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Airbus Handed A380 Lifeline With $16B Emirates Order
- nolok 9y agoGreat news for both, Airbus needed that to save the program, finally have a chance to reach profitability, and solve the chicken and egg problem of no-one is buying it because it looks like it will be stopped, it will be stopped because no one buys it. Emirates, having half the frames out, keeps the program going which means they don't get trapped in maintenance hell. Funny to look back at the messages a few days ago here on HN saying it will "obviously not happen".
- caio1982 9y agoI will save my personal opinion on the A380 for later but about previous comments on HN you always have to remember the crowd is a bunch of professional guessers. It stops to be funny quite fast...
- mpweiher 9y agoYep, I thought the public musings about halting production were simply putting the pressure on Emirates. Seems to have worked. https://news.ycombinator.com/item?id=16152902 https://news.ycombinator.com/item?id=16152902
- shadowbantruth 9y agoNobody outside of HN thinks anything of HN. I'd be deluded to believe otherwise
- distances 9y agoYou misunderstood the comment. Parent was talking about public musings of Airbus.
- notahacker 9y agoWhat we've witnessed over the last few months has basically been the negotiation process. Emirates know they're the anchor customer with a strong negotiation position and so expect even bigger discounts than airlines normally get from airframers by playing hardball, and humiliating Airbus by not making the anticipated airshow order. Airbus's only counter was to look actually willing to accept the possibility of writing the whole programme off, with negative implications for Emirates' own prospects
- walkingolof 9y agoOr the reverse, Airbus talking allot about stopping production knowing that Emirates built their business case around the plane....
- throwwwwaway9 9y ago+1. Parts and maintenance might have just tripled in price and awaiting time. Emirates protected their investment at a low price...plane for plane, why not get this and insure that someone will be there for the previous order's planes.
- MR4D 9y agoParts and maintenance are negotiated as part of the purchase. For an airline not to do so would be economic suicide. Also has the side benefit of locking in gradual prices increases for the manufacturer.
- notahacker 9y agoEmirates does its own A380 heavy maintenance, but yeah, they'll have guaranteed the parts supplies
- sho 9y ago> Emirates built their business case around the plane Absolutely. Emirates needed this deal just as much as Airbus. At the end of the day AB has multiple other profitable lines to fall back on, especially their cash cow 32X program. For Emirates the 380 is irreplaceable, not even by the 777-10, if it was even flying yet, which it isn't. I have no doubt EK got a good deal but Leahy isn't stupid. He was playing hardball too. And interestingly, it has not been specified yet whether this order is for the current model or the plus..
- fyfy18 9y agoThe real test will be how well they fare on the second hand market, when Emirates begin to retire their first aircraft over the next few years. Last year an A380 that had been with Singapore Airlines for 10 years was put into storage until a buyer is found [0], and an Irish leasing company decided to start their own airline as they couldn't find anyone to lease their A380s [1]. [0] http://www.traveller.com.au/first-retired-a380-superjumbo-parked-at-tarmac-aerosave-awaiting-sale-or-scrap-gziiuo http://www.traveller.com.au/first-retired-a380-superjumbo-pa... [1] http://www.telegraph.co.uk/travel/news/leasing-company-forced-to-start-own-airline-because-nobody-wants/ http://www.telegraph.co.uk/travel/news/leasing-company-force...
- alistairSH 9y agoIs 10 years really the expected (first-owner) lifespan of a wide-body? Is that typical for narrow-bodies as well? Seems short, given the cost to purchase.
- notahacker 9y agoWell there is no "typical" for an A380-sized widebody and Emirates might have no choice but to keep most of theirs until the end of their lifespans (unless there's a freighter conversion programme). But in general a commercial passenger aircraft lasts around 25 years, so 10 years isn't really a short period of ownership for a first owner (and is a fairly long lease). Fixed maintenance intervals often require the aircraft to be almost totally rebuilt within that timescale, which is a good opportunity to transfer owner/operator and refit to some other airline's spec. Most airframes - the A380 is an exception - can be readily resold or leased on a liquid market. There's big depreciation over the first few years, sure, but operating costs are bigger than capital costs, and newer aircraft are less thirsty for fuel. Airlines purchasing aircraft also usually get big discounts, and have specialist financial institutions willing to front up the capital and eat some of the downside risk on the depreciation. Airlines leasing aircraft typically do so for periods of more like five years, with lease extensions at their discretion.
- skgoa 9y ago
- pwaai 9y agoI wonder if any of these Airbuses will be decked out as a private airplane. Really curious to know how the extra room can be used.
- gerardnll 9y agoLink goes to AMP page. Here's a link to the desktop one: https://www.bloomberg.com/news/articles/2018-01-18/emirates-airline-orders-36-airbus-a380s-worth-16-billion-jckc224w https://www.bloomberg.com/news/articles/2018-01-18/emirates-...
