Emirates Buys Some Big Boeings

Emirates Airlines announced a firm order for of ten Boeing 747-8 freighters and options for an additional ten aircraft. This is a $5.6 billion warning shot across the bow of Airbus who are struggling to deliver the A380 as promised to Emirates. The airline's plan to expand their cargo opration hangs in the balance so they are supporting those plans up with the new 747-8. And the warning shot is two fold as Emirates also needs a new mid-range aircraft, i.e. the A350 XWB or the Boeing 787. Airbus has cautioned that the A350 XWB could be heavily delayed, Boeing's 787 is going to beat it out the door by 2-3 years at the current date. Airbus is in a very tough position.

Airbus Head Has Has Not Resigned

The difficulties in running a multi-nationally controlled company like Airbus came to the forefront late last week as we watched rumors flying about Airbus head Christian Streiff. Things kicked off with reports that Streiff has offered his resignation followed by denials from Airbus and EADS that his resignation had been accepted. It appears that Streiff is making a statement. To me that statement is to let him run the company and take the actions he deems necessary or accept his resignation. Because the job he has to do is going to be unpleasant and is going to stir up a lot of nationalism and politics. Airbus needs to cut costs to blunt the effect of the money being poured into the A380. There are talks of outsourcing and re-organizing Airbus divisions. Airbus partners Germany and Spain are already trying to assure workers at plants in their countries that all things will be considered before making decisions. Officials from the French and German government will be meeting so now things will get very sticky. Mixing business and politics is tough and often slow. Streiff needs to act fast to stem the bleeding at Airbus. Good Reuters article here.

Does Airbus Need to Decide? A380 or A350

The impact of the besieged A380 project came into stark focus today as Airbus admitted it has fallen ten years behind Boeing. Everyone following this debacle knows that the A380 is bleeding resources and finances from their other major projects, namely the A400M and the A350 XWB. Is it time for Airbus to reconsider the their projects and their future?
Airbus says the A400M, a military airlift aircraft, has no cushion left in its timeline to absorb further delays and will not make money unless costs can be cut. Ouch...double whammy.
The A350 XWB is no stranger to this blog...an aircraft that Airbus intends to pit against the Boeing 787. Airbus parent company EADS is now stating that they will not let this project move forward until the company demonstrates that they can manage the A380 and have the finances for the additional project. I am suggesting that maybe EADS needs to reconsider their priorities. Should the A380 take precedence over the A350?
I have suggested that the A380, even in concept, was doomed to be a small player in the airline business. Just a handfull of airlines flying it to the few airports that will spend the money so that they can handle the aircraft.
In my mind the timeline of the A350 XWB makes that project dead in the water unless Boeing makes some large errors in delivering the 787. I see this as an even bigger problem than the A380. Consider this quote from a Reuters article:

After several false starts, Airbus has come up with a new wider design for the A350 to try to halt a surge in sales of Boeing's rival 787 Dreamliner. Both planes exist only on paper, but the mid-sized market has become the biggest battleground between the two firms despite public attention to the A380.

Nobody's saying it yet but I am beginning to wonder. Should Airbus consider killing the A380 in favor of getting the A350 back on track? Should they devote themselves to bringing making the A350 XWB a reality and push the timeline back on the A380? Is the A380 simply ahead of its time or will its time ever come?


DIGG This!

A380 Customer First to Report on Delay...What's Wrong With This Picture

Does anybody but me find something wrong with the customer reporting the bad news? 'Cause that's exactly what is happening with the latest A380 delay. Last week EADS concluded their board meeting and left everyone, including their customers, wondering just what the latest delay on the A380 would be. In fact they were rather nonchalant about it in their press statement:

"Today the EADS board of directors met in Amsterdam to -- among other regular topics -- discuss the A380 situation. The board of directors will continue this discussion in the near future,"

Yeah, like this was just a bullet point in the agenda. If the A380 delay didn't dominate that board meeting then things are more disfunctional at EADS than I thought.

So we find out today, not from Airbus, not from EADS, but from their biggest A380 customer, Emirates Airline, that the latest delay will add another 10 months to their delivery date. The following is not the quote of a happy customer:

Our first aircraft will now arrive in August 2008. This is a very serious issue for Emirates and the company is now reviewing all its options," Emirates President Tim Clark said in a statement.

