Mortyman wrote:

flyingclrs727 wrote:

Mortyman wrote:

Airbus should seriously consider moving forward With an Airbus 380-900 neo

The engine technology isn't good enough right now to make a neo worthwhile at this time. They are more likely to have something like an 850 rather than a 900. It should have a modest stretch to allow more rows of seat, but also improve the layout of the cabin to add even more seats.

I don't know if there ever will be a true 900 stretched as originally planned. That's a lot of capacity. It was originally touted as a solution for airlines that had two 747-400 flights scheduled between the same airports less than an hour apart like HKG-LHR. How many routes need that kind of capacity compared to the costs of developing, manufacturing, and maintaining such a model?

How far are we from such an engine improvement ?

IIRC, the RR Advance and Ultrafan should be ready around the middle of next decade.

N383PA Wrote:

Well here is something controversial .... I wonder with all of these (cheap) A380's coming onto the second hand market, would that impact the 779 or A350-1100?

The problem revolves around how many A380's come onto the market the inflection point for a LCC to take the aircraft. I suspect the inflection point would ultimately become the market value. A great way to destroy your own business. 1) Kill the value of your A380 assets by flooding the market with surplus aircraft and 2) Flood the market with cheap A380’s so that an LCC can buy them and disrupt your business.

Planesmart Wrote:

Also, is there an Airbus buyback or residual value guarantee at the end of the lease? And finally, does EK already have a buyback agreement in place? In other words a sale/leaseback/sale.

You might have hit the nail on the head here!

With many airlines like Emirates, Etihad, Qatar, AirAsia, etc using sale and lease back financial arrangements to generate cash (or bringing profits foreward), Emirates could be trying to spend their way to profitability.

Taxi645 wrote:

As said before many people are unable or unwilling to understand and/or acknowledge that what is, is not necessarily the same as what will or can be. This goes for the A380 future prospects as well as in general. A mid-20's GTF A380 will be a game changer in terms of fuel per seat mile. It will change the market. Therefore it is too important for Airbus and the Airlines (especially EK) to let it die prematurely. I think you'll have to view this possible deal in that light.

I have to admit I have a hard time wrapping my head around the idea of a game-changing mid-2020s GTF A380 at the same time the A380's biggest customer's CEO is saying that his airline is already struggling to find homes for the 13 aircraft that it has taken out of the US market and is saying that if he does not find homes for them he’ll put them on the ground. Also at the same time Airbus's CEO is saying the challenge for him is to convince the airlines to introduce such a big aircraft seamlessly and grow their market share profitably without it weighing on yields.

We have a market showing many so signs of saturation, yes, with the current generation A380, but still, that mid-20's GTF A380 will need to be a total game changer in terms of fuel per seat mile in order to get Airbus's and RR's boards convinced it'd be the right place to invest large sums of money right after losing large sums of money on the same market segment. Last time around Airbus got away with some very rosy market projections. This time there's going to be a lot of skepticism and a lot of other interesting products on the market that the customers will be very comfortable with. The A380++ will be pushed even more towards the high volume end of the market where capacity risk is the greatest.

We need a A380 NEO!

EK has issued a statement to Reuters saying they have no plans to purchase additional A380's

https://www.reuters.com/article/emirate ... SD5N1FF01K

qf789 wrote:

EK has issued a statement to Reuters saying they have no plans to purchase additional A380's

https://www.reuters.com/article/emirate ... SD5N1FF01K

This makes a bit more sense. I'm sure EK and Airbus are constantly talking. There is some price for A380's at which it would make sense for Airbus to extend A380 production at ~10/yr for EK alone. The issue is whether that price destroys the value proposition for the A380, making 777-9's or something else relatively more attractive. A related issue is which improvements, such as winglets, Airbus would be willing to implement for new orders.