- profsnuggles 9y agoStandard 80x24 terminal with elinks. Number of times needed to hit page down to read article content of desktop page 13. Number of times to start reading content on amp page 0. Don't really get the amp hate.
- ulfw 9y agoYea because in 2018, using an 80x24 terminal is THE WAY to browse the web. Cool. Thanks.
- samfriedman 9y agoHackerNews is often a fertile garden for Poe's Law-level satire.
- dang 9y agoCan you please not post snark or do flamewars on HN? It really wrecks the threads. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- revelation 9y agoOn desktop you get the pie diagram and all other images blown up to full display resolution. I can't fathom how they continue to get this so ridiculously wrong. It's not difficult.
- kuschku 9y agoAMP page without JS: https://i.imgur.com/aktBoAh.png https://i.imgur.com/aktBoAh.png Desktop page without JS: https://i.imgur.com/gGYrjej.png https://i.imgur.com/gGYrjej.png AMP page with Google blocked: https://i.imgur.com/aktBoAh.png https://i.imgur.com/aktBoAh.png Desktop page with Google blocked [EDIT: actually, the screenshot I used here was wrong – the desktop page works perfectly with Google blocked, everything works] I get the AMP hate – several of my friends blackhole the entire IP ranges from Google/Facebook/Amazon in their router, and Bloomberg’s desktop site works without that. And those that don’t use uMatrix and block JS by default – and the Bloomberg Desktop site works there, too, while the AMP site fails there as well.
- stirlo 9y agoSeems like the bare minimum face saving order they could make. Still wouldn’t consider this anything but a token gesture to try to hold up the value of their existing purchase. A380 is headed to the graveyard soon rather than later
- _ph_ 9y agoGreat news. That should keep the A380 alive long enough to clearly see how the airplane market is developing. Currently, its all about 2-engined airplanes, but I cannot believe, that there is no need for the large airplanes like 747 and the A380. The amount of air travel is still growing year over year and once the production is shut down, it would means a certain class of airplanes is just unavailable.
- candiodari 9y agoThe problem is not technical. The problem is government. You have 2 types of aircraft carriers: direct and hub-and-spoke. Direct means that they either have a direct flight between A and B, or have no way to get from A to B at all (in most cases, of course no carrier is 100% hub or 100% direct). Since A and B tend to be routes like Marseille to New York there aren't going to be enough passengers to fill an A380, so smaller more efficient airplanes are where it's at. In short: Big, huge airplanes make sense for hub-and-spoke carriers and don't for direct carriers. Small airplanes, lots of them, make sense for direct carriers. For consumers, the difference is twofold. Direct carriers are faster, and they will be more expensive, because a number of costs can't be shared between as many passengers as in the hub networks. Hub carriers are slower, but a (lot) cheaper. But that doesn't even really matter. Governments have decided that most airports won't be upgraded to support more planes and/or more passengers. This has resulted in airports that would normally be hub airports, like London, Paris or New York aren't hubs, because they are incredibly oversubscribed. For the same reason they become very expensive, very slow, and generally bad for passengers. But there is no competition, because only the government can approve airports, and they don't. This means that unless you're a carrier that happens to be in a location where such government concerns don't exist, like in the UAE where the government is the carrier and doesn't care about the local population at all, you can't have a hub network. So superjumbo's are threatened. Despite, of course, the market clearly pointing out that the cheaper flight almost always wins, if it's up to the customers, and therefore hub networks should win. I would say that therefore it is pretty correct to say that customers want A380s. But governments are standing in the way. For no good reason. But governments have decided that having everyone pay significantly more for every flight, and generally have an utterly awful experience flying is absolutely worth it. After all, the alternatives would mean slightly more work for them ...
- shadowbantruth 9y agoCan somebody tell me how long does it take for then to make a plane and how long until the next "alarm"? I ask because I see 20 ordeals fulfilled per year on wiki and at his rate it seems like this is just for one year (without understanding their pipeline)
- piquadrat 9y agoAccording to https://en.wikipedia.org/wiki/Airbus_A380#Production_and_delivery_delays https://en.wikipedia.org/wiki/Airbus_A380#Production_and_del..., production in 2018 will be at 12 per year, so this would add 2-3 years (if the optioned 16 will also be produced).
- shadowbantruth 9y agoHow does this add 10 years in this case to the life?
- ubernostrum 9y agoIt won't add ten years of production of new A380s. It could extend the period of time in which there are airlines flying A380s by ten years. The earliest-delivered A380s are already starting to face retirement by airlines, and aren't being replaced with new ones -- they're being replaced with 777s and A350s. The line in the article is based on Airbus being hopeful that if they can keep the production line open another couple years, more airlines will start ordering A380s. I wouldn't hold my breath waiting for that to happen.
- mpweiher 9y agoIt doesn't add 10 years, it extends it to 10 years as there already is a backlog. And in 10 years, we will see.
