Summary
British Airways joins the long list of A380 customers who are deferring the airplane as traffic wanes – is there even a business case left for this airplane?
Analysis
Only yesterday I wrote here about how British Airways’ financial backers were demanding the deferral of the Airbus A380s until at least 12 months of stabilised traffic materialised – and today’s traffic announcement confirmed exactly that deferral.
Actually, the backers have insisted on up to 12 months' more delay than anyone had expected!
Despite taking the first of six token A380s “timed” for the London Olympics in 2012, that deliveries are stretched out into 2016 will almost certainly cause further anguish for Airbus which is already struggling to get to grips with the production of this airplane.
So far this year, Airbus has delivered only three A380s – although it claims it is allegedly “on track” to deliver 11 more by the end of the year based upon its revised assessment of this ailing program for the umpteenth time in less than 12 months.
Airbus’ delivery projections for 2010 and beyond are fictional, if not outright unachievable. Airbus’ main salesman John Leahy had touted that the A380 could break even for airlines at “65% load factor” – yet this year, no less than eight customers (Air France, China Southern, Kingfisher, Lufthansa, Qantas, Thai Airways, Virgin Atlantic and now British Airways) have deferred deliveries because they just can’t fill the seats on their existing, smaller airplanes – and that omits the importance of global yield erosion too.
Eight customers? That's half the order-book...
Try asking Singapore Airlines what their yield and load factors were for their A380 flights to London Heathrow for this last quarter and you’ll be as shocked as I was – first class passengers numbering in the single digits, fewer than 30 biz class customers and an average load factor of below 60% on their 471-seat equipped A380s.
The simple fact is that the niche in which the A380 is operating shrinks each day. British Airways’ number-crunchers have yet to figure out just how they’ll get their A380s to carry even 60% of the freight compared to the 747-400 on the key trunk routes to places like Asia, without having to sacrifice seats.
Despite Airbus rounding down the A380 to 525 seats to compensate for its over-optimistic weight target, only Emirates has consider seating near that figure given that range and freight capacity are already compromised commodities on this inappropriate aircraft.
I expect to see British Airways phase out its 747-400 fleet and replace it with more 777-300ERs and 787s than A380s – simply because the huge inflexibility of large airplanes during a downturn makes them about as attractive as using gasoline to douse a fire.
And that’s before we consider that British Airways is still a frequency-driven airline due to the volume of slots it commands at Heathrow.
After almost a decade of the A380 on sale, EADS and Airbus are proving once and for all the inadvisability of sinking money into a prestige product with no durability as a freighter after its passenger usage expires and with even less appeal even after the most trigger-happy order-fest we’ve witnessed in the history of commercial aerospace, just as airlines are beginning to realise that biting off the A380 is certainly more than they can chew, much less swallow.
The saving grace for airlines, however, is that they have Airbus’ incompetence to thank them as they battle the wider industry downturn – why bother deferring when Airbus is doing a grand-enough job for you by failing to deliver on time? Unless of course you subscribe to the theory that Airbus is deliberately slowing A380 production to avoid the spectre of rather large white-tails.
Naturally, the challenged strategists and quote-me-happy brigade who draw parallels with the 787 situation seem unaware that this is an apples-and-oranges comparison that lacks intellect. That's what a rose-tinted perspective does for you (like blinkers on a race-horse).
Airbus’ latest revised production schedules are no more believable than any of the many before them and I’m quite happy to wager that they'll remain as solid as the waters of the river Nile (or the river Styx for that matter).
The fact remains that the A380 is an airplane that will never turn a profit. Air show cool-aid flavour only lasts so long…
