maintenance, crews, etc. be to much for the airlines and the A380?
- What ( if anything) will replace the A380?
- And will a A380F be introduced after all order were canceled by the airlines?

Thanks
ps: Website - http://en.wikipedia.org/wiki/Airbus_A380
 
phxa340
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RE: Future Of The A380?

Fri Apr 13, 2012 9:46 pm

I think the A380 best days are yet to come, its still a new aircraft that is earning a good reputation. As the world economies begin to finally turn around I think more airlines will begin to order it. I am still a little nervous that EK represents a huge portion of the order book. If something were to happen to them then I who knows ?
 
eaa3
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RE: Future Of The A380?

Fri Apr 13, 2012 9:50 pm

With the scale of worldwide airtravel growth given that millions and millions of people are rising from poverty to the middle class around the world I think that the A380 will be in demand, huge demand. Furthermore the A380-900 will be in demand.
 
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Mortyman
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RE: Future Of The A380?

Fri Apr 13, 2012 10:03 pm

Quoting SWALUV (Thread starter):


- Will we see Airbus ever make there break-even point?
- With the rising cost of fuel prices, will we see any more orders for the A380?
- Will we see a new version (maybe a NEO) of the A380?
- When will the cost of fuel, maintenance, crews, etc. be to much for the airlines and the A380?
- What ( if anything) will replace the A380?
- And will a A380F be introduced after all order were canceled by the airlines?

* Yes
* Yes
* Yes we will se the 900 version of the A 380. Don't know about a NEO
* I think the A380 is a cost and fuel effective aircraft. Most likely we will see an even further effeciancy in future versions of the A380.
* An aircraft that is of the same size as the A380 and that goes in mach 2  
* Airbus had plans on offering a freighter version of the A380. However this has been put on hold. Considering that they have actually thought about a freighter version, I am also sure that they have a solution to deal with the cockpit issue. I am sure there will be a freighter version sometime down the line.
 
SeJoWa
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RE: Future Of The A380?

Fri Apr 13, 2012 10:06 pm

Of course we will see more orders: it sits alone at the bottom of an open-ended capacity pyramid, and offers compelling economics to boot.

The question is, will demand be enough to guarantee presently planned build rates? Or how low can Airbus take monthly output and (in time) not lose money on every plane?
 
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Polot
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RE: Future Of The A380?

Fri Apr 13, 2012 10:08 pm

Quoting Mortyman (Reply 5):
Airbus had plans on offering a freighter version of the A380. However this has been put on hold. Considering that they have actually thought about a freighter version, I am also sure that they have a solution to deal with the cockpit issue. I am sure there will be a freighter version sometime down the line.

Their cockpit solution is simple...no nose loading, just like all commercial freighters with the exception of the 747. I'm not entirely convinced that we will see an A380F, at least not with the performance it offered the first time around.
 
Daysleeper
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RE: Future Of The A380?

Fri Apr 13, 2012 10:10 pm

Quoting SWALUV (Thread starter):
- Will we see Airbus ever make there break-even point?

Without a doubt. Its estimated it will have repaid its production costs by 2015 and I'd estimate it will have repaid it's total project costs by the end of the decade.

Quoting SWALUV (Thread starter):
- With the rising cost of fuel prices, will we see any more orders for the A380?

Absolutely.

Quoting SWALUV (Thread starter):
- Will we see a new version (maybe a NEO) of the A380?

Its a fairly popular belief around here that Airbus will offer a stretched version with TrentXWB 'donks'

Quoting SWALUV (Thread starter):
- When will the cost of fuel, maintenance, crews, etc. be to much for the airlines and the A380?

Right after every other commercial airline becomes too costly to operate.

Quoting SWALUV (Thread starter):
And will a A380F be introduced after all order were canceled by the airlines?

Eventually.
 
Btblue
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RE: Future Of The A380?

Fri Apr 13, 2012 10:15 pm

Yes. It will sell the predicted numbers in various iterations.

It's having teething problems (still) but lets not forget how advanced the aircraft is. Airbus are making improvements all the time, the latest being the increase in weight (the R variant)?. Then there are the engines with talk about the Trent XWB being a possible candidate for putting on the wing of the 380 and saving more money for the airlines...

I have no doubt that the A380 will be here for years to come. So too the 747... there is and will continue to be demand for large aircraft such as the 380.
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RickNRoll
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RE: Future Of The A380?

Fri Apr 13, 2012 11:16 pm

Rising fuel costs help the case for the A380. It carries people more efficiently over longer distances.
 
ltbewr
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RE: Future Of The A380?

