Monday, July 24, 2006

Reports of Airbus' Death Have Been Greatly Exaggerated

One of my correspondents suggested he was waiting to see my post Farnborough report. I took that as something of a challenge for me to put my money where my mouth is and justify my sometimes critical view of events transpiring within Festung Airbus, although I have been less than approving of the Prussian Airplane Company, because of their dismemberment of my beloved Douglas.

So here you are, my friend.

A number of important things happened, as you would expect. Airbus, having received a lackluster reception for its A350, bit the bullet and announced a total redesign of the jet(A350WXB) that promises to be more competitive with Boeing's 787. This was accompanied by a launch order from Singapore Airlines for 20 of the redesigned aircraft and 20 options, although what will happen with the existing orders for the earlier marks is not yet clear. In addition, deliveries will not start for several years.

In addition, Singapore Airlines, not known for their willingness to accept the same old crap, voted with their wallets and converted nine options for the A380 into firm orders and purchased a few more options in addition to the A350WXB buy. This represents a spot of good news for a program that has been delayed by production problems, administrative delays, and the ever present specter of a distinct lack of payload capacity which we have blogged about previously.

Concluding that this order validates the business case for the A380 is something of a non sequitur-the basic numbers haven't changed with respect to weight, range, and payload, and the metrics of the business case have not changed. Orders for super jumbo aircraft have been few and far between for both manufacturers, and Richard Aboulafia says that there is far too much development money chasing far too narrow a slice of the market.

The real bright spot for Airbus continues to be the A320. They can't build them fast enough, people love 'em, and they're lining up. The A330 also scored some modest successes at Farnborough.

The news from Boeing is mixed, although they are generally more conservative in their statements about pending orders than Airbus is. Airbus, as you know, uses the Airshow circuit to trumpet its successes. Boeing doesn't seem to want to count the chickens before they hatch. Whatever.

Boeing did receive an order for 10 of the 747-8 freighters from Emirates.

Boeing has put together some figures that compare structural efficiency of the 747-8 freighter as against the A380 freighter. The A380 freighter simply carries too much dead weight for every kilo of payload. That's a real problem.

Another real competitive advantage that all fans of LTL trucking will know about is that straight in loading of the 747 freighter variety will always be more efficient than having to make 90 degree turns with the cargo, both in terms of the cargo you can accept and how fast you can load and unload it.

By far the best read on the subject is the piece in the New Yorker entitled "The Fatal Flaw Myth" which I have linked to. It offers a distinctly refreshing view of the subject that suggests we underestimate the value of luck in business affairs and see patterns where none exist. I commend it to you.

So there you have it. How'm I doing?


At 10:36 AM, Blogger G. F. McDowell said...

Looks good. I've always thought that private corporations are better decision making bodies than ugly conglomerates with CEOs chosen based on their nationality.


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