bigjku wrote:I think it’s actually the airline and finance partners that needs it more than Airbus by far. It’s an odd situation. Emirates and their finance partners have so much tied up in the A380 they can’t just let it go to zero at the end of leases. Plus the aircraft is essential to how they currently operate. It has to be kept viable.
For Airbus unless there is an end game that results in them being able to raise production rates and make money it seems like something they are doing for prestige. Unless there is a large check they have to write for the RLI if they wrap up production.
The two sides are kind of prisoners to one another. It’s an odd relationship.
In fact Airbus need to sell the A380 just as much as EK need it for their business model : no 777X brings them the same benefits & image with the public. In fact even Dubai needs it, someone in another thread intelligently remarked that Emirates is not just an airline, it is THE key to its recent & future development, I read somewhere too that all associated economic activity related to Emirates makes for some 25% of Dubai's GNP : which is huge ! And unprecedented.
In the case of Airbus, contrary to the many a.netters who stayed at Finance 101 & only reason in terms of programme bottom-lines & marginal profits, the A380 is Airbus' strategic response to check Boeing in the WB market they dominated : the 777 is one remarkable aircraft & even more so the 777X. But other than the 20 or so benefits the A380 brings to Airbus I posted elsewhere ( and you can bet there are more ), its sole existence does another 8 things worth the investment :
1. If you take out the A380 unrealistic orders, that's 270+ frames sold or 270 x 200 million ( I am being conservative, 50% of list price ) less passing through Boeing hands, a cash-flow that is used in many other ways than just to manufacture as many WBs ( i.e. capital management ) ;
2. conversely, that's some additional 270 x 200 million for Airbus in turn to place & play with ;
3. that's of course 270 x marginal profit on each frame not on Boeings books either, even if that costs Airbus money
4. more importantly, keeps the 777 & 748 prices lower than the premium Boeing could command in a monopoly ( with some repercussion on that of the 787 so that the different Boeing families do not cannibalize each other ) : somebody please calculate all the WB Boeing sold after the official launch of the A380 in year 2000 ( expect some 10 million per frame x some 2000 WB, minimum )
5. ravished the title of "Queen of the Skies" ! Call the A380 "Whale of the Heavens" or "Pig of the Skies" if you will & lipsticked if you so prefer, but in everybody's right mind the crowning masterpiece is now produced by Airbus with all the added luxury airlines have put in.
That alone is worth billions in worldwide marketing & communication budget.
6. point above led to increased orders on other frames ( and Airbus to become bigger than Boeing commercial aircrafts, who would have thought ? )
7. & thus increased - if not master negotiating power for Airbus for mega orders
8. which in turn repeat points 1, 2, 3.