Sat Apr 14, 2012 1:04 am

Quoting SWALUV (Thread starter):

- Will we see Airbus ever make there break-even point?
- With the rising cost of fuel prices, will we see any more orders for the A380?
- Will we see a new version (maybe a NEO) of the A380?
- When will the cost of fuel, maintenance, crews, etc. be to much for the airlines and the A380?
- What ( if anything) will replace the A380?
- And will a A380F be introduced after all order were canceled by the airlines?


As to 'break even', that may be more murky but if the same airlines that buy the A380 for their particular needs, they may be more likely to buy other Airbus a/c so the slight loss on the A380 may be offset by sales of other models. WIth many major airports capped as to number of flights allowed, some airlines may have no practical alternative to buy more A 380's so the 'break even' point may be reached or surpassed.

The A380 will probably be the biggest pax aircraft we may see due to practical limits on airport infrastructure, although we may see some 'stretch' or high coach capacity models. We could see a version with more advanced materials in their structure, improved engines, as become more cost practical, reduce weight and thus fuel use as long-term oil will only go up much higher. Who knows what will 'replace' it - look at the 747 still selling over 40 years after it's intro.

The costs of operating the A380 may be less important than the reality of severely slot controlled airports throughout the world.

As to a freighter, it may become the best choice for some freight airliners, as with pax ones, to deal with airports that are slot controlled, have strict curfews, to operate fewer flights on the highest demand routes thus reducing overall ops costs..
 
PHX787
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RE: Future Of The A380?

Sat Apr 14, 2012 1:20 am

Quoting SWALUV (Thread starter):
- And will a A380F be introduced after all order were canceled by the airlines?

How much farther in the future do we have for this?
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DarkSnowyNight
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RE: Future Of The A380?

Sat Apr 14, 2012 2:40 am

Quoting PHX787 (Reply 12):

- And will a A380F be introduced after all order were canceled by the airlines?

How much farther in the future do we have for this?

Theoretically forever. The real question is whether an F version will be a true F or a P2F conversion. I'm fairly certain that if there is an F, it will be one or the other, but not both. I say that given the developmental/production (dedicated F) or certification/conversion (P2F) costs involved, and the relatively small number of frames in the market.

But in any case, I do not see why there would need to be a dead-line. Even if there is only ever a P2F made, the 380, like most LH & ULH AC have a relatively low cycle count per age.
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Stitch
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RE: Future Of The A380?

Sat Apr 14, 2012 5:50 am

Quoting SWALUV (Thread starter):
- Will we see Airbus ever make there break-even point?

I figure it has a good chance. Within a few years Airbus should be able to sell an A380-800 for what it cost them to build, so at least the red ink will stop accumulating then and they can start to "recover" the costs to date (and I use quotes because Airbus has already paid those bills, so it is not a case of them having to break even).



Quoting SWALUV (Thread starter):
- With the rising cost of fuel prices, will we see any more orders for the A380?

Probably.



Quoting SWALUV (Thread starter):
- Will we see a new version (maybe a NEO) of the A380?

We'll see continued improvements and probably an 80m length A380-900.



Quoting SWALUV (Thread starter):
- When will the cost of fuel, maintenance, crews, etc. be to much for the airlines and the A380?

The real "spoiler" will be consumers no longer being able to afford to travel due to not having the disposable income.



Quoting SWALUV (Thread starter):
- What ( if anything) will replace the A380?

Yes. Probably a Blended Wing Body. But I don't expect to see the A380 superseded for many decades.



Quoting SWALUV (Thread starter):
- And will a A380F be introduced after all order were canceled by the airlines?

I do not believe we will see a new-build A380 freighter.
 
astuteman
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RE: Future Of The A380?

Sat Apr 14, 2012 6:44 am

Quoting Stitch (Reply 14):
I figure it has a good chance. Within a few years Airbus should be able to sell an A380-800 for what it cost them to build, so at least the red ink will stop accumulating then and they can start to "recover" the costs to date (and I use quotes because Airbus has already paid those bills, so it is not a case of them having to break even).

If I can just offer a point here - I suspect that Airbus are already making A380's that "sold" for more than "cost", but won't bring in profits because they have delay penalties affecting the revenue stream. By 2015, these aircraft will be out of the production queue

Rgds
 
SchorschNG
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RE: Future Of The A380?

Sat Apr 14, 2012 8:25 am

The A380 is large enough - especially the -900 - to not to mix up with anything that can be done sinple circular fuselage. So any B777-10X-ER will not touch the A380, at least not the -900.
Airframe-wise the A380 is close to the optimum, slightly more span would have helped.
New engines may come any time it seems reasonable.

I think the A380 has a good future, but think long-term. It is not the manager's aircraft though, doesn't generate bombastic profits from day one. But which aircraft ever did?
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EricAY05
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RE: Future Of The A380?

