LEX Will the last great aircraft of the old generation, the A380 superjumbo, be the saviour of Airbus and its parent EADS? Until recently, the project was mostly a source of pain for the Franco-German aerospace company. Delays pushed the original €12bn-13bn estimated development cost towards €17bn. That combined with the shift in exchange rates – aircraft are priced in dollars – pushed the number of sales required for the programme to break even from 250 to about 400. At the full production speed of four per month, expected to be reached in 2010, the programme should be profitable sometime in 2017.
Still, the costs are largely sunk. Boeing’s choice not to develop a successor to the 747 jumbo has effectively ceded the market for very large aircraft to Airbus for a decade.
The news that two jets have been delivered is encouraging. Singapore Airlines, which will start an A380 London-Singapore service on March 18, has found it is able to charge a premium on the Singapore-Sydney route. Part of this may be the novelty factor, but the extra room is an advantage, which counts in a market where pricing is brutally competitive.
The extra seats on an A380 also allow airlines to use it as a way to increase capacity on routes where long-haul landing slots are limited. The aircraft’s lower operating cost per passenger has not gone unnoticed. British Airways reversed its earlier opposition and ordered 12 A380s last September. Japan’s airlines also seem likely to bite, a big change in a market hitherto dominated by Boeing.
Sales could ultimately approach the 1,000-ish passenger jumbos sold by Boeing. That will not be enough to transform Airbus’s fortunes. Currency, cash flow and restructuring remain pressing problems. But the long-term outlook is not entirely bleak.
