Airbus said they would need to sell over 340 Units to break even from what I have heard, not a surprised there; the surprise is Airbus finally realizing that the market for the A380 is a small one. Which is why McDonnell Douglas didn't want to enter into a working relationship with Airbus when MDC was pushing the MD-12 project.smokejumper wrote:Today's edition of The Wall Street Journal has an article regarding the A380. Among the issues reported are:
- The breakeven point is now substantially above the 250 unit number publically announced. Airbus insiders confirm this but no new breakeven point number has been released.
- The market for large planes is lower than befire due the cost of fuel. Except for a few selected heavily traveled routes, airlines realize that they need to fly more fuel efficient planes in a point-to-point manner.
New problems for the Airbus A380
Moderator: Latest news team
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smokejumper
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The breakeven point is an arbitrary number that can be manipulated by politicians, management or accountants, depending on what they want to achieve. It should involve the total costs of developing and manufacturing the plane, including: engineering man-hours, wind tunnel testing, prototype development and assembly, engineering changes, assembly and parts costs, production jigs and tooling, flight testing, production costs, marketing, overhead, the time value of money, finance costs, etc. All items are subject to manipulation and politicians or management will often manipulate numbers to protect their position.
So, the A380 breakeven point many be 340 units or even more. We will probably never know the true costs (or breakeven point).
So, the A380 breakeven point many be 340 units or even more. We will probably never know the true costs (or breakeven point).
Singapore may cancel A380 order
Singapore Air could cancel Airbus order-report
Wed Oct 18, 2006 2:58am ET
PARIS, Oct 18 (Reuters) - Singapore Airlines (SIAL.SI: Quote, Profile, Research) could cancel an order for nine Airbus A380 superjumbos if there are excessive delays to its delivery, French newspapers reported on Wednesday.
"If the deliveries are too far away and take place at a moment during which we do not need them, we could indeed cancel them," said Bey Soo Khiang, senior executive vice president of the airline, was quoted as saying in La Tribune.
Airbus, the aircraft maker controlled by aerospace group EADS (EAD.PA: Quote, Profile, Research), has not have given Singapore Airlines a precise schedule for all the deliveries, La Tribune said.
A Singapore Airlines spokesman told Reuters: "The comment quoted in the French media refers only to the option that exists in the Purchase Agreement to cancel deliveries that are delayed. There has been no decision to exercise any cancellation rights under the Agreement. We therefore can't rule any options in or out at this time, which is the position we have maintained since the delay was announced."
Airbus could not be reached for comment.................
http://tinyurl.com/yg9gk2
Singapore Air could cancel Airbus order-report
Wed Oct 18, 2006 2:58am ET
PARIS, Oct 18 (Reuters) - Singapore Airlines (SIAL.SI: Quote, Profile, Research) could cancel an order for nine Airbus A380 superjumbos if there are excessive delays to its delivery, French newspapers reported on Wednesday.
"If the deliveries are too far away and take place at a moment during which we do not need them, we could indeed cancel them," said Bey Soo Khiang, senior executive vice president of the airline, was quoted as saying in La Tribune.
Airbus, the aircraft maker controlled by aerospace group EADS (EAD.PA: Quote, Profile, Research), has not have given Singapore Airlines a precise schedule for all the deliveries, La Tribune said.
A Singapore Airlines spokesman told Reuters: "The comment quoted in the French media refers only to the option that exists in the Purchase Agreement to cancel deliveries that are delayed. There has been no decision to exercise any cancellation rights under the Agreement. We therefore can't rule any options in or out at this time, which is the position we have maintained since the delay was announced."
Airbus could not be reached for comment.................
http://tinyurl.com/yg9gk2
Theres nothing better than slow cooked fall off the bone BBQ, Texas style
Did SIA already secured their delivery slots with their 9 new A380 commitments?
I mean their first 10 aircraft will be delayed the most, subsequent ones the delay effect will gradually fade because in 2010 they can produce 45 per year...
