Max Q
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A380 Biggest manufacturing loss in civil aviation to date?

Fri Feb 15, 2019 9:46 am

With development costs of over $25 Billion
the A380 must be the most expensive mistake ever undertaken by a civilian aircraft manufacturer, even more than the
787



The Concorde was cheap by comparison,
even in today’s dollars




Sad to see it go but it must be a painful
subject for Airbus
Last edited by SQ22 on Fri Feb 15, 2019 5:47 pm, edited 1 time in total.
Reason: Title updated
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SomebodyInTLS
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 12:26 pm

AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.
"As with most things related to aircraft design, it's all about the trade-offs and much more nuanced than A.net likes to make out."
 
JustSomeDood
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 1:12 pm

SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...
 
slider
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 1:19 pm

the reality of it is, yes, it probably is the losingest commercial aircraft program in history.

But that means little. Hey, Airbus swang for the fences and I can't blame them for that. Given the usual rancor on this board about A vs B and the A380 in general, I think we'll have a better postmortem only through the lens of time.

I mentioned yesterday that perhaps it was just ahead of its time; this may still be the case, we'll see. If I were Airbus, I wouldn't trash the tooling and jigs.
 
DLASFlyer
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 1:55 pm

The 787 was a mistake?
 
RDUDDJI
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:04 pm

I think the mistakes are on the marketing/sales side. They simply overestimated the demand. No doubt the timing wasn't excellent either.

Companies make mistakes. Even media darlings like Apple have made products that failed in the market. Learn from the mistakes, and become a better company.
Sometimes we don't realize the good times when we're in them
 
Max Q
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:06 pm

DLASFlyer wrote:
The 787 was a mistake?



Didn’t mean to imply that, not even close, I think the 787 will eventually be a profitable program for Boeing
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SEPilot
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:07 pm

It may well rank as the biggest money losing commercial project of all time, period.
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:14 pm

SEPilot wrote:
It may well rank as the biggest money losing commercial project of all time, period.


It may, but there are some very notable flops in contention: For example, the Intel Itanium product line, which costs tens of billions of dollars (not just Intel's money) and got nowhere in the marketplace. That's just in products. If you stretch the definition of "commercial project" to "investment" failures, there are quite a number of doozies (AOL Time Warner, for example.)
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nry
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:14 pm

RDUDDJI wrote:
I think the mistakes are on the marketing/sales side. They simply overestimated the demand. No doubt the timing wasn't excellent either.


Marketing and sales? How about engineers designing an overweight airplane in anticipation of a stretch that would never come? How about finance signing off on the cost estimates?

To blame one department is a folly. Mistakes were made up-and-down the organization. If Airbus marketing and sales are the only ones "learning from their mistakes," then this organization is in big trouble.
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N328KF
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:15 pm

SEPilot wrote:
It may well rank as the biggest money losing commercial project of all time, period.


It may, but there are some very notable flops in contention: For example, the Intel Itanium product line, which costs tens of billions of dollars (not just Intel's money) and got nowhere in the marketplace. That's just in products. If you stretch the definition of "commercial project" to "investment failures," there are quite a number of doozies (AOL Time Warner, for example.)
“In the age of information, ignorance is a choice.”
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Finn350
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:19 pm

Max Q wrote:
DLASFlyer wrote:
The 787 was a mistake?



Didn’t mean to imply that, not even close, I think the 787 will eventually be a profitable program for Boeing


The 787 development cost is at least $15 billion and then there is the deferred production cost of around $30 billion. By that standard the 787 program has made even greater loss of around $45 billion than the A380. The difference to the A380 is that now Boeing is slowly generating positive cash flow to offset the cost, but as a whole, the 787 is never going to be a profitable program.
 
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:38 pm

These threads are just all so sad. There are now 5+ threads open and more opening every few hours to mostly $hit on Airbus. Is all this really necessary? And very little facts are presented along the way. Mostly personal opinions, and in many cases provable falsehoods (some clearly intentional). It honestly doesn't speak highly of this community, it doesn't encourage participation and it just isn't much fun to hang around here anymore among all this hatred and animosity.
 
marcelh
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:40 pm

JustSomeDood wrote:
SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...

Mr. Aboulafia has some preferences to a certain US plane builder...
 