Sat Apr 14, 2012 8:56 am

How about an A380 Combi? With the size of the A380 (especially the -900) you could carry the equivalent of a, let's say, cargo 767 and a passenger 767 all in one plane. Could work for KLM and carriers with more significant cargo fleets.
 
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SQ22
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RE: Future Of The A380?

Sat Apr 14, 2012 9:59 am

Quoting EricAY05 (Reply 23):
How about an A380 Combi? With the size of the A380 (especially the -900) you could carry the equivalent of a, let's say, cargo 767 and a passenger 767 all in one plane. Could work for KLM and carriers with more significant cargo fleets.

Are you thinking about something like cargo on the lower and passenger on the upper deck? Interesting idea, but would there be need for such a bird?
 
EricAY05
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RE: Future Of The A380?

Sat Apr 14, 2012 10:51 am

Quoting SQ22 (Reply 24):

Yes, exactly. KLM seems to like the 747 Combi. I would imagine a plane like this could be perfect for cargo heavy routes where ailines use the smaller widebodies for passenger transportation. Unfortunately I don't have any examples of this kind of routes, but I'm pretty sure they exist.
 
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Mortyman
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RE: Future Of The A380?

Sat Apr 14, 2012 12:56 pm

Quoting SQ22 (Reply 24):
Are you thinking about something like cargo on the lower and passenger on the upper deck? Interesting idea, but would there be need for such a bird?

I'm thinking more in the way of cargo in the rear half of the first deck and passengers in the front lower deck and second floor.
 
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RE: Future Of The A380?

Sat Apr 14, 2012 1:08 pm

Quoting strfyr51 (Reply 15):
add in the USA airports where there is little to NO infrastructure to handle them and a lack of resources or equipment?

That for me is more a case against US infrastructure than against the bird. Do you say the US is falling behind all other regions in the world in terms of development, growth and strategic planning?
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EPA001
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RE: Future Of The A380?

Sat Apr 14, 2012 1:15 pm

Quoting Daysleeper (Reply 8):
Its a fairly popular belief around here that Airbus will offer a stretched version with TrentXWB 'donks'

It is, and I am one of them. But after reading what RR was proposing for a possible B777-X, it could be that a derivative of that engine would make it to the A380.  .

All in all over a lifespan of at least 40 years, and the A380 is only 5 years in service at SQ, it will be a huge success which had a difficult start. Just as the B787.  .
 
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RayChuang
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RE: Future Of The A380?

Sat Apr 14, 2012 1:36 pm

I still think there is a chance that UA or DL might consider the A380-800.

The reason is simple: flights to Asia, especially China (PEK, PVG, maybe even CAN), South Korea (ICN) and so on. Both the UA and DL 747-400 fleets are starting to age, and 4-5 years from now both airlines will need to start replace them. Buying the 777-300ER or the future 777X might not be a good idea (since it may end up losing number of seats per flight), and it's unknown how much of a discount Boeing will offer on the 747-8I for fairly substantial order.
 
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kc135topboom
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RE: Future Of The A380?

Sat Apr 14, 2012 1:46 pm

Quoting Daysleeper (Reply 8):
Quoting SWALUV (Thread starter):- Will we see Airbus ever make there break-even point?
Without a doubt. Its estimated it will have repaid its production costs by 2015 and I'd estimate it will have repaid it's total project costs by the end of the decade.


Daysleeper, I don't know where you are getting your numbers from, but I really doubt the A-380 will have repaid production costs by mid decade, and total program costs by the end of the decade. Airbus has yet to sell even one A-380 at a profit, and isn't projected to until your 2015 date, if then. We don't know what the total program costs are, although some have suggested somewhere between E20B and E30B Euros. The current price tag for a new build A-380 is about $390M USD, or about E300M Euros. All of the orders for the A-380 todate have had very heavy discounts, some on the order of 50% or more. My guess is EK is paying less than E120M Euros per airplane, which is a 60% discount, for the 90 airplane order. That looks good for sales, but looks bad to the bean counters as they try to make a profit on that sale....and can't.

At sales discounts this deep, the A-380 program will never break even.

Quoting Daysleeper (Reply 8):
Quoting SWALUV (Thread starter): And will a A380F be introduced after all order were canceled by the airlines?
Eventually.

No. You can buy a much more capaible and flexible B-747-8F (current list price of about $333M USD) cheaper, with discounts on top of that. The A-380 may have a future P2F version, but even that is doubtful as you have to custom build all the ground handeling and cargo loading/unlaoding equipment to be able to reach the main and upper decks.

Quoting RickNRoll (Reply 10):
Rising fuel costs help the case for the A380. It carries people more efficiently over longer distances.

