musman9853
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 2:51 pm

EChid wrote:
ScottB wrote:
But really there's only one aspect of the luxury branding which would be unique to the A380, and that's the upper deck. Everything else you cite can be implemented on the 777 or A350 or 787. Heck, we even see suites on the A321. Even if A380 production were to cease tomorrow, EK would still have decades of life left in the A380 fleet -- a very long time to promote every other aspect of luxury they offer. In the end, their brand is Emirates, not A380, and they should promote the brand they control.


I would argue that right now Emirates is very much the A380, and intentionally. You're right otherwise though, but my argument wasn't that EK can't ever shift their marketing, just that there has to be a consideration made for the value that their current product offers.

As for showers and such, several people have stated that its possible on A350s and 77s. So then, why has no one done it? EK is rolling out great new 77 products, so why not that as well? It would make their product much more consistent. But I think if they did, would start knocking CASM down to some ugly figures that might be uncomfortably close to A380 numbers.



does emirates even care about the showers and stuff etc? EY has shown that those kinds of uberluxury things don't really work out. Keep in mind by the time the last ek 1380 comes off the production line in say 2023, they'd have started getting thier 78s and 777xs. theres plenty of time for emirates to emphasize other parts of thier airline beyond a380.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 3:18 pm

I would say this A380 deal is void though.
We're all talking about the effect this has on the A380, but this deal still hinges on the 787 power plant deal. EK still has to deal with RR or GE there. So any sour grapes will spill over to the 787 deal.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 3:19 pm

Matt6461 wrote:
IMO the 20+16 deal showed that EK is somewhat desperate to keep the A380 alive. STC is now looking at 2030 for a transfer to DWC and even that seems doubtful. So if EK wants to grow or just maintain its scale it absolutely needs the A380.

Yes. I think after STC's demands for "copper bottomed guarantees" at PAS, Leahy threw it back at STC in early January by stating the A380 line would close without an EK order ( ref: A380 line faces closure without Emirates order: Leahy ) and STC had to cobble together the engine-less deal just to prevent Airbus from walking away from the A380.

Matt6461 wrote:
It would seem strange to me if airliner sales contracts were drafted in such a way that any delay-inducing holdup with third parties (i.e. engine OEM) would emancipate the parties. That would invite strategic delay by a buyer who had second thoughts.
Were I drafting these sales contracts, there'd be a section setting forth what happens if third-party issues make delivery on the envisioned terms impractical. Liquidated damages to the airframe OEM, for example, on top of delayed persistence of all obligations under the contract.

Yes, it'd be interesting to know the contractual obligations. All the press on the 20+16 deal said no engine deal was in place. No one ever discussed what would happen if EK could not come to terms on an engine deal.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 3:47 pm

Matt6461 wrote:
Revelation wrote:
You don't seem to be considering how much money they will be giving away by flying A380s while their competitors fly A350-1000/777-9.


A380 is worse on cash operating costs than the big new twins but basically even when acquisition cost comes in.
A380 gets you ~52% more capacity than 779 for maybe 15% higher price. That's a sucky deal for Airbus of course - and explains why they keep losing money here - but it's the only thing makes the A380 remotely attractive.

IMO the 20+16 deal showed that EK is somewhat desperate to keep the A380 alive. STC is now looking at 2030 for a transfer to DWC and even that seems doubtful. So if EK wants to grow or just maintain its scale it absolutely needs the A380.

An EK that no longer has an intrinsic fleet-efficiency advantage (as it did/does with A380/77W versus older competition) is still an airline with an intrinsic labor cost advantage and tremendous brand value and network momentum.

There's of course some operating efficiency hit that even EK can't take to maintain its scale, but I'll be surprised if the margin for that hit exceeds the minuscule fuel burn figures usually offered by a PIP. I'd guess EK and RR find a way to work this out - EK is under the gun here, not RR and/or EA/GE/PW.

Lightsaber wrote:
This order is now void.


What you makes you so seemingly sure that the contract has been breached? Is it a surmise from the long-lead items or an inference from what has been reported?

It would seem strange to me if airliner sales contracts were drafted in such a way that any delay-inducing holdup with third parties (i.e. engine OEM) would emancipate the parties. That would invite strategic delay by a buyer who had second thoughts.
Were I drafting these sales contracts, there'd be a section setting forth what happens if third-party issues make delivery on the envisioned terms impractical. Liquidated damages to the airframe OEM, for example, on top of delayed persistence of all obligations under the contract.

But I'm just asking because I don't have deep knowledge here.

Please read the OP link:
The companies have missed a deadline to select the engines, possibly delaying first delivery in 2020 -- and even threatening the deal outright.
Technically, that means the order wasn't firmed in the required timeline. Thus any party may restart negotiations.

It is typical to have engine selection clauses for maximum price, fuel burn, weight, and maintenance costs. No airline would sign without those terms. Since RR is not meeting fuel burn promise and EA promised worse fuel burn, EK may do what they want. So may RR and EK.

It is too late to have engine casings, rotors, and shafts plus landing gear bays, and landing gear, avionics, and the wingbox and wings on time unless someone is producing at risk. Since one can only deliver an aircraft with all of the MEL parts... The 2020 and 2021 deliveries must be reduced.

There might be some all penalties to EK. But as of now, no competent airline would be held to the contract. Missing performance allows for an easy out and the A388 cannot meet performance promises on any available engine (payload at range). Rumor is a 2% miss which is a loss of almost 200nm of still air range for a given payload.

