I think there are some important questions that really ought to be asked here:
If Airbus really is offering such substantial discounts on the A380, why haven't they actually sold *more* of them. Especially with walk-away clauses that are quite advantageous to the airlines. Half a million dollars seems to me to be VERY cheap on an aircraft that lists for well over $200 million. If I were running a large international carrier and I were convinced that the VLA market would be huge in, say, 2010, wouldn't it make sense to order at least 50 or so discounted A380's with delivery dates extending from, say 2006 to 2011? Even more so given that I could walk away for only half a million per plane.
To me, that says that either the report is inaccurate (but why would an Australian news source be partial to either Boeing or Airbus) or that there really are some serious concerns about the viability of the A380 program. I actually believe the latter for a number of reasons.
I believe Airbus' predictions on market size are overly optimistic. Why? Boeing has offered several models of the 747 for 35 years, and yet they have only garnered orders for 1340 - in a market that was essentially theirs alone. That works out to 38 orders per year - yet Airbus predicts a run rate of 50 per year for the 20 years after introduction (and a market size of 1000-2000). Not to mention that Airbus won't have the market to themselves if the 747X program is indeed launched. While the A380 would still be the largest aircraft in the skies, the 747X would offer attractive commonality (to 747 operators), reduced seat-mile costs (compared to the 744, but higher than the A380), and lower acquisition cost at typical discounts. For some routes that would require more capacity than a 747-400, a 747X would be a better fit (i.e. if you only need to carry 500 pax instead of 550).
Also note that Boeing received 180 orders for the original 747 before the first deliveries (1966-1969) - and even with that, the 747 nearly brought the company down in the early 1970's (as orders slowed dramatically for several years). Will Airbus get many more pre-launch orders? They've already sold to many of the airlines that were considered likely to buy into the program. Most or all of the US carriers are uninterested (and while the world does not revolve around the USA, it is one of the largest aviation markets and will continue to be so). In addition, many 747 orders were for the range it offered - longer than any other commercial aircraft until recently. With the range of the 777-200/300ER and the A340-500/600, the 747 doesn't hold that crown anymore.
I believe that the world aviation market will continue to fragment. The new Inchon airport in South Korea, I believe, is an excellent example of this (a new airport designed for 100 million annual passengers - a hub that could eclipse NRT in the long term), as are services like CO and UA's non-stops from EWR/JFK to HKG, or CO's service from EWR to London-Stansted. The Japanese government also has a long-term commitment to building three runways at NRT - and the second runway is finally in the works - helping to increase capacity there. The need is for flying between congested hubs - but it's not clear to me that this is even a 500 aircraft market.
As for this being a blow to Boeing - well in all honesty, with Airbus building a VLA, it would be mutual economic suicide for both unless the most wildly optimistic predictions were true. Splitting a limited market that *might* be profitable for one manufacturer would be disastrous for two. Look at what happened to Lockheed and McDonnell-Douglas with the L1011 and DC-10.
European governments will never let Airbus fail - there are too many jobs at stake - so even if they are "betting the company" with the A380, there's no risk of loss. I haven't even said a word about subsidies otherwise.
Can *anyone* formulate a *reasonable* argument against this aside from things along the lines of - "Americans aren't always right about everything; They should build it just because it's cool; Boeing's forecasters are wrong and Airbus's are right; Boeing sucks; Boeing gets unfair subsidies too; America sucks etc."