I think SIA at the start had 10 firm orders and option for 9 more, unless Airbus agreed to give slots to SIA for those 9 options, I see no reason why they are saying to cancel their 9.
edit*
read the article again... i think this line says it all "The comment quoted in the French media refers only to the option that exists in the Purchase Agreement to cancel deliveries that are delayed." Well every airline has the right to cancel their order...
I mean their first 10 aircraft will be delayed the most, subsequent ones the delay effect will gradually fade because in 2010 they can produce 45 per year...
I think SIA at the start had 10 firm orders and option for 9 more, unless Airbus agreed to give slots to SIA for those 9 options, I see no reason why they are saying to cancel their 9.
edit*
read the article again... i think this line says it all "The comment quoted in the French media refers only to the option that exists in the Purchase Agreement to cancel deliveries that are delayed." Well every airline has the right to cancel their order...
Last edited by CX on 19 Oct 2006, 12:19, edited 1 time in total.
P2P is good, but if point to hub to point is cheaper to operate, and cheaper tickets, then it is equally good...smokejumper wrote:Today's edition of The Wall Street Journal has an article regarding the A380. Among the issues reported are:
- The breakeven point is now substantially above the 250 unit number publically announced. Airbus insiders confirm this but no new breakeven point number has been released.
- The market for large planes is lower than befire due the cost of fuel. Except for a few selected heavily traveled routes, airlines realize that they need to fly more fuel efficient planes in a point-to-point manner.
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smokejumper
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- Joined: 21 Oct 2005, 00:00
- Location: Northern Virginia USA
Not for business travelers or those with a schedule. My time is worth a great deal to me. Also, why would I pay $300 to fly RT to New York so I can save $100 on a trans-Atlantic trip?CX wrote:P2P is good, but if point to hub to point is cheaper to operate, and cheaper tickets, then it is equally good...smokejumper wrote:Today's edition of The Wall Street Journal has an article regarding the A380. Among the issues reported are:
- The breakeven point is now substantially above the 250 unit number publically announced. Airbus insiders confirm this but no new breakeven point number has been released.
- The market for large planes is lower than befire due the cost of fuel. Except for a few selected heavily traveled routes, airlines realize that they need to fly more fuel efficient planes in a point-to-point manner.
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smokejumper
- Posts: 1033
- Joined: 21 Oct 2005, 00:00
- Location: Northern Virginia USA
New A380 breakeven point (420 units)
See link:
http://in.today.reuters.com/news/newsAr ... ived=False
See link:
http://in.today.reuters.com/news/newsAr ... ived=False
YIKES!! It continues to risesmokejumper wrote:New A380 breakeven point (420 units)
See link:
http://in.today.reuters.com/news/newsAr ... ived=False
...
Theres nothing better than slow cooked fall off the bone BBQ, Texas style
A long long time ago we had big discussion going on about the Airbus strategy and the Boeing strategy (Hub and spoke or direct flights).
I always preached I believed in the Boeing strategy since the A380 was too big, too expensive and over the top since not too many airports were ready, or ever will be, to receive a plane like this.
It is a wonderful Cargo plane but for pax, no way.
Unfortunately it slowly shows we are getting to the point where I was talking about, huge delivery delays, huge amounts of money have to be paid for late deliveries to the airlines, employees are getting fired and worse case scenario, airlines are even thinking about canceling their orders.
This is not good!!!
I am a strong believer in innovation but sometimes people got carried away a little too far, this is imo what is happening now to Airbus.
To be honest I don't think this is something to continue with, just build A380 Cargo planes, accept the losses and keep on focusing on the small body A31X-A32X family and the wide body A332-A333.
This is the market where they will find their costumers and save them from bankruptcy.
Once again that is what I think about it but maybe it is all too late already.
One step too far is done in a split second.....................
Greetz,
Erwin
I always preached I believed in the Boeing strategy since the A380 was too big, too expensive and over the top since not too many airports were ready, or ever will be, to receive a plane like this.