EngineIEMs are risk sharing partners for a reason, they are far more than a 3rd party vendor. Numerous aircraft orders in the past have been voided on engine performance misses. Airlines simply cannot afford the huge costs of performance misses.
PW4098
PW6000
PW4175 (everyone who switched went to RR, but on a new delivery timeline).
PW1100G (QR)
RB211
GE90 (original, not the -115).

If the item is required for service...

Heck, QR is famous for refusing delivery on carpet!!! Airlines need the OEM's help on late parts.

Airbus must deliver a system with the required performance. If they are able to do wingtips that maintain weight and fit in the box, that would have satisfied the contract. But a prove it to me by this date clause was violated. EK may walk. They may renegotiate. All depends on the 779.

With the poor resale market for A380s, EK just might buy out leases to keep old airframes. Technically, RR has breached contract to both EK and Airbus. Due to other issues and PIPs required to sell high volume issues...

Seriously, GE has high turbine inlet guide vanes, panels, and stators CMC for the GE9x. Next step is stage 2 turbine blades (1st stage undergo the most extreme conditions, so will be the last CMC part). Both Pratt and RR are in reaction mode to this game changing technology.

Combined with variable cooling for the turbine (less cooling in cruise to save a few percent), GE has a combination that does more than the GTF. :faint: As a launch customer, EK has access to a huge amount if 777X data (engine ground test, part and assembly weight versus estimates). Everything I'm hearing about the GE9x leads me to conclude it is truly the next generation of engine.

What I do not know is weight. Every estimate is for a wing weighing more than I think it will weight...

Now for that tech on 797 engines.... :cloudnine:
Ok, I digress and know they must be with proven technology. Sigh....

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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 3:56 pm

Revelation wrote:
STC had to cobble together the engine-less deal just to prevent Airbus from walking away from the A380.


Gotta say it's a weird feeling knowing that the program could be ended soon, given my role on this forum as one of the most vocal A380 critics (with subtleties to that view of course).
My immediate response has been, "God I hope not."
From a purely selfish perspective, my argument that the plane isn't a good product doesn't need evidence beyond its single customer and loss-making, low production rate. My side won that argument; program cancellation is overkill for the narrow - and trivial - purposes of A.net battles.
In the past I've said that the sooner the A380 dies, the sooner we'll see a better VLA replacement. I've reconsidered.
It's likely going to take some modicum of A380 success for the VLA sector to be reborn; an A380NEO offers at least a glimmer of hope.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 4:03 pm

I suspect other airlines would be even less inclined to order the A380 if the end result is keeping the line open, which clearly benefits EK.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 4:03 pm

musman9853 wrote:
EChid wrote:
ScottB wrote:
But really there's only one aspect of the luxury branding which would be unique to the A380, and that's the upper deck. Everything else you cite can be implemented on the 777 or A350 or 787. Heck, we even see suites on the A321. Even if A380 production were to cease tomorrow, EK would still have decades of life left in the A380 fleet -- a very long time to promote every other aspect of luxury they offer. In the end, their brand is Emirates, not A380, and they should promote the brand they control.


I would argue that right now Emirates is very much the A380, and intentionally. You're right otherwise though, but my argument wasn't that EK can't ever shift their marketing, just that there has to be a consideration made for the value that their current product offers.

As for showers and such, several people have stated that its possible on A350s and 77s. So then, why has no one done it? EK is rolling out great new 77 products, so why not that as well? It would make their product much more consistent. But I think if they did, would start knocking CASM down to some ugly figures that might be uncomfortably close to A380 numbers.



does emirates even care about the showers and stuff etc? EY has shown that those kinds of uberluxury things don't really work out. Keep in mind by the time the last ek 1380 comes off the production line in say 2023, they'd have started getting thier 78s and 777xs. theres plenty of time for emirates to emphasize other parts of thier airline beyond a380.


Emirates absolutely cares about showers, since they base a lot of their advirtising on their existance (see the Jennifer Aniston ads of a few years ago). Anecdotally, I've spoken to multiple people this year about flying and described a few of my flights (on TG, ANA, and OZ) in First. The most common question: "Did it have a shower too?!" It's all they care about from an outsiders point of view.

EY didn't demonstrate that uber luxury doesn't work, they demonstrated that overexpansion and massive investments in dying airlines doesn't work. Their A380 has garnered a tremendous amount of attention and positive PR for an airline that struggles for either alongside Emirates. People think of Etihad and they think 'apartment in the sky' and that's an extremely important thing when there is otherwise no reason to chose them over their competitors.

EY may regret the A380 from a cost perspective, but they certainly don't as a stunning marketing tool.

And, as I've said, my argument isn't that either company can't shift away from the A380 as key aspect of their image...but that shift will come at a cost and that cost will need to be considered as they make their decision.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 4:09 pm

Lightsaber wrote:
But a prove it to me by this date clause was violated. EK may walk.


Thanks for the insights.
I just can't imagine EK walking away from the A380, even for a 2% fuel miss.
What about from the other side?: Airbus wanting to void the contract.
With new management coming on, I could see a move to slough off the A380 liability.

Lightsaber wrote:
Ok, I digress


Your digressions are most welcome.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 7:26 pm

RR may have decided to bear whatever penalties they must pay EK rather than spend money and commit people to fixing the issue with the first batch of 200 engines EK has bought.

If that is the case, they would not be offering the same promises on a new batch of 80 + 72.

