A380 Watch Continues...


Well-known member
Jan 11, 2002
Total Time
PARIS -- The A380, the superjumbo jet from Airbus SAS, was billed as "The Queen of the Paris Air Show" by the public address announcer as it promenaded down the tarmac en route to its slow-moving flyover of the Le Bourget airfield.

But on the sales floor, the A380 was the prom queen that couldn't get a date.

The only taker for the A380, a double-decked giant that seats at least 550 passsengers, was start-up carrier Kingfisher Airlines of India. Kingfisher joined the stampede of Indian carriers ordering airplanes in Paris. Its flamboyant chief executive, Vijay Mallya, inked an order for five A380s.

And that was it.

The Kingfisher sale was the only A380 order by a passenger carrier since China Southern ordered five in April. It brought Airbus to 145 planes sold--far below the rosy expectations Airbus had encouraged when it launched the new airplane nearly four years ago.

The slight showing in Paris was the latest discouraging news for an airplane that represents Airbus' biggest gamble in its battle with Chicago-based Boeing Co. over the future of aviation.

Just before the air show, Airbus admitted what many aviation experts had long suspected: It will deliver its first A380 at least six months behind schedule, no sooner than April. The company can't get the A380 down to the weight promised to customers. And customization of the passenger cabin to meet airlines' demands has proven more costly and time consuming than expected.

The delay has angered Airbus customers. The chief executive of Qantas Airlines is threatening to extract severe financial penalties from Airbus. Other carriers say they expect compensation too.

A sign of success

Such troubles might prompt an air of contrition to most aerospace executives. But to John Leahy, the flashy sales executive who is Airbus' chief commercial officer, they're merely a somewhat difficult-to-interpret sign of success.

Customer unhappiness over the delays, even their threats of financial penalties, are merely an indication of the industry's need for the plane, Leahy said.

"It's comforting to hear them say how important this airplane is to them," Leahy said. "It's a game-changing airplane, and it's going to be difficult for them to make money without it."

Leahy paused for effect--or perhaps for creative thought--and added, "We're delighted at the reconfirmation of this airplane."

Salesmanship like that helped Airbus surprise industry observers with the strength of its performance at the air show: Orders for 280 airplanes, enough to overcome Boeing's early edge in the race to sell the most planes in 2005.

But the lack of orders for the A380 seemed to confirm a growing sense in the aerospace industry that the 380 isn't just a big, white airplane--it might be a big white elephant too.

"The A380 has become a tar baby for Airbus," said Aaron Gellman, a professor at Northwestern University's transportation center. "They can't get it off their hands, and they're going to lose money on every one they sell."

The A380 is the product of Airbus' $16 billion-plus program to build a superjumbo jet that can carry more than 800 passengers. The Airbus effort represents the polar opposite of Boeing's view of the future: the smaller, superefficient 787 Dreamliner.

But as the 787 began building orders last fall, Airbus switched gears and now offers a 787-style midrange jet, dubbed the A350. The A350 will carry slightly fewer passengers, and the two manufacturers debate which can be operated more inexpensively.

The A350 emerged as the surprise star of the air show, racking up 95 orders by five airlines. As a result, the A380 fell to the background, fueling intense debate over whether the plane can succeed.

While people at the air show marveled at seeing such a huge plane fly, they also picked at some of its apparent shortcomings. It was noted that a breakthrough material Airbus is using on the plane, called Glare, a lightweight sandwich of aluminum and fiberglass, is not being used on the A350. This indicates to some observers that Glare has fallen short of Airbus' initially high expectations. And the fact that Airbus flew the A380 with its landing gear down stirred suspicions that the aircraftmaker may be having a hard time perfecting the plane's landing gear. Airbus officials denied any problems, saying simply that the landing gear takes nearly a half-minute to retract--too much time to retract and open the gear during the plane's five-minute time in the air at the show.

Still, the carping seemed to reflect a mood of skepticism that has hung like a rain cloud over the A380 since Airbus started the program in August 2001.

Airbus at one point indicated it could sell as many as 2,000 of the superjumbo jets over 20 years. Lately, the figure has dropped to around 1,200. Airbus once had pegged breaking even on the plane at 250 copies, but that since has been increased to around 300 copies.

Boeing's market researchers see a much different future for the A380: roughly 300 of the planes in service in its first two decades.

Leahy doesn't see it that way.

"We've got four new orders the year before delivery, when you expect to have just about nothing," Leahy said.

Japanese and North American carriers for the first time are starting to seriously consider the plane, he added. United Airlines, which is not expected to buy any planes until it emerges from bankruptcy, has begun scheduling meetings with Airbus salespeople, Leahy said.

Leahy suggested that the best comparison for the A380 might be with Boeing's 747, the first jumbo jet and as big an innovation in 1969 as the A380 is today.

Boeing's sales force booked orders with 12 airlines for 28 of the 747s the year before Boeing delivered its first jumbo jet to launch customer Pan Am World Airways. Those sales brought the 747 to 175 orders before first delivery.

To reach the 747's sales pace in the year before delivery, Airbus would have to sell 30 planes before April. That would double the number sold since the beginning of the year, 10 of which were freighters sold to UPS.

The industry has changed substantially since the era when Pan Am and TWA ruled the international airways. Today, carriers in China, India and the Middle East are the main source of orders, and those carriers have shown a clear interest in the 787 and A350.

But to Scott Hamilton, managing director of the consulting firm Leeham Co., the 747 precedent is worth considering.

"Everything said about the A380 today was said about the 747," Hamilton said. "The 747 was a market mismatch, but the market grew into the airplane. We're in a world market that cannot support an 800-passenger airplane. But that doesn't mean the market can't grow into the A380."

Kingfisher boss confident

Vijay Mallya is one person who believes he might grow into the A380.

The leader of India's Kingfisher Airlines is that rare airline CEO with bling. Mallya sports a diamond stud in his ear, and his name is spelled in diamonds on a bracelet that would make a hip-hop singer proud.

And he left the Paris Air Show last week after ordering up the biggest bling of all: five A380s worth $1.5 billion at list prices.

Mallya's main business is UB Group, one of the world's largest liquormakers. He plans to use the A380s to build the brand name of Kingfisher, an airline named after UB's popular beer. Mallya envisions gambling tables and bars on the plane's upper decks.

"We want to bring the Kingfisher lifestyle to the airline," he said. "We sell [liquor] to the same people who can fly the airline."

Hamilton clearly wasn't impressed with the Kingfisher order. Mallya, flashy as he is, is unproven despite his family wealth and success in the liquor business.

What's more, Hamilton said that the A380 order from Mallya paled compared with Leahy's total sales in Paris of 280 aircraft worth $33 billion to 12 carriers.

"It's certainly not an order I would have cared to showcase," he said. "It doesn't have the cachet of, say, a British Airways."