A winglet's 3% fuel burn delta should be worth 4-5% price delta for EK.
Assuming new frames sell for $250mil, that's $10-12mil. Say Airbus and EK split the value creation at today's fuel prices; EK pays $5mil more per frame with winglets.
At 10/yr, winglets would earn Airbus a revenue stream of ~$50mil - let's say that's all profit (re*engineering would be dear, production cheap).
Let's say we project a 10-year production run for A380W, during which it produces $500mil profit attributable to winglets.
As suitably risk-averse manager of this difficult-to-project program, I doubt an up-front investment above $300mil would look attractive.
If winglets require modification of flight controls - as seems superficially likely and as Airbus is studying - $300mil would be cheap.

At a more fundamental level, Airbus is finally behaving rationally over the last few years re A380.
It could not make money on A380's sold to EK for ~30/yr production rates; it's probably asking more per frame now given low production rates.
Airbus is asking EK to pay a rational price for A380's rather than continuing to subsidize Dubai's aviation sector.

At the highest level even a break-even sale to EK loses Airbus money: absent EK A380's, other airlines would be flying more A350/A330 as well as Boeing planes.

Matt6461 wrote:

It could not make money on A380's sold to EK for ~30/yr production rates; it's probably asking more per
.....
At the highest level even a break-even sale to EK loses Airbus money: absent EK A380's, other airlines would be flying more A350/A330 as well as Boeing planes.

Airbus is making money on the A380 at about 20/year production rate. Of course they are making shedloads of more money by supporting the ~200 planes in service and more in the future.

At the highest level an A380 would not be replaced by a plane that is half the size (A330) or a bit bigger than that (A350) it would be replaced by the next best thing (779). No A380 would give all that business to Boeing.

Theseus wrote:

Planesmart wrote:

But on VLA's, there is a new normal. The final balloon payment on an A380 could be USD20m or more, almost the remaining residual value on the books. Would you rather invest USD10m (less Airbus contribution) on fitting out a factory fresh, bare interior in a new A380 you would use for 12 years, or USD15m removing an old interior, then fitting new on an old aircraft you would use for 6 years?

Sorry if I am missing the obvious here, but I am a bit lost here.

First why would be used only 6 years ? I would think another 10 or 12 years would be reasonable (though I know it is not the current EK policy).
Second, should the lease rate of an already amortized frame be much, much lower ?

To me, the real downsides of the 12 years old frame are that the newer ones probably perform better (especially for the first ones that EK received), and the maintenance cost should be a bit lower (but I do not have the data on either point, so I cannot quantify).

I cannot imagine EK operating leased aircraft beyond 18 years, even in a parallel universe.

The lease rate for an amortized aircraft will be lower, but everything else will cost more, including schedule disruption which comes with age. Maintenance will be much higher. For example, PBTH rates for widebody engines, if you can sign a deal, triple by Y15 compared to Y0-5. If you are going to invest more in a new interior for a 12 year old aircraft, than fitting out a brand new aircraft, it stands to reason you are going to want to obtain 10-12 years use from that interior.

The A380 isn't as high tech systems wise as the 787, but software support will increasingly obsolete aircraft, instead of fuel, hours or cycles. The lack of software support, and/or cost, will become the number one cause of aircraft making one way trips to the desert, affecting engines and air frames.

travelhound wrote:

N383PA Wrote:

Well here is something controversial .... I wonder with all of these (cheap) A380's coming onto the second hand market, would that impact the 779 or A350-1100?

The problem revolves around how many A380's come onto the market the inflection point for a LCC to take the aircraft. I suspect the inflection point would ultimately become the market value. A great way to destroy your own business. 1) Kill the value of your A380 assets by flooding the market with surplus aircraft and 2) Flood the market with cheap A380’s so that an LCC can buy them and disrupt your business.

Planesmart Wrote:

Also, is there an Airbus buyback or residual value guarantee at the end of the lease? And finally, does EK already have a buyback agreement in place? In other words a sale/leaseback/sale.

You might have hit the nail on the head here!

With many airlines like Emirates, Etihad, Qatar, AirAsia, etc using sale and lease back financial arrangements to generate cash (or bringing profits foreward), Emirates could be trying to spend their way to profitability.