Not when the fuel bill for each flight on an A-380 is approaching $333,000 USD to fill her up. The overall fuel capacity of an A-380 is about 83,200 USG. At the current Jet-A price in the US around $4 per USG that is about $333,000. If every seat on a 525 seat A-380 sold for $2000 it would mean the flight would gross about $1,000,000, minus the fuel of $333K is $667K, then minus crew costs, maintenance, landing and parking fees, ground handling fees, other employees costs, and lease or loan payments you quickly get near zero dollars for each flight. That's on a full flight, and not every flight will be full. The A-380 has a very high break even load factor. You can make a profit on each flight with a load factor at or above 50% if fuel only costs you about $2 per USG.

Finally, the A-380 can only use some 75 airports worldwide. Not all major hubs have invested in all the infastructure the A-380 needs, and with the global economy the way it is now most airports won't do that for a few A-380 flights per day unless the airline who owns the airplane wants to cover those costs.

[Edited 2012-04-14 08:17:51 by srbmod]
 
musapapaya
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RE: Future Of The A380?

Sat Apr 14, 2012 1:57 pm

Quoting KC135TopBoom (Reply 31):
Not when the fuel bill for each flight on an A-380 is approaching $333,000 USD to fill her up. The overall fuel capacity of an A-380 is about 83,200 USG. At the current Jet-A price in the US around $4 per USG that is about $333,000. If every seat on a 525 seat A-380 sold for $2000 it would mean the flight would gross about $1,000,000, minus the fuel of $333K is $667K, then minus crew costs, maintenance, landing and parking fees, ground handling fees, other employees costs, and lease or loan payments you quickly get near zero dollars for each flight. That's on a full flight, and not every flight will be full. The A-380 has a very high break even load factor. You can make a profit on each flight with a load factor at or above 50% if fuel only costs you about $2 per USG.Finally, the A-380 can only use some 75 airports worldwide. Not all major hubs have invested in all the infastructure the A-380 needs, and with the global economy the way it is now most airports won't do that for a few A-380 flights per day unless the airline who owns the airplane wants to cover those costs.

So based on your calculations, can you sugget which plane can help airlines make money?
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Stitch
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RE: Future Of The A380?

Sat Apr 14, 2012 2:42 pm

Quoting EricAY05 (Reply 23):
How about an A380 Combi?

The economics are not there with the current safety requirement impact. It would be only worse on an A380, since you need to protect two decks, not just one.



Quoting KC135TopBoom (Reply 31):
My guess is EK is paying less than E120M Euros per airplane, which is a 60% discount, for the 90 airplane order.

EK's 16th delivery (A6-EDF | MSN 077) was sold to Nimrod Capital LLC on a lease-back deal for USD 234 million (E179 million) in October 2011. This price was for the airframe and did not include engines (which are owned and leased by Commerzbank).

I'm sure EK sold it to Nimrod at a profit, but I imagine it wasn't E50M.  
 
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DarkSnowyNight
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RE: Future Of The A380?

Sat Apr 14, 2012 2:46 pm

Quoting KC135TopBoom (Reply 31):
Not when the fuel bill for each flight on an A-380 is approaching $333,000 USD to fill her up. The overall fuel capacity of an A-380 is about 83,200 USG. At the current Jet-A price in the US around $4 per USG that is about $333,000. If every seat on a 525 seat A-380 sold for $2000 it would mean the flight would gross about $1,000,000, minus the fuel of $333K is $667K, then minus crew costs, maintenance, landing and parking fees, ground handling fees, other employees costs, and lease or loan payments you quickly get near zero dollars for each flight. That's on a full flight, and not every flight will be full. The A-380 has a very high break even load factor. You can make a profit on each flight with a load factor at or above 50% if fuel only costs you about $2 per USG.

There are a few problems with this. First off, any Ops department will ask, straight away, why in the hell are you maxing out your fuel tanks?

If you are, that can only mean this is a ULH mission. And off the cuff, it's likely, especially with the amount of premium pax on such runs, that $2000 per ticket is on the low side.

Quoting KC135TopBoom (Reply 31):
The A-380 may have a future P2F version, but even that is doubtful as you have to custom build all the ground handeling and cargo loading/unlaoding equipment to be able to reach the main and upper decks.

Well what else will happen with all those old frames? Most will be retired with a great deal fewer cycles than say a 787 or 350. I definitely think this is more likely than a new-build F model, as there are essentially no markets for that. But a P2F conversion could be cost effective (if the price is right) for some parcel outfitters. Remember, even FX keeps it's MD-10s, A300s & Scuds on the ground a lot more than PAX carriers do, which drives down a lot of fixed operating costs (where A380s take their hits). A cheaply enough had A380 P2F could be worth it for certain and specific runs.

