Superjumbo stalled another year

[maninblack]

I don't think anyone will cancel A-380 orders. Then they would have even greater problems. Imagine if all these carriers jumped in and ordered new 747-8s. They would probably take even longer to deliver and not give them the capacity that they are seeking, though the need for that capacity may prove dubious if anything causes a significant downturn in travel. The A-380's will be delivered...eventually. Boeing is playing it safe and watching what happens but I am sure that they have already designed a competitor plane, they just aren't showing us.

 

[jakeseven7]

As bad as the delay of the A380 is for Qantas, it would be having a much larger impact on SQ and EK. The problem as I see it, were they to cancel, was that they would still need something, and just what would that something be? Given the time lines that they need the aircraft in, I would think that they do not have lots of options at this point in time.

Its a really good point. Everyone has focused on QF, but I have a friend who works as a consultant to EK and she says they are absolutely spitting chips and are in a really really bad place - I would hypothesise probably worse than QF and SQ. This is starting to hit the press now as well.

Poor old EK, this time they can't run to their government for help - UAE doesn't manufacture large passenger aircraft.... yet?!

 

[simongr]

though the need for that capacity may prove dubious if anything causes a significant downturn in travel.

The airlines/manufacturers cant be forecasting on that potential risk as even though we had SARS/911/Bird flu - they have still moved to build these super carriers. One might suppose that that Airbus are expecting (maybe even manufacturing) a new downturn so they can ditch the 380 when order are cancelled - but thats just the consipracy theorist in me

 

[Altair]

I think there is a need for the A380 or very large aircraft, it is just a niche market. There are only a few airports that have a slot constraint and it is unlikely to change. US carriers seem to focus on frequency with smaller planes, 4 RJs when they uset to fly a 757, which is convienient for some but I think all of us when travelling through the US, ORD, JFK, LGR are good examples, where the pilot tells us the good news that we are number 33 in the line. The US does not seem to use slots but their airports are congested but we keep hearing more frequencies:!:
I wonder if EK will take their A340-600s that they did not want to make up for their capacity shortfall?

 

[NM]

I think there is a need for the A380 or very large aircraft, it is just a niche market. There are only a few airports that have a slot constraint and it is unlikely to change. US carriers seem to focus on frequency with smaller planes, 4 RJs when they uset to fly a 757, which is convienient for some but I think all of us when travelling through the US, ORD, JFK, LGR are good examples, where the pilot tells us the good news that we are number 33 in the line. The US does not seem to use slots but their airports are congested but we keep hearing more frequencies:!:
I wonder if EK will take their A340-600s that they did not want to make up for their capacity shortfall?

Indeed. Places like LHR may be slot-constrained, but most of my trips to/from LHR are connections to/from other places. Just look at the crowds at the Flight Connections area near T1/2/3. There are two ways to fix this - use larger aircraft to get more people through the airport, or use smaller aircraft for more point-to-point services so people don't need to go through the large hubs.

I see the future as being a combination of these two solutions.

 

[Flying Fox]

I think that all the airlines are v. unhappy when they have already planned their routes etc for their new A380s.

Plus many airlines were planning to use the A380 for launching new interiors and for airlines such as QF this is delay is a huge glitch. Afterall, QF probably has the new interiors ready to be installed but now doesn't want to retro-fit its 744s. So their new interiors have to sit in a warehouse somewhere until the A380s arrive.

SQ has new 773s entering service and these can be fitted with their new interiors. As we have already seen, CX is already taking firm mover's advantage.

In addition with the new slower delivery schedule, no airline wants to fly only one of any aircraft type. Airlines would probably need a min of 4 (my guess) aircraft to make it economically viable to have an aircraft type in its fleet (need to consider spare parts, engineering skills etc).

So there are lots of factors behind the airlines being v. upset by the delays.

 

[garyjohn951]

Airbus chairman reports that A350 will probably not go ahead, thus the first major casulty of this saga.

 

[maninblack]

I think that all the airlines are v. unhappy when they have already planned their routes etc for their new A380s.

Plus many airlines were planning to use the A380 for launching new interiors and for airlines such as QF this is delay is a huge glitch. Afterall, QF probably has the new interiors ready to be installed but now doesn't want to retro-fit its 744s. So their new interiors have to sit in a warehouse somewhere until the A380s arrive.

SQ has new 773s entering service and these can be fitted with their new interiors. As we have already seen, CX is already taking firm mover's advantage.

