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Confuscius
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 7:46 pm

Quoting tortugamon (Reply 95):
I would say that Tom Enders has some Airbus insider info

He better get with the program before John Leahy fires him.
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JimJupiter
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 7:53 pm

Quoting Confuscius (Reply 100):

Quoting tortugamon (Reply 95):
I would say that Tom Enders has some Airbus insider info

He better get with the program before John Leahy fires him.

Oh come on, make an effort and google the guy...  
One is born, one runs up bills, one dies.
 
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Stitch
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 8:06 pm

Quoting Flighty (Reply 99):
Stitch it is hard to say "trip costs are quite low" when talking A380, on a mission the A321 could do. Probably why A380 shorthaul is so very unusual.

True, but the A380 is what EK has available in Australia so that is what they use.

And if it lost them money doing it, I imagine they'd have dropped the service.



Quoting Confuscius (Reply 100):
He better get with the program before John Leahy fires him.

John Leahy works for Tom Enders.
 
The777Man
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 8:23 pm

Boeing said something similar about building VLA even before the 380 was launched; the market for these aircraft is too small to make it a profitable program. They were right and then it's still the correct assessment of the air transport marktet.

There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit. Same for Boeing on the 747-8 but at least the 747 program as a whole was very profitable. They should never have launched he 747-8 but I guess the 747-8F was very compelling.

The777Man
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ozglobal
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 8:43 pm

Quoting racercoup (Reply 82):
Quoting OzGlobal (Reply 14):
The A380 will be a modest medium to long term success financially, is a huge success already in certain market niches and in premium passenger experience : it is certainly achieving big success for EK, SQ, LH, BA and others.

If losing billions of dollars, being a constant distraction and a drag on company moral and image is your idea of any kind of success I hope you work for a government.

Whoa, steady.... Well at least we seem to agree on one point regarding the A380:

Quoting OzGlobal (Reply 14):

Perhaps its greatest achievement however is in consistently making some of our US friend's brains explode  
 
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abba
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 8:58 pm

Quoting silentbob (Reply 21):
For Airbus? I don't think the program will ever be a financial success. That assumes you factor in the related costs that they have written off and not just the costs that they have charged to the program.
Quoting Stitch (Reply 86):
There is a difference between break-even projections and sales projections. They've consistently expected to sell over 1000 of them between 2005 and 2025 based on their Market Outlooks.

I believe that this number was their overall market prediction rather than what they expected to sell of the 380.

Quoting The777Man (Reply 103):
There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit.

Remember that such programs have a rather long life. The 380 will most likely still - in new incarnations - be on sale well into the '30'ties. The same with the 787. ( At which time both of these programs - due to bad program management - will perhaps begin to make a profit (seen in isolation and all that))
 
dtw2hyd
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:06 pm

Quoting Confuscius (Reply 100):
He better get with the program before John Leahy fires him.

Three words. Google, Google and Google. Please...
All posts are just opinions.
 
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SEPilot
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:10 pm

Quoting The777Man (Reply 103):
Boeing said something similar about building VLA even before the 380 was launched; the market for these aircraft is too small to make it a profitable program. They were right and then it's still the correct assessment of the air transport marktet.

I have believed this from the start. Airbus thought that the airliner market was going to change radically, with much more demand for hub-to-hub travel, making a larger plane highly desirable, but it has not happened that way. If the A380 program had gone without a hitch, they would have probably reached break even by now, and would have a chance to make a small profit on the program, even though sales are unlikely to ever meet their expectations. But that ship has sailed, and they are unlikely to ever recoup the development costs. They should be in a position to make money on production costs soon, if not already, but the development costs are way beyond any hope of recovery.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
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PW100
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:13 pm

Quoting tortugamon (Reply 95):
Quoting trent900 (Reply 58):I can't seem to get this out of my mind. So how full does a 777 have to be before a 85% full A380s operating costs fall below the 777s?

OK I'll bite.
I also struggle to understand. The A380 operating cost does not change with load factor. Revenue on the other hand . . .

Quoting tortugamon (Reply 95):
I think the point is that up to an 85% full A380 the 777 is the lower CASM option for EK. Now the A380 clearly has higher RASM

Aren't we getting mixed up in definitions here? CASM is Cost per AVILABLE Seat Mile. Load factor (either it be 85%, or 25%) does not affect that.
RASM on the other hand is affected by load factor. So I'm still at loss as to what was originally meant . .

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peterinlisbon
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:18 pm

It's true, sales have not been as expected and Boeing turned out to be right in not making the investment (although they didn't really need to, as they already had the 747). But on the other hand, they failed to take advantage of the huge demand for the 787 with all of the delays and problems and this gave Airbus time to catch up with its A350. Anyway, it's not over yet... there are many years to go until they finish production and by then, maybe someone will order another 100 or so.
 
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airmagnac
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:40 pm

Quoting The777Man (Reply 103):
There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit

Would you mind expanding on that ? As you seem to have necessary information, I'd be interested to see figures on the non-recurring development & testing costs and infrastructure costs, recurring manufacturing costs, a spread of sales prices for the aircraft sold, estimates of acillary revenues from spares, training and operational consulting activities, a quantification of the goodwill and other non-tangible knowledge & skills acquired during the A380 development, maybe also an indication of how the buildings, test rigs, design tools and other infrastructure has been re-used for other programs...
You know, all those things that dynamically flow in & out of the program scope to create costs & revenues....

Quoting tortugamon (Reply 95):
There is no reason to wait. From a financial standpoint Airbus would be better off today if they had not done the A380.

Maybe. Maybe not. Too many things are shared among programs to know fo sure, too many dynamics and evolving aspects. It just makes no sense to look at a single program, ad even less sense to do so on a scale of 10-15 years. That might seem a long time , but aircraft programs are intended to last 40, 50 years, and might reach 70 or 80 years. That 747 is nearing 50 years old, and although I don't expect many sales from now on, the latest birds might still be flying in 25 years, creating costs & revenues.
So those are the kind of time scales we need to consider.

