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seahawk
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 8:34 am

Who would be willing to invest into making A380 parts today? It is like making parts for a Ford T-Model.
 
mxaxai
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 8:36 am

FlyHappy wrote:
Waterbomber wrote:
Imo, what Airbus can do is to force suppliers to lower their prices or threaten to move things in-house.


and if they could wave a magic wand, and do that, there'd be no such thing as suppliers and subcontractors in the industry.
A380, everything built "in house"..... double the price.

how exactly does one "force" a supplier to reduce prices on a product with such an uncertain future? Do you think all the suppliers are as anxious to earn less (than likely already contracted for) to gamble on highly speculative future earnings as a.net members seem think they are?

I suppose if Airbus had a customer - e. g. BA - who was certain to buy at the right price, they could guarantee their suppliers some extra sales in exchange for a lower price. They could also agree upon preferential treatment for future sales of other, sucessful aircraft programmes, e. g. the A350 or A320, where Airbus has more pricing power than with the A380.

For the supplier, it becomes a question of "Should I sell at a lower price, or don't sell at all?".
 
FlyHappy
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 9:05 am

This oversimplification really needs to stop. Just because avgeeks want the A380 to continue, they've somehow lost their their collective heads.
Airbus is already building the A380 as cheaply as they can. FULL STOP. Any further meaningful reduction in the production cost can only come about thru additional massive investment (not gonna happen at this moment) or a massive order, the scale of which is impossible by any single airline, EK included.

you want a cheaper A380? send the plans, tooling, and some engineers to China - they'll get 'em built.
 
Waterbomber
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 9:54 am

Mxaxai has it right. Airbus has leverage over suppliers. Suppliers too don't make money if they are not reasonable in pricing.

But there is one more lever for Airbus and it's that a lot of young airframes are going to hit the scrapper. When that happens, suppliers will see their production collapse.
Heck, in theory Airbus could produce new parts without building their own parts. They could do so by buying select parts from scrapped aircraft and install them on new airframes after overhauling them.

Given how IAG is stuck in the dilemma of whether to buy second hand airframes and undergo an expensive refurbishment on an already older base airframe that is not to their desired specs, Or get brand new A380's to their specs at a high price, it may not be too crazy to think that Airbus could offer them the best of both worlds by combining a brand new airframe with systems and engines from scrapped aircraft...

This has many advantages in that it increases scrap value and thus resale value, and pushes suppliers to be aggressive on pricing for new parts.
After all, what does it matter to Airbus or an airline that the LRU sitting on the shelf and about to be fitted to a brand new aircraft is a brand new one or an overhauled one if it saves them both money?
 
bigjku
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 10:47 am

Slug71 wrote:
Matt6461 wrote:
Slug71 wrote:
Airbus is in the business of selling planes. Like any company in sales, you take any sale you can get!


I will buy your house for $1.
It's a sale you can get; you can't turn it down. DM for closing documents.


I wasn't selling a house. I'm also not in sales, but market sets the value, and I command a price. You don't tell me how much you'll take it from me though. I'll show you the door.
So that would be an A380 at the AGREED price between Airbus and BA. Even if that the sale price was half of list, or even less at a round $200 million, youre crazy if you would turn down a single order. Increasing the production rate by even 1or 2 a year is not going to hurt any more than the current dissolvable loss. So turning a single sale (at a realistic price) down, would be very foolish. $0 < $200 million. That's $200 million that could be used to study the feasibility of a NEO. Or pay/hire employees, pay the light bill, fund your next projects etc..


If the cost of production exceeds the sales price it most certainly isn’t more money to spend on a NEO or anything else. It’s less money.
 
LewisNEO
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:11 am

nry wrote:
N14AZ wrote:
LewisNEO wrote:
B757neo, sounds great btw, maybe an item for a new topic? ;-)

I don't know, it's always a risk to start a thread about a new topic that has never ever been discussed before... ;-)


Absolutely not, unless it includes discussion on fish hauling capacity....

