Quoting 777stl (Reply 42): The same day, Airbus's stock price dropped 10%, so evidently it isn't just us silly Americans that remain skeptical.

I believe the stock dropped on lower than expected profit forecast for the next couple of years. If the A380 is such a burden then the fact that Airbus is looking to close the line would be seen as a positive.

Quoting mjoelnir (Reply 48): Just again how much would Airbus have to pay Emirates for cancelling the delivery of 80 A38ö

Airbus would deliver the A380's they are contractually obliged to deliver or negotiate a settlement with the customer.

There would be no financial sense in keeping the A380 line open just to deliver EK 5-10 aircraft per year.

Quoting seahawk (Reply 45): Imho the industry has decided that in general they prefer frequency over capacity. Which actually makes sense.

I see - you have yet to travel long intercontinental routes, because if you had done so you would also have known that the above do not make much sense. Travel above 10 to 12 hours eat-west and the number of windows for meaningful departure times is rather limited.

Quoting seahawk (Reply 45): Imho the industry has decided that in general they prefer frequency over capacity. Which actually makes sense. In a time of quickly changing demand flying 2x400 seats is easier than 1x600, as you can offer more seats when the demand is high and just drop one flight when the demand is low.

Good point, but 1x800 seats when demand is high is cheaper... Maybe the A380 is not doomed after all?

Cheers

Peter

Quoting abba (Reply 52): I see - you have yet to travel long intercontinental routes, because if you had done so you would also have known that the above do not make much sense. Travel above 10 to 12 hours eat-west and the number of windows for meaningful departure times is rather limited.

Frequency can also be more airlines offering the same route. I think the A380 is outstanding if an airline can fill it the whole year despite the competition. This is just hard to achieve and few airlines and few routes are up to that.

Especially if you think of 2 airlines using A380s on the same route.

Quoting NAV30 (Reply 49):

No No No, their production will continue beyond the day we both disappear from this earth.  

They're not as out-of-date as all that aircraft sitting in the dessert ready to be scrapped now are they?  


Airbus can cancel the A380 project tomorrow and forget the thing. But they will start making profit from airframes built towards the end of next year, so that's already positive cash flow. Then by closing it, it's not like there'll be any more profit because all resources that can be placed on their other projects are already there. There is plenty of room in Toulouse for development of existing projects. There is not shared components between the A380 and other aircraft anyway.

Quoting 777stl (Reply 42): See below.

I still don't see it.

Quoting mjoelnir (Reply 41): As long as the design is grandfathered, holding on to design features as old as the original design, I have difficulties accepting those birds as a brand new design all around.

Me too.

Quoting mjoelnir (Reply 40): I am amazed at the invalid criticism.

Again, me too.

Quoting par13del (Reply 39): I guess you don't consider that a new a/c, ok.

Indeed, I don't. Because it is not a totally new aircraft.

Quoting Aesma (Reply 36): Especially with Airbus, wasn't the A340 still available very recently while there was already no more production ? And the A318 ?

Ah, but that is not a very valid comparison.
Production line wise the A380 is an only child albeit with a stillborn twin. On the other hand, the A318 have a flock of siblings and the A340 do at least have a close cousin.

Quoting ChinaClipper40 (Reply 30):

Sorry, but some of the points you make are just plain wrong.
EG China, S. Korea and many other Asian nations are extremely close to following Japan into absolute population decline.
Also that airports are in fact multiplying like fleas in China; Japan is just one big airport when you call them up on the "MAP" screen, etc. etc.

However the major point is right on the button, and one that I have tried to make before -
the A.net forums are overwhelmingly focused on Europe& N.America, and show little understanding of the reality
of exploding middle-classes in Asia (read "future airline passengers"!).

I have tried to throw-out thoughts on what it might mean, but, sadly have so far been mostly wrong.
(EG the 787-10 type of solution looks perfect for Asia but so far is gaining few takers.
This is despite the fact that my 40+-years of travel in Asia & (luckliy) a happily long list of Asian girlfriends has taught me that many if not most Asian people want to travel ---> within Asia!).

So your thoughts on what it all means will be appreciated.

Taking all the trans-North Atlantic hate-stuff away just for a second, it does seem to me that the reason there is so much dissension is that the case is really finely-balanced.

It is not yet clear, and really could go either way.