As the overall air transport market continues to grow, I think there is a pretty good chance that in the next couple of decades the >500-pax-aircraft will finally increase. And A380 orders will finally take off, if the program survives till then (let's not kid ourselves, if there are no sales in the next few years, termination may have to be considered).
I guess the Airbus decision-makers back in 1999-2000 expected that to happen much sooner, and it was a reasonable prediction based on the past. The traditional answer to increased demand was only to increase the size of aircraft. But since the end of the 90s, alternative solutions have appeared in the form of increased seating densities and an increase in the number of aircraft. Which is no small feat as it implies a huge industrial supply chain, an equivalent maintenance organisation, and a huge training infrastructure for pilots and other specialist personnel. And also requires a huge real-time information processing capability for ATC and airline ops.
At least that's my take on it.

Quoting MaverickM11 (Reply 87):
That 250 number is ancient history, long before major delays and problems with production unfolded.

I think Mjoelnir's point was precisely that the 250 figure was before the development issues. It was the target established at the launch of the program, which justified the business case, ie that even with relatively small sales numbers, the revenue per aircraft would be sufficient to cover the costs after 250 sales. Supposing it was a reasonable number, then the initial business case is vindicated by the current 300+ orders.
But as you say, the production issues changed everything. And as anyway we do not know what cost & revenue scope was covered in that target figure, and what assumptions were used, it is indeed quite a useless number now.

Quoting racercoup (Reply 82):
being a constant distraction and a drag on company moral and image

   

It's been a relatively normal series program for quite a few years, with the routine correction & upgrade activities. Maybe some increased efforts to reduce production costs and streamline the processes, but that's actually done on all active programs. As for moral and image, there might have been some negativity back around 2006, but that was mostly due to necessary, belated reorganisation of the company following the merger of the 4 national champions back in 2000. These days everything is rather positive in terms of pride, and actually beneficial to the company's image (moronic Airbus-haters excluded of course   )

Quoting SEPilot (Reply 107):
Airbus thought that the airliner market was going to change radically, with much more demand for hub-to-hub travel, making a larger plane highly desirable

See above, I actually think the opposite : the decision-makers were far too conservative in their thinking. The A380 was designed for an airliner market that was going to continue the development it had seen for 50 years. They failed to anticipate the new factors appearing : acceptance of lower comfort by passengers who were giving upon the "glamour" of air travel, and the overall capability to produce and exploit a significantly larger number of aircraft than before. And thus, the overall air transport capacity was increased without the corresponding increase in aircraft size that was the "traditional" answer.
However, I do think that hub-to-hub will remain the main paradigm. A network of numerous P2P routes is just too expensive and inflexible.

Quoting SEPilot (Reply 107):
they are unlikely to ever recoup the development costs
Quoting SEPilot (Reply 107):
the development costs are way beyond any hope of recovery

Why, why, why ? I wonder.
Your assertion may be true, but it may not be...Nobody here will ever know for sure
Strangely, based on no clear reasoning that I can see, "A380 will nver recoup its costs" is the mantra of the a-net collective mind. But based on similarly unclear resoning, it is also widely accepted here that the 787 will break even by 2025-ish. Weird. But interesting.
I actually don't really care about comparing A vs B, or if both programs will be profitable or not. As I said, we'll never know for sure, and in reality it doesn't mean anything anyway. I just find the sociological dynamics at play here quite fascinating  
My goal as an engineer is to fill my soul with coffee and become immortal
 
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diverdave
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 9:46 pm

Quoting The777Man (Reply 103):
There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit. Same for Boeing on the 747-8 but at least the 747 program as a whole was very profitable. They should never have launched he 747-8 but I guess the 747-8F was very compelling.

At this point, none of that really matters. It's done. The R&D and startup money has all been spent and it's a sunk cost. Much has already been written off.

The flyaway cost is what matters going forward, and Airbus says the A380 will be profitable starting in 2015.  

David
 
rwessel
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 10:09 pm

Quoting mjoelnir (Reply 80):

Why do people in this thread are talking about the A380 not reaching Airbus projections?

The business case was set up with 250 frames to be sold to reach a program break even. Those frames have been sold.

There have been so many versions of these numbers that I'm not even going to hazard a guess where they were originally.

However, your statement is wrong. Program break even is absolutely *not* a business case. Hitting program break even means you'd have been just as well off taking the cash out of the bank and stuffing it in your mattress for the duration. The business case for the A380 would like have been made based on a 20%-or-so return-on-investment. Now as to which, if any, of those correspond to 250 units, I don't know; but if 250 units was the expected break even, the 20% ROI business case would likely have been more like 400-500 aircraft. And that's always going to assume a timeframe. Delays and reduced production rates cost money, even if only the cost of money over the interval.

Of course none of that has any bearing on whether or not Airbus should continue with the program *now*.
 
mffoda
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 10:49 pm

Quoting dtw2hyd (Reply 106):
hree words. Google, Google and Google. Please...

Don't you just hate all those "Google Fan boys"! This is not a duopoly... We have Yahoo, Bing or Ask to name a few...  
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racercoup
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 10:53 pm

Quoting jayunited (Reply 53):
Based on studies I have seen, an A380-800 clears her trip costs at around a 55-60% load factor (thanks to the higher premium cabin seating the majority of operators install), so a significant portion of those incremental 1-200 passengers, even at "bargain bin pricing", are pretty much pure profit.

Seems to me you have forgotten the cost of the lease. Seems to me if the revenue sharing EK does with investors thru firms like Doric where the investors have received all of their investment plus a generous return by lease end would translate into an expensive lease proposition.
 