Nothing to do with spend their way to profitability.

I was attempting to highlight, there is very low risk to EK, the leasor and syndicate participants. The syndicate participants get their money back and interest from lease payments (the senior loan). The residual is the junior loan, which is taken care of by scrap value, plus final balloon payment, plus initial sale/leaseback premium, plus tax effective management of all the transactions. An unlikely shortfall might be taken care of with a sliding scale guaranteed buyback arrangement with Airbus or related parties.

We already know EK are not planning a top up order. Even if needed, waiting 6-12 months will see pencils sharper still price wise at Airbus for the A380 and Boeing for the 777X. And there will be cancellations with dollars changing hands on both models to factor into the equation too.

qf789 wrote:

EK has issued a statement to Reuters saying they have no plans to purchase additional A380's

https://www.reuters.com/article/emirate ... SD5N1FF01K

Indeed "Emirates has no plans at this time to purchase additional A380s". The original article states that a decision would be taken at the end of 2017.

goosebayguy wrote:

BA or IAG were thinking of buying a few more not so long ago. I get the feeling there will be a few occasional orders by other airlines over the next 20 years.

If your feeling does come along, then will Airbus rejig their production for a few occasional orders over 20 years? And the supply chain will correspondingly do so? Not possible. It doesn't work that way.

I believe that notwithstanding all of the issues and speculations surrounding the A380, Airbus in the end may be smiling due to possible cargo conversions for used aircraft coming into the market. I am personally not a huge fan of the A380, although I do believe that Airbus (and Boeing), manufactures safe and technologically advanced aircraft. Cargo conversions, other than the possible NEO developments, will certainly extend the life-cycle of the aircraft and by that time, hopefully the market will be ready for the aircraft.

IAG have stated interest in used A380s and other widebodies, but when it came to Level, they opted for new build A330s.

Strato2 wrote:

At the highest level an A380 would not be replaced by a plane that is half the size (A330) or a bit bigger than that (A350) it would be replaced by the next best thing (779). No A380 would give all that business to Boeing.

Thing is, there is a cost associated with keeping that business. We can see it involves the cost of keeping the production line open for another 7-8 years, and the cost of building an all-new engine for the A380, and the cost of building and certifying a stretch. That needs to be justified by a suitably large market. If anything, the current A380 is proving that the market for the A380 isn't as big as Airbus projected it would be.

The thread starting article says:

Sales chief John Leahy, speaking with Evrard, said Airbus remained in talks that could secure fresh commitments for the A380. He added that he hadn’t given up on maintaining the agreed build rate, which is intended to prolong the program until a hoped-for revival in demand for bigger jets fired by Asian economic growth and crowded runways at major hubs.

Same old story. Thing is, Asia has been growing tremendously for the entire lifetime of the A380 and hub runways have been crowded too yet the market response to the product has been tepid whilst the market demand for narrowbodies and small widebodies has been truly phenomenal.

Just like the 747, A380 is a money losing program that the parent company can afford to keep funding in the hopes that the market eventually wants some, but that outcome is not guaranteed. It could very easily go the way of the 757 and A300: no orders so let's close it down. Add into that some external stimulus such as a few years of economic weakness at the wrong time and the program(s) will be toast.

Revelation wrote:

Taxi645 wrote:

As said before many people are unable or unwilling to understand and/or acknowledge that what is, is not necessarily the same as what will or can be. This goes for the A380 future prospects as well as in general. A mid-20's GTF A380 will be a game changer in terms of fuel per seat mile. It will change the market. Therefore it is too important for Airbus and the Airlines (especially EK) to let it die prematurely. I think you'll have to view this possible deal in that light.

I have to admit I have a hard time wrapping my head around the idea of a game-changing mid-2020s GTF A380 at the same time the A380's biggest customer's CEO is saying that his airline is already struggling to find homes for the 13 aircraft that it has taken out of the US market and is saying that if he does not find homes for them he’ll put them on the ground. Also at the same time Airbus's CEO is saying the challenge for him is to convince the airlines to introduce such a big aircraft seamlessly and grow their market share profitably without it weighing on yields.

