There seems to be some light between the vision by Airbus CEO Fabrice Bregier and sales chief John Leahy. Whereas Mr Leahy opined at the Dubai air show the A380neo is inevitable and suggested a timeline around 2022 or 2023. A few weeks later and Mr Bregier has a distinctly different view; 2022 is too soon.
The usual impetus for a rapid move to the A380neo is Emirates. Emirates is also keeping Airbus hanging on for an A350 order. Any suggestion that this is part of a carefully planned strategy to add pressure is purely speculation, we’re sure.
The table below lists the state of the A380 program. So far about 48% of all A380s ordered have been delivered.
The remaining 152 should, at current production rates of 30 per year, take us to mid 2020. Clearly, absent any new orders, we can expect Airbus to sow production. Mr Leahy has said he is working on 32 more sales which is roughly one year’s worth of production.
Which brings us back to the 2022/2023 period. Airbus does not have the orders to sustain the program until 2022, assuming Mr Leahy’s efforts succeed. We are inclined to accept his number as he is arguably the world’s best commercial aircraft salesman. But still that takes production at 30 per year to mid 2021. We still don’t see 2022. Of course Mr Leahy will argue he can make more sales by then, unless he retires. He has joked about retirement a number of times in recent years. He is not the only A380 salesman – but even the persuasive sales people at A380 lessor Amedeo have struggled mightily.
Mr Bregier said “People love the A380 as passengers. But airlines don’t.” Airlines, despite denials, don’t especially care what customers think. Everyone we have spoken with about their flight on the A380 concur with Mr Bregier’s sentiment; it is a great ride for passengers.
But it is a mightily expensive aircraft. It seats some 550 and is useful on thick routes. Only Emirates has been able to effectively use it on thin routes. Even Emirates does not understand why other airlines can’t make it work. Airlines managers are trained to be risk averse, and for many the A380 is a lot of risk. Running costs for an A380 are in the region of $26,000 per hour – or about $50 per seat hour. Compare this to $90 per seat hour on a 747-400 or $44 per seat hour on a 777-300ER . The A380 may have a high sticker price, but its costs are competitive even as it can carry so much more and generate revenues to match.
The world’s fastest growing airline, Emirates, has grown using the world’s biggest A380 fleet. And the future of the A380neo is going to be impacted more by Emirates than any other airline. Emirates clearly understands, that at current orders and production, the daylight between the visions of Mr Bregier and Mr Leahy offers them an opportunity to push hard for the A380neo. And, of course, though the potential A350 order has nothing to do with it, it adds to the impetus of underscoring Emirates’ role as being one of, or perhaps even the most important customer for Airbus wide-body models.
Leahy arguably the best airplane salesman? HA! He couldn’t sell Saharan Bedouins ice cubes as far as I’m concerned and Bergier is a blowhard.
First off, the A-380 does not have an $11,000 per hour advantage over the B-747-400. It does have a $6,000 advantage, meaning the cost to fly the WhaleJet for one hour is about $32,000. The B-744 costs about $37,400 per hour, at $90 per seat. Only a very few A-380s have 550 seats ($59/hr.), most have 500 seats ($64/hr.), or less. KE flies their A-380s with only 365 seats ($87/hr.), compared to their 416 seat B-744s.
A 465 seat B-747-8I has a $28,000 per hour operation, and a seat cost per hour of $60/hr.
But that does not consider the cargo revenue that both models of the B-747 generate, which would reduce seat/hr. costs. The A-380 with a full pax load cannot carry cargo, there is no room left aboard in the cargo holds. To be able to carry cargo, the A-380 needs to fly with about 100 empty seats, or more.
Second, in only 5 different years has Airbus sold 30 or more A-380s (one years production), for 9 different years, they have sold less than 30 airplanes, and 6 of those years sold 10 or less.
The A-380 sales is like the first several sales years of the B-747, back in the `60s and `70s, every airline had to have them. Now, almost no one wants them.
Airbus has another problem with future sales of the A-380. The early deliveries will be coming up on the end of their leases, or getting to old for the original airlines, like Singapore, and Emirates. They will start dumping the ones they own, maybe at fire sale prices. But, like the A-340-500/-600s, few will eventually get picked up on new leases or go to their second airline owners. These airplanes will compete directly in the used airplane market sales against the early production B-777-300ERs for new homes.
The B-744 and B-748 will have less of a problem selling as the passenger versions can be converted into freighters, something that cannot be done with the A-380.
remind me again which operator chooses to cramp 465 pax in their 748s ? LH has between 360 and 380 in theirs… thats approx 78 USD per seat and hour assuming your glorifiying 28.000 USD/hr are true… the true figure is more likely to be nearer the 30,000 USD/hr mark…. however, I agree on the parallels of the 747 and the 380… which is why the latter will survive as opinions change with the decades….
AFAIK there are no B-748 operators with 465 seats. There are only a few (less than 6) of the 173 in service A-380s with 550, or more seats. Very few A-380 missions are ever flown with full pax loads. The same can be said for the B-748, but with fewer seats, they usually have a higher load factor. Except for a few EK missions, most A-380s fly with a 65%-80% load factor. Most B-748I missions fly with a 80%-90% load factor. (there are exceptions to both)
But you missed the point. The reason why the A-380 and B-748 are not selling is because airplanes like the B-77W, A-359, and B-789 are much more efficient over the long haul range. All 3 of these jets can be had with 350, or more seats, and still have room enough for below deck cargo revenue.
The A-380 cannot do that. The B-747 can, but with 4 engines it is less attractive than any large twin (except in the pure freighter market, than there is nothing that can compare to a B-747F, except pure military haulers).
Neither that B-748, nor the A-380 will survive in the passenger market for much more than the next 10-12 years, or so, their days are numbered, my friend. The B-748 will survive as a pure freighter, with its oversized cargo capability. Even if Airbus revives the A-380F concept, it will not sell very many as no one needs a 4 engine package freighter anymore (plus there still is no A-380F infrastructure in place, or the special ground handling equipment to reach the upper deck cargo.
Just a reminder. Depending on the route, sometimes the 777 or 748 have enough room, but can’t take the weight. Cargo also gives a lot less earnings compared to passengers. Just to put things into perspective. The advantages of more cargo room might not be as advantagues as they seem. It all depends on what route they are used on. If we compare 777 with A380, compare with the same comfort level. That means seats 11 abreast for the A380 compared to the 777x. The A380’s major strength is also its major weakness: capacity. And with capacity comes risk. Once you can fill it, it’s a mighty cash generator, more than any other plane…. If you can fill it. Emirates can due to their unique one central stop strategy, and enables them to grow faster then any other airline. Others will follow that strategy, but Emirates has first mover advantage. Did the A380 come to soon? Probably. A 380neo only would give it a more level playing field with the 777x. Something it needs if it wants to survive. And the longer airbus waits, the better the engine technology gets. Bregier thinks he has time to wait a little longer, reap those benefits of better (engine) technology and bets on a rising demand later. Mr Leahy thinks 2022 is good enough and there is not as much time. But both believe in the A380(neo) future. Maybe AIrbus should go back to those first years sales strategy. Try it, and buy it if you like it. That’s something they could do with those A380’s coming off-lease.
Excellent analysis, sir!
Do the A380 backlog numbers quoted in this article assume all orders are still definite? I was under the impression that many are questionable or obsolete. Taking those out, how much time does Airbus have at 30 deliveries a year?