Motorhussy
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 11:08 pm

It pretty much astounds me that a certain member of this forum has made comment with such authority and confidence on the A380's apparent gloomy future, yet not known who Tom Enders is. He's the big kahuna, the commander and chief, the guy Fabrice Brégier reports to, who in turn is the guy John Leahy reports to. Tom Enders captained Airbus back on the course set by Louis Gallois after the debacle that was Noël Forgeard and his 2IC Gustav Humbert, and the insider trading scandal et al. Know your subject please before you criticise it.
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SEPilot
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 11:30 pm

Quoting airmagnac (Reply 110):
Quoting SEPilot (Reply 107):
they are unlikely to ever recoup the development costs
Quoting SEPilot (Reply 107):
the development costs are way beyond any hope of recovery

Why, why, why ? I wonder.
Your assertion may be true, but it may not be...Nobody here will ever know for sure
Strangely, based on no clear reasoning that I can see, "A380 will nver recoup its costs" is the mantra of the a-net collective mind. But based on similarly unclear resoning, it is also widely accepted here that the 787 will break even by 2025-ish. Weird. But interesting.

The reason is fairly clear and really simple. First, development costs were far, far higher than anticipated (I have seen the figure of 25 billion euros; whether or not it is accurate I do not know, but let us assume that it is. I believe the original budget was more on the order of 10 billion euros. To recoup that on the basis of 250 sales means that each one would have to have a profit of 100,000,000 euros, (as opposed to 25,000,000 with the original figure). And since they are only now approaching the production break-even point (I do not know if they have actually reached it, but let us assume that they have) none of that money has been recovered yet. They will have to produce another 250 with a profit margin of 100,000,000 euros each, or 500 with a profit margin of 50,000,000 each, or 1000 with a profit margin of 25,000,000 each to recover the development costs. And that is with no further investment, which is not going to happen. The problem is that with the new large twins (779, A3510) coming online with better CASM the probability of selling that many more A380's is essentially zero. In fact, to sell many more at all it is almost certainly going to need at least new engines, which will only deepen the fiscal hole. My personal estimate is a total of about 500 sales, and there is no likelihood that that will be enough to recover the development costs, even if my speculative figures were wildly off.

The 787, on the other hand, even though its development was badly botched, and also wildly exceeded its planned development costs, has every prospect of selling thousands, and so if it does not break even until 1200 are sold is not as big a deal. Every one sold after the 1200th one will be making money no matter how you figure the accounting. And I think the 787 is on track to be the best selling widebody of all time; it would not surprise me to see 3000 sold by 2030.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
racercoup
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 11:39 pm

Quoting zeke (Reply 61):
I wonder if the reason this has been coming to the press so much this week is because TK is very close to making their decision on the large WB order. Boeing know they have a lame duck with the 747-8i, so why not destroy your competitions A380 reputation to send them back to you for 777s ?

With all due respect the A380 program is doing badly all by itself. It doesn't need Boeing's help. Can you imagine the trash Leahy would be spewing if the shoe was on the other foot?

Fact, in order to get the green light for the A380 project Airbus predicted a 20 year market for VLA of around 1,700 frames. Boeing and some analysts including the much maligned on Anet Richard Abulafia felt the market was about half of that. John Leahy called Boeing's estimate both ridiculous and irresponsible. (apparently if you don't agree with him you are not only wrong you are somehow a reckless being) Boeing having witnessed 747 usage declining for years felt there would be more city pairs added using medium and large twins.

Fact, it has been 14 years and the number of A380/747 orders stands at 518, so I guess the Boeing prediction was pretty much on target.

Fact, in the 10 years since the 787 was launched there have been about 4,000 orders for the 787/777/A350. So there goes the argument that A380 sales are poor due to the industry climate.

Fact, Airbus designed and built a phenomenal airplane in the A380 they just built it for the wrong era.

You can twist it and turn it, blame the economy, restrictions by European governments, hell blame it on Global warming but just like the 747 the order situation for VLA deteriorating at a time when airlines are placing record orders. Last June those Doric, not Doric, Amedeo boys claimed a major portion of their 20 frame "order" sic would be placed within a year, that was 15 months ago and not a peep.

Some day Boeing folks will be mourning the last 747 coming off production, the same may be true of the A380, and it may be sooner than we think.
 
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Stitch
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NY Times On The 380: Oversize Expectations Part 1

Tue Aug 12, 2014 11:41 pm

Quoting The777Man (Reply 103):
Boeing said something similar about building VLA even before the 380 was launched; the market for these aircraft is too small to make it a profitable program. They were right and then it's still the correct assessment of the air transport marktet.

And yet Boeing then threw away billions on the 747-8, even declaring it's market would be as large and rosy as the A380's.



Quoting abba (Reply 105):
I believe that this number was their overall market prediction rather than what they expected to sell of the 380.

Yes and no. Airbus pretty much assumed they'd own that entire market as they did not expect Boeing to launch a new 747 (i.e. - they'd continue on with the 747-400 and that would only sell as a freighter and in small numbers).

Quoting The777Man (Reply 103):
There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit. Same for Boeing on the 747-8 but at least the 747 program as a whole was very profitable. They should never have launched he 747-8 but I guess the 747-8F was very compelling.

The 747-8 was still a mistake that cost the company billions.



Quoting peterinlisbon (Reply 109):
(Boeing) on the other hand, they failed to take advantage of the huge demand for the 787 with all of the delays and problems and this gave Airbus time to catch up with its A350.

The A350 was launched well before the 787 program went aground. And even if the 787 had launched to plan, the A350 still would have followed it's current success trajectory because the A350-900 and A350-1000 are larger planes.
 
jayunited
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 12:35 am

Quoting Stitch (Reply 118):
The A350 was launched well before the 787 program went aground. And even if the 787 had launched to plan, the A350 still would have followed it's current success trajectory because the A350-900 and A350-1000 are larger planes.

I agree I think sales of the A350 would still be where they are even if the 787 had entered service on schedule. And I think sales of the A350-1000 will pick up although the A359 will lead the way in sales

Quoting Stitch (Reply 118):
The 747-8 was still a mistake that cost the company billions.