:duck:


LOL How fishy ;-)
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scbriml
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:25 am

Matt6461 wrote:
By definition, loss-making production means you have no money left over - less than none actually - after you pay the suppliers and workers required to build the next A380.


It might be a problem if the A380 was the only plane Airbus built. But it isn't.
Time flies like an arrow. Fruit flies like a banana!
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Planesmart
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:41 am

scbriml wrote:
Matt6461 wrote:
By definition, loss-making production means you have no money left over - less than none actually - after you pay the suppliers and workers required to build the next A380.


It might be a problem if the A380 was the only plane Airbus built. But it isn't.

And tax treatment can soften the blow.
 
WIederling
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 12:01 pm

TC957 wrote:
BA should have a trip to Boeing's sales team and discuss getting 748i's.....that'll bring the A380 price down !


They probably made those moves already ... silently .. and Airbus didn't flinch?
Murphy is an optimist
 
RickNRoll
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 12:08 pm

seahawk wrote:
Who would be willing to invest into making A380 parts today? It is like making parts for a Ford T-Model.

Hyperbole much?
 
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seahawk
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 12:08 pm

RickNRoll wrote:
seahawk wrote:
Who would be willing to invest into making A380 parts today? It is like making parts for a Ford T-Model.

Hyperbole much?


No, it is a fact. Unless we are talking about universal parts or parts that can be made on existing machines, setting up a parts production for the A380 makes no sense. The supply lines have already been pressed to adjust for the 6 frames a year production rate and the backlog is limited, so there is no realistic way of regaining your investment.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 12:37 pm

seahawk wrote:
RickNRoll wrote:
seahawk wrote:
Who would be willing to invest into making A380 parts today? It is like making parts for a Ford T-Model.

Hyperbole much?


No, it is a fact.

Just for fun, I just checked if someone is still producing parts for the Ford T-Model... the answer seems to be, yes: https://www.modeltford.com/
But if they produce parts for six complete Ford T-Modells per year, I don't know ... ;-)
 
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seahawk
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 12:51 pm

As I said if you have to tools to make those parts, it can make sense, but if you do not and you need to buy tools and machines, the backlog is not big enough to even fully depreciate those new machines.
 
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SEPilot
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 1:36 pm

Seeing how BA’s main hub is probably the most slot-restricted airport in the world, if BA could NOT make good use of the A380 it would really be bad news for it.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 1:59 pm

SEPilot wrote:
Seeing how BA’s main hub is probably the most slot-restricted airport in the world, if BA could NOT make good use of the A380 it would really be bad news for it.

Would be interesting to know what future historians will write about this aspect in several decades. Hopefully not
“BA’s main hub was probably the most slot-restricted airport in the world, and BA would have made good use of the A380 but by the time the negotiations between BA’s CEO and Airbus came to an end (see for example what people discussed on the so called “internet” in 2018: viewtopic.php?f=3&t=1384197 , LHR had already two additional runways and BA ordered some C623s instead.
;-)
 
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par13del
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 2:23 pm

Waterbomber wrote:
Heck, in theory Airbus could produce new parts without building their own parts. They could do so by buying select parts from scrapped aircraft and install them on new airframes after overhauling them.

In theory, you also have parts certification which will affect how these parts are handled, overhaul and rebuild will most likely be the only option.
However, is the client going to be okay with new a/c with refurbished parts, I assume the price will be even lower than what is acceptable now, which is not moving the product.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 2:54 pm

Continuing building 380s makes EK and Singapore happy. Keeping the line open makes those at Airbus who may be working on the NEO happy. Suppose Airbus loses $1 Billion over the next ten years building those 380s. But closing the line, and then reopening it would cost $10 Billion, that would keep the beancounters happy. Maybe selling the odd 380s over the next ten years would cost another $1 Billion in losses, making the Airbus beancounters unhappy. Numbers are strictly as an example.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
goosebayguy
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 3:07 pm

Consider how EK is midway between Asia and Europe then look at how it uses its A380's on the LHR route 6 a day plus others to other UK airports. BA sits at a similar crossroad to the USA from Europe. so it should be able to pile A380's on the New York route etc. Yet it has failed to do this. Some will say it looks to provide lots of flights giving its business passengers choice. I suggest it should maintain the frequencies but pile A380's on. An aircraft which is popular with passengers. BA would grab market share from a lot of the US carriers and probably force some to counter with their own A380's. LHR slots are very limited and ek makes the best use of its slots BA should now do the same and gain an advantage.
 