It is a wonderful Cargo plane but for pax, no way.
Unfortunately it slowly shows we are getting to the point where I was talking about, huge delivery delays, huge amounts of money have to be paid for late deliveries to the airlines, employees are getting fired and worse case scenario, airlines are even thinking about canceling their orders.
This is not good!!!
I am a strong believer in innovation but sometimes people got carried away a little too far, this is imo what is happening now to Airbus.
To be honest I don't think this is something to continue with, just build A380 Cargo planes, accept the losses and keep on focusing on the small body A31X-A32X family and the wide body A332-A333.
This is the market where they will find their costumers and save them from bankruptcy.
Once again that is what I think about it but maybe it is all too late already.
One step too far is done in a split second.....................
Greetz,
Erwin
A Whole Different Animal
My take is that there is a definite market for the A380 as a pax version. The big question in this is “is there enough market for this and make any money on it?” I have never thought so, and its obviously gone down hill since then.
As for Cargo, its not really setup for Cargo in the sense the B747 is. While not all take advantage of the raised nose capability, it also means flexibility. With it, you can put it on any run that might need that capability. Obviously its not required, as there are a lot of conversions from pax out there that do not require it.
The A380 so far only has garnered freighter offers with UPS and FedEx, both of which have unique loads (bulky) as opposed to heavy, and the volume is important. Airbus has not made a single order since UPS made theirs (Emirates swapped their freighters for pax as they did not like the lack of data on the Cargo versions and went with 747s instead).
However, they are the only two like that in the world presently. While overall it’s a pretty big order between UPS and FedEx (roughly 40 with firm and options), its a situation where they order a few occasionally once the original operation capability is met.
Within that mix, UPS runs 747s, and they have ordered more, the statement was that we need both types. In their case, it also insulates them from the delays.
FedEx does not like the 747s, they do not fit their existing can structure. However, they too use 747s at times (on charter basis). So, they obviously can make them work if they need to.
EADS has revised their data, they now say 420 to break even.
As (by all independent accounts) their accounting is “murky”, it is almost certainly higher.
Launch customers are paying 66% off (with the penalties). The open question is of course, are ALL the customers so far “launch” customers? They have to sell them at a normal price, if not, they are sunk.
If it was a case that they knew the A380 would succeed, then they have to keep going. However, it needs to not only succeed, it needs to do so in a short enough period of time to generate revenue, and its not going to do that for a long time.
In the meantime the overruns are so high, that they could have built the A350 with those proceeds. It’s a very grim (possibly fatal) financial picture.
As for Cargo, its not really setup for Cargo in the sense the B747 is. While not all take advantage of the raised nose capability, it also means flexibility. With it, you can put it on any run that might need that capability. Obviously its not required, as there are a lot of conversions from pax out there that do not require it.
The A380 so far only has garnered freighter offers with UPS and FedEx, both of which have unique loads (bulky) as opposed to heavy, and the volume is important. Airbus has not made a single order since UPS made theirs (Emirates swapped their freighters for pax as they did not like the lack of data on the Cargo versions and went with 747s instead).
However, they are the only two like that in the world presently. While overall it’s a pretty big order between UPS and FedEx (roughly 40 with firm and options), its a situation where they order a few occasionally once the original operation capability is met.
Within that mix, UPS runs 747s, and they have ordered more, the statement was that we need both types. In their case, it also insulates them from the delays.
FedEx does not like the 747s, they do not fit their existing can structure. However, they too use 747s at times (on charter basis). So, they obviously can make them work if they need to.
EADS has revised their data, they now say 420 to break even.
As (by all independent accounts) their accounting is “murky”, it is almost certainly higher.
Launch customers are paying 66% off (with the penalties). The open question is of course, are ALL the customers so far “launch” customers? They have to sell them at a normal price, if not, they are sunk.
If it was a case that they knew the A380 would succeed, then they have to keep going. However, it needs to not only succeed, it needs to do so in a short enough period of time to generate revenue, and its not going to do that for a long time.
