The A380 and 747 - Nine Years Into the Program

With speculation that ILFC and Thai may cancel or defer A380 orders, the question of how the A380 is performing vis-a-vis the Boeing 747 when it was introduced provides an interesting analysis. The following chart shows cumulative aircraft orders and deliveries for both the Boeing 747 (beginning in 1966 with the initial Pan Am order as year 1) and the A380 (beginning in 2001 with its initial order from Singapore Airlines as year 1). The results are quite interesting. Orders, on a cumulative basis, are quite close, with a slight lead for the 747. Deliveries, however, are quite different, with a large gap. Boeing was able to deliver its first units within 4 years, as opposed to 6 for the A380, and was able to quickly ramp up production to reduce the backlog. Airbus has been unable to ramp up production, leaving a large gap. The major difference in the programs has been the ability to deliver. Clearly the A380 is a more complex aircraft, with 4 times as much wiring as early Boeing 747s and a larger footprint. But it's first delivery is 37 years later, providing the benefits of more modern manufacturing technology and techniques. This leads to several unanswered questions:

Will Airbus be able to close the production to order gap?

Will potential cancellations cripple the A380 program?

Will customers maintain their positions in light of delayed deliveries?

In a recession, can Airbus take advantage of customer deferrals to more gradually increase output?

Will the program reach the projected 500 aircraft now needed to break even over its life cycle?

Will the A380 need additional versions, like the 747 had, to provide additional impetus over the life of the program?

Are engine manufacturers likely to invest in such a narrow potential market?

Can the A380, with similar seat-mile costs, compete with the 787 and other smaller yet equally efficient aircraft? The answers to these are other questions will be explored by analysts in the next few weeks, as the sale of ILFC and its anticipated cancellation of the A380 order bring new focus to the difficulties Airbus has had in ramping up production and meeting customer demand. Stay tuned to this channel!

In other news --

• China tries again
• Some goods news from IATA's KL meeting
• BA's first 2009 strike starts to loom
• Midwest gets another $6m - and shrivels away

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