Amiga500
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 4:04 pm

N14AZ wrote:
SEPilot wrote:
Seeing how BA’s main hub is probably the most slot-restricted airport in the world, if BA could NOT make good use of the A380 it would really be bad news for it.

Would be interesting to know what future historians will write about this aspect in several decades. Hopefully not
“BA’s main hub was probably the most slot-restricted airport in the world, and BA would have made good use of the A380 but by the time the negotiations between BA’s CEO and Airbus came to an end (see for example what people discussed on the so called “internet” in 2018: viewtopic.php?f=3&t=1384197 , LHR had already two additional runways and BA ordered some C623s instead.
;-)



Corrected that for you...

“BA’s main hub was probably the most slot-restricted airport in the world, and BA would have made good use of the A380 but by the time the negotiations between BA’s CEO and Airbus came to an end (many experts on the subject had split opinions, see the differences between even the most vaunted of aerospace influencers of the time on an early primitive version of virtualife: viewtopic.php?f=3&t=1384197 ), LHR had already two additional runways and BA ordered some C623s instead.


;)
 
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Polot
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 4:08 pm

goosebayguy wrote:
Consider how EK is midway between Asia and Europe then look at how it uses its A380's on the LHR route 6 a day plus others to other UK airports. BA sits at a similar crossroad to the USA from Europe. so it should be able to pile A380's on the New York route etc. Yet it has failed to do this. Some will say it looks to provide lots of flights giving its business passengers choice. I suggest it should maintain the frequencies but pile A380's on. An aircraft which is popular with passengers. BA would grab market share from a lot of the US carriers and probably force some to counter with their own A380's. LHR slots are very limited and ek makes the best use of its slots BA should now do the same and gain an advantage.

BA/AA are already by far the market share leaders on LHR-JFK. Adding A380 on the route would primarily be adding just a ton of Y capacity, they don’t have that much more premium capacity than the heavy J 747 used frequently on the route. Why would BA want to chase junk Y travelers only searching for the lowest price just for “market share?” A singular focus on market share above all else is actually what got the US carriers in so much trouble 10-15 years ago. It can easily happen to the Euro carriers too.

mjoelnir wrote:

I do not see this wave hitting the 747-8 even if that program is in a worse position. If Airbus is crazy, Boeing must be crazy too.

Why are you constantly bringing up Boeing/the 748? Nobody here is talking about that plane, only you. Stop trying to derail and shift the conversation because it makes you uncomfortable.
 
Waterbomber
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 4:42 pm

par13del wrote:
Waterbomber wrote:
Heck, in theory Airbus could produce new parts without building their own parts. They could do so by buying select parts from scrapped aircraft and install them on new airframes after overhauling them.

In theory, you also have parts certification which will affect how these parts are handled, overhaul and rebuild will most likely be the only option.
However, is the client going to be okay with new a/c with refurbished parts, I assume the price will be even lower than what is acceptable now, which is not moving the product.


I think that BA wouldn't mind having 12 year old engines and overhauled LRU's on a brand new airframe.
If you remove a working LRU that passes a self-test, in principle it's fit for use as-is. It doesn't hurt to send it by the shop and have it double-checked with deeper testing before tagging it with a Form 1. That's what an overhaul would look like on a typical 6-digit value LRU.
On something like coffee makers and ovens, it could consist of deep cleaning, decalcifying and swapping filters.
Economy class seats can simply be reused by changing the seat covers, cabin fittings also as long as they fit.