Those new CX interiors look pretty nice too. Qantas needs to pull their finger out, Qantas First is looking rather dated, as they are still going to be flying the 744's for another decade or more, if they have new interiors they may as well start fitting them.

 

[Mal]

Those new CX interiors look pretty nice too. Qantas needs to pull their finger out, Qantas First is looking rather dated, as they are still going to be flying the 744's for another decade or more, if they have new interiors they may as well start fitting them.

But if Qantas doesn't have much leeway with spare planes, they may be reluctant to have the aircraft offline to install them and possibly cause issues with scheduling.

The airbus delay really s stuffing around with various airlines. Qantas isn't the only one.

 

[pauly7]

But if Qantas doesn't have much leeway with spare planes, they may be reluctant to have the aircraft offline to install them and possibly cause issues with scheduling.

The airbus delay really s stuffing around with various airlines. Qantas isn't the only one.

If there is any silver lining, it is that QF's main competitors - big goverment backed airlines like SQ and EK are stuck in the same boat, I read in the paper yesterday the EK chairman or president is extremely pissed (!) and that EK is the worst affected airline (they didn't go into a hell of alot of detail why though) Anyone know?

 

[Mal]

the EK chairman or president is extremely pissed (!) and that EK is the worst affected airline (they didn't go into a hell of alot of detail why though) Anyone know?

My understanding is that EK are expanding in 2 directions - the first is that they want a whole raft of new routes, and the second is the number of passengers on their planes (esp. flights to/from DBX). They need the A380 to increase their capacity to serve their current routes and the new ones they want to introduce.

 

[oz_mark]

If there is any silver lining, it is that QF's main competitors - big goverment backed airlines like SQ and EK are stuck in the same boat, I read in the paper yesterday the EK chairman or president is extremely pissed (!) and that EK is the worst affected airline (they didn't go into a hell of alot of detail why though) Anyone know?

EK has ordered 45 of the aircraft. This is a substantial number that, and the delay is something that is going to be difficult to manage given their expansion plans.

 

[maninblack]

My heart just bleeds for EK Never flown them and never will

 

[Kiwi Flyer]

EK has ordered 45 of the aircraft. This is a substantial number that, and the delay is something that is going to be difficult to manage given their expansion plans.

True, but I suspect part of the reason for their large order was in expectation that Airbus would be unable to deliver and thus increasing the amount of compensation due.

 

[Altair]

True, but I suspect part of the reason for their large order was in expectation that Airbus would be unable to deliver and thus increasing the amount of compensation due.

I do not quite know the logic of EK but I do fear that they will be capacity dumping, in particular across the Tasman. They will undoubtably be flying their planes across not leaving them in OZ, so how cheaqp do you think their tickets will be? Of course according to NZ Herald there is supposed to be monitoring by the NZ authorities to ensure that they do not do this
EK did change their order for their freighters, to the pax version then ordered the 747-8F. I wonder if they will now order to pax version as they will have pilots and crew rated for the 747-8.
Of course you can reverse this and say that Airbus has deliberately caused the delays so they can sell more of their old aricraft (A330 & A340)

 

[NM]

Those new CX interiors look pretty nice too. Qantas needs to pull their finger out, Qantas First is looking rather dated, as they are still going to be flying the 744's for another decade or more, if they have new interiors they may as well start fitting them.

I heard last year from a QF insider that they planned to update the 744 F cabin with a similar product to their A380 F suites. Of course the A380 delay is also going to delay the 744 F cabin upgrades as they want to keep the new product launch for the A380 and they can't afford the re-fit time for the 744 fleet until they get the A380s into service.

He mentioned the challenge they had at that time (and that was last year so I assume some progress has been achieved since then) was designing the new F suite with all the space and features they wanted for the A380 cabin and still be able to install at least 12 of them in the F cabin of the 744.

So I do expect we will be seeing a new F cabin for the QF 744s, but not until the A380 is delivered. And as usual QF will keep it under wraps until they are ready to start the marketing push around the A380s. CX does not have to wait for A380 deliveries, so they are getting in early with their new cabin products to try to get the jump on the A380 operators in the region.

All sound business process for both CX and QF given their individual circumstances.

 

[maninblack]

All sound business process for both CX and QF given their individual circumstances.

I of course understand that QF may not be in a position to easily pull 744's out of service at the moment for the refits but sound business process...I'm not so sure, perhaps just no choice. Given that I can already get better pricing on CX and they will be offering a superior product, QF may be losing a fair number of seats to CX if it waits two years.