In the meantime the overruns are so high, that they could have built the A350 with those proceeds. It’s a very grim (possibly fatal) financial picture.
Hopefully Airbus have a big enough backlog to give them time to fix this, but I'm not sure.
Airbus have said that some of their contracts for the 380 are loss making, so even delivering the aircraft will make matters worse, but it might be less than the cost of cancellation.
Airbus need now to do a few things imo;
1. Make sure they can respond to any 737 replacement initiative by Boeing
2. Scrap the 350 and lighten the 330 instead. Airbus had what was it 222 committments to what was essentially a reworked 330. Admittedly they would not be able to take on the 777 with this, but I think this part of the martket will largely be gone by the time the 350 is ready.
3. EADS should sell off Airbus, to foreign investors. yes inc American investors, and/or form a strategic partnership with a major aerospace firm like Lockheed. However BAE think it is better to get out, so maybe Lockheed, or someone else would not be interested
If the politicians of France or Germany do not allow a Commercially based restructure, things don't look good for Airbus/EADS.
Ruscoe
Airbus have said that some of their contracts for the 380 are loss making, so even delivering the aircraft will make matters worse, but it might be less than the cost of cancellation.
Airbus need now to do a few things imo;
1. Make sure they can respond to any 737 replacement initiative by Boeing
2. Scrap the 350 and lighten the 330 instead. Airbus had what was it 222 committments to what was essentially a reworked 330. Admittedly they would not be able to take on the 777 with this, but I think this part of the martket will largely be gone by the time the 350 is ready.
3. EADS should sell off Airbus, to foreign investors. yes inc American investors, and/or form a strategic partnership with a major aerospace firm like Lockheed. However BAE think it is better to get out, so maybe Lockheed, or someone else would not be interested
If the politicians of France or Germany do not allow a Commercially based restructure, things don't look good for Airbus/EADS.
Ruscoe
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cageyjames
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smokejumper
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The A-380 is not designed as a true freighter (nor is the B777F); the B747 represents a great example of a true freighter. With its upward hinging nose, cargo can be loaded straight in and outsized (and long) freight can readily handled . With a side loading door (B777F / A380), loads are limited to items (such as pallets) that can be pushed in through the side door and then back without turning it. The large floor area of the A380 does not lend itself to carrying a large amount of heavy loads since the plane will hit it’s maximum gross weight before the load density fills the available cargo floor area.RC20 wrote:My take is that there is a definite market for the A380 as a pax version. The big question in this is “is there enough market for this and make any money on it?” I have never thought so, and its obviously gone down hill since then.
As for Cargo, its not really setup for Cargo in the sense the B747 is. While not all take advantage of the raised nose capability, it also means flexibility. With it, you can put it on any run that might need that capability. Obviously its not required, as there are a lot of conversions from pax out there that do not require it.
The A380 so far only has garnered freighter offers with UPS and FedEx, both of which have unique loads (bulky) as opposed to heavy, and the volume is important. Airbus has not made a single order since UPS made theirs (Emirates swapped their freighters for pax as they did not like the lack of data on the Cargo versions and went with 747s instead).
However, they are the only two like that in the world presently. While overall it’s a pretty big order between UPS and FedEx (roughly 40 with firm and options), its a situation where they order a few occasionally once the original operation capability is met.
Within that mix, UPS runs 747s, and they have ordered more, the statement was that we need both types. In their case, it also insulates them from the delays.
FedEx does not like the 747s, they do not fit their existing can structure. However, they too use 747s at times (on charter basis). So, they obviously can make them work if they need to.
EADS has revised their data, they now say 420 to break even.
As (by all independent accounts) their accounting is “murky”, it is almost certainly higher.
Launch customers are paying 66% off (with the penalties). The open question is of course, are ALL the customers so far “launch” customers? They have to sell them at a normal price, if not, they are sunk.
