June 9 (Bloomberg) -- Thai Airways International Pcl said it may cancel Airbus SAS A380 orders, threatening to become the first customer to scrap contracts for the passenger version of the world’s largest commercial plane.

“We need to determine whether it’s worth the large investment,” President Narongsak Sangapong said by phone today from Kuala Lumpur. The Bangkok-based airline, with six A380s on order, has begun a review which may lead to the planes being axed or delayed, he added.

Emirates Airline, the largest A380 customer, also said today it may join Air France-KLM Group and Deutsche Lufthansa AG in delaying planes as the global recession hammers travel. Customer delays may lengthen the time Airbus needs to recoup spending on the A380’s development, which has ballooned to about $18 billion from the originally planned $12 billion on cost overruns and penalties.

Emirates may defer as many as 10 planes, either A380s or Boeing Co. 777s, beginning in about 18 months, President Tim Clark said in an interview today. Still, Clark reiterated that the Dubai-based carrier wouldn’t ax any of the 53 A380s it has on order. The airline is already flying five of the planes.

Delays, Cancellations

The A380 program has suffered two years of delays caused by manufacturing problems related to wiring systems. FedEx Corp. and United Parcel Service Inc. have also canceled orders for a total of 20 A380 freighters, forcing Toulouse-based Airbus to shelve plans for an all-cargo version.

International Lease Finance Corp. is also re-examining its order for 10 A380s, according to WirtschaftsWoche. The magazine cited an interview with Steven Udvar-Hazy, the leasing company’s chief executive officer, yesterday in an advance report ahead of its next edition. The A380’s list price is $327 million, though the earliest customers for planes got discounts.

Airbus has scaled back production of the A380 this year as customers resist taking large planes on the travel slump. The planemaker plans to hand over 14 of the double-decker aircraft this year, down from 18 previously, it said on May 6. Airbus has 200 orders for A380s, of which 15 had been delivered by the end of last month, according to data on its Web site.

International air travel fell for an eighth straight month in April as business and leisure passengers pared flights because of the recession. Price cuts and the impact of swine flu may cause airlines to post combined losses of $9 billion this year, almost double a previous forecast, the International Air Transport Association said yesterday.

Yields may drop a further 5 percent to 10 percent before reaching their bottom, Emirates’ Clark said today.

Buy more shrimp. Buy more prawns. Order will stand.

Wonder how the EU taxpayers feel about it??

"It is not economically viable to have and deploy this aircraft in our network," Mr Wallop said at the sidelines of the International Air Transport Association (IATA) annual general meeting being held in Kuala Lumpur.

Airlines operating A380s have found it difficult to achieve the yields they expected due to the global economic crisis, high operating costs and a lack of flexibility in moving the aircraft through airports, he said.

"It is a special mission airplane and can currently operate through eight airports around the world, meaning you can't put the aircraft on routes as you may wish," he said.

With THAI's planned configuration of the A380, the airline must fill 88.8% of 501 seats just to break even, he said.

"We need to make a major turnaround decision," he said.

http://www.bangkokpost.com/business/econom...-jumbo-jet-deal

who's next..

...who's next..

Another "MAY CANCEL a380 ORDER" topic. Like we have seen so may during the last 5 yrs.

Randy's article today was interesting. Airbus forecast 1200 VLA DELIVERIES over 20 years, starting from 2005. The forecast was in 2002 or 2003.

I don't possess the unadulterated hatred of Airbus as most others on here do, but this aircraft is a POS if there ever was one. I think this is beyond objective debate amongst half intelligent individuals...

Boeing's own numbers often haven't been that far behind.

Airbus has raised its forecast of demand for A380-size aircraft only slightly to 1,700 deliveries in its latest long-term outlook, but warns that this is a conservative estimate that could increase to 2,200 because the calculation assumes a very low level of airport congestion.

The airframer's 2007-2026 global market forecast, revealed in London last week, sees a requirement for 1,283 "very large passenger aircraft" (VLA - 400 seats and more) and 415 freighters for a total of 1,698 aircraft worth $527 billion. This is up only 2% on the 2006 forecast of 1,665 aircraft, with the outlook for passenger aircraft demand rising just 20 units from 1,263 aircraft.

http://www.flightglobal.com/articles/2008/...congestion.html

So you agree with some of us that the business case is not (or never was) all it was made out to be?

BTW, to what airlines were you referring? VS, IB, LH, AF, TAP?

Well making just 20 380's a year makes it a long time to get to breakeven, just the interest on all those $ B invested will push BE way further out.

Anyway, the $50 question is - Which airline will do the next 12 plane A380 order?

Worse - What 5 airlines will order the next 50 of the beast. - It is difficult to come up with a list.