. Furthermore, Emirates is mulling over their next mid-range aircraft, the A350 or the 787. Rumors estimate that deal to be worth $15 billion. Which way would you go? Yeah...that's what I thought.

What a debacle. Will the A380 become a modern day Spruce Goose? At this point I say no but I am willing to go out on a limb with this thought. If Airbus does not halt this backslide the A380 may be doomed to be a bit player much like the Concorde was a bit player. Just a few airplanes flying to the few airports that can actually take the aircraft. Specialized service for specialized routes. It is becoming evermore doubtful that the A380 will be the revolution that Airbus envisioned.

Good News, Bad News for Airbus

The good news: The group tasked with studying wake turbulence on the A380 has found that standard spacing for the aircraft on departure and landing will not need to increase as much as originally feared (ATW link). This helps to mitigate some but not all the concerns from already crowded airports trying to maximize the number of aircraft they can shove through their airspace. The A380 will cause a 2 minute wait for another "heavy" aircraft on departure (same as the 747) but will cause a 3 minute wait for medium and light aircraft (up from the 2 minute wait on the 747). On approach it is going to require increased spacing for all aircraft types. If you read this and found yourself asking what is wake turbulence and why do I care then Wikipedia is your friend.
The bad news: Information continues to trickle out of Airbus that the A380 is sucking up company resources like there is no tomorrow. This resource drain will likely cause 6-12 month delay on the A350 XWB pushing it into 2013 for the first deliveries. If Boeing can maintain their timeline to deliver the first 787-8 in 2008 with the larger 787-3 and 787-9 in 2010 then the story on the A350 XWB could be over before its begun.

Air France Stomps Feet, Want Its A380 First

Apparently Air France is a bit put off by the whole A380 delay thing and is "demanding" that it be the first European airline, ahead of Lufthansa, to receive the new aircraft. According to an article on Hemscott the delays mean that the schedule will not support a delivery for each airline in time for the Olympics in Beijing. So Air France is playing the home field advantage trump card...my bet is they will get their wish.

Besieged at EADS/Airbus

As long as we are talking about Airbus and EADS today lets step back and try to summarize all the fronts they are battling on:

A380 Program: Delays along with recent departures of key individuals from the program

The less-than-amicable departure of long time partner BAE. BAE cites the A380 progam as a contributing factor in the decision to sell off their 20% interest

Depressed stock value (30% decrease since the beginning of the year) thanks in part to the A380 delays and unknowns with the A350 re-design.

The unexpected purchase of 5% of EADS stock by Russian investors and increasing pressure by Russia to gain influence at EADS. All this thanks to the aforementioned depressed stock value.

A350 redesign project due to demands from their customers that they do something to with their current long range aircraft product line. The project is still on the drawing board and only Aeroflot is committing to the aircraft so far.

Heavy competition from Boeing's 787 drawing interest and orders away from future A350 variants.

Increasing interest in the upcoming Boeing 747-8 as a alternative to the A380 causing airlines around the world to re-think their long term strategy.

EADS and Airbus have their hand full but I am not counting them out. Airbus has proven to be a very shrewd competitor to Boeing and has made some good decisions in the past. Unfortunate for them that several issues have coalesced at the same time forcing them to divide their efforts. Stay tuned...

A380 Loses Ground Again

Another delay on the A380 has been rumored for about 2 weeks now and today, finally, Airbus is confirming the rumors (Reuters article). What remains unknown at this point is the impact this delay will have on delivery schedule. Airbus parent EADS issued the following statement:

"Although the company's assessment is still under way, continuing industrialisation challenges with the wiring of production aircraft have been identified and are being tackled," EADS said in a statement.

"Consequently, from what is known today, there will be further delays."

This is all a very nice way of saying that we screwed up the wiring again.

Airbus claims they will still deliver the first A380 to Singapore Airlines in Dec 2007 and that delays will impact deliveries beyond that. My bet is even that delivery is in jeopardy at this point.

Lufthansa Compensates for Late A380

Lufthansa announced yesterday that they are placing an order for 5 A330 to "compensate for the delayed entry into service of the A380,". To me this lends credence to the persistant rumor that additional A380 delays are going to be announced after EADS completes its audit. The A330 will be delivered in 2007 and 2008 to service routes that Lufthansa has planned to handle with the A380.