I've often wondered why Boeing launched the 747-8i especially when Boeing had hard data showing that most airlines were interested in moving away from quads to twins. Boeing should have trusted the data and never wasted so much time and money on the 747-8i instead that money could have been spent on the 777 program. Look at how long it took Boeing to make a decision about and then launch the 777-8/9. The argument could be made that Boeing was resistant because they were enjoying the success of the the 77W. However I believe Boeing resistance was because they knew most airlines were replacing their 744's with 77W and the 777-8/9 would be the death of the 747-8i. It was only after they failed to garner the sales they hoped for that Boeing finally made a decision about the 777-8/9.
 
RickNRoll
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 12:38 am

Quoting racercoup (Reply 114):
Seems to me you have forgotten the cost of the lease. Seems to me if the revenue sharing EK does with investors thru firms like Doric where the investors have received all of their investment plus a generous return by lease end would translate into an expensive lease proposition.

If the plane wasn't make Emirates any money, they wouldn't keep buying them. They showed they can be pretty ruthless, look at their A350 order.
 
The777Man
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:11 am

Quoting airmagnac (Reply 110):
Would you mind expanding on that ? As you seem to have necessary information, I'd be interested to see figures on the non-recurring development & testing costs and infrastructure costs, recurring manufacturing costs, a spread of sales prices for the aircraft sold, estimates of acillary revenues from spares, training and operational consulting activities, a quantification of the goodwill and other non-tangible knowledge & skills acquired during the A380 development, maybe also an indication of how the buildings, test rigs, design tools and other infrastructure has been re-used for other programs…

You know, all those things that dynamically flow in & out of the program scope to create costs & revenues....

I don't have the numbers but I remember reading about the development cost for the 380 before and during launch. With exch delay the cost went up and I remember reading that the break even was something like 600-700 aircraft to cover development cost. That was before the last delay was announced.

Quoting diverdave (Reply 111):
At this point, none of that really matters. It's done. The R&D and startup money has all been spent and it's a sunk cost. Much has already been written off.

The flyaway cost is what matters going forward, and Airbus says the A380 will be profitable starting in 2015.  

True. The development cost has been written off at this time but should really be included in the total cost of the program.

Funny that the 380 will be "profitable" by 2015. It's all how you juggle the numbers.

Quoting Stitch (Reply 118):
And yet Boeing then threw away billions on the 747-8, even declaring it's market would be as large and rosy as the A380's.
Quoting Stitch (Reply 118):
The 747-8 was still a mistake that cost the company billions.

Very true ! The 747-8 program was a big mistake as were the 767-400/ER program, the 757-300 program.

I guess it can be argued that the 747-8 program is a bigger mistake since Boeing could see Airbus had problem selling the 380 and still launched the 748.

The777Man
Boeing 777s flown: UA, TG, KE, BA, CX, NH, JD, JL, CZ, SQ, EK, NG, CO, AF, SV, KU, DL, AA, MH, OZ, CA, MS, SU, LY, RG, PE, AZ, KL, VN, PK, EY, NZ, AM, BR, AC, DT, UU, OS, AI, 9W, KQ, QR, VA, JJ, ET, TK, PR, BG, T5, CI, MU and LX.. Further to fly.. LH 777
 
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Stitch
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:41 am

Quoting The777Man (Reply 121):
Funny that the 380 will be "profitable" by 2015. It's all how you juggle the numbers.

It's more how well people read.

The 2015 figures for both the A380 and 787 refer to production cost break-even on a per frame basis. In other words, the average revenue Airbus and Boeing receive for a 2015 delivery of an A380 or a 787 will match the average production cost of that delivery.

The statements were very clear on that fact. I and others have posted it literally hundreds of times across scores of threads. And yet people still think both OEMs are talking about overall program break-even and accuse them of "cooking the books" or "fudging the numbers".
 
Planeflyer
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 3:28 am

Quoting Confuscius (Reply 88):
Who's Tom Enders? Another analyst, like Richard Aboulafia, without inside information on Airbus.

If that's humor hat's off!

Seriously, Airbus misread the market. Relax, it happens. Engineering while not perfect wasn't the big issue. 90% of new product development failures are sales and marketing types reading the market incorrectly and I think this is the case with the 380.
 
The777Man
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 4:01 am

Quoting Stitch (Reply 122):
It's more how well people read.

The 2015 figures for both the A380 and 787 refer to production cost break-even on a per frame basis. In other words, the average revenue Airbus and Boeing receive for a 2015 delivery of an A380 or a 787 will match the average production cost of that delivery.

The statements were very clear on that fact. I and others have posted it literally hundreds of times across scores of threads. And yet people still think both OEMs are talking about overall program break-even and accuse them of "cooking the books" or "fudging the numbers".

I was merely referring to the reply to my post rather than the actual numbers that were published.

The777Man
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zckls04
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 4:21 am

Quoting The777Man (Reply 121):
I guess it can be argued that the 747-8 program is a bigger mistake since Boeing could see Airbus had problem selling the 380 and still launched the 748.

Could it be argued that the A380 would be a somewhat greater success if the 747-8 had not been made? Maybe Airbus were hoping it wouldn't be.
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racercoup
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 4:50 am

Quoting ricknroll (Reply 120):
If the plane wasn't make Emirates any money, they wouldn't keep buying them. They showed they can be pretty ruthless, look at their A350 order.

I never said it didn't make them any money. I was just pointing out that all income after "trip Cost" is not "pure Profit"
 
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 5:00 am

Quoting PW100 (Reply 108):
OK I'll bite. I also struggle to understand. The A380 operating cost does not change with load factor. Revenue on the other hand . . .

Yes, it's a pretty non-conventional use of 'cost' to make a certain point.

I feel the article's point about EK making great profits on the upper deck on peak periods is informative. I also don't know how it all stacks up on non-peak days on non-peak routings.

Quoting motorhussy (Reply 115):
Tom Enders captained Airbus back on the course set by Louis Gallois after the debacle that was Noël Forgeard and his 2IC Gustav Humbert, and the insider trading scandal et al. Know your subject please before you criticise it.