EK no doubt wants all promises met across both batches.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 7:34 pm

I think the engine OEMs see no future for the engines they make for the A380. And I think the new management at Airbus would probably like the plane killed before they take control. And to be honest I think it would be lifting a big burden on the sales team, when the A380 is finally dead, while opening new options for the engineers, like a A350-1100.

In the end the hall space the A380 line uses is probably the most valuable part of the whole project, but it could be put to much better use. If they end the production by the end of 2020, they could have a new A320 line running by 2023 and that line could be most useful for introducing new versions of that line.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 8:19 pm

lightsaber wrote:
It is too late to have engine casings, rotors, and shafts plus landing gear bays, and landing gear, avionics, and the wingbox and wings on time unless someone is producing at risk. Since one can only deliver an aircraft with all of the MEL parts... The 2020 and 2021 deliveries must be reduced.


My guess is that they're still OK for production for 2020 and at least 1H 2021. The delivery rate will drop to eight next year and six for 2020 under the existing plan. 3 of the 2019-onward deliveries will be the ANA aircraft and I'd estimate there are 3 deliveries remaining for EK this year. That leaves, if we delete the EK 20+16 order, 21 aircraft for delivery in 2019 and beyond. Fourteen would be delivered in 2019 and 2020, which leaves seven in 2021 and later. My presumption is that even if the contractual delivery dates don't match up with the production schedule, Airbus would continue production at the most economical reduced rate and park the aircraft until their agreed delivery dates.

If anything, I'd expect that the missed contract date we've been discussing was chosen to give Airbus adequate time to wind down the A380 program in an orderly way, without eating the costs of those expensive long-lead-time components, just in case there were to be some sort of issue with the engine order. I simply cannot believe they would be that desperate to prolong the life of the A380 to risk hundreds of millions of dollars in additional costs.

Matt6461 wrote:
I just can't imagine EK walking away from the A380, even for a 2% fuel miss.


I think you're right -- that wouldn't be the sole reason they'd walk away. That said, I could see the fuel burn miss being a fig leaf for other issues -- like less attractive terms being offered from banks and other financing sources due to increasing interest rates and the relative illiquidity of the secondhand A380 market.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 8:29 pm

EChid wrote:
And, as I've said, my argument isn't that either company can't shift away from the A380 as key aspect of their image...but that shift will come at a cost and that cost will need to be considered as they make their decision.

I'm sorry, but that's just not the way marketing works in the real world. Yes, EK has branded itself well. Simply consider that it has a mediocre-to-bad Y product and a (mostly) sub-par J product. And yet, they've successfully branded themselves as the "Tiffany's of the Sky". So yes, it is an important part of their branding. But their business model (mundane things like cash flow, profit and capex) is driven by real-life things like a plane's economics, route profile and yield.

Also, the vast majority of fliers don't buy tickets because they get to fly on a plane that has a shower in F while they're sitting in seat 83E. I'm an av geek and recently booked a flight to southeast Asia in QR's J class. I was really excited as I haven't flown an A350 and wanted to experience QR's J. But my schedule changed and it became more efficient for me to fly CX, a wonderful J that I've experienced several times. But even for someone like me, I wasn't going to waste much extra time or money just to fly a specific airline or airliner. And again, I'm an av geek.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Thu Oct 11, 2018 8:42 pm

ScottB wrote:
Matt6461 wrote:
I just can't imagine EK walking away from the A380, even for a 2% fuel miss.

I think you're right -- that wouldn't be the sole reason they'd walk away.


Agreed, unless they got cold feet for some other reason and were looking for an excuse . . .


ScottB wrote:
That said, I could see the fuel burn miss being a fig leaf for other issues -- like less attractive terms being offered from banks and other financing sources due to increasing interest rates and the relative illiquidity of the secondhand A380 market.


Agreed again, and EK and the ME3 are masters at that style of negotiation. They could sqeeze Airbus to the point that they're the ones who decided to walk away. I fear that they may be close to that point already.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 12:38 am

EChid wrote:
As for showers and such, several people have stated that its possible on A350s and 77s. So then, why has no one done it? EK is rolling out great new 77 products, so why not that as well? It would make their product much more consistent. But I think if they did, would start knocking CASM down to some ugly figures that might be uncomfortably close to A380 numbers.


The A380s blessing and curse is its forward crown space. It’s a blessing because it’s empty space that can’t be used for passengers, so it allows airlines like EK and EY to install showers and residences because they can’t put actual passenger seats there, so they might as well use it for something. It’s a curse though because it’s weight and space that can’t be used for seats and therefore revenue generation. The 777 and A350 are better at using more of their available floor space for actual passsneger seats, which means revenue and profit.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 1:07 am

Airbus, RR, EA, ANA and leasors must be having sleepless nights reading and re-reading the fine print in respect to orders delivered and still to be delivered, including penalties and buyback activation.

Boeing and GE laughed at the EK A350 cancellation and Airbus single customer exposure to the A380. Bet they are re-reading 777X T&C's and guarantees, wanting to make changes, which won't assist X and 787 sales go unconditional.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 1:36 am

hinckley wrote:
EChid wrote:
And, as I've said, my argument isn't that either company can't shift away from the A380 as key aspect of their image...but that shift will come at a cost and that cost will need to be considered as they make their decision.