Airbus Offers Transparent Response to A380 Delay Rumors

Airbus is attempting to downplay the possibility of additional delays on the A380 amid rumors that broke loose all over the internet. Per AP article Airbus claims "...it is too early to say whether the troubled A380 superjumbo jet faces further production hitches, after a minority shareholder said another delay is likely." That minority stock holder would be none other than 20% stakeholder BAE. The same BAE would is trying to sell off their 20%.

I'd like to point out that nowhere does Airbus say "we have no reason to believe another delay is imminent". All they are really saying is "The audit which EADS is doing at Airbus on the A380 is still ongoing." This evasive language along with the departure last week of A380 project lead Charles Champion (awesome name...seriously...how could you not kick ass with that name) tells me that BAE is likely spot on with their prediction of another delay. Time is money baby.

A380?...Please Standby

The wounds from Airbus' June announcement that delivery of its A380 would be delayed by seven months have hardly healed and now more trouble looms large. ATW's is reporting that another delay is imminent and some sources are saying the delay could be up to one year. Brutal timing for Airbus parent EADS who are (a) not parting amicably with former partner BAE and (b) trying to attract interest from new investors.

I say we nickname the A380 "The Albatross" because the aircraft is quickly becoming just that, an albatross around their neck. Editor's Note: If the whole albatross thing makes no sense then I invite you to click here for a quick explanation. I still believe that the A380 was not a good idea to begin with. Not because I thought it would be so difficult to build but because I don't think the business model makes sense.

Here are some blasts from my past rants on this aircraft
Is this a viable aircraft?
Will the cost model prove sustainable for this aircraft?
Will enough airports modify their runways and facilities to take the aircraft?

NEWS: LAX Expansion Plans Get the Smack Down

An $11 billion dollar LAX modernization plan has been halted by a tenacious grassroots effort. After 10 years of planning and court battles LAX has conceded and agreed to a deal that will limit passengers served and will actually reduce the number of gates at the airport. $150 million has already been poured into the planning of the project and now its back to the drawing board. The question in my mind is, what does this do to the plans to rework LAX for the Airbus A380? LAX is already under pressure from future A380 operators that are threatening to take their business elsewhere if the airport cannot keep needed improvements on schedule.

NEWS: A380 Customers tell LAX to get Crackin'

LAX lags in accommodating the A380 Los Angeles International airport, LAX to you and me, is being leaned on to pick up the pace on modifications needed to accomodate the massive A380. Both Singapore Airlines and Virgin Atlantic are telling LAX to get things moving or they may look to other airports. The improvements needed are major and local efforts aimed at slowing or even halting growth at LAX have turned out to be more formidable than anticipated. In the end LAX hopes to handle around 2 dozen A380's a day in 2010...approximately 15000 passengers...a DAY.

NEWS: Airbus A380 Delays

BBC NEWS | Business | Airbus jet delay costs 'millions'
The twelve readers who looked at my blog all know that I have been openly critical of the A380 on more than one occasion. I'll admit that I never expected the test flight to occur on schedule and yes...I was wrong about that. But fear not, oh single remaining reader. You see, flight testing has commenced on the A380 after which the scheduled delivery date to the launch customer was seen screaming over the horizon never to be heard from again. Ands its a spendy delay at that
Current news puts the delivery date about 4-6 months behind schedule which is putting a pinch on some big players like Qantas, Singapore Airlines and Malaysia Airlines. While no specifics are available the costs to Airbus are likely in the millions.

NEWS: A380 Makes its Maiden Voyage

OK it was a flight...not a voyage...but one has to admit its almost as big as a cruise ship. Congratulations to Airbus as the A380 successfully completed a 4 hour test flight, its first in an expected 2500 hr flight test regimen expected to stretch into the latter half of 2006. Favorite quotes regarding the momentus occasion are:

Chief test pilot Jacques Rosay, "You handle (this aircraft) as you handle a bicycle. It's very, very easy to fly," ...I'll bet that sounds way better in French.

Boeing Chief Executive James Bell, in his comments congratulating Airbus on the first flight "We always thought it would fly because that's what airplanes do,"...uuuummmm...yeah.