(That is, all the partisans in EACH camp can find a compelling reason why they are obviously right and their opponents
are clearly bozos, if not worse.)

 

So, from the top:

A) The idea that congested airports/airspace/etc will be solved by bigger & bigger aircraft operating fewer flights is clearly not stupid.

B) Similarly the idea that people would prefer to avoid hubs & intermediate landings by taking a direct flight is also clearly not stupid.

C) The A380 has not (YET!) done as well as hoped .... but it is equally NOT an obvious failure.
It certainly could have a stronger future with just a bit of luck (both it & the B747-8i have suffered from the North Atlantic Crisis - which never was a GFC.)

My two cents?

D) Airbus will do the -800NEO, at least, and

E) Frustratingly, it will continue in the current "Not a Success but also Not a Failure" mode, as the coming world economic state is quite dark, IMO, and will tend to demand modest, cautious decisons on the part of airline decision-makers.

Which is not the best environment for the -800NEO (or whatever), IMHO.

   

cheers, Bill

Quoting seahawk (Reply 54): This is just hard to achieve and few airlines and few routes are up to that.

Again - if you forger Europe and the US for a moment, then you will see that this number is fast raising.

It seems this discussion is moving off the mark a bit. Issues of Chinese airspace, capacity vs frequency, new engines, NEO, and CEO are all interesting. The bottom line and the real issue is new orders. Where are the new orders? Show me the orders. I personally think there will be none. I think we are soon approaching a time when both the B747 and the A380 programs have run their course and will be concluded. The current orders will be completed and then it will be game over.

Quoting 11Bravo (Reply 61): It seems this discussion is moving off the mark a bit. Issues of Chinese airspace, capacity vs frequency, new engines, NEO, and CEO are all interesting. The bottom line and the real issue is new orders. Where are the new orders? Show me the orders. I personally think there will be none. I think we are soon approaching a time when both the B747 and the A380 programs have run their course and will be concluded. The current orders will be completed and then it will be game over.

Yes the A380 will need new orders, but the order situation with at least 4 years of backlog at the current rate of production is not to bad, enough time to get new orders. Airbus can wait two years and if there are no new orders until than, can cut the production rate.

Quoting mjoelnir (Reply 40): How much do you think it will cost to shut down the A380 production while there are still confirmed orders to be delivered?

The financial cost would be retrenchment packages, negotiated settlements with suppliers and customers and moth baling of A380 specific equipment and tooling. I'd suggest somewhere around the $2.5 billion dollars. That is if the facilities are not used for other programs.

Quoting Stitch (Reply 57): The A380's production infrastructure is designed uniquely to produce A380s. I'm skeptical it can be effectively (much less, efficiently) adapted to production of a different model, be it the A320, A330 or A350.

The major cost of running a production facility is generally not the equipment, but the fixed costs associated with managing and maintaining the facility and than wages.

I had a small engineering manufacturing business that worked in the telecommunications and mining industries. Our basic business ratio for capital expenditure was annual running and maintenance costs of 50% of CAPEX.

As such when we would put a business plan together, our main consideration was operational costs verses revenues. If these numbers added up, we made some quick telephone calls for financing CAPEX.

I'd suggest 70% of the equipment used for the manufacture of aircraft components would be interchangeable between different programs. Even though the CNC milling / cutting machines, presses and rollers, etc would be to a degree customised for the works they perform, they would essentially be off the shelf equipment. As such this equipment and the consumables (which can represent 10% of the value of the equipment) should be more than capable of being used else where.

Quoting brindabella (Reply 59): A) The idea that congested airports/airspace/etc will be solved by bigger & bigger aircraft operating fewer flights is clearly not stupid.

I don't think anyone is saying it is stupid. The (Boeing) statistics tell us the average size of aircraft has decreased from 304 to 299 seats over the last ten years. If we break this down, narrow body aircraft are now larger and wide body aircraft are now smaller (747>777). I think what people are trying to say is that we can't over state the impact congested airports will have on airlines decisions for buying the A380.

For instance, if airlines in China changed a proportion of their 737/A320 sized aircraft to A330 sized aircraft the immediate concerns of congestion can be alleviated. There is a big difference between an A330 and an A380.

