BA says Airbus jet not viable: Won't order A380
Financial Post - Canada; Feb 22, 2001
BY ANDREA ROTHMAN
GENEVA - British Airways PLC said it has decided against buying Airbus Industrie's new A380 because it thinks there are too few routes that require very large jets and because the aircraft would have a low resale value.
BA spent several months studying the possible uses for the 550-seat plane before concluding it wasn't viable, said Dick Wyatt, head of fleet planning for Europe's largest airline.
"We are not ordering the A380," Mr. Wyatt told aircraft finance bankers at a conference. "There's very few routes that suit large aircraft and we believe that markets will continue to fragment."
The decision is a setback for the European aircraft maker, which has included BA on its list of potential A380 customers.
"No question it's a blow to Airbus," said Doug McVitie, managing director of Arran Aersopace, a consulting company in Scotland. "But the program won't be affected because Airbus already has put together a launch base with blue-chip customers like Singapore Airlines, so other airlines are bound to follow."
Virgin Atlantic, Air France, Qantas, Emirates Airlines, FedEx Corp. and International Lease Finance Corp. have agreed, along with Singapore Air, to buy a total of 60 superjumbos. Airbus is negotiating with Lufthansa AG and others for further orders for the plane, which cost US$12-billion to develop.
Airbus declined to comment.
BA has been reducing the size of its planes, moving from Boeing Co.'s 747s to smaller 777s, so it can concentrate on higher-paying business travellers and stop carrying as many economy-class passengers. But the congested airports in many Asian cities and at its Heathrow International hub made it necessary to consider the A380.
Mr. Wyatt said BA looked at using the plane on Singapore-to-London routes, where it competes against Singapore Air(It's Airlines!), which has ordered as many as 25 A380s. But under the scenarios put together by a group of BA managers, the numbers just didn't work. (Ah! Shame, pity!)
BA also would have been leery of making an investment six years before the expected entry of the plane into service, he said, because of the "rapidly changing" airline environment.
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