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Francoflier
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:40 pm

What's certain is that if Airbus got a dollar for every a380-bashing thread on A.net since the program began, it would have been the most profitable venture ever...
:wink2:
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marcelh
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:41 pm

JustSomeDood wrote:
SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...

Mr. Aboulafia has some preferences to a certain US plane builder...
 
BUFJACK10
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:43 pm

Max Q wrote:
DLASFlyer wrote:
The 787 was a mistake?



Didn’t mean to imply that, not even close, I think the 787 will eventually be a profitable program for Boeing[/quote

In my opinion, efficient aircraft designs such as the 787 and A350 helped stifle the need for large aircraft such as the A380. Most airlines do not need high capacity aircraft reliant on hub to hub business models. Boeing had the correct idea of flying either P2P or hub to secondary markets. I also believe that when DWC becomes fully operational, EK May adjust their business model more centered on frequency.
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SomebodyInTLS
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:45 pm

JustSomeDood wrote:
SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...


You really don't do yourself any favours by mentioning Mr Aboulafia and "reputable source" in the same sentence when it comes to the A380 or A350...
"As with most things related to aircraft design, it's all about the trade-offs and much more nuanced than A.net likes to make out."
 
wawaman
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 2:53 pm

Surely the question here is 'and what will Airbus do next'. What is the market opportunity created by removing the a380 at the top of the lineup, and how will they see the future. In that context we can judge the A380 decision. I guarantee you Airbus will be well ahead of us in this thinking, and not spending a lot of time looking back 2 decades or more when A380 decisions were made. The Emirates decision to take the Neo and A350 combo may give us some clues.
 
RalXWB
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:15 pm

Mr. Aboulafia is certainly NOT a reputable source. He is perhaps one of the biggest Team B-extremists out there. #justsaying
 
dredgy
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:16 pm

It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).
 
JustSomeDood
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:19 pm

SomebodyInTLS wrote:
JustSomeDood wrote:
SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...


You really don't do yourself any favours by mentioning Mr Aboulafia and "reputable source" in the same sentence when it comes to the A380 or A350...


Don't attribute bias without proof just because he was a longtime critic of an A380, even if his forecasts for the A380 looked pessimistic at the time they have proven themselves to be on the money. The following is from a Morgan Stanley Research report in September 2006 https://www.researchgate.net/publication/283720958_The_A380_debate, with the benefit of hindsight, that's a pretty on-the-nose judgement on how the A380 ended up:

Mr. Aboulafia thinks the A380 is a tremendously expensive way to address a market that’s small and shrinking. Given the A380’s excessive weight and modest technological advances, he thinks it can be operated profitably on only a small number of routes, and believes it will face stiff competition from the 747-8 in the freighter, and potentially passenger, market. He thinks demand for international passenger travel will be better served by Boeing’s two-engine 777 and 787, as well as Airbus’ own A350XWB family. Even with significant required improvements, such as a stretched A380–900 version to carry 650/700 passengers, Mr. Aboulafia expects Airbus to deliver only 200 A380s through 2015, with an additional 200 from 2016-2025. (the bull case expected 380, and 500 deliveries respectively)


And frankly, if you want to prove that $25b number is something pulled outta thin air, why not post some other sources instead of poking holes in mine?
Last edited by JustSomeDood on Fri Feb 15, 2019 3:29 pm, edited 1 time in total.
 
VV
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:24 pm

But there is no deferred production cost.
Do not take this at the first degree.
 
Amiga500
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:27 pm

JustSomeDood wrote:
I guess Mr. Aboulafia, or the many other reputable sources


Sorry.... what? The broken clock is now reputable?
 
douwd20
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:29 pm

JustSomeDood wrote:
SomebodyInTLS wrote:
AFAIK that $25b number is complete fiction and it annoys me that it persists and persists. It's literally double the last feasible estimates that were being made back in the day. Someone made a mistake mixing up currencies, producttion and R&D costs while joking about the ever-increasing budget back then - and somehow this number plopped out, was seized upon and has stuck ever since.


https://www.forbes.com/sites/richardaboulafia/2016/06/06/airbus-a380-the-final-countdown/#5266be85553d

I guess Mr. Aboulafia, or the many other reputable sources who reported on the ballpark of this figure are all barking up the wrong tree and you alone are utterly correct...


I recall the relentless bashing here of Mr. Aboulafia and it turns out he was spot-on. Now the bashers will run away and never repent. Airbus’s market forecast was only off by 75%.
Last edited by douwd20 on Fri Feb 15, 2019 3:31 pm, edited 1 time in total.
 
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:30 pm

aaexecplat wrote:
These threads are just all so sad. There are now 5+ threads open and more opening every few hours to mostly $hit on Airbus. Is all this really necessary? And very little facts are presented along the way. Mostly personal opinions, and in many cases provable falsehoods (some clearly intentional). It honestly doesn't speak highly of this community, it doesn't encourage participation and it just isn't much fun to hang around here anymore among all this hatred and animosity.


Agreed
 
firemansparky
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:31 pm

aaexecplat wrote:
These threads are just all so sad. There are now 5+ threads open and more opening every few hours to mostly $hit on Airbus. Is all this really necessary? And very little facts are presented along the way. Mostly personal opinions, and in many cases provable falsehoods (some clearly intentional). It honestly doesn't speak highly of this community, it doesn't encourage participation and it just isn't much fun to hang around here anymore among all this hatred and animosity.


:checkmark:
 
musman9853
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:37 pm

dredgy wrote:
It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).



they'd have to sell each a380 at 100M+ above production cost just to break even. considering airbus is losing money on each a380 they build, they're not even recouping production costs, let alone development costs
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RDUDDJI
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:44 pm

nry wrote:
RDUDDJI wrote:
I think the mistakes are on the marketing/sales side. They simply overestimated the demand. No doubt the timing wasn't excellent either.


Marketing and sales? How about engineers designing an overweight airplane in anticipation of a stretch that would never come? How about finance signing off on the cost estimates?

To blame one department is a folly. Mistakes were made up-and-down the organization. If Airbus marketing and sales are the only ones "learning from their mistakes," then this organization is in big trouble.


I meant to say "are *mostly* on". Regardless, none of your scenarios would have happened if they hadn't decided there was a market for this airplane and decided to green light the project.
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Amiga500
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:48 pm

Max Q wrote:
the A380 must be the most expensive mistake ever undertaken by a civilian aircraft manufacturer


Regardless of the actual costs, it is easily the most expensive mistake ever within civil aerospace.

There are many lessons to come out of it - principle of which (for me) is - if you cannot make an economic case fairly quickly[1], then its highly likely there is no economic case. Spend too long on the numbers and institutional bias will set in[2].


[1]The consortium that backed out of making a VLA in the early/mid 90s due to concerns over market size included both Boeing and Airbus.

[2]Like Boeing are currently doing with MoM. Those numbers are highly massaged to the point they are now probably telling Boeing whatever Boeing wants them to say.
 
nikeherc
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 3:51 pm

The A380 may be the biggest loss in current dollars, but it won't bring Airbus down. In aviation, the biggest disaster was the DC-8, which started Douglas on a downhill slide from which it never recovered. The DC-8 used up all of Douglas' cash flow impacted the efficiency of manufacture for the DC-9 and caused them to scrimp on the DC-10. The flub on the DC-8 caused the merger with McDonnell and made the most successful civil manufacturer into a basket case. The defense business kept McDonnell Douglas going for quite a few years, but when the feds decided that there were too many defense contractors after the A-12 fiasco McDonnell Douglas was beaten down to the point that the merger with Boeing was inevitable.
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Slash787
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:21 pm

How the hell is the B787 a mistake? it has been a game changer for many airliners, especially the b787-9, perfect size aircraft for many airlines who don't want big planes and it has an amazing range.
 
VV
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:25 pm

Francoflier wrote:
What's certain is that if Airbus got a dollar for every a380-bashing thread on A.net since the program began, it would have been the most profitable venture ever...
:wink2:


I am wondering which aircraft is the most bashed on a.net.
The second question is who is the most bashed poster.
 
PSAatSAN4Ever
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:42 pm

aaexecplat wrote:
These threads are just all so sad. There are now 5+ threads open and more opening every few hours to mostly $hit on Airbus. Is all this really necessary? And very little facts are presented along the way. Mostly personal opinions, and in many cases provable falsehoods (some clearly intentional). It honestly doesn't speak highly of this community, it doesn't encourage participation and it just isn't much fun to hang around here anymore among all this hatred and animosity.


