a380900
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Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 1:01 am

We can assume that most airlines that have ordered the A380 are making money with it. "They" say customers like it and the biggest airlines have the capacity and routes to use this aircraft.

But is Emirates making money on every single one of their A380s? Is that too much airplane for smaller players that ordered it for prestige purposes? In a word, where are today the most profitable and least profitable A380 likely to be?

Also what would be the situation if there were 250 of them as the original production plan intended (roughly) by now?
 
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Stitch
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 1:13 am

TG and CZ have both noted they have struggled with profitability operating the A380, but then both at the time were using them on domestic routes which is not what Airbus had in mind when they developed it.  

TG has been delayed in putting the A380 into service on BKK-LHR due to the wing rib modifications and CZ has just started CAN-LAX with CAN-SYD planned for the fall.
 
RyanairGuru
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 1:40 am

Quoting Stitch (Reply 1):
TG and CZ have both noted they have struggled with profitability operating the A380

CZ are in a bit of a bind, but I expect that they will eventually smooth things over with the powers-that-be in Beijing.

TG and MH are interesting.

MH have suffered from Air Asia X entering the Australian market, as it has resulted in both diluted yields and maxed out Malaysia-Australia capacity. They therefore can't fly the A380 to SYD as originally planned, but seem to be doing better than expected nonetheless. "MH" and "profit" aren't exactly synonumous terms at the best of times, but I am cautiously optimistic that the A380 will work out for them.

I don't know enough about TG to comment.

As for the "big 5" (SQ, EK, QF, LH, AF) I have no reason not to believe that it is a profit machine for them. Yes, including EK. While some ANetters get hung up on EK flying the A380 several times a day to BKK, they wouldn't be doing it unless it made money. That applies for every current EK A380 destination. There are plenty of markets in the EK system that are on the waiting list for A380 service, and EK won't be shy to yank an under-performing route to shift another up the list (see JFK in 2008)
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davidho1985
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 8:17 am

I remember CZ lost RMB100M in the first year of A380 service.
 
giblets
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 9:14 am

Presumably any airline losing money with the type would have to increase fares, or would have to swap to a smaller type.
Either way it is a really difficult thing to work out, as no airline reveals it's operating costs, especially not per type. This would have to be worked out per route also. I can imagine it being a lot tighter on certain well fought over routes.
 
jfk777
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 1:29 pm

Quoting davidho1985 (Reply 3):
I remember CZ lost RMB100M in the first year of A380 service.

Flying to Peking and Shanghai does not make for profitable A380 operations for China Southern. China Southern now flies it to LAX and this fall to Sydney, two long haul routes for which it was designed.
 
pnwtraveler
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 2:29 pm

A more accurate way of looking at the performance of the A380 is how many airlines are making more money or less money using the aircraft than previous aircraft. Or is an airline losing less money or more money using the aircraft. In other words is the airline better off or worse overall using the airframe versus another scenario. I suspect with their much lower corporate cost structures EK has a much lower number of seats needed to be filled to turn a profit than other airlines in other countries with much different tax, labour and other overhead costs. I think on of the keys is year round utilization and not having periods where the aircraft are flying part full. At what point for example does a part full A380 cost more than a totally full 777 that flies at the peak of its profitablity.
 
Rdh3e
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 2:35 pm

Quoting giblets (Reply 4):
Either way it is a really difficult thing to work out, as no airline reveals it's operating costs, especially not per type

Too bad no US operators have them, the do reveal the operating costs by model as you can see in this other thread:

US Airline Aircraft Operating Cost Report (by LAXintl Jul 17 2013 in Civil Aviation)
 
delta88
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 4:02 pm

Well maybe as Airports expand and grow to be able to handle A380 sized aircraft, possibly airlines could expand their A380 routes. dont forget there isnt all that many airports in the world that can handle A380s. Boston for example can handle just one. But we shall see. Personally if the airline isnt making money with the aircraft, either fare changes occur, or they will change amenities on board.
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n729pa
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 4:36 pm

BA....'cos it won't let anyone fly on it yet!!   
 
delimit
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 4:44 pm

I don't think this is really an answerable question without fairly detailed (and usually confidential) information from the airlines. Too many other things play into profit and loss.
 
nethkt
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RE: Any Airline Presently Losing Money With The A380?

Tue Jul 23, 2013 5:50 pm

Quoting delimit (Reply 10):
I don't think this is really an answerable question without fairly detailed (and usually confidential) information from the airlines. Too many other things play into profit and loss.

Totally agree. Airlines won't release such confidential information like this anywhere.
Even if we think they hinted somehow, the truth is, you'll never know.
As long as airlines can sell tickets filling seats and reduces cost, they will find a way to make money of this mother whale.
Let's just blame it on yields.
 
racercoup
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 12:10 pm

The profitable A380 route of today may not be tomorrow. As more 787 and 350 types are delivered city pairing will expand. In some case this will affect load factors on hub to hub flights. Obviously the bigger the aircraft the more vulnerable it is to competative market forces.

Larger planes are great when load factors are high but even EK with dozens of whale jets may end up in 10 years or so having difficulty finding enough profitable routes.
 