I'm sorry, but that's just not the way marketing works in the real world. Yes, EK has branded itself well. Simply consider that it has a mediocre-to-bad Y product and a (mostly) sub-par J product. And yet, they've successfully branded themselves as the "Tiffany's of the Sky". So yes, it is an important part of their branding. But their business model (mundane things like cash flow, profit and capex) is driven by real-life things like a plane's economics, route profile and yield.

Also, the vast majority of fliers don't buy tickets because they get to fly on a plane that has a shower in F while they're sitting in seat 83E. I'm an av geek and recently booked a flight to southeast Asia in QR's J class. I was really excited as I haven't flown an A350 and wanted to experience QR's J. But my schedule changed and it became more efficient for me to fly CX, a wonderful J that I've experienced several times. But even for someone like me, I wasn't going to waste much extra time or money just to fly a specific airline or airliner. And again, I'm an av geek.


Ah good, someone patronizing. See, what you're talking about here is the importance of an airlines' route network and scheduling, not branding. That's also incredibly key, but totally different. If you're speaking from the perspective of someone who has a specific schedule to maintain, then you are automatically less sensitive to other aspects of a product. Period. Your anecdote about booking a flight does not erase the value of a brand simply because you had other priorities for booking.

And I'd suggest that, as an avgeek, the marketing is even less successful...not more. You know, for example, that EK's J product isn't that great, that they're F Class is cool but some of the tightest in the sky, and that their Y offering has little in common with their F offering. Most don't. You also know that you aren't trading brilliant service for inferior by making the choice you did. Again, EK wants the average person thinking that by booking somewhere else they are losing out.

I'm afraid that you don't understand the point here. And it's not that marketing is the be all and end all. Yes, of course there are things to consider...they are discussed by others in detail above and I don't disagree with any of them, but for some carriers, choosing a brand and maintaining it is really important. EK is already a very numbers-based airline, they will get the other stuff right...but they'll also need to consider this.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 1:38 am

tjh8402 wrote:
EChid wrote:
As for showers and such, several people have stated that its possible on A350s and 77s. So then, why has no one done it? EK is rolling out great new 77 products, so why not that as well? It would make their product much more consistent. But I think if they did, would start knocking CASM down to some ugly figures that might be uncomfortably close to A380 numbers.


The A380s blessing and curse is its forward crown space. It’s a blessing because it’s empty space that can’t be used for passengers, so it allows airlines like EK and EY to install showers and residences because they can’t put actual passenger seats there, so they might as well use it for something. It’s a curse though because it’s weight and space that can’t be used for seats and therefore revenue generation. The 777 and A350 are better at using more of their available floor space for actual passsneger seats, which means revenue and profit.


Absolutely, the amount of wasted space on the A380 is astonishing. I love the things, but being on a couple of them in July was an eye opener regarding just how inefficient they are. Even the 747 did that better.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 2:15 am

smartplane wrote:
Airbus, RR, EA, ANA and leasors must be having sleepless nights reading and re-reading the fine print in respect to orders delivered and still to be delivered, including penalties and buyback activation.

Boeing and GE laughed at the EK A350 cancellation and Airbus single customer exposure to the A380. Bet they are re-reading 777X T&C's and guarantees, wanting to make changes, which won't assist X and 787 sales go unconditional.

EK is a blue Chip airline that meets contract provisions. But missing by 2% blows a contract out of the water.

If the 777x doesn't beat promise, it will have trouble and EK will cut orders. So GE

The 787 order hasn't been firmed. So EK could walk. That order is held up on the engines too. GE and RR will have to be agressive. If not... EK waits.

It is impossible to ignore the largest buyer of large widebodies (#1 for A380 and #1 for 777). EK is a Kingmaker when they choose to be. Issues with A345 fuel burn killed their A346 order; EK probably was very happy to have performance clauses in that contract.

EK also really helped draw positive attention to the A332. Considering all there used examples found a ready market.... EK is good for their business partners.

All airlines that place large orders negotiate. I'm sure in the 787 Boeing wants a more iron clad contract. Perhaps that is why EI hasn't firmed up their order?

But since they pay on time, what company doesn't like timely cash...

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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 4:35 pm

EChid wrote:
tjh8402 wrote:
EChid wrote:
As for showers and such, several people have stated that its possible on A350s and 77s. So then, why has no one done it? EK is rolling out great new 77 products, so why not that as well? It would make their product much more consistent. But I think if they did, would start knocking CASM down to some ugly figures that might be uncomfortably close to A380 numbers.


The A380s blessing and curse is its forward crown space. It’s a blessing because it’s empty space that can’t be used for passengers, so it allows airlines like EK and EY to install showers and residences because they can’t put actual passenger seats there, so they might as well use it for something. It’s a curse though because it’s weight and space that can’t be used for seats and therefore revenue generation. The 777 and A350 are better at using more of their available floor space for actual passsneger seats, which means revenue and profit.


Absolutely, the amount of wasted space on the A380 is astonishing. I love the things, but being on a couple of them in July was an eye opener regarding just how inefficient they are. Even the 747 did that better.


You might reconsider this impression. You should look at the wasted volume of the other wide bodies above the cabin ceiling. I think that the A380 is very good at using most of the available volume of its fuselage, while still offering some space for unique amenities.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 4:49 pm

lightsaber wrote:


I calculate 14% more profit per flight with a 779.



I have seen you say this in a few threads, but I still don't see how you reached that conclusion. There's no doubt that 779 will have the higher profit per seat, but it wouldn't make sense that it would generate more profit per flight.

profit per flight = profit per seats * number of seats

If we assume both are in a 3 class configuration, then we have A380 with 41% more seats than the 779.