To previous repliers concerning the production of parts, you have to consider the fact that suppliers in aviation typically charge up to 10000% of production cost for new parts. The mark-ups are huge. The justification is that they are low-volume limited production parts purpose-made for the aircraft and need to match specs, pass certification. In reality they are just variants of previous designs that they supply for other aircraft.
For instance, a LRU selling for 200.000 USD wouldn't cost more than 10.000 USD to manufacture.
There is more in it for Airbus than the production for A380's. Once you acquire the technological savoir-faire, you can apply it to the next design, so the savings are not limited to the A380.
Even a set of 3 economy class seats can cost 5-digits, while they are relatively poorly made and should cost in the 3 digits to manufacture. Why do you think Boeing started that JV with Adient?

On a finished aircraft, all those supplier mark-ups add up to a huge amount and ties up Airbus' hands on pricing.
 
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seahawk
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 5:08 pm

Why would you not simply buy the used plane then?
 
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sergegva
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 7:56 pm

Airbus interest in selling 5-10 aircraft to BA at a loss (a small loss, per airbus) is evident: they need to increase A380's production rate, and the best way to do it is to sell A380 again to regain market confidence. A big order is more likely to occur if three major airlines (ANA, BA & EK) just bought some of them, rather than if there had been no order for 5 years.

Airbus cannot afford the luxury to wait for large orders only if it wants to relaunch the A380. If I'm a chinese airline and I see EK & BA buying new A380, I'll think "OK, they are betting on the A380 for the long term, so let's go too, we're not likely to find ourselves alone with this aircraft". That means more chance of PIPs, more chance of a NEO, more parts, etc.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either. But from the public relation point of view, man, what a success! They built one of the most incredible plane in history and made a name for themselves even in audiences that knew nothing about aviation. Ask anyone under 40yo what is currently the greatest aircraft and count how many answer "A380" !
 
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Polot
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 9:24 pm

sergegva wrote:
Airbus interest in selling 5-10 aircraft to BA at a loss (a small loss, per airbus) is evident: they need to increase A380's production rate, and the best way to do it is to sell A380 again to regain market confidence. A big order is more likely to occur if three major airlines (ANA, BA & EK) just bought some of them, rather than if there had been no order for 5 years.

Airbus cannot afford the luxury to wait for large orders only if it wants to relaunch the A380. If I'm a chinese airline and I see EK & BA buying new A380, I'll think "OK, they are betting on the A380 for the long term, so let's go too, we're not likely to find ourselves alone with this aircraft". That means more chance of PIPs, more chance of a NEO, more parts, etc.

Airbus has no near term interest in increasing the production rate. That is why they announced the 6/ year rate then immediately signed an order with EK for 20+16. The A380 had been too much of a distraction for Airbus. They don’t want to scramble every year trying to get the next years production filled. That just takes up to much of the their sales team time and resources. Scrambling is also not conducive to additional major orders at good prices (for Airbus). Airlines hold off because they know Airbus is desperate and that they could get a better deal of they wait just a teeny bit longer.

The reality is Airbus has given up on the current A380. Customers were not interested in the A380plus if the improvements were not retrofittable. Airbus doesn’t want to waste too much of their sales team time or engineering resources on the A380 for the time being. The focus now is on ramping up the A320neo and A350, and working on improved variants of everything but the A380. The A380 will be the red headed step childed built at low production almost exclusively for EK to minimize losses (less variablity and cost if building to one airline’s spec). This gives Airbus breathing room, and means Airbus can wait until the middle of next decade, after important things like the A320 plus plus and future of the A330neo are cleared up, to return their attention to the A380. The hope is by then the market would have grown enough, and tech improved enough, that by then Airbus can build a solid case for a new A380neo (and possible rewing) irrespective of the current A380’s market performance.

The A380 has been available for sale for about 18 years, and in service almost 11. Airlines are not going to suddenly “wake up” in regards to the current A380. They have all already made up their minds in regards to their views toward the aircraft and whether it fits in their fleet.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 9:58 pm

sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!
 
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sergegva
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 10:12 pm

7BOEING7 wrote:
sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Did Airbus really deliver 200 A380 at a loss?
 
