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Airbus ready to axe A380 if fails to win Emirates deal

reuters.com

201–210 of 355 posts

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

#201

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 already in decline before the A380 came along. It was getting long in the tooth (fuel burn too high) and Boeing needed to invest billions to update it to keep it viable.

In the 1970s the 747 averaged 32 orders per year. In the 1980s it averaged 43 orders per year. It peaked in 1990, taking in 122 orders that year alone, but from 1992-2000 orders dropped to average 27 per year.

In 2000, Airbus approved spending €9.5B to build the A380.

In 2005, Boeing announced the 747-8 to better compete with the A380.

From 2000-2009, the 747 had 214 total orders. The A380 had 212. Between them that's 43 orders a year. The market did not grow, despite substantially better, more capable, more efficient, products.

From 2010-2017, the 747 has booked 27 orders, or 3 per year. The A380 has booked 115, or 15 per year. 18 orders per year combined is by far the smallest jumbo market since it started.

There is no doubt that Airbus hurt Boeing's profitability by building the A380. But estimates are that Airbus spent €20B-€30B developing it, most of which it will never recoup. And the bulk of Boeing's profitability is in small to medium sized jets. It mints money with the 777 and 737. It never needed the low volume 747 to "subsidize" them.

Losing tens of billions so your competitor can lose a few billion is not a smart strategy. Good business strategy is making profitable entries into your competitors most profitable niches, not hemorrhaging money in them. Airbus and Boeing were both told that point to point was the future. Boeing heeded that advice (helped by a ton of their own customer research), Airbus mostly ignored it, and the end result is that Airbus crippled themselves while Boeing is as successful as ever.

The argument about airport congestion was always a false one. Not only can and will (edit) new runways and airports be built, but the A380's massive separation requirements gives back much of it's slot efficiency benefits.

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

#202

Earlier quoted context omitted.

I think that was obvious from at least 10 years ago. Airbus’s bet at the time raised a lot of eye brows, while boeing’s didn’t. The only thing Boeing screwed up on was outsourcing too much of the assembly.

> The only thing Boeing screwed up on was outsourcing too much of the assembly Selling planes is complicated. For the same reason the F-35 sources random things from practically everywhere [1], Boeing may have found it advantageous to have suppliers in the countries of national airline purchasers. [1] https://www.f35.com/about/economic-impact-map#nevada

Boeing’s decision to outsource internationally on the 787 was more of a political move (well, foreign customers buy planes you know) than a technical one. Surely they would have outsourced some parts, but not the wings and the tail!

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

#203

Earlier quoted context omitted.

I resent that. Chicago gets 747s and 777s from British Airways and is about to get an A380 :)

My guess as stated elsewhere A380 usage will increase.

I was just being snarky about the implication that Chicago is a new opportunity opened up by the 787 when it’s actually one of the largest cities in the world that already gets multiple flights daily from most major world cities.

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

#204

Earlier quoted context omitted.

The 787 is a little more than half the capacity of a 747.

It's a better bet to say the 777 killed the passenger 747. The real question is if cargo operations will continue to drive 747 demand. It'll probably look like tanker/military demand for the 767. The a380 cargo option never really developed...

> The real question is if cargo operations will continue to drive 747 demand.

The reality is that we're going to have loads of 747-400s that aren't life-expired available, and I imagine many operators will just turn to freighter conversions of them rather than order new 747-8s.

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

#205

Earlier quoted context omitted.

> if the A380 is struggling, the 747 is moribund or dead Boeing has built and sold over 1,500 747s [1]. It first flew in 1969 and is now being end of lifed. It has been obscenely profitable over its lifetime. The A380 first flew in 2005 [2]. It has been a commercial disaster. The 747 was a great plane for 1969. Airbus built the finest horse-drawn carriage just as the Model T came out. > constrained slots at major air…

> It has been obscenely profitable over its lifetime Exactly. And these obscene profits in a line where it had no competition were a problem for Airbus. A problem that has now disappeared. > The A380 first flew in 2005 [2]. It has been a commercial disaster. (a) It helped kill the "obscenely profitable" 747. (b) It was a hedge in case airlines were going to stick with the hub-and-spoke model (c) Slot constraints may…

I don't think the A380 really competes that directly. The 747 can use many more airports than the A380.