Quoting KC135TopBoom (Reply 31):

Daysleeper, I don't know where you are getting your numbers from, but I really doubt the A-380 will have repaid production costs by mid decade, and total program costs by the end of the decade. Airbus has yet to sell even one A-380 at a profit, and isn't projected to until your 2015 date, if then

From the fact that Airbus have written down a lot of the 380's developmental costs. They are now basing success primarily on production costs (which are still considerable), and though I cannot say specifically what those numbers look like, or where Daysleeper gets his from, 2015 doesn't sound unrealistic. I do agree though, that more should be done to "show your work", so to speak.

Related to that...

Quoting KC135TopBoom (Reply 31):
All of the orders for the A-380 todate have had very heavy discounts, some on the order of 50% or more.
Quoting KC135TopBoom (Reply 31):
My guess is EK is paying less than E120M Euros per airplane, which is a 60% discount, for the 90 airplane order. That looks good for sales, but looks bad to the bean counters as they try to make a profit on that sale....and can't.

Where have you heard this? I'm sure some discounting has been invoked, but 60% sounds like an awful lot off the top. That's more than 70 Free 380s for EK's order 120 airplane order thus far!

Quoting EricAY05 (Reply 23):
How about an A380 Combi?

You'd have to find a way to get it certificated. Currently the FAA & EASA are not certificating new (or converted) Combis. The ones that do exist have been grandfathered into the system.

Quoting Mortyman (Reply 26):

I'm thinking more in the way of cargo in the rear half of the first deck and passengers in the front lower deck and second floor.

Probably better from a logistical standpoint just to use lower deck - freight & upper deck - PAX. You won't have a partition issues (making certification more plausible), weight and balance would be simplified and loading/unloading would be more palatable (pun not intended) as well.
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Flighty
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RE: Future Of The A380?

Sat Apr 14, 2012 3:00 pm

The A380 will repay its project costs, but I can't see how it happens before 2020.

Airbus has dedicated a monstrous amount of money to A380 with absolutely no profitable actions / production thus far. By their own admission. The entire project is predicated on a future streamlining of production and the -900 variant. If you triple sales volume, and hugely decrease costs (both of which are possible) then Airbus 380 can dig out of its current ?25 billion? dollar hole.
 
Flighty
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RE: Future Of The A380?

Sat Apr 14, 2012 3:08 pm

Quoting darksnowynight (Reply 36):
From the fact that Airbus have written down a lot of the 380's developmental costs.

That doesn't really affect the real accounting of the project's success, which we might do more accurately on a.net than Airbus is willing to do.
 
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ER757
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RE: Future Of The A380?

Sat Apr 14, 2012 3:14 pm

Quoting SWALUV (Thread starter):
- Will we see Airbus ever make there break-even point?

That's a moving target. Costs associated with production range from labor to materials to the electricity to keep the lights on in the factory. That being said, I believe that yes, Airbus will surpass break-even and make money on the program. This isn't a short-term project, the A380 will likely be in production for many years to come.

Quoting SWALUV (Thread starter):
- With the rising cost of fuel prices, will we see any more orders for the A380?

Without a doubt. I'd say we'll see more orders this year. I don't think new orders will be in large batches, not like 20 or 25 planes at a time, but between new carriers dipping their toes in the waters and follow-on orders from existing customers, they'll come.

Quoting SWALUV (Thread starter):
- What ( if anything) will replace the A380?

Nothing in the immediate future which led my responses above

Quoting SWALUV (Thread starter):
And will a A380F be introduced after all order were canceled by the airlines?

I don't see it happening.

Welcome to a.net by the way.
 
Daysleeper
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RE: Future Of The A380?

Sat Apr 14, 2012 3:17 pm

Quoting KC135TopBoom (Reply 31):
Daysleeper, I don't know where you are getting your numbers from, but I really doubt the A-380 will have repaid production costs by mid decade, and total program costs by the end of the decade.
This is just one of many articles which back up my claim

Quoting KC135TopBoom (Reply 31):
Airbus has yet to sell even one A-380 at a profit, and isn't projected to until your 2015 date, if then. We don't know what the total program costs are, although some have suggested somewhere between E20B and E30B Euros.

This isn’t strictly correct, I agree in that it will be 2015 before the A380 is able to show a true profit and Airbus can start to recover R&D costs, however they are obviously making money from current deliveries in order to be able to repay the additional production costs incurred by the delays.

I’d also be interested to know who has suggested costs between E20 and E30 if you would be so kind as to provide a link.

Quoting KC135TopBoom (Reply 31):
All of the orders for the A-380 todate have had very heavy discounts, some on the order of 50% or more. My guess is EK is paying less than E120M Euros per airplane, which is a 60% discount, for the 90 airplane order. That looks good for sales, but looks bad to the bean counters as they try to make a profit on that sale....and can't.

All orders? Any proof?