Yes, you get it! Don't forget Trooper Tom also took a jump out of the back of a fine Airbus product, A400M, with a bunch of his colleagues, to his great credit. Note also it was pointed out that one of his less fortunate jumps resulted in him not getting to go on a trip seated next to Ms. Merkel where he could have chatted with Angie on the merits of a nice tight link up with BAe. C'est la guere!

Quoting SEPilot (Reply 116):
I have seen the figure of 25 billion euros; whether or not it is accurate I do not know

Actually you have seen it recently, if you read the NYT article that is the subject of this thread, because that is the figure it states as fact.

Quoting SEPilot (Reply 116):
My personal estimate is a total of about 500 sales

And of course as so with all estimates it should come with a specification of time, because of the time value of money.

Quoting Stitch (Reply 118):
And yet Boeing then threw away billions on the 747-8, even declaring it's market would be as large and rosy as the A380's.

Two wrongs don't make a right. The four engined VLA market was over sold, period.
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Prost
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 5:12 am

Emirates was i aunique situation of having the infrastructure, the market, and the capital to leverage the A380s assets to their advantage. Obviously the market felt the European and Asian carriers were charging too much for travel between their regions (and Australia as well) and Emirates leveraged that to their advantage. Other carriers could have duplicated this endeavor, and have to an extend, but none were as bold as Emirates.

I just don'tknow if there is another carrier in this current market who can duplicate this. Emirates needs the A380 as much as the A380 needs Emirates. My personal belief is the A380 will break even over its life span, but it is money that would have been bettwe spent on other projects.

The best lesson that Airbus has learned is putting together a much better program in the A350 and I assume the A320 neo. The A380 has made them a better company with a more complete line of products. If in 15 years Airbus is still putting together ~20-25 planes a year, but worldwide traffic is starting to indicate a need for a more modern VLA, Airbus will be in a better position to respond to the market than Boeing will be.
 
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airmagnac
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 5:48 am

Quoting SEPilot (Reply 116):
To recoup that on the basis of 250 sales means that each one would have to have a profit of 100,000,000 euros

No it does not. You are assuming that program income is only the direct payments received on aircraft delivery. That is not necessarily the case. As for total costs, this 25B$ figure may be true, just as the 35B$ figure for the 787 may be true. Who knows. Just depends what you put in those figures I guess.

But overall, you are confirming what I said. For both programs, you (and everybody else here) have no idea of what the total costs were/are, and how they evolve, and no clear idea of what the total revenue stream may be. No idea about the total amount of cost overruns, no idea of how this cost is spread among Airbus/Boeing and their supply chains, no idea of real pricing for the 2 aircraft...
The main argument you propose is based on the fact that the 787 has sold "a lot" more than the A380 - which is true to some extent (about 3 times more so far), but we have no indication of the net revenue per aircraft taking in all factors. You then say that going forward, the available market is much bigger in the 787 case then for the A380. So the 787 will preserve its lead in sales numbers. This is true, and at this point in time the A380 market indeed seems to be close to non-existent, but who knows how the >450pax market will evolve. Also, direct comparison of sales numbers is somewhat misleading ; after all, wide-body aircraft sales are as tiny compared to single-aisle sales than A380 sales are compared to 787/A330 sales.
As for the 1200 accounting block, it's just like the 250 "breakeven" figure. If we don't know how it is defined, what it takes into account and what assumptions are behind it, it's as good as meaningless. Given the several long discussion on accounting blocks I have seen here over the past few years, I'm not convinced that we a-netters (except for 2 or 3 respected posters) have such a clear understanding of what is behind the number.

And as I mentioned (and Revelation also), one has to keep in mind the time scale involved. If we look at the next 5 years, both programs are disasters. If we look at the next 50, then it's a different story.

Just to be clear : I'm not saying you're wrong, and that the A380 will become a smashing financial success. It's just that we really don't know. Just as we don't know how financially successful the 787 may end up being. There are too many dynamic variables at play.
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astuteman
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 5:49 am

Quoting racercoup (Reply 117):
Fact, in order to get the green light for the A380 project Airbus predicted a 20 year market for VLA of around 1,700 frames

Fact. That's wrong. In order to get a green light for the A380 project, Airbus predicted SALES over 20 years of 750 frames, for an ROI of 20%. Whatever the market size prediction was.

Quoting Stitch (Reply 118):
Airbus pretty much assumed they'd own that entire market as they did not expect Boeing to launch a new 747 (i.e.

Wrong again. See above, They predicted securing 750 out of 1700 frames, i.e.45% of the market they forecast.
as a percentage of sales, if you factor in both the 748i and 777-9X they probably won't be far off in the 2000 - 2020 period
Today the number stands at 320 after 14 years.
If there had been no delays, there would clearly have been some more sales than that, not least 27 (and probably more) A380F's
Clearly c. 360 sales (say) in 14 years doesn't hit the business case model.
But it doesn't miss it by the gulf that is portrayed here on A-net.

I also don't believe for one second that the business case didn't assume that R+D money would continue to be spent on the product after EIS.
Every other aircraft on the planet experiences this.
There's no way they would have treated the A380 differently.

Quoting jayunited (Reply 119):
I've often wondered why Boeing launched the 747-8i especially when Boeing had hard data showing that most airlines were interested in moving away from quads to twins.

Just my hunch, but I think Boeing saw an opportunity that actually never transpired - i.e. to put up a cheap and cheerful alternative to a failing programme.
There was a time when the A380 was rumoured to be 6t overweight, missing its specs, and delayed for years, where I personally believe A380 customer airlines turned to Boeing and encouraged them to have a reasonably cheap alternative to hand.
I personally believe that there was a time c. 2004 - 2005 when the A380 programme came very close to being cancelled
I think what scuppered that is that despite being heavy, Airbus brought the A380's performance in on spec, so the customers stuck with it.
And of course today's models beat their original spec.
To add insult to injury, the 748's execution was compromised by resources and management attention being diverted by the issues being experienced on the 787 programme.

But that's just my hunch.
The 748 ended up not being cheap, and the A380 eventually did what it said on the tin.
I have it on pretty good authority that the 748 team were absolutely gutted when they saw the A380 test flight data coming in.
I hazard a guess that that's because it showed that their assumption of a big performance miss on the A380 hadn't transpired.

Rgds
 
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 5:55 am

Quoting MaverickM11 (Reply 5):
That's an interesting number considering their system wide LF was 79% this year and last year.

If you delete new routes started in the last 12 months, and upguaged routes in the last 12 months, EK are in the mid to high 90's.
 
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zeke
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 6:39 am

Quoting racercoup (Reply 117):
Fact, in order to get the green light for the A380 project Airbus predicted a 20 year market for VLA of around 1,700 frames. Boeing and some analysts including the much maligned on Anet Richard Abulafia felt the market was about half of that. John Leahy called Boeing's estimate both ridiculous and irresponsible. (apparently if you don't agree with him you are not only wrong you are somehow a reckless being) Boeing having witnessed 747 usage declining for years felt there would be more city pairs added using medium and large twins.

No, Airbus had at launch a break-even of 250 aircraft, with an expectation to build 751 aircraft over the life of the program to 2021. That break even number was then revised up to 270 aircraft, then 420 aircraft.



Airbus took responsibility for the delays and extra costs at the time, they accounted for something like 11.3 billion euros by the end of 2006, thus had some very poor results writing off the much of the A380 development/delay costs while generating no income from the program (cash from other programs paid for the A380 sunk costs). The end result is the break even number for the program actually reduced DOWN to 150 aircraft in 2007.

Quoting racercoup (Reply 117):
Fact, it has been 14 years and the number of A380/747 orders stands at 518, so I guess the Boeing prediction was pretty much on target.

Airbus never expected to get every aircraft in the segment, at best they were hoping for just under 50% of the combined passenger and freighter market in that segment (forecast market segment was 1510 aircraft, 1208 pax aircraft > 400 seats, and 302 freighters > 80t), I think they are relatively happy at how they have recovered.



Their biggest issue is with the delays they internal rate of return on the project has decreased significantly below their original projection of 20%. For a manufacturing project of that size, you would expect more like 20-30%.

A major way they saved on the original project was to defer the development of the A380-800F, A380-800R, and A380-900. I do expect them to look at a NEO later this decade, and the A380-900 in another 10 years.

Quoting racercoup (Reply 117):
Fact, in the 10 years since the 787 was launched there have been about 4,000 orders for the 787/777/A350. So there goes the argument that A380 sales are poor due to the industry climate.

Different market segments. The Airbus forecast from that time had 2830 widebodies with less than 250 seats, and 2340 widebodies in the 250 to 400 seat range. I think their 20 year forecast in 1999 was underestimated in that segment (your numbers do not include the 767/A300/A310/A330/A340).
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astuteman
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 7:11 am

Quoting zeke (Reply 132):
No, Airbus had at launch a break-even of 250 aircraft, with an expectation to build 751 aircraft over the life of the program to 2021. That break even number was then revised up to 270 aircraft, then 420 aircraft.

Thanks for providing the back-up evidence, Zeke.
I couldn't lay my hands on it just now.

Rgds

[Edited 2014-08-13 00:17:10]
 
1400mph
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 8:14 am

There's one reason why the A380 hasn't met its order targets.

Too much competition.

EK ( not saying it's a bad airline ) has sucked the guts out of everyone else's meaningful demand for the aircraft especially in Europe. Bad news for the A380 program is that EK hasn't created enough demand for itself to balance the loss of demand and orders from its competitors.

Other airlines must now deploy fleets that can be utilised across a range of routes as where before less diverse fleets in terms of type would do the trick.

There are literally only a handful of routes on which the big European carriers can steadfastly deploy the A380 year round. ( and even a handful is pushing it for AF and LH ) The bulk of the fleets of these airlines must be made up of more 'universally' practical aircraft.


BA ( a perennial user of this type of aircraft in the past ) across the North Atlantic although still strong faces competition from AA, DL, UA and VS. VS is half owned by DL so we are really talking about a ratio of 4:1. Again I'm not saying this is a bad thing before you all jump down my throat but it negates the need for the A380 in favour of smaller jets.

(Yes AA has its J.V with BA but AA still has to fill its own birds with punters and thus still dilutes the need for the A380 over the Atlantic.)

The big carriers in south East Asia and Australia are all involved in a fight to the death with each other and the ME3 so their demand is cautious at best. I seriously doubt SQ's need for 20+ A380's going forward.

Airlines are ordering the same amounts of aircraft but they can't achieve the kind of scale they require on enough routes these days to make large fleets of the A380 economically practical.
 
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SEPilot
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 1:01 pm

Quoting astuteman (Reply 130):
I have it on pretty good authority that the 748 team were absolutely gutted when they saw the A380 test flight data coming in.
I hazard a guess that that's because it showed that their assumption of a big performance miss on the A380 hadn't transpired.

I can believe that. They should have known better; they had experienced unexpectedly good results with the 77W; did they truly believe that only they, and not Airbus, could do that?

Quoting zeke (Reply 132):
Airbus took responsibility for the delays and extra costs at the time, they accounted for something like 11.3 billion euros by the end of 2006, thus had some very poor results writing off the much of the A380 development/delay costs while generating no income from the program (cash from other programs paid for the A380 sunk costs). The end result is the break even number for the program actually reduced DOWN to 150 aircraft in 2007.

This makes no sense whatsoever. They have massive cost overruns (more than double the initial estimates), are delayed for years, run into production problems delaying the per unit break even on manufacturing costs well beyond expectations, do not achieve the production rate expected, and the number of aircraft to break even goes DOWN? I am not an accountant, but I believe that the mathematics they use is the same that I have used all my life, and there is no way I can make that add up.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
brindabella
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 1:21 pm

Quoting MaverickM11 (Reply 5):

That's an interesting number considering their system wide LF was 79% this year and last year.

  

Quoting clydenairways (Reply 7):

That's an interesting number considering their system wide LF was 79% this year and last year.

So. Are you trying to imply that the A380 is running at 79% and the 777 is at 100% LF. Then you would have a point.

OK. Enough. What TC said was completely meaningless without an "apples to apples" comparison.

EK doubtless has many different classes/fares strategies on their many different routes, served by different types.

Doesn't mean the 777 isn't a wonderful financial asset (in fact I've elsewhere quoted the very same TC as revealing that the 777W is: their most profitable a/c(!)
Nor does it prove that the A380 is a drag on their bottom line.
"apples to apples".

It's just a throwaway line, OK?

cheers Bill
Billy
 
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 1:26 pm

Quoting zeke (Reply 132):
No, Airbus had at launch a break-even of 250 aircraft, with an expectation to build 751 aircraft over the life of the program to 2021. That break even number was then revised up to 270 aircraft, then 420 aircraft.

Why are you comparing apples to oranges? I pointed out how many ORDERS Airbus expected in VLA segment over 20 years and you show the BUILD number. Not that it matters by 2021 they will not have delivered 50% of their own forcast.

Quoting zeke (Reply 132):
Airbus never expected to get every aircraft in the segment, at best they were hoping for just under 50% of the combined passenger and freighter market in that segment (forecast market segment was 1510 aircraft, 1208 pax aircraft > 400 seats, and 302 freighters > 80t), I think they are relatively happy at how they have recovered.

Again you respond to statements I never made. I always included both the A380/747 in my counts.

Quoting zeke (Reply 132):
I think they are relatively happy at how they have recovered

Exactly how have they recovered? When they resort to hailing orders like Amedeo as a sign of the confidence in the program, well that's just reaching don't you think?

Quoting zeke (Reply 132):
Different market segments

The new long range twins are creating new city pairs in a way never before thought possible, bypassing hubs and indirectly taking sales from the VLA segment. Also this growing world wide fleet full of belly cargo is reducing the need for exclusive frieghters hurting the 747 program.
 
brindabella
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:09 pm

Quoting silentbob (Reply 20):
It's hard to predict where we will be in 20 years, but I could see it happening. By that time China will likely have grown substantially and we could be seeing massive development in Africa. However, I would expect Boeing to develop an improved competitor if that market segment matures significantly.

777-10 anyone?


 
Quoting MaverickM11 (Reply 21):
EK is the surrogate carrier for plenty of places (Pakistan, India, Iran, Saudi Arabia, etc) that don't have competent local carriers and would require passengers to connect regardless

I have wondered if basically the EK 120-strong A380 fleet represents the "long-haul" that many European operators should have been operating.

So the EK orders are mostly really repesentative of the total requirement from the EU zone.

Except that rather than being distributed among many resident carriers, they are mostly concentrated in Dubai.

cheers Bill

BTW - the note that "timing is everything" really applies here, IMO.
Plenty of good types have been wrong place, wrong time.
The A380 (and B747-8) may yet be victims of this.
Obviously the notion that increasing congestion requires fewer, more capacious movements is not stupid.
But they each had the misfortune to be launched into a (mostly) global slowdown.

All really too early too tell, IMO!

The test is whether the two types can last long enough until better times roll around.

The B757 didn't (EG)!




 

So, finally, like most things in life, the answer is boringly wishy-washy.

To all of you out there violently contesting whether the B787 or the A380 model is THE correct one?
Sorry!

  

The contest is rather which one is more applicable at the particular time.


sorry.
 

Bill
Billy
 
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Stitch
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:18 pm

Quoting zckls04 (Reply 125):
Could it be argued that the A380 would be a somewhat greater success if the 747-8 had not been made? Maybe Airbus were hoping it wouldn't be.

I don't see how. At best, they would have secured a few more orders from LH and KE.



Quoting astuteman (Reply 130):
Wrong again. See above,

Airbus assumed 750 unit sales when they were seeking ATO from the BoD in 1999-2000, but I've read the texts in the CMO's between 2000 and 2005 and the clear impression I gleaned from them is that Airbus expected to sell more than that.

But we've (collectively - not you and I) have had that debate already.  Smile

[Edited 2014-08-13 07:49:55]
 
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SEPilot
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:37 pm

Quoting Stitch (Reply 139):
Airbus may have assumed 750 unit sales when they were seeking ATO from the BoD in 1999-2000, but I've read the texts in the CMO's between 2000 and 2005 and the clear impression I gleaned from them is that Airbus expected to sell more than that.

I am sure they did. Most business cases are built on very conservative estimates of sales; the ones behind the program ALWAYS believe that they will do much better than those estimates. I am sure that Airbus brass truly believed that they would ultimately sell as many or more than the 747 sold. And I am sure that they never believed that a 400+ seat twin would appear on the scene in less than 20 years that would beat their economics. In fact, I am sure they did not believe that the 77W, which comes very close (and according to some acounts beats) to its economics, would appear before they even got the A380 in service, If you want to know what has really blunted the A380's appeal, I think it is the 77W. It is certainly not the 748, and the 779 is going to hurt it even more. Without a NEO I think it will pretty well kill it.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
brindabella
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:39 pm

Quoting FLALEFTY (Reply 63):
IIRC Airbus has already written off the A380 development costs. Therefore, they are now looking for the production break-even point, which they say will come in 2015.

    

I've watched this topic with extreme interest for yonks.
Many commentators on this forum are adamant in totally opposite positions.

Without going in too deep, my (pretty) confident summary is that what A has written-off is the:

overrun costs incurred during the development.

That is, the basic projected development cost (lets' say $BN15, for arguments' sake) is untouched.
It remains on the balance sheet and has NOT been written-off.

On the contrary, it remains to be paid-down after the type has acheived a surplus of sales-costs over production-costs that it is servicing all relevant overheads first (including Interest) such that it can also begin to pay-down the budgeted development cost.

But maybe you are in a better position to elucidate?

cheers Bill
Billy
 
tommy1808
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:41 pm

Quoting SEPilot (Reply 140):
In fact, I am sure they did not believe that the 77W, which comes very close (and according to some acounts beats) to its economics, would appear before they even got the A380 in service

I am sure you can provide a bunch of sources for the 77W being close or even beating the A380 economics, because the airlines flying both give it a 20+% advantage. And that is still almost 2 aircraft generations.

best regards
Thomas
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MaverickM11
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:42 pm

Quoting PW100 (Reply 108):
I also struggle to understand. The A380 operating cost does not change with load factor. Revenue on the other hand . . .

Yeah that didn't make any sense to me either...no idea what he's talking about there.

Quoting Stitch (Reply 118):
And yet Boeing then threw away billions on the 747-8, even declaring it's market would be as large and rosy as the A380's.

Ego makes a lot of people do a lot of stupid things

Quoting planesmart (Reply 131):
If you delete new routes started in the last 12 months, and upguaged routes in the last 12 months, EK are in the mid to high 90's.

That's reeeeeeeeally stretching the facts.

Quoting brindabella (Reply 138):
I have wondered if basically the EK 120-strong A380 fleet represents the "long-haul" that many European operators should have been operating.

I think that's part of it. EK's success is a result of the EU squashing its own carriers with taxes and regulation, and the Subcontinent getting in the way of their own airlines, among other countries...the traffic will go somewhere, no matter how much you block, tax, and regulate your home carriers, and that somewhere is EK.
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Stitch
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:47 pm

Quoting brindabella (Reply 141):
That is, the basic projected development cost (lets' say $BN15, for arguments' sake) is untouched. It remains on the balance sheet and has NOT been written-off.

On the contrary, it remains to be paid-down after the type has acheived a surplus of sales-costs over production-costs that it is servicing all relevant overheads first (including Interest) such that it can also begin to pay-down the budgeted development cost.

The scenario you describe above is how Boeing accounts for those costs, not Airbus.
 
tommy1808
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 2:56 pm

Quoting MaverickM11 (Reply 143):
I think that's part of it. EK's success is a result of the EU squashing its own carriers with taxes and regulation,

Not to forget that they give the ME3 lavish traffic rights, despite, like in the German-UAE bilateral, having a stated goal -- that both nations agreed to -- of covering the demand from and to each signatory country. Volume beyond that is not part of the agreement, yet traffic rights lead to tons of this.

Also interesting in the case of Germany, the agreement is not supposed to have an influence on consumer prices as per statement for the ratification by Parliament.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
pnwtraveler
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 3:10 pm

What is missing from all this arguing back and forth? Hard numbers. And even more specifically, how fast does the A380 start to lose money when the break-even numbers for a flight isn't reached. The hard costs to fly a four holer that size, with that many flight crew, extra ground support etc. etc. has to be pretty serious. Is it a flat line increase in loss, or is there a curve to the loss that says the losses really mount as the volume of bums in seats drops. For example does two half empty 77W lose more or less money than that same number on an A380. That goes to the level of risk the airline is prepared to carry when things go bad.

Given who owns the ME3, and their access to massive amounts of credit at extremely preferable rates, they can afford to carry loses much more than an airline that relies on market credit (not backed up by constant oil revenues), shareholder pressure, and higher labour and other costs.
 
tommy1808
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 3:19 pm

Quoting pnwtraveler (Reply 146):
The hard costs to fly a four holer that size

According to Airlines the A380 Trip costs are about the same as the 744s, only that you get much more space to sell.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
brindabella
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NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 3:22 pm

Quoting The777Man (Reply 103):

There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit. Same for Boeing on the 747-8 but at least the 747 program as a whole was very profitable. They should never have launched he 747-8 but I guess the 747-8F was very compelling.
Quoting airmagnac (Reply 110):
Quoting The777Man (Reply 103):
There's no way Airbus will break even on the 380 program. They may sell a few more but no way near what they need to make a profit

Would you mind expanding on that ? As you seem to have necessary information, I'd be interested to see figures on the non-recurring development & testing costs and infrastructure costs, recurring manufacturing costs, a spread of sales prices for the aircraft sold, estimates of acillary revenues from spares, training and operational consulting activities, a quantification of the goodwill and other non-tangible knowledge & skills acquired during the A380 development, maybe also an indication of how the buildings, test rigs, design tools and other infrastructure has been re-used for other programs...
You know, all those things that dynamically flow in & out of the program scope to create costs & revenues....

Steady lad!

Noone here will ever know those things, nor (probably) will any industry analysts.
But we can all make intelligent inferences from the information which is steadily made available, as do those same analysts.

My basic take is that the original $15BN development cost remains on the books; that the 4/month production rate was a real number; and that I retain a major skepticism that 2.5/month is anything close to a proper cash break-even unless you stand cocked at 45degrees to a full moon with a strong Westerly wind blowing ... or some such.
What do I know? Bugger all, however I did take note some years ago when an Airbus Production Manager said that they required 4/month to get to cash break-even and then to continue to defray the Principal.
And I took special note because he was not in Sales or Spin, but rather in an occupation and position where you just don't say stuff that you can't deliver-on.
Maybe that has changed? Could be.
Maybe you have better or more recent information?

cheers Bill
Billy
 
brindabella
Posts: 692
Joined: Fri Apr 30, 2010 10:38 am

NY Times On The 380: Oversize Expectations Part 1

Wed Aug 13, 2014 3:28 pm

Quoting Stitch (Reply 144):
The scenario you describe above is how Boeing accounts for those costs, not Airbus.

Excellent!

So the difference is .. ?

(not sarcastic; rather that what I am outlining is conventional Accounting, AFAIK.)

cheers Bill
    
Billy

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