In order for the 779 to have the same profit per flight as the A380, then it has to have a higher profit per seat by 41%. In other words, not a chance.

If 779 has a higher profit per seat by 20% (which sounds reasonable), then A380 has to sell anything more than 444 seats to bring more profit per flight overall. (based on a 3-class confiugraion for both).

I am curious, how did you get the 14% more profit per flight figure? it only seems possible if 779 has 60% more profit per seat or something in that range, or at least that's how I calculated it.

If what you are saying is true, then it doesn't make sense for EK to fly or order those A380s if the 779s are around the corner. However, EK knows it can bring in more profit flying A380 than 779 ONLY if they can fill those A380 up to a certain load factor, which is something only EK can do apparently.
Last edited by Eyad89 on Fri Oct 12, 2018 5:17 pm, edited 1 time in total.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 5:16 pm

Eyad89 wrote:
lightsaber wrote:


I calculate 14% more profit per flight with a 779.



I have seen you say this in a few threads, but I still don't see how you reached that conclusion. There's no doubt that 779 will have the higher profit per seat, but it wouldn't make sense that it would generate more profit per flight.

profit per flight = profit per seats * number of seats

If we assume both are in a 3 class configuration, then we have A380 with 41% more seats than the 779.

In order for the 779 to have the same profit per flight as the A380, then it has to have a higher profit per seat by 41%. In other words, not a chance.

If 779 has a higher profit per seat by 20%, then A380 has to sell anything more than 444 seats to bring more profit per flight overall. (based on a 3-class confiugraion for both).

I am curious, how did you get the 14% more profit per flight figure?

My costs and revenue
The 779 burns 20% less fuel per seat than the 77W and the 77W already burned a few percent per seat less. The 779 also has the latest avionics and is receiving the 787 predictive maintenance algorithms. That will save about 10% in maintenance costs (pulling parts to inspect is so 2005 and inefficient).

So about 23% * 40% = 9% cost reduction. Plus a few percent for maintenance plus a few percent as more passengers spread over fixed expenses.

The CFRP wing also cuts costs.

I would love to see your numbers. But there is a reason mk2 777 sales were not impacted and now we are at mk3.

In general, every generation cuts the cost per seat 15% to 20%. From what I've seen in the wing, avionics, and fusalage improvements as well as GE9x...

The LEAP engine is competitive with the game changing GTF. The GE9x has all that technology including variable cycle), CMC turbine blades, and an amazing cooling system that I cannot say more.

The T900 and GP7200 are conservative old school engines lacking technology. When I worked on the GP7200 I was appalled at what ready technology wasn't implimented due to having to Frankenstein that engine together. :cry:. The T900 is similar tech that the PIP missed promise.

So the more I think about this, the more I think 12% savings is low. But what I do not know is 779 OEW...

My job is to improve performance and cut costs. The 777x has a lot of what it needs.

A380 profit= (revenue-costs)*591
779 profit=(revenue 2-costs2)*420

Fewer seats means fewer empty seats. First seats sold have a slightly higher revenue than last (only so many last minute full fare)
Revenue 2=Revenue*1.02
Cost2=cost*(1-9%-2%-2%)=87% cost

I assume competitive reduces fares, so revenue=cost*1.07

A380=(1.07-1)*591=41.37*cost per seat
779=(1.02*1.07-.87)*420=92.88 cost per A380 seat

So I errored. Due to the HUGE cost advantage, the profit per seat is much more than double.

Hmm... :scratchin:

What are your numbers?
I must have done a cut paste error to arrive at my prior numbers. I think I neglected to reduce revenue on the A388.

Profit margins are heavily dependent on costs for low margin industries such as airlines.

So the 779 should make about double the profit per flight. :hyper:

Seriously, I expect prior generations of widebodies to be scrapped early due to the step function changes that the 787, A350, and 777x bring to market. In particular once the 787 and A350 receive CMC high turbine PIPs (first static than rotating parts).

The zero chance of selling more A380 engines in quantity (>400 engines) means late PIPs. That is the brutality of aviation economics of scale.

There is a simple answer to congestion, build new runways for London and Tokyo. Since the other high yeild markets are expanding, the market is adapting (by this I mean new IST, new airport at WAW and SVO, continued expansion in Florida, ATL, and CLT, new Daxing, 2 new runways for PVG, new runway at HKG, new Sydney airport, new runway at Jakarta finally A380 ready, HYD/BLR expansion).

I really think the prior generation will be retired quick, say a third the pace of the 707 & DC-8. Sadly that includes the A380. Partially as the A321LR and 797 will fragment markets

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smartplane
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 5:39 pm

lightsaber wrote:
My costs and revenue
The 779 burns 20% less fuel per seat than the 77W and the 77W already burned a few percent per seat less. The 779 also has the latest avionics and is receiving the 787 predictive maintenance algorithms. That will save about 10% in maintenance costs (pulling parts to inspect is so 2005 and inefficient).

So about 23% * 40% = 9% cost reduction. Plus a few percent for maintenance plus a few percent as more passengers spread over fixed expenses.

The CFRP wing also cuts costs.

I would love to see your numbers. But there is a reason mk2 777 sales were not impacted and now we are at mk3.

In general, every generation cuts the cost per seat 15% to 20%. From what I've seen in the wing, avionics, and fusalage improvements as well as GE9x...