Several articles also mentioned the $285 million price tag for this aircraft and renewed speculation that it may take far more than the 250 orders for Airbus to break even. So far they have 154 orders and "commitments".

It also remains to be seen if the actual performance of the aircraft will support the cost model that they used to get those 154 order and commitments.

NEWS: Airbus A380 First Flight Planned This Week

The massive Airbus A380 is slated for its first test flight on Wednesday. Airbus claims this behemoth sporting two full decks for seating up to a mind numbing 840 passengers will be the next big thing (my pun...intended of course)to hit the airline industry. If all goes well it will be the first commercial passenger aircraft larger than the Boeing 747 to hit the friendly skies. Airbus expects to spend the next year testing the aircraft...and there are many questions to be answered. Only some of them relate directly to the aircraft.

Is this a viable aircraft?

Will the cost model prove sustainable for this aircraft?

Will enough airports modify their runways and facilities to take the aircraft?


I've come right out and said that I do not believe the A380 can be a cost effective aircraft and will be relegated to a niche markets much like the Concorde...only slower. Wonder if I'm right? We should start getting a better idea in a year.

NEWS: A380 - Flying Cruise Ship or Super Economy Model?

USA Today has a good article regarding some of the hype surrounding the Airbus A380. Specifically, industry analyst are questioning plans to put high end amenities like work out rooms, casinos, beds and duty free shops right on the aircraft. Not surprisingly, Richard Branson, Chairman of Virgin Atlantic Airways, is at the center of that hype. Instead the analysts believe airlines who operate the A380 will need to fly it very close to its 840 passenger limit to make money on it.

Branson's plan would put him somewhere in the 500 seat range. Airbus believes most operators will average around 555 seats with 3-class (first/business/economy)set up. That's a really wide discrepancy between what the analysts think and what the Airbus marketing plan says. I tend to think it will end up somewhere in the middle with the analysts being closer to reality. I do not believe that this aircraft will be even close to cost effective for the first few years of operation and will be only marginally successful after that. It will be a niche aircraft much like the Concorde...just slower...and with way more people.

NEWS: No A380's For Atlanta Airport

Hartsfield-Jackson Atlanta International Airport (what a mouthful) has announced that they do not intend to make the necessary modifications to deal with the massive Airbus A380. The reaction from Airbus was a predictable equivalent of "yeah...well...we never wanted to land there anyway". In the mean time its reported that Airbus is leaning on some airports to get moving on preparations for the aircraft. To give you some perspective Orlando International Airport will spend $20 million dollars to upgrade taxiways and facilities to accomodate the behemoth. $20 million to be blessed with the opportunity to try and service 500-800 people dropped on your door step all at once. No thanks.

Finally, I'd like to note that tucked away in my January Archive is a post titled "The A380 Gamble" where I ask the question, "How many of them [airports] will decide its just not worth it?" The answer, so far, is at least one.

NEWS: The A380 Gamble

While this is not directly related to airlines it will be soon enough. The corporate buzz machine that is Airbus unveiled their new behemoth, the A380, amidst lots of pomp and circumstance. While there continues to be a lot of speculation as to whether this aircraft has a place in the new airline world order Airbus is sprinting ahead touting the aircraft as the answer to life the universe and everything. They point to the 149 orders for this yet to be flown aircraft as proof that they are on the right track. Airbus claims the A380 will offer better range, lower operating costs and the holy grail of improved cost per passenger when compared to its closest competitor the Boeing 747. And the comparison is startling. The A380 in 3 class configuration will carry 555 passenger, one-third more than a 747. In full economy you are talking 800 people! Now...here's your reality check. Reality #1: All of the Airbus claims to better range, fuel efficiency and costs are based on design calculations. The aircraft has not even left the ground yet. I'll wait for a flight test before buying into the hype. Reality #2: Name the number of airports that are ready to deal with this beast of an aircraft and the number of passengers it carries. The answer, right now, is probably none. The 747 delivers enough passengers at once to challenge even the largest airports ability to process people and luggage. The larger airports will need to invest millions (lots of millions)to upgrade facilities. How many of them will decide its just not worth it? In my book there is a lot to be proven before the A380 can be considered the next revolution in airline history.