If we look at the experience of BA and their A380's at LHR, the aircraft has enabled the freeing up of landing slots. The reality is, if landing slots is such a problem, they would be better off substituting their 140 A320 and 737 aircraft with larger high density A330 or 787 aircraft. This could free up to 80 landing slots per day.

Quoting travelhound (Reply 63): The financial cost would be retrenchment packages, negotiated settlements with suppliers and customers and moth baling of A380 specific equipment and tooling. I'd suggest somewhere around the $2.5 billion dollars. That is if the facilities are not used for other programs.

I again could imagine that just compensating the customers for non delivery of 160 contracted frames could run up to 5 billion USD leaving compensating Airbus direct suppliers and the engine suppliers for loss of business. My idea of a price tag for closing the line down now could easily reach 10 billion USD.

Quoting mjoelnir (Reply 64): I again could imagine that just compensating the customers for non delivery of 160 contracted frames could run up to 5 billion USD leaving compensating Airbus direct suppliers and the engine suppliers for loss of business. My idea of a price tag for closing the line down now could easily reach 10 billion USD.

The CFO was talking about closing the line post 2018. Out of the 160 remaining frames 40 of those frames are questionable orders anyway.

So, in reality a close of the A380 line would only happen once the good majority of remaining A380 aircraft on order are delivered.

As such your $5 billion would probably at the very worst be less than $0.5 billion.

There is a really puzzling aspect on most of the posts : some have called the reasoning behind as US / Euro-centric, which is truie but they are also very stuck in the current situation : This argument about hub vs point to point is really ludicrous as air transport is really about hubs in the overwhelming majority of routes.

An air service between two points has always followed a fixed pattern :
1/- Opening with the smallest airplane
2/- Development of a multi service i.e frequency ; this has a limit both from the airline side : too many aircraft vs not enough good slots, and from the airport infrastructure, both in terms of runway saturation and gates.
3/- Aircraft size augmentation with the same number of flights.

Problem : that airline won't be alone on that route. Competition will be fierce, fares will go down and/or airlines will be forced to improve CASM with more seats.
One can see where this will lead as the demand of air travel will grow in some parts of the world, mainly China, India, Indonesia and Malaysia foremost, then Korea and South-East Asia.

To not see that an A380-size module will have then a future is, to me, akin to severe myopia.

On this forum, there is a thread about the newest Peking airport, designed for 75 million passengers in three years'time, 120 in six years... all that with a ban on LoCos.

What Japan did in the past with the short ranged, beefed up 747s on domestic flights can very well be copied in Chine with a VLA. These aircraft stopped because the high speed train became very efficient and cheaper...
I do not recall anyone of the A380 doubters recalling that aspect. Do I ?

The issue for me is that the asia domestic capacity arguement would point to 320 and 737 being replaced by 330/350R/787-10, not 380.

Quoting Pihero (Reply 66): What Japan did in the past with the short ranged, beefed up 747s on domestic flights can very well be copied in Chine with a VLA. These aircraft stopped because the high speed train became very efficient and cheaper... I do not recall anyone of the A380 doubters recalling that aspect. Do I ?

China is, of course, massively* investing in HSR. IIRC, in 2013 the number of domestic passengers carried on HSR was double that carried on aircraft.

China clearly has the population density to support HSR (~137 people per square km, vs. ~116 for the EU), and in many ways China's population is rather more concentrated that Europe's. As a bit of an over simplification, pretty much everyone lives in the eastern half**. And two-thirds of the population is in about half the eastern region, in about 11 provinces, centered. And China has (for better or worse) the political will to implement HSR.

Something like a 747D is going to see a pretty limited market. Perhaps some from the Hong Kong area to the Beijing/Shanghai regions. Shanghai to Beijing is already under five hours by train (depending on how many stops are made, most of the fast trains make half a dozen stops and are actually nearer 5.5 hours).


*Again, IIRC, there were some 6000 miles of HSR by the end of 2013, and that's expected to grow to 19,000 miles by the end of 2015.

**Just discounting Inner Mongolia, Xinjiang, Tibet, Qinghai and Gansu, which are large but sparsely populated (having about 6% of China's population), bumps the population density to about 280 people per square km.

Quoting lutfi (Reply 67): The issue for me is that the asia domestic capacity arguement would point to 320 and 737 being replaced by 330/350R/787-10, not 380.

Let's hope not, a fair bulk of the A32X-NEO's are in Asia, and if they are kept for 10-20 years it will be a while before they are replaced.