The LEAP engine is competitive with the game changing GTF. The GE9x has all that technology including variable cycle), CMC turbine blades, and an amazing cooling system that I cannot say more.

The T900 and GP7200 are conservative old school engines lacking technology. When I worked on the GP7200 I was appalled at what ready technology wasn't implimented due to having to Frankenstein that engine together. :cry:. The T900 is similar tech that the PIP missed promise.

So the more I think about this, the more I think 12% savings is low. But what I do not know is 779 OEW...

My job is to improve performance and cut costs. The 777x has a lot of what it needs.

There seems to be significant dissonance between your numbers and Boeing's confidence.

Boeing worked extremely hard 4Q17 - 1Q18 to turn at least a percentage of conditional orders to unconditional, without success.

Achieving unconditional orders is an important project milestone, as the Board would almost certainly have approved initial funding for enhancements (for SQ / QF, or even a new model - 10?).

If numbers offered to customers were half (or better) those of your own, supported by B and GE guarantees, there would surely be unconditional orders on the books by now, especially from SQ, LH and CX, and perhaps new conditional orders from IAG.

Or perhaps the A350 has, and continues to raise the bar and customer expectations.

Plus the A380 continues to underpin unit pricing in this sector of the market.
Last edited by smartplane on Fri Oct 12, 2018 5:45 pm, edited 1 time in total.
 
hinckley
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 5:44 pm

EChid wrote:
I'm afraid that you don't understand the point here. And it's not that marketing is the be all and end all. Yes, of course there are things to consider...they are discussed by others in detail above and I don't disagree with any of them, but for some carriers, choosing a brand and maintaining it is really important. EK is already a very numbers-based airline, they will get the other stuff right...but they'll also need to consider this.


I would guess that we agree much more than we disagree, but I would ask you to consider how your patronizing comment may apply to your first sentence above.

I've spent my life building companies from scratch. I well understand the importance (and cost) of marketing in general and branding in particular. As you say, marketing is not the be all and end all. It is one of the important factors to achieving the be all and end all of well run companies - profit. So while I appreciate and applaud the gilt edge brand that EK has built, I doubt that they would buy an aircraft that does not best match its cash flow/route/yield needs just so they can market an in-air shower. EK are brilliant marketers and they can figure out how to extend their brand without spending billions on the wrong aircraft - IF the A380 is the wrong aircraft.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 6:05 pm

If this deal dies the A380, unfortunately, goes with it. That being said it might've been too ambitious for Airbus to plan on keeping the A380 production line open for another 10 years.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 6:06 pm

I miss TDSCanuck
 
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ER757
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 7:48 pm

Nomadd wrote:
I miss TDSCanuck

While no longer posting here, rest assured he is alive and well. Just had lunch with him last week as a matter of fact.

Back to the topic - I say the deal ends up getting done eventually and EK takes their shiny new A380's after all. Then the line stays open a few more years. And maybe NH decides they want a few more after kicking the tires on the three they're taking for TYO/HNL. And maybe someone else comes along to buy a few too. As an unabashed fan of large flying machines I have to keep hope alive. Of course, for the longest time I was sure that UA, CI and maybe even KL were going to get some 748-i's and we see how that worked out........
 
Exeiowa
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 8:19 pm

Its an iconic plane, but it never really took off commercially the way it needed too. Its sad but its going to go away in the near future unless something dramatic changes, which I doubt, but that is the reality of the situation. I do not expect to see anything else like it for a long time. Even big twins are not going to be made in huge numbers going forward, it will likely cluster around large narrow bodies and medium sized widebodies as they represent the peaks of profitability.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 8:40 pm

Sir Tim has stated that the deal will be signed by the end of October. Emirates won't let the deal slip from its hands.
 
brindabella
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 8:44 pm

xwb777 wrote:
Sir Tim has stated that the deal will be signed by the end of October. Emirates won't let the deal slip from its hands.


Must have misread it.

Thought he said something like "the decision will be made by the end of October".

cheers
Billy
 
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lightsaber
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Fri Oct 12, 2018 9:18 pm

brindabella wrote:
xwb777 wrote:
Sir Tim has stated that the deal will be signed by the end of October. Emirates won't let the deal slip from its hands.


Must have misread it.

Thought he said something like "the decision will be made by the end of October".

cheers

The difference is important..

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NWADTWE16
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 3:37 am

Those of you who say you are not fans of the A380, or the others who are so quick to call her demise, clearly have never flown on her. There is NOTHING better from a customer point of view, so quit this ish, and lets see this bird into the future.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 5:09 am

The customer does not matter, as long as he is not willing to pony up more cash for a flight on the A380 and to match the coming 777-9, the ticket price would have to be about 15% higher. So a 1000$ ticket costs 1150$ because you fly the A380. Ask yourself how likely that is to be a success.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 5:34 am

NWADTWE16 wrote:
Those of you who say you are not fans of the A380, or the others who are so quick to call her demise, clearly have never flown on her. There is NOTHING better from a customer point of view, so quit this ish, and lets see this bird into the future.


Are we flying on the same aircraft ? Unless you are in the high end seats, there is nothing especially special about the 380. There is nothing special about the seats or leg room, inflight service is dictated by the airline and should be the same as other long haul types in the airlines fleet, same for inflight entertainment. As far as I'm concerned, I book for value and if I can get to my destination cheaper than a competitor who happens to be flying the 380 and it doesn't involve a big detour, I'll be going the cheaper option thanks. In fact I've just done precisely that for my next trip.

