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Airbus ready to axe A380 if fails to win Emirates deal

reuters.com

291–300 of 355 posts

Re: Airbus ready to axe A380 if fails to win Emirates deal

#291

Earlier quoted context omitted.

Yes as I was checking the spelling of Tegel I came across the Brandenburg airport information and linked to it above. It makes Terminal 5 look fast and flawless by comparison!

Terminal 5 was fast and flawless (until the day it opened and the airline computer systems fell over). Then again, it is a giant metal shed. Now Crossrail, THAT'S something.

>Now Crossrail, THAT'S something.

On time and on budget. Yet they still won't give the green light for Crossrail 2.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#292

Earlier quoted context omitted.

i) 747 sales were already declining and it required expensive investment to continue. ii) How would A380 sales help sell other Airbus aircraft? It's such a low volume plane that it offers virtually zero benefits to purchasing other Airbus models. 200 deliveries for a $30B+ development costs is a disaster. Airbus has already admitted the development costs will never be recouped, they'd have to sell over 400 planes to…

Nobody is saying Airbus has made a profit on the A380, but absorbing development costs over 250 aircraft delivered leads to much lower losses than absorbing them over 14 aircraft delivered like a certain innovative indirect ancestor of Airbus... And much as program costs are accounting fiction, Boeing's written down far more than a 10th of the A380 program costs as 747-8 development programme specific losses, never m…

Airbus isn't absorbing development costs over 250 aircraft at all, those aircraft are barely going to be profitable on their own construction costs, let alone chip away at the $30B+ developmental costs.

The 747-8 cost only $2.5B to develop. The accounting fiction is Airbus's attempt to minimize how much it actually spent on A380 development. The sole ramification of being the undisputed leader in large wide bodies is apparently limited to massive capital losses.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#293

I think coverage of the A380 often misses the point that at the time, Boeing's 747 simply had no competition, whereas all of Airbus's planes did. So Airbus pretty much had to create the A380 in order to protect its other lines from cross-subsidy by this unopposed cash-cow. And, also missing from almost all the coverage is the fact that this worked: if the A380 is struggling, the 747 is moribund or dead. Official back…

The 747 was killed by loosening the regulations on ETOPS. Going to 4 engines used to be the only way you could run certain routes (particularly transpacific and trans-antarctic routes). Now that big jumbo twins are allowed to run those routes, running a 747 is unnecessarily expensive.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#294

Earlier quoted context omitted.

The 747 was a problem that was disappearing on it's own. When the A380 was approved, the 747 was no longer obscenely profitable, it was already facing lower demand and the requirements for an expensive update. Airbus crippled itself trying to eliminate it with the A380, they blew a huge amount of capital they'll never get back. The hub and spoke model is dead and won't be coming back. New slots can be easily created…

> New slots can be easily created by adding runways or building new airports. I wouldn't call that "easy". How many new runways are going to be built next year? How many new airports? I'll make a guess that the answers are "none" and "very few or none".

Well, demand is the driver of that. Right now the need isn't that great. If it becomes that great, a far easier solution than the A380 is new runways and new airports.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#295
post #129

I think coverage of the A380 often misses the point that at the time, Boeing's 747 simply had no competition, whereas all of Airbus's planes did. So Airbus pretty much had to create the A380 in order to protect its other lines from cross-subsidy by this unopposed cash-cow. And, also missing from almost all the coverage is the fact that this worked: if the A380 is struggling, the 747 is moribund or dead. Official back…

Boeing made a bet on the 787. However, as you note, that's an easier bet to make when you already have the 747. Boeing already had a jumbo. It's easy to make a bet on twin-engines getting certified for longer ocean crossings when you already have the 747. There's a lot of things that Boeing bet on with the 787 and you're totally right that it's way easier to make those bets when you already have the 747. However, the…

The other thing that the 787 does is open up availability of more gates at more destinations. If you're an airline and having difficulty getting gates at the traditional international airports, having the 787 is a competitive advantage.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#297

Earlier quoted context omitted.

fuel costs killed the 747, not the A380 we know this is true because no one is replacing retired 747s with A380s, they are replacing them with smaller, more fuel efficient planes

Plenty of airlines have replaced 747s with A380s. British Airways, Lufthansa, Air France and Qantas immediately come to mind.

Qantas are currently replacing 747s with a fleet of A380s and 777s

Re: Airbus ready to axe A380 if fails to win Emirates deal

#298

Earlier quoted context omitted.

> New slots can be easily created by adding runways or building new airports. I wouldn't call that "easy". How many new runways are going to be built next year? How many new airports? I'll make a guess that the answers are "none" and "very few or none".

Well, demand is the driver of that. Right now the need isn't that great. If it becomes that great, a far easier solution than the A380 is new runways and new airports.

Demand may be the driver, but the transmission is broken. There's zoning, and environmental regulations, and NIMBY opposition, and on and on.

I mean, how's Heathrow's new runway coming? The demand is clearly there, but the runway is not. It received the support of the government clear back in 2009. After much back and forth, it's ready for a final decision this winter, with the earliest possible year of operation being 2025. And that's with the demand being clearly there.

Re: Airbus ready to axe A380 if fails to win Emirates deal

#299
post #240

Earlier quoted context omitted.

Excellent points, and I agree that the switch in the market certainly was a large component, and probably the larger component. I still think that Airbus simply could not not do the A380, just as a defensive move and hedge, and that it may have served a commercial purpose even if it didn't manage to be profitable on its own. > constrained slots [..] certainly money [..] Are slots primarily a money problem? My underst…

Non-availability is what makes them expensive. It's kind of two sides of the same coin. If the slots were widely available, they wouldn't be a valuable asset. They are a valuable asset only because they aren't available. The point of looking at the monetary value is that it's a way to quantify how unavailable they are. Land costs money. Where land is scarce, it becomes expensive. Where land is abundant, it's cheap. I…

The Economist recently ran two articles on slots.

https://www.economist.com/blogs/economist-explains/2017/12/e... https://www.economist.com/news/leaders/21731390-heres-how-fi...

The slots seem to cost no actual money. They are however valuable because they generate money and are scarce.

IIRC they proposed auctioning them off instead of using the current system. There was a letter in a later issue arguing against that: https://www.economist.com/news/letters/21731801-tpp-airports...

Re: Airbus ready to axe A380 if fails to win Emirates deal

#300
post #238

Earlier quoted context omitted.

That article is misleading, the Dreamliner is at least a decade away from true profitability, if it ever gets there. When Boeing announces it "turned" profitable, they are saying it now costs less to make each Dreamliner than they are selling for. But that is ignoring over $30B in development costs (plus interest) that it needs to earn back before it can ever generate a true economic profit. "In the second quarter of…

Thanks for the insight and clarification. This has to be one of the most difficult businesses to be in, given a poor choice can risk bankruptcy for the developer/manufacturer. If relative success means turning a profit 20 years hence, that's one hell of an industry to be in.

The old joke goes, How do you make a small fortune in the aviation industry? Start with a big one.
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