I don’t dispute that EK would have received very large discounts due to the number of frames they have ordered, however as has been discussed here many times this is normal practise and Boeing will be giving them similar discounts on the 77W.

Quoting KC135TopBoom (Reply 31):
At sales discounts this deep, the A-380 program will never break even

Absolute rubbish.

Quoting KC135TopBoom (Reply 31):
No. You can buy a much more capaible and flexible B-747-8F (current list price of about $333M USD) cheaper, with discounts on top of that. The A-380 may have a future P2F version, but even that is doubtful as you have to custom build all the ground handeling and cargo loading/unlaoding equipment to be able to reach the main and upper decks

I actually don’t see them producing a freighter in the immediate future, but should they decide too based on the current specifications it will be far more capable than the 748, being able to carry an additional 10,000KG over 1000nm further. And those figures are based on the current A380, a possible future version with XWB engines would increase its advantage.

Quoting KC135TopBoom (Reply 31):
Finally, the A-380 can only use some 75 airports worldwide. Not all major hubs have invested in all the infastructure the A-380 needs, and with the global economy the way it is now most airports won't do that for a few A-380 flights per day unless the airline who owns the airplane wants to cover those costs.

Can you provide any proof of this? I’ve never seen a single article in which suggests airports are unwilling to accommodate the A380 should a carrier want to operate it.

[Edited 2012-04-14 08:51:11]
 
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Stitch
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RE: Future Of The A380?

Sat Apr 14, 2012 3:28 pm

Quoting Daysleeper (Reply 31):
This is just one of many articles which back up my claim...

That article, as with the others, refers to "production break even" - as in the money Airbus receives at delivery is equal to the money Airbus spent to produce the frame. As astuteman noted up-thread, Airbus is likely already delivering airframes at a unit production cost below the delivery price, but those frames are still "picking up the tab" for the frames before them that are not.

Of course, such a scenario happens with every airplane program - be it new or a derivative. It's just the scale that makes it more apparent on the A380, 787 and 747-8 (for the moment).
 
Daysleeper
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RE: Future Of The A380?

Sat Apr 14, 2012 3:40 pm

Quoting Stitch (Reply 32):
That article, as with the others, refers to "production break even" - as in the money Airbus receives at delivery is equal to the money Airbus spent to produce the frame. As astuteman noted up-thread, Airbus is likely already delivering airframes at a unit production cost below the delivery price, but those frames are still "picking up the tab" for the frames before them that are not.

Aye, I understand that and made it clear further up the thread that 2015 is the production break even not the program break even.

And although perhaps not as clear, I also made the same point regarding current deliveries.

Quoting Daysleeper (Reply 31):
This isn’t strictly correct, I agree in that it will be 2015 before the A380 is able to show a true profit and Airbus can start to recover R&D costs, however they are obviously making money from current deliveries in order to be able to repay the additional production costs incurred by the delays.
 
babybus
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RE: Future Of The A380?

Sat Apr 14, 2012 3:52 pm

As they say 'It takes an A380 to compete with an A380'

Since A380s exist already and operate profitably there can only be more in the future.

A freighter? Is that important? Most airlines can use the 'new' 747i if they need a big freighter.
and with that..cabin crew, seats for landing please.
 
yyzala
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RE: Future Of The A380?

Sat Apr 14, 2012 3:55 pm

I think the real question that needs to be asked is how many A380s will be sold beyond break even. The reason A380 has not being doing so well is due to the global economy, top that with all the delays and compensations that needed to be paid out. Airlines are simply afraid to purchase a whale that will be a money loser if its not filled up. However, with rising fuel prices, slot constrained hubs (cough LHR cough) and competition (EK), the A380 will pick up the momentum.
 
PanAm1971
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RE: Future Of The A380?

Sat Apr 14, 2012 3:58 pm

As someone in business... looking at the A380 alone-without considering the aircraft's impact on perceptions of Airbus and it's other products-may be a little self deceiving. Airbus knew full well the cost risk they were engaging in when they started the project. However, the net benefit of changing the image of Airbus with airlines and passengers helped (in my opinion) propel the European aircraft manufacturer into the leading position ahead of Boeing. Eventually, the A380 will become profitable per unit... and over the course of time the A380 will become a profitable line. At the very least-the project probably won't lose money. The intrinsic value of the A380 to Airbus has, and will be, massive.
 
solarflyer22
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RE: Future Of The A380?

Sat Apr 14, 2012 4:15 pm

I'm surprised at the emphasis on this thread for "break even" when in my mind the real goal is to...make money! A lot of it. I'm sure it was 5-10 billion to invest in the A380 and while its certainly worth it to do it for advancing technology I would want to make that investment back plus an extra $5 billion. Its kind of hard for me to see them doing that at this point but they do have 10-15 years left of production. I think the A380-900's lower CASM will help a lot in the future.

A lot of things have to go right for the A380 to be really worthwhile for an airline and the maintenance on engines and wing cracks all eat into a slim margin. The upfront acquisition cost is also staggering. Buying just 5 A380s is going to set you back a cool $2 billion at least and thats just a lot of money for most airlines to pony up (even with favorable financing). The A380 really needs China and India to develop mass air travel quickly and for sustained high gas prices.
 
Daysleeper
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RE: Future Of The A380?

Sat Apr 14, 2012 4:37 pm

Quoting PanAm1971 (Reply 36):
As someone in business... looking at the A380 alone-without considering the aircraft's impact on perceptions of Airbus and it's other products-may be a little self deceiving. Airbus knew full well the cost risk they were engaging in when they started the project. However, the net benefit of changing the image of Airbus with airlines and passengers helped (in my opinion) propel the European aircraft manufacturer into the leading position ahead of Boeing. Eventually, the A380 will become profitable per unit... and over the course of time the A380 will become a profitable line. At the very least-the project probably won't lose money. The intrinsic value of the A380 to Airbus has, and will be, massive.

Although I believe Airbus would have become the world’s leading commercial aircraft manufacture based solely upon the success of the A320 and A330 projects the A380 has undoubtedly provided Airbus with a huge PR boost.

Going back perhaps only a decade I’d imagine the majority of the general public wouldn’t have had a clue who Airbus were, but given the mass media coverage the A380 has generated it undoubtedly now enjoys the same level of public recognition as Boeing does.

I’m not sure what the ultimate effect of this public recognition will be, but we have seen recently that the general public are far more aware of what aircraft type they fly upon than many here would like to believe. And further to that, there is now evidence that the A380 is associated with luxury travel and passengers are not only aware that it is more comfortable than previous generations, they are also willing to pay a premium for it.
 
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Stitch
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RE: Future Of The A380?

Sat Apr 14, 2012 5:00 pm

Quoting solarflyer22 (Reply 37):
I'm surprised at the emphasis on this thread for "break even" when in my mind the real goal is to...make money!

Airbus is going to make plenty of money off the A380: from deliveries, from upgrades, from conversions, from maintenance/spares, etc.

And as PanAm1971 noted, the A380 program generated - and continues to generate - a lot of "good will" for the company and that does have a financial value, even if it can't explicitly be broken out in a spreadsheet.
 
IMissPiedmont
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RE: Future Of The A380?

Sat Apr 14, 2012 5:27 pm

If the breakeven point is 270 aircraft I can't see breakeven ever happening. When was the last order placed and how many firm orders/deliveries are there to date?
The day you stop learning is the day you should die.
 
brilondon
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RE: Future Of The A380?

Sat Apr 14, 2012 5:36 pm

I don't see much in the U.S. for the future of the A380. With no U.S. based airlines ordering the A380, and out side of the major airports of which there are only a hand full that will actually have the A380 flying to it, there is no real incentive to investing the millions of dollars that are required for such a small percentage of flights.

As for the A380 freighter version, I was told when I made that suggestion on here a few years ago that the A380 would need to have its floors strengthened to accommodate the weight of the containers. This would make it cost prohibitive at that time to have a freight only version. Were FX orders for a package freighter version or a pure freight version of the aircraft?

All in all, I would like to see more A380's flying in the world but today's economies just don't justify the aircraft and the attitude of the flying public in North America is for more frequency and less crowds. The A380 may not fit the bill for the next 10 to 15 years if ever.
Rush for ever; Yankees all the way!!
 
art
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RE: Future Of The A380?

Sat Apr 14, 2012 5:43 pm

Quoting SWALUV (Thread starter):
First Time Posting on the site. As I was browsing around, I came across this:

"The break-even for the A380 was initially supposed to be reached by selling 270 units, but due to the delays and the falling exchange rate of the US dollar, it increased to 420 units."

Welcome to a.net!

The figure of 420 (from Airbus) dates back a few years. As far as I know, 420 was the last figure Airbus gave. With the slower than anticipated ramp up in production, that figure could now be much higher.

Quoting SWALUV (Thread starter):
- With the rising cost of fuel prices, will we see any more orders for the A380?

I think we will see more orders for the A380 whether fuel rises in price or not.

Quoting SWALUV (Thread starter):
- Will we see a new version (maybe a NEO) of the A380?

I can see an NEO offered on an A389. Since a redesign + testing cost would be incurred using existing engines, why not go for the most efficient engines available, too, and charge an extra premium? I think that the larger and more expensive the A389 turned out to be in comparison with the A388, the less it would cannibalise A388 sales.
 
rwessel
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RE: Future Of The A380?