Even if production was to stop in a couple of years, they'll still be flying for another 20 years anyway, it's not like they are going to disappear overnight. It's a fine piece of engineering, but Airbus got the market wrong, let them work on some of the other products were they have gotten the product and the market right.
 
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Slug71
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 5:43 am

seahawk wrote:
The customer does not matter, as long as he is not willing to pony up more cash for a flight on the A380 and to match the coming 777-9, the ticket price would have to be about 15% higher. So a 1000$ ticket costs 1150$ because you fly the A380. Ask yourself how likely that is to be a success.


A good reason why Airbus should certify the T7000 and GEnx. Or at least be open to it and support the A380. It's only getting older. If a relatively small upgrade cant gain some interest, I dont see a major updated NEO happening.

Fuel prices will also drop again. Too many electric vehicles coming to market over the next few years, to keep prices high.
 
cpd
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 5:45 am

jupiter2 wrote:
NWADTWE16 wrote:
Those of you who say you are not fans of the A380, or the others who are so quick to call her demise, clearly have never flown on her. There is NOTHING better from a customer point of view, so quit this ish, and lets see this bird into the future.


Are we flying on the same aircraft ? Unless you are in the high end seats, there is nothing especially special about the 380. There is nothing special about the seats or leg room, inflight service is dictated by the airline and should be the same as other long haul types in the airlines fleet, same for inflight entertainment. As far as I'm concerned, I book for value and if I can get to my destination cheaper than a competitor who happens to be flying the 380 and it doesn't involve a big detour, I'll be going the cheaper option thanks. In fact I've just done precisely that for my next trip.

Even if production was to stop in a couple of years, they'll still be flying for another 20 years anyway, it's not like they are going to disappear overnight. It's a fine piece of engineering, but Airbus got the market wrong, let them work on some of the other products were they have gotten the product and the market right.


It is very quiet inside and is very good in turbulence. The crew warns of turbulence and I wonder, what turbulence? Nothing really major.

I will take an A380 of EK over someone else's 747, 777 or other plane. The onboard service is good too, even in economy class.

I have flown both in economy class and business class on the A380.
 
grbauc
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 6:17 am

PlanesNTrains wrote:
Or the nudge to push it across the finish line?



The news story, has nothing about this being a Nudge to push it across the finish line. I get it the big fan club of people wanting A380 to fail on here causes comments like this, however silly responses like this imop just add to the tit for tat.
This is a troubling report, however I do think they will get past this there is to much money on the line. Has a flyer long live the A380 it's helped lower the cost of J/F seats and hope they don't end soon.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 6:19 am

neutronstar73 wrote:
62k64k wrote:
Interesting article, can't really blame RR. Could this be the final nail in the coffin for the A380 program?

https://www.bloomberg.com/news/articles ... ium-europe

How can it not be RR's fault. They aren't meeting performance guarantees.



Agree it's all RR fault.
 
RB211trent
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 7:33 am

grbauc wrote:
neutronstar73 wrote:
62k64k wrote:
Interesting article, can't really blame RR. Could this be the final nail in the coffin for the A380 program?

https://www.bloomberg.com/news/articles ... ium-europe

How can it not be RR's fault. They aren't meeting performance guarantees.



Agree it's all RR fault.

No engine manufacturer is offering an engine that can meet EKs performance requirements .....so its all RRs fault mmm I think there is rubbish being spoken (again). But RRs is the nearest.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 10:32 am

Earlier this year I flew man - Dubai, then Dubai - Bangkok in Business class on the EK 380.
China southern from Bangkok to Shanghai.
Shanghai to Dubai then Dubai to Man.

I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.

The whole experience on EK was amazing. Dubai has been built around having A380’s so I would think they would like to carry on buying the plane. However my boss who flew from Glasgow flew in the EK 777 said there was more room in Business class on the 777 then the A380.
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 10:43 am

Revelation wrote:
Yet the primary reason STC is balking about taking more A380s with fuel burn shortfalls has to be fear of being undermined by more efficient competitors.


Sure?
very much up front primary reason may well be : he paid for better sfc. It is in the contract. ... and probably was decisive for going with RR. :-)
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hOMSaR
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 12:27 pm

lowbank wrote:
I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.


I think it would be very difficult, if not impossible, for a passenger to judge the relative “power” of different engines. Unless you happened to know the planned takeoff weight of each flight, any local weather conditions that would affect takeoff performance, a flight plan that may call for different thrust settings on takeoff, etc., then you really wouldn’t be able tell (and even then, by what basis does a plane “seem slightly less powerful” than another?).
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cpd
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 12:40 pm

lowbank wrote:
Earlier this year I flew man - Dubai, then Dubai - Bangkok in Business class on the EK 380.
China southern from Bangkok to Shanghai.
Shanghai to Dubai then Dubai to Man.

I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.

The whole experience on EK was amazing. Dubai has been built around having A380’s so I would think they would like to carry on buying the plane. However my boss who flew from Glasgow flew in the EK 777 said there was more room in Business class on the 777 then the A380.


Some 777s have the new business class. I've been in the A380 J and the new J in the 777-300/ER. The 777 feels more spacious because it doesn't have the surrounding cabinets and walls. The new J seat on the 777 is also a bit softer too.

But the A380 is much quieter and also has the bar on board.
 