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7BOEING7
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 10:55 pm

sergegva wrote:
7BOEING7 wrote:
sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Did Airbus really deliver 200 A380 at a loss?


From what has been discussed in the press and on here, they barely made a profit on the production in 2015 and after that the rate dropped and profitability became questionable. They delivered 27 airplanes in 2015 and they've delivered about 226 airplanes -- do the math. Conservatively you could probably say 190 if you want, makes no difference, it's in a deep, deep hole, getting deeper..
 
frmrCapCadet
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:12 pm

Point is fairly simple. You may have had to work at missing it. Airbus wants to keep EK happy, and it still has ambitions that mid next decade it will see its way clear to do a NEO.
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:46 pm

7BOEING7 wrote:
sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.
 
777PHX
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:50 pm

frmrCapCadet wrote:
Point is fairly simple. You may have had to work at missing it. Airbus wants to keep EK happy, and it still has ambitions that mid next decade it will see its way clear to do a NEO.


I dunno who you're talking (down) to, but I disagree. Airbus will not build a NEO if only EK is interested.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Wed Jul 04, 2018 11:55 pm

seahawk wrote:
Why would you not simply buy the used plane then?


Because retrofitting it costs more money than some of the aircraft in their fleet and with those costs might as well get new frames.
A350/CSeries = bae
 
FlyHappy
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:00 am

frmrCapCadet wrote:
Point is fairly simple. You may have had to work at missing it. Airbus wants to keep EK happy, and it still has ambitions that mid next decade it will see its way clear to do a NEO.


Its not quite that simple.
EK , on its own - is not enough. Not enough to support a NEO/rewing program in the future. That will just create more losses in the next decade.
Airbus needs more carriers to buy into the A380 ecosystem, sooner the better. But it must happen under financially responsible terms. EK has received the benefit of best possible pricing, repeatedly (and with good reason), but those same terms cannot be handed out to others, and the supply chain cannot be expected to "take the hit", so that EK and Airbus can, just maybe, have a NEO in the next decade.

The foundation for the program has to be built on solid commercial grounds.
The C-Series saga should be illuminating; misjudgment and fiscal irresponsibility has cost a proud company, and its own country, the ownership of technically brilliant engineering program - literally given away. Airbus is smarter than this. The program has to stop costing them so heavily.

If BA wants more badly enough, they'll need to pay more than they apparently want to right now; its not up to Airbus (much less their suppliers) to subsidize BA.
 
neutronstar73
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 1:52 am

OA940 wrote:
seahawk wrote:
Why would you not simply buy the used plane then?


Because retrofitting it costs more money than some of the aircraft in their fleet and with those costs might as well get new frames.


Yikes! I guess that makes more sense to buy a new plane then. It seems BA operates their A380s fairly well, so if I were Airbus, yes, I'd make BA pay a bit of a premium since retrofitting used aircraft is apparently prohibitively expensive. I think eventually, BA will knuckle under and pay the man (Airbus) and get their planes.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 1:54 am

Slug71 wrote:
7BOEING7 wrote:
sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.


Written off or taken up front they are still loses. $25 billion is pretty heavy and has affected the company.
 
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 8:33 am

7BOEING7 wrote:
Slug71 wrote:
7BOEING7 wrote:

You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.


Written off or taken up front they are still loses. $25 billion is pretty heavy and has affected the company.


Still lower than the current bill for the 787. More than 25 billion unrecovered development cost plus 28 billion deferred production losses.

What was the bill for the 747-8 development? It is clear that those costs will not be recovered and the deferred production losses on the 747-8 have been written off as unrecoverable.
 
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OA940
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 9:45 am

neutronstar73 wrote:
OA940 wrote:
seahawk wrote:
Why would you not simply buy the used plane then?


Because retrofitting it costs more money than some of the aircraft in their fleet and with those costs might as well get new frames.


Yikes! I guess that makes more sense to buy a new plane then. It seems BA operates their A380s fairly well, so if I were Airbus, yes, I'd make BA pay a bit of a premium since retrofitting used aircraft is apparently prohibitively expensive. I think eventually, BA will knuckle under and pay the man (Airbus) and get their planes.


Tbh the only reason these are so expensive is because there are so many seats. And if you look at both decks (but especially the upper deck), each airline has a wildly different config. Imagine getting an ex-EK aircraft and have to take out even the showers and stuff and readjust the walls and everything in addition to 500+ seats you have to buy and put on it, and then to operate that aircraft for just 10-15 years when new aircraft could last them 25.
A350/CSeries = bae
 
LupineChemist
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:03 am

Matt6461 wrote:
Strato2 wrote:
To basically claim Airbus should actively try to avoid selling Superjumbos is one of the craziest things that I've read here and it's not even original thinking but already made by one A380 troll about a decade ago.


The troll was right! Airbus has only lost money on the A380; cancelling this program a decade ago or at any time before or since would have been smart.

It's ridiculous for the (few remaining) A380 partisans to continue impugning the motives of A380 critics.
That'd be like the Trojans calling Cassandra a false prophet after the fall of Troy.
Sure it hurts that your dreams burned down but you're standing in the ashes and have to face reality at some point.


As mentioned elsewhere obviously profit = revenue - costs so taking a loss means the costs are higher than the revenue...so why continue?

As mentioned "costs" is not as straight forward as "cost to build an airplane". As mentioned elsewhere costs include material, labor and overhead. Now I'm not that involved with Airbus' accounting but my company also adds "amortization" of capital expenses as a line item cost and I can't imagine a major corporation like Airbus does it any differently. But unless you can figure out a way to undevelop the aircraft and get that money back, there's no way to recover the development costs regardless.

So that means if Airbus can sell higher than the marginal cost, ignoring the development amortization costs, it's still a smart move and will bring positive cash flows to the company. The sales team will have massive pressure to at least break even on the accounting measures, though.

Saying the 380 was a bad idea to develop does not mean it's a good idea to shut the program down now though since you can still make money on each plane while losing money on the project overall. Realistically, Airbus will have to take a one-time write down of that development cost which will be painful but overall pretty meaningless operationally at this point.

This is why P&L can be very different from cash flow and both are important.

And bringing it all back around, IAG knows the program is doomed and Airbus is desperate, so are just trying to wait them out until they agree to manufacture at those prices. I do suspect that they could use 10 more or so with a few being used at IB, but they are clearly in no hurry since creating scarcity at LHR just ups their yields.
 
mutu
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:24 am

I suspect the issue for Airbus is that the BA possible order just isn't big enough to make a difference. They appear to have settled on a production rate based around EK orders outstanding and that production rate satisfies both EK delivery time frames AND minimises production losses per frame.
An additional order for 6-8 frames would require either an immediate re-ramp up of the production line followed by a cutting back after say 2 years say or they can only trickle out a frame to BA once a year - which doesn't help BA who see a current need.
There is no doubt BA have found the network for the 380 which is delivering real economies for them but wont hang around for years waiting. CPT needs 2 frames now.
And if BA finds the 787-10 and A350 to be "game changers" that need could be satisfied somehow else.
There are plenty of slot sitting rotations in the BA programme waiting for the right frames to open new routes/ungauge established routes.
 
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par13del
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:32 am

mjoelnir wrote:
Still lower than the current bill for the 787. More than 25 billion unrecovered development cost plus 28 billion deferred production losses.

How many A380's have not been sold because of the massive deferred cost of the 787, are airlines refusing to purchase A380's because it will assist Boeing in its recouping its deferred cost on the 787?

mjoelnir wrote:
What was the bill for the 747-8 development? It is clear that those costs will not be recovered and the deferred production losses on the 747-8 have been written off as unrecoverable.

[/quote]
How is Boeing writing off cost for the 748 different than Airbus writing off cost for the A380, has Boeing done a partial write off?

Second question as the first, are airlines not buying A380's because of the benefit to Boeing on the 748?