Quoting abba (Reply 60): Again - if you forger Europe and the US for a moment, then you will see that this number is fast raising.

Where? In Asia the next move will be for many narrow body routes to be up-graded to 787/A330 size, then maybe to A350/777.

The gepgraphy and the competition however means that many routes will be point-to-point rather than via hubs.

I have been hearing about the great future of the A380 for 20 years now, yet nobody wants to order more.

Will Airbus ever offer a Regional A380?

I have some catching up to do. From the previous thread:

Quoting travelhound: I wonder if this will affect existing orders. There could be quite a few customers wanting to convert their orders to the NEO once it is released.

That usually depends on the delivery date. Customers taking delivery of the aircraft in the coming years will most likely stick to it, while airlines with delivery dates in the mid- to long term future will most likely convert (take Qantas for example, the carrier has outstanding A380 orders post 2020).

Upgrading also means a higher price to pay.

Quoting N14AZ: I am convinced that this is one reason why Airbus is not happy being pushed by EK so hardly to launch the NEO. Imagine you were member of the Airbus sales team and working hard to convince up to four customers to buy some A 380-800 right now (Airbus confirmed that there are four parallel sales campaigns) and your potential client leans back in his armchair and tells you "why should I buy your A 388 now if you will launch the A 380 NEO soon."

You are right but it is unavoidable. A re-engine project comes with a lead time of several years, you can't just announce a new upgrade only 1 or 2 years in advance. Whether they launch the NEO in 2020 or 2030, the situation you described is unavoidable. There will always be a transition period like we are now seeing with the A330 and 777. And it will have impact on sales for the current jet.

When a country is emerging it also means new cities, new airports, and more sophisticated Airlines. The fundamental mistake many at Airbus have done was to believe all the growth would go to the same markets and same Airlines than 20 years ago.
Yet because of the concentration of demand and the fact many routes have reached the maximum frequency threshold, more bigger aircraft will be sold. But bigger does not mean much bigger. I also believe the 787 is too small. You don't operate a sub fleet just to be more able to test a bunch of new markets that if they work would also soon work well for larger aircraft.

Quoting SEPilot: There is a desperation on the part of many members of this forum to keep the A380 in production.

Calling people desperate because they have a different opinion, is that your last line of defense? I thought we had a nice conversation, people have given some good arguments about a possible business case for a future A380 upgrade. I did not expect such strange comment from you.

Quoting lightsaber: Since that is over 400 engines, it is a business case for RR (in particular if they 'steal' GP 7200 orders). I agree that that is the minimum plus growth. Plus other airlines. If the cost per flight is improved, it shall help sales. of the A380NEO. It comes down to how many other A380s. I see a future. Not for slot limited airports per se (although they'll be used there). But rather to feed growing hubs from major markets that do not have the needed fragmentation.

That's 460 engines, just for EK alone. I'm convinced we will see more orders. With 200 to 250 orders, there's a business case for 800 to 1,000 engines, way more than RR have today with the Trent 900.

Quoting travelhound: For this business case to work, we would have to expect, at the very least to produce thirty aircraft per year (i.e. - 300 sales) to ensure a stable manufacturing cost base. As such the $2.5 billion in development costs would be paid off over 300 frames.

Quoting travelhound: The financial cost would be retrenchment packages, negotiated settlements with suppliers and customers and moth baling of A380 specific equipment and tooling. I'd suggest somewhere around the $2.5 billion dollars. That is if the facilities are not used for other programs.

The bulk of the $2.5 billion costs are for RR so the investment costs for Airbus alone will be much lower. If we do the math again with $1.5 billion for RR, and the remaining $1 billion for Airbus, less than 300 frames are required. With 'only' 200 orders, RR would have to recover their investment over 800 engines. Do you believe that's not possible?

Quoting KarelXWB (Reply 76): If we do the math again with $1.5 billion for RR, and the remaining $1 billion for Airbus, less than 300 frames are required.

A couple questions on that cost, is this just for the NEO or also the -900?
Based on info in the various threads, Airbus had initially intended a production rate of 45 per year, the stretch (900) was also planned, in relation to the infrastructure actually created / built (30 versus 45), did they accommodate for the larger size of the 900, especially the roads, barges are a much easier fix than roads.
I assume the FAL was also designed to build the 900?