Lufthansa
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 1:08 pm

Of Identified customers.... Boeing has just a handful for the 777X. LH, EY, EK, CX, QR, NH and SQ. There's about 320 or so orders and about half of that is for EK and EY's orders are probably in doubt, just because we don't know what their future is going to be like and they had planned on sending some of them to their loss making investments.
By comparison EY and EK do very well on some routes with the jet(388) and it constantly goes out full and for a premium. Like SYD-LHR. So much so BA is regularly having sales upgrading pax in one direction for free from J to F, or throwing in a free transatlantic return in. So this aircraft, on particular routes absolutely does generate a premium. I used to work in the global HQ of a travel agency and saw the difference first hand.

By comparison, Airbus has already sold nearly 3 times the amount of A350s. Yes, they will be slightly older technology in some regards. Not all.
But here is a list of current Operators. There's :
Air Caraïbes
Air china
Vietnam Airlines
Thai Airways
Singapore
Sichuan Airlines
Qatar
Philippines
MAS
Lufthansa
Latam
Iberia
Finnair
Hong Kong
Delta
Asiania
Cathay
CAL

And I have probably missed some. But there's more to come like JAL, United, and Virgin Atlantic.
I actually like the 777, but the problem is unless oil drastically increases in prices there really gonna have to
do something amazing with it. Most airlines don't need the long haul performance Emirates required. So some stretch of the 777 is
unlikely especially if Airbus can keep the 388 program on life support until it gets some proper upgrades like the 747-400 did.

I can think of only 3 more carriers that probably NEED what the 777X promises.
First - Qantas
Next - Air New Zealand.

And a distant 3rd because of Altitude issues at JNB
South African Airways.

Now if Boeing can put together an even longer they might just kill off the A380.
The only issue is, if all those A350 operators listed above also get offered a further
stretch the ones with the need will likely pick it. The other issue is the 77W is pretty good
and if oil prices don't go up, more airlines might "do a delta" and just refurbish them and hang
onto them longer. Or Snap up the 100 or so EK will get rid of over the next few years and refurbish them.
 
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 2:19 pm

Lufthansa - You are making the old (and true) argument - the very biggest planes get fewer, the next smaller planes get a little bigger and more common. EK and the 380 proved (actually tested) the argument, but remain unique in its success. The 787/350 are going to rule long haul and big. 777X will be the large but niche aircraft, and 380 may hang in if an engine appears. But after the 787/350 are tweaked and re-engined watch out 777X.
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Waterbomber
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 2:25 pm

EK has one more option though.
In principle, they can take brand new A380's with used engines. With the soft used market, there are going to be plenty of used half life A380 engines available to put on brand new airframes.
It is worth a consideration IMO.
 
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Channex757
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 3:03 pm

lowbank wrote:
Earlier this year I flew man - Dubai, then Dubai - Bangkok in Business class on the EK 380.
China southern from Bangkok to Shanghai.
Shanghai to Dubai then Dubai to Man.

I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.

The whole experience on EK was amazing. Dubai has been built around having A380’s so I would think they would like to carry on buying the plane. However my boss who flew from Glasgow flew in the EK 777 said there was more room in Business class on the 777 then the A380.

The RR was probably a 615-seat version which are the ones coming off the line with Trents at the moment. It was slower because it was heavier.
 
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Channex757
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 3:07 pm

Waterbomber wrote:
EK has one more option though.
In principle, they can take brand new A380's with used engines. With the soft used market, there are going to be plenty of used half life A380 engines available to put on brand new airframes.
It is worth a consideration IMO.

I have yet to see any proof of this soft market.

The first SQ one went to storage as nobody wanted an oddball aircraft with increased insurance payments due to its unique certification.

Two more of the more-standard version have been remarketed to Hi-Fly and are working hard.

Where are the rest of the parked-up A380s then? Some may be up for sale but there are no lines of them at Teruel waiting in the dust......
 
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Revelation
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 3:55 pm

Channex757 wrote:
Where are the rest of the parked-up A380s then? Some may be up for sale but there are no lines of them at Teruel waiting in the dust......

https://www.businessinsider.com/airbus- ... ory-2018-6 says:

LN3: Scrap
LN5: Scrap
LN6: HiFly

Google 'a380 scrapped' and you get lots of hits saying two are scrapped, but the presser from the owners is no longer online.

https://www.planespotters.net/airline/Hi-Fly-Malta suggests only one A380 in HiFly's fleet.
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RB211trent
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 4:15 pm

lowbank wrote:

I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.
.

Both EA and RR engines Cover the same thrust ratings so i don’t see your point.
 
lowbank
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Re: Bloomberg: A380-Saving Emirates Deal Is Stalled Due to Engine Impasse

Sat Oct 13, 2018 4:46 pm

hOMSaR wrote:
lowbank wrote:
I flew three EA powered and one RR. The RR plane seemed slightly less powerful on takeoff but I was taking extra note so could just be me being over sensitive.


I think it would be very difficult, if not impossible, for a passenger to judge the relative “power” of different engines. Unless you happened to know the planned takeoff weight of each flight, any local weather conditions that would affect takeoff performance, a flight plan that may call for different thrust settings on takeoff, etc., then you really wouldn’t be able tell (and even then, by what basis does a plane “seem slightly less powerful” than another?).


Yes I know, I work for RR and make parts for that T900. So might be biased but they felt less powerful.

I read some of the comments on here and think “if only they knew” and I cannot tell. Well could but could not keep my job.
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Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos