What's Love Got To Do With It?
There's an old saying around here: "I may be an Okie but I've been to town."
"Do the math" is another way of saying that something doesn't add up.
Of course the big question on everyone's minds around the Dougloid Towers is "when's the other A380 shoe going to drop?" I suspect that we rude frontiersmen may be more sensitive to such things, perhaps because we're in such bad shape, economically.
A brief recap.
The A380 is a conventional structure, 4 engined, double decker bus of an aircraft that is the largest cattle hauler ever built, and which promises to hold that blue riband indefinitely. Others will never be developed. Passenger capacity, depending on configuration is running at about 550 maximum with some room for expansion-how much is a subject of dispute as well.
The A380 development program costs in 2000 were projected to be about 8.8 billion euros, but that had escalated to nearly $20 billion US by the time the first aircraft was delivered according to James Wallace, the Seattle PI aviation wizard. It's reasonable to suppose that development costs have declined but not disappeared, as the first production airplanes required significant major rework and customization for the buyers.
At present, Airbus projected the 'break even' point for the project at somewhere west of 420 completed and sold aircraft. Assuming that's correct, the sunk development cost on each frame is just shy of $50 million per aircraft, exclusive of escalations and the economist's bugbear, the time value of money. That's money that's required to pay the lenders and refill the piggy bank.
Parenthetically, that's also money that you don't get to allocate to other projects like the A350 and the A400M. Oh, you may squeeze out the money but it's definitely going to have a chilling effect on those programs.
The cash cow that is the European taxpayer has its limits, whatever they happen to be, and even reasonable people can be inspired by a Howard Jarvis type. Nobody likes to see good money thrown after bad, even if it is for la gloire, as they say.
At present the order book stands at 202 firm A380 orders, with 23 deliveries as of December 2009. There may have been a couple more deliveries in the interim, but the order book has been stagnant-since 2007, only 13 aircraft have been ordered. 25 aircraft have been delivered since the first delivery in 2007.
There it is, folks. Unless Airbus acquires another 220 or so firm orders for the A380 that are not loss leaders, the program's not going to make money, and loss leaders are, in many cases how the orders thus far have been acquired. It's not only going to not make money, it stands to lose a crapload of money before this is over.
What this all tells us is that what happens at Farnborough in July of this year may well be make or break time, given Airbus' predilection for announcing large orders at airshows.
As we opined elsewhere, it is going to be an interesting year. Some folks took that to mean I had no clue as to what may or may not happen this year.
Well, it's true. We're all clueless.