Indeed, what is and what will or can be... I don't think anyone in their right mind would be arguing that the current A380 is the most competitive airplane on the market.

Revelation wrote:

We have a market showing many so signs of saturation, yes, with the current generation A380, but still, that mid-20's GTF A380 will need to be a total game changer in terms of fuel per seat mile

Indeed and I think it will be exactly that for two reasons:

1 If it is not there is no use in going through so much trouble (cost) to extend production. A management team would not get approval to go ahead with such a unsustainable strategy.

2 There are multiple (technical) reasons why it can deliver exactly that. Although the current A380 has economics of scale and an aerodynamically very efficient double decker fuselage (floor area to wetted area) it was never at a single time sold in the most optimized/competitive form:
- It was not weight optimized for the sold capacity
- It had an underused floor area
- The fact that it is too heavy for it's given 80m wingspan significantly reduces aerodynamic efficiency.

Yes currently we have a more optimized use of the floor area, but by now the engines are one to two generations behind and it's still overbuilt for the sold capacity, so it still is not nearly as competitive as can be as is obvious by a lack of sales.

A mid 20's ultrafan A380 can address all of the above and this time, unlike the A380 CEO, offer it simultaneously:
- Optimized use of the floor area
- Latest generation widebody engines (with a step change in fuel efficiency)
- The resulting enormous reduction in fuel weight combined with a weight optimization based on the sold capacity will enormously improve the weight to wingspan ratio thus greatly reducing induced drag.

This combined with the already mentioned advantage of economics of scale and the aerodynamically efficient double decker fuselage will in my view produce a game changing reduction in fuel per seat mile that an A380 sized plane needs to compete with smaller more flexible and less risky twins.

One might argue that by simply slapping the same generation on a twin the advantage will disappear. This however is only true to a certain degree, because, as argued, it is not the solely SFC improvement by itself that will help the A380”NEO” but the resulting improvement in weight to wingspan ratio that will help the A380 much more than those twins as the A380 is currently much more compromised in that area. And then there is still the damage a LCC carrier could do with a A380NEO if apart from the massive fuel savings per seat it unleashes it's inherent low cost onto the mass transport market. For a LCC passenger, price is everything and certainly much more important than 10 vs 11-abreast or frequencies on a day.

From the Bloomberg article:

Airbus might also be required to commit to measures to make the A380 more efficient before a deal is signed.

Would be interesting to know if this requirement was relating to the current A380 or an A380"NEO" or both.

One would have to be very prudent with regards to the ROI of measures to a few A380CEO frames if they would not be reusable for an A380NEO. For instance because the latter would have a much more thoroughly redesigned wing.

BLUESKY57 wrote:

I believe that notwithstanding all of the issues and speculations surrounding the A380, Airbus in the end may be smiling due to possible cargo conversions for used aircraft coming into the market. I am personally not a huge fan of the A380, although I do believe that Airbus (and Boeing), manufactures safe and technologically advanced aircraft. Cargo conversions, other than the possible NEO developments, will certainly extend the life-cycle of the aircraft and by that time, hopefully the market will be ready for the aircraft.

Makes me wonder if perhaps the Prime Air operation might do better with something this size on a limited number of trunk routes considering the volume of product shipped by Amazon daily.

peterinlisbon wrote:

Why not just carry out the maintenance required to keep the A380s it already has in service? I flew on a Kuwait Airways A320 that was 20 years old the other day and (because it had been refurbished) I couldn't have told the difference between that and a brand new one.

The first build have too many artifacts from the Catia 4/Catia 5 debacle. Too many parts (e.g. tails and wires) had to be hand fit to every airframe. This makes the 12 year maintenance prohibitively expensive for the earliest A380s. Everyone is scrapping the.:SQ, QF, and EK.