Quoting par13del (Reply 77): A couple questions on that cost, is this just for the NEO or also the -900?

NEO only.

Quoting par13del (Reply 77): I assume the FAL was also designed to build the 900?

Correct.

Quoting KarelXWB (Reply 76): The bulk of the $2.5 billion costs are for RR so the investment costs for Airbus alone will be much lower. If we do the math again with $1.5 billion for RR, and the remaining $1 billion for Airbus, less than 300 frames are required. With 'only' 200 orders, RR would have to recover their investment over 800 engines. Do you believe that's not possible?

I question if RR could manage an ROI that is commercially acceptable.

On the same point I don't think RR would be willing to solely invest the $1.5 billion for the new engines. I'd suggest Airbus would be asked to throw some money into the kitty.

As per one of my previous posts, with the A350 only being $10m more expensive than today's 777-300ER, but being 20% more efficient, I don't think there is going to be much opportunity for Airbus to sell an A380NEO at a price premium to justify the $2.5 billion investment. I would even suggest if airbus want to sell the NEO in the numbers required to keep the production line going, Airbus may need to discount an A380NEO more than what they are today.

We know that Tim Clark from Emirates has said if Airbus go ahead with a NEO he will buy 160 of them. We don't know at what price he is willing to pay.

It just might be the case, once all of the conversations with airlines are finished and all of the numbers finally crunched, airlines (including EK's) commitment to buy the NEO just might not be there at the price Airbus needs to justify the investment. Conversely, it could be, but there is nothing at this stage to say this will be the case!

Quoting travelhound (Reply 79): with the A350 only being $10m more expensive than today's 777-300ER, but being 20% more efficient

Beware that Airbus and Boeing list prices cannot be compared with each other.

Quoting travelhound (Reply 79): On the same point I don't think RR would be willing to solely invest the $1.5 billion for the new engines. I'd suggest Airbus would be asked to throw some money into the kitty.

Unless something changes, both Airbus and RR can apply for RLI, so RR really does not need Airbus finances.

Quoting par13del (Reply 81): Unless something changes, both Airbus and RR can apply for RLI, so RR really does not need Airbus finances.

Well, that would only be true if the RLI would cover the total development costs. But per application a maximum of 1/3 of the total development costs may be funded through RLI.

Well, we could get the bean counters involved.
At present from the articles we are looking at a cost of 2.5billion, no break down was given so let's speculate.
If both RR and Airbus apply for RLI, RR will need an additional 2/3's of its development covered either by investors or Airbus or a combination of both.
Per the rules I don't believe Airbus can apply its RLI to RR since it is not supposed to be for financing, the experts can confirm. So if Airbus provides additional finances to RR would it be as a loan written off against frames / engines sold or as just another program development cost?

The articles speculate that RR is in need of an a/c for an engine, so would they be willing to accept greater risk?

Quoting par13del (Reply 83): Well, we could get the bean counters involved.

I don't think that is necessary.  .

Quoting par13del (Reply 83): At present from the articles we are looking at a cost of 2.5billion, no break down was given so let's speculate. If both RR and Airbus apply for RLI, RR will need an additional 2/3's of its development covered either by investors or Airbus or a combination of both.

Not necessarily. RR could apply for RLI for its engine program, which is perfectly legit. Airbus can do the same for her A380-neo program (which stands alone from engines). Both can get a maximum of 1/3 funded through RLI. But the situation might very well occur that Airbus applies for it, and Rolls-Royce does not. Or vice versa. Or that both will not apply for RLI, which is just as easily possible. Since they would be individual applications if submitted, they have no direct relationship to each other whatsoever.

Quoting par13del (Reply 83): Per the rules I don't believe Airbus can apply its RLI to RR since it is not supposed to be for financing, the experts can confirm. So if Airbus provides additional finances to RR would it be as a loan written off against frames / engines sold or as just another program development cost?

If Airbus were to finance the development at Rolls-Royce that financing would highly resemble any other commercial loan (for an estimated 99,99%), and basically any other RLI-loan as well, about for 99,98% (due to royalties). Not sure where you are going with this statement.

Quoting par13del (Reply 83): The articles speculate that RR is in need of an a/c for an engine, so would they be willing to accept greater risk?

Quite possible, but time will tell if they will go forward along that route.