Cerecl
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 12:58 pm

Quoting racercoup (Reply 12):
As more 787 and 350 types are delivered city pairing will expand. In some case this will affect load factors on hub to hub flights.

This goes both ways. One cannot assume hub to hub traffic will remain static. The situation is, while P2P (not much evidence yet) or P2H will obviously grow, so will H2H, today's 77W route may be tomorrow's A380 routes. The hubs did not become hubs out of nowhere.


[Edited 2013-07-24 05:59:40]
 
racercoup
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 1:23 pm

Quoting cerecl (Reply 13):
This goes both ways. One cannot assume hub to hub traffic will remain static. The situation is, while P2P (not much evidence yet) or P2H will obviously grow, so will H2H, today's 77W route may be tomorrow's A380 routes. The hubs did not become hubs out of nowhere.

I would think the sheer numbers of twin aisle aircraft that will be delivered in the next decade will create a much larger number of P2P routes created. This does not favor VLA
 
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zeke
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 1:42 pm

Quoting RDH3E (Reply 7):
Too bad no US operators have them, the do reveal the operating costs by model as you can see in this other thread:

Form 41 data cannot be used like that, it is not an apples to apples comparison. It is designed to be used to measure airline productivity, hence the reason why different airlines operating the same type have different operating costs, some are more productive/efficient than others.
We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
 
doug_or
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 2:38 pm

Quoting jfk777 (Reply 5):
Flying to Peking and Shanghai does not make for profitable A380 operations for China Southern. China Southern now flies it to LAX and this fall to Sydney, two long haul routes for which it was designed.
Quoting Stitch (Reply 1):
CZ has just started AND OLD: Guangzhou - Baiyun (CAN / ZGGG) (closed), China">CAN-LAX with AND OLD: Guangzhou - Baiyun (CAN / ZGGG) (closed), China">CAN-SYD planned for the fall.

At least from what I've read on this site CZ was suffering from low yields AND low loads doing AND OLD: Guangzhou - Baiyun (CAN / ZGGG) (closed), China">CAN-LAX with a 777. If that is true then the up-gauge must be a bloodbath.
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PlaneAdmirer
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 2:50 pm

Here is another thought on whether or not the A380 makes money for its operators: Do airlines that operate it add more of them? A lot of airlines have topped off their A330 and 777 orders and some have added to 787 orders.

The answer for EK is yes. Will others?
 
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zeke
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 3:06 pm

Quoting planeadmirer (Reply 17):
The answer for EK is yes. Will others?

Singapore, Lufthansa, Korean, Eithad, Air France, and Qantas also have.
We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
 
stylo777
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 3:41 pm

I'm looking at this differently. A DXB-BKK route may not be profitable; in fact, maybe none of the A380 routes are profitable at all. The question is how much they contribute to the network in terms of pax numbers and overall yield. Contribution margin is the magic word.
 
flyhigh@tom
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RE: Any Airline Presently Losing Money With The A380?

Wed Jul 24, 2013 4:46 pm

Quoting A380900 (Thread starter):
Any Airline Presently Losing Money With The A380?

talk about glass half empty...could also be any airline presently making profits with the A380?  

...but seriously with a carrier like EK..it might not be the point to point flight with the 380 but the way the 380 fits into their network.
 
m404
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RE: Any Airline Presently Losing Money With The A380?

Thu Jul 25, 2013 4:02 am

This might be revealing about individual 380 operators.



http://www.forbes.com/sites/tedreed/...take-a380-deliveries-analyst-says/

About ten paragraphs down it mentions only two carriers may be making it work.
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RyanairGuru
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RE: Any Airline Presently Losing Money With The A380?

Thu Jul 25, 2013 4:27 am

Quoting m404 (Reply 21):

This might be revealing about individual 380 operators.



http://www.forbes.com/sites/tedreed/...take-a380-deliveries-analyst-says/

About ten paragraphs down it mentions only two carriers may be making it work.

I'm sorry, but that's not actually what its saying

Quoting Forbes:
Among the publicly-traded A380 operators, he said, “only China Southern and Lufthansa have a positive ROIC – WACC gap

By your reasoning, CZ are making money with the A380. We know that isn't true. What they are looking at there is the entire fleet, and look at the cost of capital of buying [by my reading] all of their aircraft, not just the A380.

Also, it excludes both EK and SQ, who have very low capital costs, and should realise pretty decent ROIC.

Further, while Qantas is a bit of a mess, their A380 routes to LAX and LHR are profitable. I'm not sure how they account for the cost of capital, but they do print black ink on flying the A380.
Worked Hard, Flew Right
 
Cerecl
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RE: Any Airline Presently Losing Money With The A380?

Thu Jul 25, 2013 7:16 am

Quoting racercoup (Reply 14):
I would think the sheer numbers of twin aisle aircraft that will be delivered in the next decade will create a much larger number of P2P routes created.

Most of these aircrafts will be for replacement of last generation aircrafts like 767, some 777, A340 and some 330s. We have seen only a handful of new P2H routes with the introduction of 787, let alone P2P. The current market is very much in for larger aircrafts which again does not argue for a mostly P2P or P2H use for these new aircrafts.

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