Is the A-380 dead??

[Kip Powick]

 

The Airbus A380 Is Dead — Airbus Just Hasn’t Admitted It Yet

JANUARY 17, 2017  BY AIRNATIONCREW LEAVE A COMMENT

In 2016, amid a tough sales climate for commercial jets, Airbus A380 jumbo jet posted a goose egg. The two orders Airbus received last year were offset by two cancellations. The A380 didn’t sell much better in 2015, either, bringing in a grand total of two net orders.

Indeed, the A380 has never lived up to Airbus’ sales expectations. The competing Boeing  747-8 jumbo jet has been even less popular. Changing air travel patterns have undermined the business case for jumbo jets.

Airbus executives still claim that the A380 was just ahead of its time and will grow in popularity going forward. They are almost certainly fooling themselves.

The A380 backlog shrivels up

Airbus delivered 28 A380s during 2016, up from 27 a year earlier. But in delivering 55 A380s since the beginning of 2015 while receiving only two net orders, Airbus has rapidly depleted its order backlog.

Airbus currently has a backlog of 112 firm A380 orders. However, as many as 49 of these orders are likely to be canceled due to airlines’ fading interest in jumbo jets. Nearly all of the other 63 A380s on order — 50 to be exact — are destined for a single customer: Emirates.

A year ago, Airbus hoped to bolster its A380 backlog while diversifying its customer base by selling a dozen A380s to Iran Air. However, when Iran Air firmed up its landmark deal with Airbus last month, the A380 was no longer included.

Due to the shrinking backlog, Airbus announced last year that it would slash production of the A380 to 20 units in 2017 and then 12 annually beginning in 2018. However, last month, Emirates deferred six orders from 2017 to 2018 and another six orders from 2018 to 2019 due to engine problems. As a result, Airbus will have to cut A380 production even more drastically this year.

The fallacy of the A380

While Airbus is focused on reducing its fixed costs, it will still struggle to break even building just 12 A380s per year. Recovering the type’s massive development costs and the losses incurred on early production models is out of the question.

Nevertheless, top Airbus executives remain committed to the A380. They note that global air traffic has been doubling every 15 years and the vast majority of passengers travel through a relatively small number of big cities. Many of those airports are already congested. As a result, Airbus executives believe that airlines will have to add jumbo jets like the A380 to their fleets to meet demand growth.

It’s true that air traffic is growing at a strong pace, but that doesn’t mean airlines will need to use ever-larger planes to move passengers through enormous megahubs. While Emirates has had notable success with that model, many airlines are going the opposite direction by opening up new point-to-point routes.

Boeing’s revolutionary 787 Dreamliner has played a big role in that process. The Dreamliner can fly as far as a jumbo jet with comparable unit costs but is dramatically smaller. (Many airlines configure Boeing’s 787-8 and 787-9 models with 200-250 seats, about half as many as an A380 typically holds.)

The Dreamliner has already enabled numerous new point-to-point routes. These routes siphon traffic away from the biggest hubs by allowing travelers to fly nonstop. If air traffic does indeed double over the next 15 years, a slew of additional point-to-point routes will become viable. Thus, the natural growth of air travel in big hub markets will be offset to a large degree by the cannibalization of their connecting traffic by new point-to-point service.

Does the A380 have a future?

For the next few years, Airbus can break even (approximately) while delivering just 12 A380s a year, nearly all for Emirates. But Emirates has already started to ask for an upgraded model with new engines to improve fuel efficiency. Airbus can’t afford to sink any more money into the A380 program unless the new model would be far more popular than the current version.

To make matters worse, Boeing’s new 777X will give airlines even less reason to operate the A380. The 777-9 model will hold more than 400 passengers in a three-class configuration, putting it in the low end of the jumbo jet segment. And with state-of-the-art engine technology, it is likely to be far more fuel efficient than the Airbus A380.

Emirates has already given the 777X its seal of approval, ordering 150 from Boeing. In the coming years, even Emirates — the only big fan of the A380 — could find that the 777X is big enough for its purposes. (Boeing is also reportedly mulling a stretched version of the 777X, which would put it even closer to the A380 in terms of capacity.)

Boeing’s new 777X jets will erode demand for the A380. Image source: Boeing.

Today, Emirates operates at the capacity-constrained Dubai International Airport. However, it plans to move its hub to Dubai’s new airport within the next decade. The new airport will eventually have five parallel runways capable of simultaneous operations, compared to two at the current airport. That will enable Emirates to grow by adding flights rather than needing to use the biggest planes available.

Cost-cutting has bought Airbus a few years to look for new A380 orders. However, there are very few (if any) airlines for which buying additional A380s would make sense. As a result, the A380 is unlikely to rebound from its current order slump and Airbus may be forced to kill it off within the next decade.

http://www.nasdaq.com/article/the-airbus-a380-is-dead-airbus-just-hasnt-admitted-it-yet-cm733740

 

[Guest]

Kip: your article of course highlights Emirates who it would appear  are running out of long haul pairs for their A380s and interestingly enough are using some on short haul operations.  http://onemileatatime.boardingarea.com/2016/10/30/emirates-a380-doha/  Following is an article re their proposed long haul New York new routing which may be in violation of their US Agreement and it will interesting to see if there is any action from the new POTUS .  

Mon Jan 23, 2017 | 5:24pm EST

Emirates' Dubai-Athens-New York flight violates U.S. aviation agreement, say U.S. airlines

 

An Emirates plane is seen at Lisbon's airport, Portugal June 24, 2016. REUTERS/Rafael Marchante

 

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By Alexander Cornwell | DUBAI

Emirates' announcement on Monday that it would start flying to the United States with a stop for passengers in Greece sparked a strong reaction from a lobby group representing U.S. competitors who accused it of competing unfairly through state subsidies.

The world's largest long-haul airline said it would start daily flights to New Jersey's Newark Liberty International Airport via Athens on March 12.

Emirates was "flagrantly violating" the air services agreement that allows it to fly to the United States, said the Partnership for Open & Fair Skies, which represents Delta Air Lines (DAL.N) and other U.S. airlines.

Accusing Emirates of "throwing down the gauntlet," the group said it would discuss the matter with the new administration of President Donald Trump to "protect American jobs."

The Dubai-Athens-Newark route would be Emirates' second so-called 'fifth freedom' flight to the United States in addition to an existing daily Dubai-Milan-New York service. It also operates three daily direct Dubai-New York flights.

Fifth freedom rights allow an airline to fly between foreign countries as a part of services to and from its home country.

Delta and other U.S. airlines have accused major Gulf carriers -- Emirates, Abu Dhabi's Etihad Airways and Qatar Airways - of receiving over $50 billions in unfair subsidies. The Gulf carriers deny the allegations.

The Obama administration began informal consultations with the United Arab Emirates and Qatar on the issue, but no agreement was reached before President Obama's term ended.

The group, which also includes United (UAL.N) and American (AAL.O), was always likely to try and block the new service before it starts, said Will Horton, senior analyst at CAPA Centre for Aviation.

However, the U.S. carriers would have a hard time arguing the flight was damaging to their interests, given that U.S. carriers do not fly to Greece all year round, Horton said in emailed comments. He also said that the fact that Emirates was an important customer for U.S. planemaker Boeing (BA.N) would also work against the group.

Emirates President Tim Clark said the Greek government approached the airline "some time ago" to start a flight between Athens and New York, according to an airline statement.

Emirates airline embarks on 'modest restructuring' as growth slows

Emirates has previously said it could fly to the United States from European hubs and in 2016 the Hungarian government said the airline could fly fifth freedom routes from its capital, Budapest.

 

(The story clarifies status of Obama administration, US airline lobby and Gulf states on airlines.)

 

(Editing by Jeremy Gaunt, Greg Mahlich)

[Super 80]

Unless someone wants to explain how one goes about overcoming political, environmental and NIMBY opposition to building new runways in the first tier cities of the world the need remains. And standing in central London for any length of time you will see the A380 in all it's glory.

The real fallacy is the supposed potential for new point-to-point routes operated by new smaller long-range widebodies, as though there were really a battle of ideas or visions between the 787 and A380. For one thing there are very few routes of that type that couldn't have been operated with a 767-300ER at any time in the last thirty years. There is also the matter that these international hubs are also major destinations in their own right. So then you're right back to contemplating the best use for your slot at LHR... Is it a flight to YEG? I will just about guarantee it isn't. On the other-hand you could probably fill a 787 from YYC to some secondary city in India, but that is not going to represent a terribly good use of the 787.

[Seeker]

Super 80;  so where are the orders?  I agree with your points but, apparently, airline executives don't.

[Super 80]

Airlines don't place orders for the convenience of Airbus, Boeing and beat reporters.

[rudder]

Lots more A380 orders being cancelled/converted to other Airbus product offerings.

This production line will be shut down sooner rather than later.

[Guest]

Maybe not dead but withering away.

Air France formally swaps remaining A380s for A350s

• 03 February, 2017
• SOURCE: Flightglobal Pro
• BY: David Kaminski-Morrow
• London

Airbus has formally recorded the cancellation of two outstanding A380s intended for Air France, which instead is taking three more A350-900s.

The swap, originally disclosed by the airline about a year ago, increases the Air France commitment for A350s to 21 aircraft.

It brings the backlog for the A380 down to 110 aircraft. Airbus did not deliver any A380s during January, according to the airframer’s revised backlog data.

Air France had originally ordered 12 A380s, fitted with Engine Alliance GP7200 powerplants, and has taken delivery of 10.

The carrier had previously indicated the A380s were due to arrive in 2018.

Its half-year financial statement for 2016 shows that Air France owns a single A380, with four others on finance lease and the remaining five on operating lease.

Airbus registered only one other order for January, a single A320 for Mexican low-cost operator VivaAerobus.