I'm surprised at the buy as a 779 will make more profit per flight.

Taxi645 wrote:

Yes currently we have a more optimized use of the floor area, but by now the engines are one to two generations behind and it's still overbuilt for the sold capacity, so it still is not nearly as competitive as can be as is obvious by a lack of sales.

A mid 20's ultrafan A380 can address all of the above and this time, unlike the A380 CEO, offer it simultaneously:
- Optimized use of the floor area
- Latest generation widebody engines (with a step change in fuel efficiency)
- The resulting enormous reduction in fuel weight combined with a weight optimization based on the sold capacity will enormously improve the weight to wingspan ratio thus greatly reducing induced drag.

This combined with the already mentioned advantage of economics of scale and the aerodynamically efficient double decker fuselage will in my view produce a game changing reduction in fuel per seat mile that an A380 sized plane needs to compete with smaller more flexible and less risky twins.

Thing is, in 2015 Airbus did pull together its big bag of tricks (one generation newer engines so less fuel use/weight, space optimizations, etc) and discussed it with the A380 customer base and only EK was interested. Should have some more interest by 2025, but will it be enough to justify the cost?

Taxi645 wrote:

And then there is still the damage a LCC carrier could do with a A380NEO if apart from the massive fuel savings per seat it unleashes it's inherent low cost onto the mass transport market. For a LCC passenger, price is everything and certainly much more important than 10 vs 11-abreast or frequencies on a day.

Yet LCCs can purchase used A380s at scrap value in the near future with low purchase cost and better economics than 77W, yet none are showing interest. MAS is saying they'll try LCC flights when their A380s are not flying pilgrimages. That should be an interesting test case. It should increase understanding of the market opportunities by the time the 2025 decision is needed.

Boeing778X wrote:

Mortyman wrote:

Airbus should seriously consider moving forward With an Airbus 380-900 neo

Great! Now who do you think will buy that waste of space besides EK?

Well, to be fair: there were some airlines who told Airbus that the A388 is big enough to be an inconvenient disrupting force, but not big enough to be worth the trouble.

IINM, CX was one of the most publicly vocal entities with that stance.
But that was quite some time ago, and much has changed.... CX for example has since likely shrunk its average aircraft size (getting rid of 744s and taking A359s), and have fully embraced ETOPS whereas at the debut of the A380 they were one of the last holdouts to that over the Pacific.

If you have 2 744 flights the cargo would probably necessitate 2 779's rather than 2 A389's.

Revelation wrote:

LCCs can purchase used A380s at scrap value in the near future with low purchase cost and better economics than 77W, yet none are showing interest.

A Southwest and Ryanair joint venture? With their extensive network and brand recognition on each side of the Atlantic, the joint venture could operate used A380s @ 856 seats between Southwest and Ryanairs respectively largest US and EU bases.

I don't think it will happen, but it would definitively disrupt the transatlantic market.

reidar76 wrote:

Revelation wrote:

LCCs can purchase used A380s at scrap value in the near future with low purchase cost and better economics than 77W, yet none are showing interest.

A Southwest and Ryanair joint venture? With their extensive network and brand recognition on each side of the Atlantic, the joint venture could operate used A380s @ 856 seats between Southwest and Ryanairs respectively largest US and EU bases.

I don't think it will happen, but it would definitively disrupt the transatlantic market.

That's a very interesting and potentially great idea! Bypass the Big NY airports and LHR = even lower cost.

reidar76 wrote:

Revelation wrote:

LCCs can purchase used A380s at scrap value in the near future with low purchase cost and better economics than 77W, yet none are showing interest.

A Southwest and Ryanair joint venture? With their extensive network and brand recognition on each side of the Atlantic, the joint venture could operate used A380s @ 856 seats between Southwest and Ryanairs respectively largest US and EU bases.

I don't think it will happen, but it would definitively disrupt the transatlantic market.

I wouldn't put it past ryanair, look what they did with the ryanair holidays. Anything is possible with them.

reidar76 wrote:

Revelation wrote:

LCCs can purchase used A380s at scrap value in the near future with low purchase cost and better economics than 77W, yet none are showing interest.