Agreed! "The man who has never failed has never tried". No one is ever blameless in anything, however, as Harry Truman is famous for saying, "the buck stops here". The people to "blame", which is a word I find to be rather hypocritically used sometimes, must start with those who okay-ed the project to begin with. If the information presented to said supervisor was faulty, that person must live with that fact, and so on.

As far as the A380 goes, it is a niche aircraft that will serve its airlines well. Is Airbus rolling around in the "Divine Treasury", swimming in unlimited profits, like a Ferengi's wildest dream? No. Are there other aircraft doing well for Airbus? Ummm...yes!!

And for the record, the Lockheed took a loss of 2.5 billion U.S. dollars on the L-1011 in 1981, which equates to nearly 6.7 billion dollars today. Being as that was their only commercial product, they withdrew from civil aviation. Their competition with McDonnell Douglas killed them, and in the end, the rush to compete with the L-1011 led to a somewhat rushed DC-10, which, after several horrific crashes and subsequent design changes, had a long and successful career with many airlines - but also led to McD's eventual envelopment into Boeing. Many theorize that had the two manufacturers worked together instead of against each other, one finished product might have led to both companies around and building airplanes.
 
airbazar
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:54 pm

It was a mistake only if you believe Airbus would be where it is today without it.
Going back to the turn of the century Airbus was primarily a narrow body aircraft manufacturer. Boeing held something like 70% of the widebody market share which is by far the most lucrative segment. Some believe the A380 gave Airbus the know-how and reputation as a trusted wide body OEM. True or not we'll never know but today Airbus competes with Boeing on equal terms in all segments. Was it worth a $25 billion loss to get to this point?
Last edited by airbazar on Fri Feb 15, 2019 4:56 pm, edited 1 time in total.
 
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keesje
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:56 pm

List price $350-430mln over the years, discount 40%? (contrary to 787, no competition), 250 sold. Turn over.. 90 Billion? Ongoing aftermarket services.. unknown, investment facilities, development, supply chain.. 15 Billion? Damages delay a few billion...A350 inherited a lot of A380 systems / composite technology, shared investment there? Very complicated..
"Never mistake motion for action." Ernest Hemingway
 
mayohoo
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 4:56 pm

The development cost in 2006 according to Airbus was approximately 18 billion euros ($22.5 billion dollars at the 2006 exchange rate). It then said in 2015 development costs were 15 billion euros ($16 billion) Since that time it is reasonable to expect they have spent more money on development (NEO plans, wing twist development etc.). $25 billion dollars cumulative to 2019 is in the ballpark.

From Wiki with references which you can look up:

In 2000, the originally projected development cost was €9.5 billion.[36] In 2004 Airbus estimated 1.5 billion euros ($2 billion) would be added for a €10.3 Bn ($12.7 Bn) total.[37] In 2006 at €10.2 Billion, Airbus stopped publishing its reported cost and then provisioned €4.9 Bn after the difficulties in electric cabling and two years delay for an estimated total of €18 Bn.[36]

In 2014, the aircraft was estimated to have cost $25bn (£16bn – €18.9bn) to develop.[38] In 2015, Airbus said development costs were €15bn (£11.4bn – $16.95 Bn), though analysts believe the figure is likely to be at least €5bn ($5.65 Bn) more for a €20 Bn ($22.6 Bn) total.[5] In 2016, The A380 development costs were estimated at $25 billion for 15 years,[39] $25–30 billion,[40] or 25 billion euros ($28 billion).[6]

To start the programme in 2000, Germany, France and the UK loaned Airbus 3.5 billion euros and refundable advances reached 5.9 billion euros ($7.3 billion). In February 2018, after an Emirates order secured production of the unprofitable programme for ten years, Airbus revised its deal with these countries to save $1.4 billion (17%): restructured terms allow to lower the production rate from eight in 2019 to six per year.[41]

It is a good plane, safe, roomy. It had a terrible business case.

Unfortunate.
 