^
I'm not sure what part of that of that article has caused you to say "good grief" - but let's just say this: There are several European airlines operating long haul flights with A340s and other related (inefficient) aircraft where the breakeven is over 100% - ie, as I once had to explain to a government minister: "The only way this route can become profitable is if you put passengers in the cargo hold"

So 88.1% isn't surprising, but Thai should cancel the A380.

I don't possess the unadulterated hatred of Airbus as most others on here do, but this aircraft is a POS if there ever was one. I think this is beyond objective debate amongst half intelligent individuals...

Back to reality, 200 A380's are on order, 50 options. Sold out for years.

Back to reality, 200 A380's are on order, 50 options. Sold out for years.

As far as the aircraft; unlike most here expected it fully meets its performance specification, the airlines and passengers love it, additional airlines ordered and reordered it. No serious competition (only freighters) helps the margins.

like Airbus did by delaying the 800F.

Boeing's own numbers often haven't been that far behind.

Even now, they still say over 700 and that includes a serious cut in the number of freighters, so Boeing still seems to have hope they'll sell hundreds of 747-8I's.

The 380 is a familiar story in aviation history. In terms of its potential financial disaster, it certainly would rank with Concord. In terms of marketing disasters, well it could be the worst since "New Coke."

Boeing could cut costs by simplifying the FLA by focussing on the 8F, like Airbus did by delaying the 800F.

Boeing downsizing its VLA forecasts doesn't spell much good for 747-8i IMO. The point of no return for the 8i is approaching. LH probably doesn't want to become single operator and Boeing could cut costs by simplifying the FLA by focussing on the 8F, like Airbus did by delaying the 800F.

What's even better for Airbus is that as long as they keep cutting their production rates, their "years of backlog" will continue to look stellar--even if they don't sell another plane! Clever, very clever.

I would say the difference between 700 and 1200 is quite large actually.

But in defense of the 747-8I, I distinctly remember that in circa 2002-2003 that Boeing was predicting over 500 orders for the 777LR series before decade's end. At that time the 777-300ER had not yet cracked 80 units and the sole, solitary 777-200LR customer was PIA. In the dark days of the post-9/11, post-dot com, and SARS breakout, who would have guessed that two short years later the 777LR would have rendered the A340-NG all but obsolete and a half-dozen A345/A346 customers would switch to the 777LR? The 777LR broke 500 orders last year.

So color me at least somewhat optimistic about the 747-8. Like the 777LR, I think Boeing offered the 747-8I at a poor time as it got hit by a mix of customers sitting on the fence waiting for A380 data then later by a major recession. But also like the 777LR, an excellent flight testing program coupled with a timely EIS could result in considerable sales.



The Concorde!? Need I remind you that only 20 Concorde's were built and only two customers retained? I would condemn the A380 to a fate closer to the L1011 Tristar. It is certain that several hundred A380s will be delivered and the customers that operate them will generally be quite pleased with them. But as a financial exercise, the A380 will indeed prove unable to recouperate its investment cost or turn a net profit of any significance.



Not as much as I expect you think. In the case of the A380-800F, a substantial amount of unique engineering was required to convert a passenger aircraft into a useful freighter. This is true of any aircraft. But Boeing has already been building passenger 747s for decades. It's not just a matter of what is unique between the 747-8F and the -8I, but the -8F and the passenger -400/ER that preceeded it.

For their part, Airbus executives will have to address the low and slowing production rate of the A380 superjumbo, at a time when the troubled market shows ominous signs of turning away from the company's flagship jet.

http://seattletimes.nwsource.com/html/boei..._airshow12.html

But it's sold out for years!

Who would have guessed given the enormous efficiency, flexibility of the B77Ws, A330s, B767's (and eventual B787s and A350s') bring to the table. Not to mention, the rise of many LCC's and increased bilaterals. Why be tied down to a plane which can be used only in a few routes?

Now, can someone please explain the economics of cancelling an A380-800 order (placed at preferrential rates) and replacing it with what ? Twice as many B777's or B787-x (where the cost of 1 would probably exceed the cost of the original A380-800 price) ? Or maybe some A350-9's ?

It is also pertinent to remember that we are currently in a recession. With traveller numbers decreasing, it is less likely that new international point-to-point routes will be initiated (airlines are loathe to take perceived risks in such times) which in turn, increases the importance of the hub-to-hub model. A model where the likes of the A380-800 and the B747-400 (and ultimately the B747-8I will) excel in.

In what universe does the B767 provide "enormous efficiency and flexibility" ? In today's economic environment, none ... as far as I am concerned. A 1980's-90's holdover, which was a good performer in it's time. But in today's paradigm - I think not.