A Southwest and Ryanair joint venture? With their extensive network and brand recognition on each side of the Atlantic, the joint venture could operate used A380s @ 856 seats between Southwest and Ryanairs respectively largest US and EU bases.

I don't think it will happen, but it would definitively disrupt the transatlantic market.

On the US side we can offer up PSM (Pease, near Boston) and SWF (Stewart, near NYC) as LCC380 home bases. Both are former USAF bases with loooooong runways.

Matt6461 wrote:

At 10/yr, winglets would earn Airbus a revenue stream of ~$50mil - let's say that's all profit ...
Let's say we project a 10-year production run for A380W, during which it produces $500mil profit attributable to winglets.

If you use NPVs, I think it's a much closer call. $50mln/yr for 10 years at a constant 5% is $386mln.

reidar76 wrote:

A Southwest and Ryanair joint venture? With their extensive network and brand recognition on each side of the Atlantic, the joint venture could operate used A380s @ 856 seats between Southwest and Ryanairs respectively largest US and EU bases.

I don't think it will happen, but it would definitively disrupt the transatlantic market.

Wow. Nice.
In the very same trip, I can be miserable on both sides of the Atlantic!

Falling profits, falling load factors, capacity reductions across their network, lack of pilots, and now they are deciding to order more A380's...who's making the decisions at EK?! They need smaller aircraft ASAP.

PerfectGriffin wrote:

Falling profits, falling load factors, capacity reductions across their network, lack of pilots, and now they are deciding to order more A380's...who's making the decisions at EK?! They need smaller aircraft ASAP.

Actually, as was posted upstream, EK is NOT contemplating adding additional A380s now.

So, apparently, this has all been just another exercise in wishful thinking.

Regards. -ir

WPvsMW wrote:

Matt6461 wrote:

At 10/yr, winglets would earn Airbus a revenue stream of ~$50mil - let's say that's all profit ...
Let's say we project a 10-year production run for A380W, during which it produces $500mil profit attributable to winglets.

If you use NPVs, I think it's a much closer call. $50mln/yr for 10 years at a constant 5% is $386mln.

I assume you're using 5% as the discount rate for your NPV calculation. I didn't have an NPV calculator when I posted but I'd agree that NPV is a good metric.
5%, however, is far too low a discount rate for a risky investment like the A380. My gut sense is that you'd use something like 12%.

https://www.calculatestuff.com/financial/npv-calculator and others online.

12% discount rate makes the revenue stream worth $282.5mln
20% discount rate (maybe better reflects risk over 10 years for VLAs) makes the rev stream $209mln.
IMO... too risky for Whale II.

Strato2 wrote:

At the highest level an A380 would not be replaced by a plane that is half the size (A330) or a bit bigger than that (A350) it would be replaced by the next best thing (779). No A380 would give all that business to Boeing.

You're not thinking at quite the right level. It's not a matter of whether EK replaces A380's with 779's necessarily. It's more a matter of whether the international airline system uses A380's to move A to B via DXB or uses other planes to go direct A to B or via smaller hubs. EK has some stimulative effect on total travels, but not enough to compensate for its effect on other airlines. Economists have estimated price elasticity for air travel to be ~1. Therefore even if EK's A380's allowed 10% lower prices (dubious at best without a NEO), stimulated travel still wouldn't compensate. I.e. there would still be fewer planes bought by other airlines due to EK buying more A380's.

Given the doubtful prospect of profit off of future A380 production, losing even 1 A350/A330 order due to subsidizing EK's expansion doesn't seem wise.

WPvsMW wrote:

https://www.calculatestuff.com/financial/npv-calculator and others online.

12% discount rate makes the revenue stream worth $282.5mln
20% discount rate (maybe better reflects risk over 10 years for VLAs) makes the rev stream $209mln.
IMO... too risky for Whale II.

