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.

2015-11-20_12-03-52The 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.

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