Emirates Interest in A380plus Offers Airbus a Breather

In Toulouse Blagnac it isn’t yet time for uncorking the champagne but Airbus must be heaving a temporary sigh of relief after Emirates reportedly confirmed its interest in the A380plus. No deadline for any announcement has been made though and none is likely till the airshow come November and maybe not even then.

As it’s staggeringly beautiful predecessor the A380 suffers from a lack of love passing its tenth year of service, the reinvention of this big boy depends largely on one airline.

That is a very unusual equation in commercial aviation where there may be a favoured customer or a jumpstarter like what Singapore was for the Triple 7s with a 77 aircraft deal in 1995 making it the largest single wide-body deal ever but never a single carrier making the difference between stay or go.

The 380 scenario is not good. With no sales this past year the assembly line in Toulouse is tres desole.

With a fleet of 96 A380 aircraft and options on another 45 on order Emirates has the single largest order and is now holding the key to the future of this giant. Not that it wishes to but that’s the way the cookie has crumpled. Almost half the sales over the decade of 319 aircraft have been to Emirates. But there has been a slowing down and having deferred delivery of 16 planes it only placed an order for two aircraft at le Bourget.

If it has been unhappy it is not without cause. For one, the A380 is a relative gas guzzler and with Emirates having a 25 per cent fuel cost of its total running outgoings this is hurting.

Again one of the drawbacks to a full flexing of such a high capacity aircraft is the inability to increase city pairings because many airports cannot handle the big bird. Contrary to popular opinion it is not the heaviness of the aircraft touching down on the ribbon but the invasion of a possible 500-800 people on the terminal and the time consumed in going through Immigration and being reunited with a thousand bags.

There are also technical and mechanical niggles that have been issues brought up by the 13 carriers which operate the A380.

The aircraft has a listing of 131 incidents including in this year alone more than ten situations. These have included engine problems in flight on Air France and Lufthansa, a fire in the cabin on also on the latter, stuck flaps on Korean Air and Qantas and a dropped nosewheel on MAS.

There will be a certain amount of suspense during the five day Dubai airshow and the issue will be central to the gathering of the global aviation community. It is safe to say this venue might well decide whether Airbus will close shop on the A380 and shelve the 380 Plus programme entirely as the sluggishness of the sales graph literally sinks to zero.

It is also pretty much clear that Emirates will not make a commitment prematurely until it has done its sums and checked out how carrying on with the double deckers will affect the bottom line. Emirates has shown a 70 per cent decline in profits in its last fiscal year and cannot continue endlessly to be a saviour in the sky.

Consequently, the depth of the intent shown when the faithful gather will be interpreted as a measure of how far Emirates will hold Airbus’ hand.

A GREAT DEAL WILL DEPEND ON WHAT AIRBUS HAS TO OFFER. AS MUCH IN COST PER UNIT AND EASY PAYMENT PLANS AS IN THE REFINEMENTS TO THE AIRCRAFT THAT POSITIVELY IMPACT ON RUNNING COSTS AND FUEL EFFICIENCY

Second guessing the decision is pointless. Suffice it to say that there is no rescue mission element in the final decision just the fact that there are 96 aircraft in the fleet and no carrier wants to have a flag bearer that’s gone off the assembly line.

A great deal will depend on what Airbus has to offer. As much in cost per unit and easy payment plans as in the refinements to the aircraft that positively impact on running costs and fuel efficiency. At present the very amenable Airbus has to sweeten the pot. But will larger winglets, a 15 ft wing extension and a fuel saving of 4 per cent be enough. The prototype of the Plus was on display at Le Bourget and Airbus is being quoted as having promised as high as a 13 per cent cost reduction per seat on the reworked aircraft. Range could also increase by 300 nautical miles though that extra push may not make much difference in terms of attraction.

The downside is that there may be a six abreast configuration which means four ‘excuse me’ seats and woe the poor guy stuck between three and two pax on either side.

Does this new packaging make it a viable proposition? While it is not easy to jettison a fleet Emirates is a pragmatic carrier and hasn’t become a global lead player by sheer chance. If the rest of the world is moving away from the mass transit high density aircraft to the ‘long haul middle to large capacity high frequency options’ why isolate itself with something that could literally be a white elephant. Between the Dreamliner and the revamped 777 stretched version Boeing is eager to deliver a further blow to the A380 ambitions. Both enjoy lower per passenger operating costs.

For Airbus it is also a toss up. Were Emirates to be agreeable to the Plus and all the boxes ticked in their favour the European manufacturer will have to see if the investment in the engine upgrade and work on the wings (pegged at over $2 billion) has a chance of paying off beyond the Emirates offer. So while it puts on a brave face and make promises to keep Emirates from feeling done down can it afford to keep these promises?