Bongodog49
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:00 pm

The A380's ability to burn cash is minute compared to the Boeing 2707 SST, just remember that not a single SST flew, so there's not even a single airframe to allocate the cost to. Even Concorde had better economics with 14 production examples.
Yes the A380 is a classic case of getting carried away with the "mine's bigger than yours" attitude, but it has still produced a fair number of successful airframes. It certainly should never feature on a top 10 of disastrous airliners.
 
drdisque
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:04 pm

I think the only fair way to look at this would be margin. The programs I'd like to compare it to:

1. CV-880/-990 (expensive development, abysmal sales, drove Convair out of jet airliner business)
2. Concorde (very expensive development, few sales)
3. L1011 (very expensive lengthy development, mediocre sales, drove Lockheed out of civilian market)
4. Dassault Mercure (I honestly don't know about its development, but had ridiculously poor sales, so it's a candidate)

It's obviously unfair to compare it to aircraft that were never built/sold.
Last edited by drdisque on Fri Feb 15, 2019 5:05 pm, edited 1 time in total.
 
Vladex
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:04 pm

RDUDDJI wrote:
I think the mistakes are on the marketing/sales side. They simply overestimated the demand. No doubt the timing wasn't excellent either.

Companies make mistakes. Even media darlings like Apple have made products that failed in the market. Learn from the mistakes, and become a better company.


The demand is there with the ever increasing traffic but the problem is the short term profit driven environment that is almost totally risk averse and putting trust in dubious airlines like Qatar and Etihad which scared even more others.
 
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SEPilot
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:05 pm

dredgy wrote:
It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).

You forget that Airbus has to build the plane as well as develop it, and all but a few of the 251 sold (including the ones not yet delivered) cost more than they were sold for (by Airbus’s own words) to build. And I do not think $25 billion is an excessive estimate of the development costs. By the time the program is all closed down the total losses are likely to be much higher than that.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
VV
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:06 pm

Bongodog49 wrote:
The A380's ability to burn cash is minute compared to the Boeing 2707 SST, just remember that not a single SST flew, so there's not even a single airframe to allocate the cost to. Even Concorde had better economics with 14 production examples.
Yes the A380 is a classic case of getting carried away with the "mine's bigger than yours" attitude, but it has still produced a fair number of successful airframes. It certainly should never feature on a top 10 of disastrous airliners.


What does this even mean?
 
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spinotter
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:06 pm

aaexecplat wrote:
These threads are just all so sad. There are now 5+ threads open and more opening every few hours to mostly $hit on Airbus. Is all this really necessary? And very little facts are presented along the way. Mostly personal opinions, and in many cases provable falsehoods (some clearly intentional). It honestly doesn't speak highly of this community, it doesn't encourage participation and it just isn't much fun to hang around here anymore among all this hatred and animosity.


You are 100% right, aaexecplat. Obviously Airbus misread the aviation marketplace, but so did Boeing with the 748. If more airlines had bought the A380, it might have been a success. Boeing made a gigantic mudsplat with the inauguration (!) of the 787, but it might one of these days be cash-positive. Airbus acquired the know-how to create the A380, and if they play their cards right, they can always create some new top-of-the-line models. They have won in the 320/737 and in the 330/767 wars. They can't win everywhere. Nor can Boeing. I would think people on this thread would be positive about a healthy duopoly, but I guess not!
 
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ElroyJetson
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:10 pm

The A380 was built more for bragging rights and corporate ego than any sound business reasons.

Make no mistake, the entire program hurt Airbus tremendously. For example, imagine if the A350 would have come to market 4 years earlier?

But hey Boeing made huge mistakes with the roll out of the 787. The difference is the business case for the 787 was a grand slam and the business case for the A380 was the equivalent of a 3 pitch strike out.
707 717 727 72S 737 733 737-700 747 757 753 767-300 764 A319 A320 DC-9-10 DC-9-30 DC-9-50, MD-82 MD-88 MD-90 DC-10-10 DC-10-40 F-100
 
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spinotter
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:10 pm

SEPilot wrote:
dredgy wrote:
It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).

You forget that Airbus has to build the plane as well as develop it, and all but a few of the 251 sold (including the ones not yet delivered) cost more than they were sold for (by Airbus’s own words) to build. And I do not think $25 billion is an excessive estimate of the development costs. By the time the program is all closed down the total losses are likely to be much higher than that.


How much of the development cost has been allocated to personnel, tools, know-how which will allow Airbus to keep pace with Boeing in the future? How many engineers and their families have lived the good life in Toulouse and Hamburg all these years? The attitude by some here is that monetary profit is the only good in the universe. A disgusting attitude. Do you people know the meaning of the word Schadenfreude?
 
bigjku
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:19 pm

spinotter wrote:
SEPilot wrote:
dredgy wrote:
It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).