- skgoa 9y agoThey made 15 in 2017 and will make 12 in 2018. Starting in 2019 they will go to 8 p.a., which means that the additional 20 planes will push the currently foreseeable end of production from 2023 to around 2025. However Airbus have said that they could go to 6 p.a. and there are strong rumors regarding a big order from China being announced at Leahy's (head salesman at Airbus) last press conference in February. This plus Emirates supposed demand for Airbus guaranteeing production over a 10 year period starting in 2028 has lead people on the internet to speculate that 2028 is the year current and prospective orders will be delivered (going at a rate of at 6 p.a. instead of 8), barring any replacement orders by current users. Overall, the whole story is murky at best. We simply don't know the details of Airbus' production costs and though they claim to be making a profit at 8 p.a., it's pretty unlikely that 6 p.a. can yield any profits. So that would be Airbus making a bet on significant demand materializing over the next 10 years. It would also be a huge bet on Emirates making use of the 10 years of production (i.e. at least 60 airplanes) starting in 2028 that Airbus is rumored to have guaranteed.
- raverbashing 9y ago16 Bi for edit: 20 planes + 16 options is around 440Mi ea. seems they didn't get as large as a discount as I was expecting
- shadowbantruth 9y agoThat's for additional optional 16 for a total of 36.
- Neracked 9y agoThe 16 Bi$ figure is for 36 aircrafts (including the 16 options) and means a price per unit of 445 Mi$. This is exactly the unit cost listed on Wikipedia. So we can assume the real price for the contract is lower.
- sho 9y ago> So we can assume the real price for the contract is lower Very much so. Common discounts for airframes can be 40-50%. Given the circumstances I'd assume Emirates got somewhere near 50; who knows. But both parties needed this deal and as other comments correctly point out the unusually public manoeuvring has been going on for months. Of course, no-one in the media has any idea about this very closely guarded commercial information and so they simply go by the list price.
- skgoa 9y agoThat's pretty much list price according to Airbus' recently published price adjustments for 2018.
- pacificmint 9y agoThe article clearly states that $16B is the list price, not the price emirates paid: > signed an outline agreement for 20 of the double-deckers with an option to buy 16 more, worth a potential $16 billion at list prices
- perseusprime11 9y agoThis is a tangent but I really love flying Emirates. Their economy feels like luxury in United or Delta.
- dx034 9y agoTo be fair, it's not hard to beat US airlines when it comes to comfort in economy class.
- swarnie_ 9y agoUS airlines are a terrible measure of quality. United and Delta are easily the worst two airlines i've traveled with.
- vinay427 9y agoHave you never traveled on low-cost airlines, in any country? There's nothing quite like a transoceanic flight with extra-thin seats and no water, let alone snacks, provided. (Of course, this is made clear to the customer, but my point is that United and Delta are better than many airlines in most countries.)
- phatboyslim 9y agoDid anyone catch the Emirates videos put together by Casey Neistat? I often wonder if YouTube celebrities will usher in a new form of advertising, where content and marketing are blended into an entertainment experience. The videos were wildly popular and I wonder if this aided significantly in bookings for Emirates flights, thus leading to the $9B order.
- rco8786 9y ago> I often wonder if YouTube celebrities will usher in a new form of advertising, where content and marketing are blended into an entertainment experience. This goes on all around you, and isn't really a new form of anything. Movies, TV, YouTube, even music all blend marketing and entertainment.
- exabrial 9y agoBluff called! That was one expensive game of poker
- gjem97 9y agoI'm with you. I think the correct poker metaphor, though, is that the bluff worked. The way I see this is that Airbus knew that Emirates was generally happy with the A380, but unwilling to agree to whatever terms Airbus had on the table for new planes. Airbus then puts out a press release that they may cancel the line if there are no forthcoming customers, effectively saying "it's now or never if you want an A380"--i.e. the bluff. At which point Emirates folded. (in all likelihood, it just brought them back to the negotiating table). If Emirates had called the bluff, they would have said "Ok, good luck then!" and waited for Airbus to admit that they weren't cancelling the line.
- detuur 9y agoIf Emirates wasn't buying, it was actually quite possible that they would've shut down the line, and try to focus more on getting A350 orders out the door. Whatever Emirates was offering, it was a pittance, because you don't go publicly on record threatening to shut down a flagship product unless it's your best course of action.
- gjem97 9y agoMaybe it was a "semi-bluff", then. http://www.pokerlistings.com/10-essential-texas-hold-em-moves-the-semi-bluff http://www.pokerlistings.com/10-essential-texas-hold-em-move...
- gandreani 9y agoHere's a great video that explains partly the reason the A380's have struggled compared https://www.youtube.com/watch?v=NlIdzF1_b5M https://www.youtube.com/watch?v=NlIdzF1_b5M
- patrickk 9y agoFascinating stuff.