 

[NM]

I of course understand that QF may not be in a position to easily pull 744's out of service at the moment for the refits but sound business process...I'm not so sure, perhaps just no choice. Given that I can already get better pricing on CX and they will be offering a superior product, QF may be losing a fair number of seats to CX if it waits two years.

Yes, the sound business practice is based on what options they have right now. QF is constrained by the late delivery of the A380 and has to make decisions based on that very real situation. I believe that accelerating their cabin upgrade plans to match CX would not be sound business practice given the current capacity and fleet availability situation.

They have a huge marketing plan for the launch of the A380 and breaking that plan now to launch the new cabins in the current fleet will undermine the A380 launch. I am sure they are very disappointed with the A380 delay and the need to delay the new product launch. But I also believe the decision to save the fleet upgrade until after the A380 delivery is a sound business decision when they weigh up the long-term benefits to Qantas.

CX has also made a sound business decision to get in now and beat the A380 customers to the mark. They have been planning this one for quite some time and wanted to time it around the impending competition from SQ (and to some extent from QF, EK, MH and others). But now they have the chance to get their product launched first so they are going to get the best mileage they can from the A380 delays.

Yes, some people will choose to use CX over QF. That is part of the justification for claiming large amounts of financial compensation from Airbus. I think from memory that QF booked something like $104M in A380 delay compensation last year and we can certain there will be more to come this year.

 

[Altair]

Yes, some people will choose to use CX over QF. That is part of the justification for claiming large amounts of financial compensation from Airbus. I think from memory that QF booked something like $104M in A380 delay compensation last year and we can certain there will be more to come this year.

I believe the CFO of QF said that the $104M was the full amount of cash compensation that QF could claim for the first 6 planes. Further cash compensation will only be for the following 6 planes and therefore with less delay for these planes, at the moment, the amount will be less. I am sure all the airlines will be looking for and probably be getting further non-cash compensation to keep them happy with Airbus.
I do not know what the heavy maintenance schedule is for the 747, some I believe will be getting checks that QF would probably not have done if the A380 was on schedule and would have left the fleet. If QF really wanted to they could have the new cabins installed during these checks but they would have lost their impact....but really is not the introduction of the A380 enough of an impact without promoting the new premium cabins?:shock:

 

[NM]

I believe the CFO of QF said that the $104M was the full amount of cash compensation that QF could claim for the first 6 planes. Further cash compensation will only be for the following 6 planes and therefore with less delay for these planes, at the moment, the amount will be less. I am sure all the airlines will be looking for and probably be getting further non-cash compensation to keep them happy with Airbus.

I thought that comment from QF was prior to the latest announced delay of a further 12 months. I expect this extended delay will result in new compensation negotiations.

I do not know what the heavy maintenance schedule is for the 747, some I believe will be getting checks that QF would probably not have done if the A380 was on schedule and would have left the fleet.

I don't believe there were plans to start the retirement of the 747-400s any time soon. The A380 deliveries were to be a trigger for the retirement of the 747-300s and some of these may now need additional heavy maintenance due to the A380 delays. The 747-300s will not see any further cabin upgrade even if they do see additional heavy maintenance.

If QF really wanted to they could have the new cabins installed during these checks but they would have lost their impact....but really is not the introduction of the A380 enough of an impact without promoting the new premium cabins?:shock:

Of course they could do cabin upgrades on the 744 fleet if they really wanted to. But I think their marketing dept has decided that the best marketing plan is to continue with the new cabin launch aligned with the A380 delivery. They want to keep the specific cabin design and features a secret until they are ready to launch the marketing campaign and they believe the biggest bang is still to be achieved by combining the cabin and A380 launches.

I would love to see the new cabins launched early. But I understand the process by which Qantas determines what they believe to be the best timing for the new product launch. Launching the new cabins now would have some short-term gain, but combining with the A380 launch will have more significant long-term benefits including delaying the capital cost by a further 12 months. I expect the cost of the 744 cabin upgrades is built into a complex cost model that includes the operation of the A380 on the high volume trunk routes. Without that component of the cash-flow the cabin upgrade costs for the rest of the long-haul fleet may not be recoverable. Its a very complex issue and decisions like this cannot be taken in isolation.

The A380 delays will have significant flow-on implications to companies well beyond the airlines. For example the upgraded cabin fabricators, seat manufacturers etc will also have to cope with a 2-year delay in earning revenue from the airlines. We have also seen Rolls Royce report they are stopping development on their Trent 900 engines for the A380 for the next 12 months. So its not just Airbus and their airline customers that are affected.