If it was a case that they knew the A380 would succeed, then they have to keep going. However, it needs to not only succeed, it needs to do so in a short enough period of time to generate revenue, and its not going to do that for a long time.
In the meantime the overruns are so high, that they could have built the A350 with those proceeds. It’s a very grim (possibly fatal) financial picture.
Rather, the A380 is very much optimized for passengers, on routes that need very high capacity over long distances and, serving airports that have invested in infrastructure expansion to handle very large passenger loads. A similar airport investment decision was made 35 years ago for the B747, but this was in an era of unbridled optimism and financial exuberance.
The Airbus Investors review reveals some disturbing figures.
420 deliveries to break even!
based on achieving total sales of 751 Aircraft, over the expected life cycle of the frame? a questionable amount?
As well the Freighter customers have received their official notification of delay from Airbus, and they have suffered the same fate as the PAX versions, Fedex and UPS are both looking at options to fill the shortfall.
http://msnbc.msn.com/id/15340437/
420 deliveries to break even!
based on achieving total sales of 751 Aircraft, over the expected life cycle of the frame? a questionable amount?
As well the Freighter customers have received their official notification of delay from Airbus, and they have suffered the same fate as the PAX versions, Fedex and UPS are both looking at options to fill the shortfall.
http://msnbc.msn.com/id/15340437/
There are no strangers in the world, just friends we have yet to meet.
Basically, I think the problems at Airbus are a shame. I'd love to see that huge, lumbering beast in the sky. I will also enjoy seeing the 747-8. I may even enjoy flying in them as long as airlines give me enough personal room.
For those who ordered the 380 with specific deliver dates in mind, it's a raw deal. The biggest screwup by Airbus was promising dates it couldn't deliver. I find it hard to believe that these delays weren't predictable.
The 380 will be a wonderful plane, when it's finished. In the end, I'd rather they delay the delivery until they get it right than release a flawed product.
Eventually, it will be delivered, it will enjoy a long service life and it may even make a buck or two for Airbus.
For those who ordered the 380 with specific deliver dates in mind, it's a raw deal. The biggest screwup by Airbus was promising dates it couldn't deliver. I find it hard to believe that these delays weren't predictable.
The 380 will be a wonderful plane, when it's finished. In the end, I'd rather they delay the delivery until they get it right than release a flawed product.
Eventually, it will be delivered, it will enjoy a long service life and it may even make a buck or two for Airbus.
420 deliveries to break even seems like a tall order indeed.bits44 wrote:The Airbus Investors review reveals some disturbing figures.
420 deliveries to break even!
based on achieving total sales of 751 Aircraft, over the expected life cycle of the frame? a questionable amount?
As well the Freighter customers have received their official notification of delay from Airbus, and they have suffered the same fate as the PAX versions, Fedex and UPS are both looking at options to fill the shortfall.
http://msnbc.msn.com/id/15340437/
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smokejumper
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- Location: Northern Virginia USA
The 420-unit break-even point is very disturbing, especially if the total A380 market (as estimated by Airbus) is 751.
This means that the first 420 sold will just pay for the developmental costs (the order book today stands at 159). The next 321 will result in a profit for the company, according to Airbus. However, this assumes that Airbus will sell all planes over the first 159 at a profit; this might be a tall order, especially with Boeing offering the 747-8 as a smaller and more efficient alternative. The total 20-year market for very large planes may only be for 1000 units and Boeing is certainly sure to get a good percent of these.
Airbus may have a super jumbo white elephant on its hands, one that may sap funds needed for development of new aircraft.
This means that the first 420 sold will just pay for the developmental costs (the order book today stands at 159). The next 321 will result in a profit for the company, according to Airbus. However, this assumes that Airbus will sell all planes over the first 159 at a profit; this might be a tall order, especially with Boeing offering the 747-8 as a smaller and more efficient alternative. The total 20-year market for very large planes may only be for 1000 units and Boeing is certainly sure to get a good percent of these.
Airbus may have a super jumbo white elephant on its hands, one that may sap funds needed for development of new aircraft.