EK is the largest A380 operator, they are just getting on the 787 bandwagon and even that is still a couple years away, so still more losses for Boeing from a loyal A380 operator.
 
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glideslope
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:35 am

seahawk wrote:
Who would be willing to invest into making A380 parts today? It is like making parts for a Ford T-Model.


That's a bit harsh, eh? More like a 48 Ford Woodie Wagon. A couple more inches abreast, and you can set up a makeshift lounge out the back. ;)
To know your Enemy, you must become your Enemy.” Sun Tzu
 
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Momo1435
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:54 am

mjoelnir wrote:
7BOEING7 wrote:
Slug71 wrote:

Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.


Written off or taken up front they are still loses. $25 billion is pretty heavy and has affected the company.


Still lower than the current bill for the 787. More than 25 billion unrecovered development cost plus 28 billion deferred production losses.

What was the bill for the 747-8 development? It is clear that those costs will not be recovered and the deferred production losses on the 747-8 have been written off as unrecoverable.

Did the losses Boeing incurred on the 747-8 and 787 have any impact on the losses of the A380 program?

Or is this just a kindergarten argument that Airbus can only have issues if Boeing also has some?

The losses on the A380 program had an large impact on Airbus, but not large enough to become dangerously problematic. Always keep in mind that there are not that many companies worldwide that can survive a $25 billion loss on one of their major product lines. Instead of always including Boeing in the argument you should better be happy that the competition is just Boeing and not a larger number of other competitors. There would be much less room for such losses for both Airbus and Boeing if airlines had more choice then just these 2 manufactures.
 
brindabella
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 11:55 am

Slug71 wrote:
7BOEING7 wrote:
sergegva wrote:
.

Finally, I'm under the impression that some people here underestimate the overall impact of the A380 for Airbus. From a strictly financial point of view, the programme may not have brought them any money. But until proven otherwise, it did not cause heavy losses either.


You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.


:checkmark:

Exactly analogous to the (infamous) 787 "deferred cost" brouhaha.

In both cases the (enormous) debts have in fact been extinguished ages ago.

The rest is Accountants shuffling numbers from one Spreadsheet cell to another.

cheers
Billy
 
LupineChemist
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:10 pm

mutu wrote:
I suspect the issue for Airbus is that the BA possible order just isn't big enough to make a difference. They appear to have settled on a production rate based around EK orders outstanding and that production rate satisfies both EK delivery time frames AND minimises production losses per frame.
An additional order for 6-8 frames would require either an immediate re-ramp up of the production line followed by a cutting back after say 2 years say or they can only trickle out a frame to BA once a year - which doesn't help BA who see a current need.
There is no doubt BA have found the network for the 380 which is delivering real economies for them but wont hang around for years waiting. CPT needs 2 frames now.
And if BA finds the 787-10 and A350 to be "game changers" that need could be satisfied somehow else.
There are plenty of slot sitting rotations in the BA programme waiting for the right frames to open new routes/ungauge established routes.


Isn't it generally agreed that the EK order is largely to just keep the line going until they need to decide on doubling down and start replacing the whole 380 fleet or start downsizing? If that is truly the case, I'm sure EK would be happy to swap some production slots in order to kick that can a bit further down the road.
 
SC430
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:27 pm

brindabella wrote:
Slug71 wrote:
7BOEING7 wrote:

You're calling $20-25 billion (conservatively) in development costs plus another few billion in losses on the almost 200 airplanes they delivered at a loss not a heavy loss for Airbus? Whoa!!!


Most of the development costs were paid up front, most of the rest (if not all of it) were written off. The losses Airbus currently incurs, are production losses.


:checkmark:

Exactly analogous to the (infamous) 787 "deferred cost" brouhaha.

In both cases the (enormous) debts have in fact been extinguished ages ago.

The rest is Accountants shuffling numbers from one Spreadsheet cell to another.

cheers


In the case of the 787 you would be 100% wrong. With block accounting the development cost are factored in to the first 1,300 frames delivered. If the first 1,300 frames do not generate enough revenue to cover those factored costs. Boeing either incurs a loss at that time or may increase the accounting block if the number is reasonable. It is amazing to me that after thousand of posts on this topic some still refuse to understand a simple concept.