Thanks. So my gut that 12% discount rate would make $300mn investment dubious was about right.

IslandRob wrote:

Actually, as was posted upstream, EK is NOT contemplating adding additional A380s now.

Nobody claimed EK would be ordering more A380s now. All the article claimed is:

Dubai-based Emirates could reach an agreement to acquire the planes before the end of 2017 for deliveries starting in 2020, two people said. That would hand Airbus a lifeline in maintaining production at a level where it can break even on each jet, after the company warned this week it would have to cut output further in the absence of new orders this year.

Regarding airframe upgrades, the following was mentioned today:

We won't build @Airbus #A380neo says COO Brégier, no biz case. Denser cabin, more efficient engines, new winglets instead #AirbusMediaDay

https://twitter.com/SpaethFlies/status/ ... 0962496513

I wouldn't be surprised if EK replacement A380s come with a completely new, denser cabin. Something Tim Clark hinted at few years ago.

When EK cannot fill current cabins, what would it do with denser cabins?

Trents are maintenance hogs compared to EAs, so EK will be paying for higher MTOW at higher lease rates for more ground time.

What is the business logic?

lightsaber wrote:

peterinlisbon wrote:

Why not just carry out the maintenance required to keep the A380s it already has in service? I flew on a Kuwait Airways A320 that was 20 years old the other day and (because it had been refurbished) I couldn't have told the difference between that and a brand new one.

The first build have too many artifacts from the Catia 4/Catia 5 debacle. Too many parts (e.g. tails and wires) had to be hand fit to every airframe. This makes the 12 year maintenance prohibitively expensive for the earliest A380s. Everyone is scrapping the.:SQ, QF, and EK.

I'm surprised at the buy as a 779 will make more profit per flight.

Thanks for the explanation, I was wondering why they insisted on getting rid of them only to replace them like for like.

Strato2 wrote:

Matt6461 wrote:

Airbus is making money on the A380 at about 20/year production rate. Of course they are making shedloads of more money by supporting the ~200 planes in service and more in the future.

Interesting comment!
Do the airlines have to a kind of a service fee?

The "shedloads" of money made on support pales in comparison to the "barnloads" being lost on production.

KarelXWB wrote:

IslandRob wrote:

Actually, as was posted upstream, EK is NOT contemplating adding additional A380s now.

Nobody claimed EK would be ordering more A380s now. All the article claimed is:

Dubai-based Emirates could reach an agreement to acquire the planes before the end of 2017 for deliveries starting in 2020, two people said. That would hand Airbus a lifeline in maintaining production at a level where it can break even on each jet, after the company warned this week it would have to cut output further in the absence of new orders this year.

So, we're saying exactly the same thing. Future EK A380 orders may (or may not) materialize. Nothing imminent, nothing new. Regards. -ir

Strato2 wrote:

Airbus is making money on the A380 at about 20/year production rate. Of course they are making shedloads of more money by supporting the ~200 planes in service and more in the future.

What percentage of support revenue goes to Airbus? Major airlines usually have direct agreements with suppliers. Small fleet owners usually go with A/B support contracts because it is difficult to sign direct agreements without sufficient volume.

dtw2hyd wrote:

When EK cannot fill current cabins, what would it do with denser cabins?

Trents are maintenance hogs compared to EAs, so EK will be paying for higher MTOW at higher lease rates for more ground time.

What is the business logic?

Lower average cost per seat meaning fares can be sold cheaper ( in a nutshell ). the airline can compete better.

Arion640 wrote:

dtw2hyd wrote:

When EK cannot fill current cabins, what would it do with denser cabins?

Trents are maintenance hogs compared to EAs, so EK will be paying for higher MTOW at higher lease rates for more ground time.

What is the business logic?

Lower average cost per seat meaning fares can be sold cheaper ( in a nutshell ). the airline can compete better.

That only works up to a point. More supply than demand drives prices down. The lack of new orders for the current A380 and the failure of Airbus to launch an A380neo suggests that there isn't enough routes available where the demand can support the large amount of supply of seats that the A380 provides.