You forget that Airbus has to build the plane as well as develop it, and all but a few of the 251 sold (including the ones not yet delivered) cost more than they were sold for (by Airbus’s own words) to build. And I do not think $25 billion is an excessive estimate of the development costs. By the time the program is all closed down the total losses are likely to be much higher than that.


How much of the development cost has been allocated to personnel, tools, know-how which will allow Airbus to keep pace with Boeing in the future? How many engineers and their families have lived the good life in Toulouse and Hamburg all these years? The attitude by some here is that monetary profit is the only good in the universe. A disgusting attitude. Do you people know the meaning of the word Schadenfreude?


I will preface this by saying it really doesn’t matter if the program is a large money loser. It’s closing down simply because it can’t make money going forward. Everything else is just scorekeeping and it didn’t kill Airbus so it doesn’t really matter that much.

But that being said yes...making money matters. You make a profit because you provide something other people value. That means what you do has meaning and value to other people and enriches their lives. If you don’t provide things others value the only way you can make a living is either by being totally self sufficient, a thief or at the point of a gun by getting money from tax payers. So yes, by far the most altruistic motive for productive activities is the profit motive in a free market.
 
sciing
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:22 pm

Finn350 wrote:
Max Q wrote:
DLASFlyer wrote:
The 787 was a mistake?



Didn’t mean to imply that, not even close, I think the 787 will eventually be a profitable program for Boeing


The 787 development cost is at least $15 billion and then there is the deferred production cost of around $30 billion. By that standard the 787 program has made even greater loss of around $45 billion than the A380. The difference to the A380 is that now Boeing is slowly generating positive cash flow to offset the cost, but as a whole, the 787 is never going to be a profitable program.


Deffered COST is not LOSS.
I wonder why such complete nonsens is repeated here again and again.
What is the next step. Sum up all production cost as loss, forget any revenue? Ups sorry this the idea of this stupid thread!
 
777PHX
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:24 pm

I'm not sure why this is considered a sad thing. Minus the costs involved in shutting down production, they're all sunk costs. With this move, Airbus can utilize those resources for something else more lucrative and the company and its shareholders will be better off for it.
 
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SEPilot
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:29 pm

spinotter wrote:
SEPilot wrote:
dredgy wrote:
It wouldn’t be the biggest loss I think (though might be).

They’ve delivered 234 aircraft (plus more still to come)
Let’s assume that the program cost was $25bn which is unlikely.
25billion divided by 234 means they would have needed to sell each plane for an average of $107million to break even on the program.
The list price for an A380 was about $445m, so the $107m seems achievable - even conservative. I would be surprised iff they were selling all A380s for a quarter of list price - Emirates maybe got prices that low but nobody else surely.

Of course that’s a broadly simplistic view, but there’s a good chance Airbus haven’t actually lost any money on the program (though since their resources were tied up in it, lost opportunity could be argued).

You forget that Airbus has to build the plane as well as develop it, and all but a few of the 251 sold (including the ones not yet delivered) cost more than they were sold for (by Airbus’s own words) to build. And I do not think $25 billion is an excessive estimate of the development costs. By the time the program is all closed down the total losses are likely to be much higher than that.


How much of the development cost has been allocated to personnel, tools, know-how which will allow Airbus to keep pace with Boeing in the future? How many engineers and their families have lived the good life in Toulouse and Hamburg all these years? The attitude by some here is that monetary profit is the only good in the universe. A disgusting attitude. Do you people know the meaning of the word Schadenfreude?

The simple fact is that if corporations do not make profits they go out of business, and all of that good life you wax so eloquently about is gone with the wind. Sure, many people got a lot of benefits out of the A380 program, but think of how many more could have, and could continue to do so, had Airbus instead have developed an airliner that the airlines actually wanted and continued to want. Fortunately Airbus is able to survive this debacle, but think of how much stronger it would be AND how many more people it could employ had it invested that money in a profitable program?
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
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kczombie
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Re: A380 Biggest manufacturing loss in civil aviation ?

Fri Feb 15, 2019 5:40 pm

Alas, let's not forget the venerable L1011...

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