The big difference between the two programs - one was a colossal failure and the other is setting sales and delivery records every day.

The A380 has done very little to change the way people fly today. The 787 and A350 have created hundreds of city pairs that did no exist prior to their availability. With the out the 787 Airbus dosen't build the A350, so double kudos to Boeing.
 
travelin man
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:35 pm

I feel that BA’s recent network decisions (adding smaller cities such as AUS, BNA, MSY, etc) point to a need for 787/350 type of aircraft, not A380s.
 
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N14AZ
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:40 pm

SC430 wrote:
The 787 and A350 have created hundreds of city pairs that did no exist prior to their availability.

Hundreds?!?! :eek: :eek:

I am curious to see that list. Maybe you can use this format? :blush:

1.
2.
3.
4.
5.
.....
.....
....
.....
279.
.....
....
317
 
brindabella
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:41 pm

FlyHappy wrote:
frmrCapCadet wrote:
Point is fairly simple. You may have had to work at missing it. Airbus wants to keep EK happy, and it still has ambitions that mid next decade it will see its way clear to do a NEO.


Its not quite that simple.
EK , on its own - is not enough. Not enough to support a NEO/rewing program in the future. That will just create more losses in the next decade.
Airbus needs more carriers to buy into the A380 ecosystem, sooner the better. But it must happen under financially responsible terms. EK has received the benefit of best possible pricing, repeatedly (and with good reason), but those same terms cannot be handed out to others, and the supply chain cannot be expected to "take the hit", so that EK and Airbus can, just maybe, have a NEO in the next decade.

The foundation for the program has to be built on solid commercial grounds.
The C-Series saga should be illuminating; misjudgment and fiscal irresponsibility has cost a proud company, and its own country, the ownership of technically brilliant engineering program - literally given away. Airbus is smarter than this. The program has to stop costing them so heavily.

If BA wants more badly enough, they'll need to pay more than they apparently want to right now; its not up to Airbus (much less their suppliers) to subsidize BA.


:checkmark:

Very lucid.

Planesmart, as ever, has recently added another dimension which greatly expands the case - the engine OEM.

Right now RR is in absolutely no shape to do aggressive deals which contain any risk whatsoever.

cheers

* to all 380neo enthusiasts
, a caution:
Even if Airbus gets a rush of enthusiasm to launch it (that enthusiasm, just like the last time, coming from somewhere that we won't discuss in polite company),
the engine OEM is likely to be very, very hard to get on board.
Very, very, VERY hard to get on board.
Billy
 
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Momo1435
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 12:51 pm

travelin man wrote:
I feel that BA’s recent network decisions (adding smaller cities such as AUS, BNA, MSY, etc) point to a need for 787/350 type of aircraft, not A380s.

That's also to make use of the 787s that continue to join the fleet. If they would order more A380s you would see more changes in the use of aircraft within the network to facilitate the new A380s. IAG has pretty much said this when mr. Walsh commented that more A380s could easily be absorbed into the BA network. But for some reason, he says acquisition costs, it hasn't resulted in a follow-up order.
 
LupineChemist
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 1:03 pm

SC430 wrote:

The A380 has done very little to change the way people fly today. The 787 and A350 have created hundreds of city pairs that did no exist prior to their availability. With the out the 787 Airbus dosen't build the A350, so double kudos to Boeing.


I disagree that the 380 hasn't changed the way people fly. Emirates fundamentally changed a huge amount of global connectivity over the last 15 years and the 380 was a huge part of that.

But that plus the other uses wasn't enough to make the 380 a good idea in the first place. But again, that has nothing to do with if it's viable going forward.
 
frmrCapCadet
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Re: Airbus Is in Talks With British Airways on More A380s

Thu Jul 05, 2018 1:32 pm

Concur with Flyhappy and Brindabella - but want to emphasize that were the 380 to stop production for even 5 years restarting likely would not happen.
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