Sat Apr 14, 2012 5:45 pm

Quoting IMissPiedmont (Reply 40):
If the breakeven point is 270 aircraft I can't see breakeven ever happening. When was the last order placed and how many firm orders/deliveries are there to date?

There have been 253 firm orders, 72 or so have been delivered. There were 19 new firm orders last year.
 
SWALUV
Topic Author
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RE: Future Of The A380?

Sat Apr 14, 2012 5:47 pm

Quoting brilondon (Reply 41):
Quoting brilondon (Reply 41):
With no U.S. based airlines ordering the A380,

I heard a rumor that United is looking at the A380 from another thread.

Quoting ER757 (Reply 30):
Quoting ER757 (Reply 30):
Welcome to a.net by the way

Thanks
 
WingedMigrator
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RE: Future Of The A380?

Sat Apr 14, 2012 6:02 pm

Quoting yyzala (Reply 35):
I think the real question that needs to be asked is how many A380s will be sold beyond break even.

Break even is relevant before you launch a program, circa 2000. After that, you execute the program, however badly that may be. The decision to continue, at any given time, no longer has anything to do with breakeven; it is based solely on whether it is more profitable to continue than to stop. Sunk cost is sunk cost, and you can't unsink it.

From here on out, and for years to come, it will be more profitable for Airbus to build the next A380 than not to build it. Pondering breakeven numbers with the benefit of hindsight is an intellectual amusement that has nothing to do with the business at hand.
 
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Mortyman
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RE: Future Of The A380?

Sat Apr 14, 2012 6:37 pm

Quoting IMissPiedmont (Reply 40):
If the breakeven point is 270 aircraft I can't see breakeven ever happening. When was the last order placed and how many firm orders/deliveries are there to date?

They have 253 firm orders + 41 options. 72 Deliveries.
 
phxa340
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RE: Future Of The A380?

Sat Apr 14, 2012 6:59 pm

Quoting babybus (Reply 34):

As they say 'It takes an A380 to compete with an A380'

You mention this in pretty much every A380 , 787, A350, and 747-8i thread. I would say that many successful, profitable, and "prestigious" airlines would disagree with this statement.
 
Flighty
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RE: Future Of The A380?

Sat Apr 14, 2012 7:43 pm

Quoting WingedMigrator (Reply 45):
Pondering breakeven numbers with the benefit of hindsight is an intellectual amusement that has nothing to do with the business at hand.

Disagree. This was an active disagreement in 2000-2005 with passionate argument on both sides. It is important to highlight who was right and who was wrong, and what that says about equivalent cases, now and in the future.

They did not plan for a cascade of failures and delays in a very complex plan. In that sense, the program was approached unprofessionally. They took risks without accurately describing or understanding those risks. Or if they did, they kept it rather quiet.

Either way, a business can't sustainably survive based on totally wrong forecasts. My impression was, and is, that they just wanted to do the A380 because they wanted the biggest airliner. They had a pot of other people's money (company money) they could spend to entertain themselves "intellectually," as you also put it.

[Edited 2012-04-14 12:43:42]
 
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DarkSnowyNight
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RE: Future Of The A380?

Sat Apr 14, 2012 7:51 pm

Quoting Flighty (Reply 29):

That doesn't really affect the real accounting of the project's success, which we might do more accurately on a.net than Airbus is willing to do

Perhaps, but it is an accepted standard for OEMs to write down sunk costs. Boeing either has or will do this with the 787.
Be A Perfectionst, You're Nothing If You're Just Another; Something Material, This Isn't Personal...
 
by738
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RE: Future Of The A380?

Sat Apr 14, 2012 8:00 pm

Im in the negative camp, I cant see there being any large significant orders coming from a brand new customer.
 
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TheRedBaron
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RE: Future Of The A380?

Sat Apr 14, 2012 8:08 pm

Quoting Flighty (Reply 48):
They did not plan for a cascade of failures and delays in a very complex plan. In that sense, the program was approached unprofessionally. They took risks without accurately describing or understanding those risks. Or if they did, they kept it rather quiet.

DId Boeing planned the 787 delay debacle, fire and all the crap in the development stage? Did they approach the program unprofessionally?
DId they took risks blindly?

these are real questions for moronic statements...

Not to start a A vs B war here, but I guess some faults and miscalculations on the A380 progress were totally unforeseen, any person in a very complex program development understands that there are always things you never plan or anticipated, hence murphy´s law.

At this point Airbus knows how bad is the A380 program but they have a lot of orders to deliver and the future looks promising with the ever rising pax numbers, industry growth , limited airport expansion and fuel prices.

Remember the DC10 and the Tristar? perfectly good aircraft delivered in a huge crisis, and dire financial problems...both killed by newer AC with better economies, but in A380 that AC is alone in its own niche....no risk there at least for a decade.

Best Regards TRB
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