Arion640 wrote:

Lower average cost per seat meaning fares can be sold cheaper ( in a nutshell ). the airline can compete better.

I think that myth had been busted several times.

First of all, EK is in the commercial aviation business, not in a refugee evacuation contract. There is a limit how many people will travel even on routes like DXB-LHR.

Even with lowest per seat/ton cost, there is a nasty thing called BELF. EK's seat/load factors are right on the line.

A $28K/hr A380 cannot compete with $20K/hr B77W or $8K/hr A330 or $5K/hr A320/B737 even if landing charges are same. (rough numbers)

It works only if competitors fold quickly. Otherwise, larger aircraft will the victim by burning cash quickly

In summary airframe with lowest trip cost in its class wins.

dtw2hyd wrote:

A $28K/hr A380 cannot compete with $20K/hr B77W .

So you are saying that the A380 cost 40% more per hour than a B77W. Well, that is a good news for Emirates since they have 44% more seats on their A380s.

dtw2hyd wrote:

Arion640 wrote:

Lower average cost per seat meaning fares can be sold cheaper ( in a nutshell ). the airline can compete better.

I think that myth had been busted several times.

First of all, EK is in the commercial aviation business, not in a refugee evacuation contract. There is a limit how many people will travel even on routes like DXB-LHR.

Even with lowest per seat/ton cost, there is a nasty thing called BELF. EK's seat/load factors are right on the line.

A $28K/hr A380 cannot compete with $20K/hr B77W or $8K/hr A330 or $5K/hr A320/B737 even if landing charges are same. (rough numbers)

It works only if competitors fold quickly. Otherwise, larger aircraft will the victim by burning cash quickly

In summary airframe with lowest trip cost in its class wins.

but on routes like DXB-LHR, there is a lot of premium demand and frankly their 77W J seat is pathetic and drive people away, whereas their A380 J seat is much better and bring in those prized premium flyers.

I know I avoid flying them on long business routes now because one of the 2 legs might be a 77W.

AsiaTravel wrote:

dtw2hyd wrote:

A $28K/hr A380 cannot compete with $20K/hr B77W .

So you are saying that the A380 cost 40% more per hour than a B77W. Well, that is a good news for Emirates since they have 44% more seats on their A380s.

Assuming they can fill. No one is waiting outside airports with their hard earned money just because there is an A380 in the town.

At 75% BELF, EK has to fill minimum 400 seats to cover the trip cost.
At same 75% BELF, a QR B77W has to fill just 250 seats (or) a QR A320 has to fill just 130 seats.

On a regional route where an A320/B737 has legs, even if EK barely manages to fill 400 seats, QR can beat EK prices (because of lower trip cost) and push EK route into red. Assuming even 100 switch carriers, EK A380 route cannot breakeven with 300 pax.

AsiaTravel wrote:

dtw2hyd wrote:

A $28K/hr A380 cannot compete with $20K/hr B77W .

So you are saying that the A380 cost 40% more per hour than a B77W. Well, that is a good news for Emirates since they have 44% more seats on their A380s.

Sure, and if it was that simple, EVERY passenger airliner sold after the A380 was introduced would be an A380 since it had the lowest cost per air mile when it was introduced.

However, it ain't that simple.

In fact, they haven't had a significant A380 order in years and have cut production from 30/year to 12/year and plan to go below that, despite it still having one of the best costs per air seat mile in the industry.

That should tell you something.

tphuang wrote:

but on routes like DXB-LHR, there is a lot of premium demand and frankly their 77W J seat is pathetic and drive people away, whereas their A380 J seat is much better and bring in those prized premium flyers.

I know I avoid flying them on long business routes now because one of the 2 legs might be a 77W.

Not having a consistent hard product is a strategic flaw by EK. EK executive A319 has same (if not better) F suite and showers. So frame size is not an issue. Now money is tight to fix this inconsistency. This is hurting have multiple frequencies with different frames.