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

#206
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…

Wasn't another thing that Boeing believed that fuel economy would become more important in the future and thus developed airframes with fuel efficiency in mind?

At the time the Dreamliner was being announced people were initially underwhelmed by the proposal but Boeing persisted and tried to impress upon the aviation industry that they had made the right choice. I don't think at the time everyone thought the Dreamliner was the best answer to the A380.

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

#207
I find it interesting that people claim that the hub and spoke model is being phased out. It's not...it's being expanded. There are more hubs, and hubs are expanding the reach of their spokes, and that means more cities where you can find direct flights to or from.

The expansion of the number of cities in the US that fly direct to London is because the London hubs have expanded its reach to US cities. In the absence of an airline hub there, you would never find a direct flight to London from Seattle or New Orleans. In fact, you can prove this out yourself: find the list of non-seasonal direct international flights available from your local airport. Of those, filter out the flights that are seasonal, or on an airline for which your local airport is a hub. Then filter out all the flights where the destination is a hub for that specific airline. What is left? For me, nothing [0].

The trend in aviation isn't point to point. It is more hubs with longer reaches. The A380 failed because it is an extremely expensive behemoth with a single solitary benefit that could only ever be realized at megahubs that were already maxed out on 747s: it eased slot constraints. Airlines responded to slot constraints like they should have, by spreading out to more hubs with fewer slot constraints...not by buying a steaming pile of extremely expensive garbage.

[0] http://www.portseattle.org/Sea-Tac/Flights-Airlines/Route-Ma...

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

#208
post #129

Earlier quoted context omitted.

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…

2 points: Airbus had a competitor to the 747. The A340 was close to the 747 with all the benefits of a single airframe supplier. Second point: Airbus was in a tough spot with the A380. They had to make it huge because Boeing was always threatening a cheaper 747 stretch. I almost feel like Boeing only ever spent money on the post -400 stretch as a "special teams" move to force Airbus into the A380.

> competitor to the 747. The A340

The A340 was not competitive. The cost of a 4 engine plane with the seating of a large twin.

Beautiful plane, though, very quiet near the front.

> Airbus was in a tough spot with the A380

Absolutely. To me it was damned if you do, damned if you don't. A lot of industrial jiu-jitsu going on at that level.

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

#209

Earlier quoted context omitted.

This is a lie. Bombardiers planes don’t compete with any Boeing planes. Yet still Boeing flexed their lobbyists.

Delta chose to go with Bombardier planes in this case[1] which directly affected Boeing's ability to sell them their equivalents. That sounds like competition. [1] https://en.wikipedia.org/wiki/CSeries_dumping_petition_by_Bo...

Your own link explains how uncompetitive they are. Boeing's 737s range from 138-200+ passengers, the CS100 is in the 108-133 passenger range. More importantly the CS100 is significantly smaller and lighter, helping make it cheaper to operate on the routes Delta wanted.

So to bid against Bombardier, Boeing didn't even try to offer 737s, knowing they can't fit Delta's needs. Instead they offered 717s and Embrauers, both of which are used (Boeing canceled the 717 over a decade ago).

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

#210

Earlier quoted context omitted.

> which directly affected Boeing's ability to sell them their equivalents. Boeing's bid to Delta was some Embraer E series they had from an Air Canada trade-in. [1] No model of 737MAX competes with the C Series for Delta's RFP. Both Boeing and Delta have readily admitted this when asked (see [1]). Boeing has nothing in the market to compete with regional jets like the C Series. This is exactly why they are now lookin…

That sounds like there is competition for this market between Bombardier and Boeing.

Yea, it's like Chrysler suing to block Ferrari imports because they want to re-sell McLarens.
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