Airbus Set To Unveil A380, Largest Airliner Ever

Airbus SAS, the world’s largest plane maker, today is expected to unveil its 555-seat A380, a $16 billion wager that airlines will order giant aircraft to ferry passengers between major airports over the next 20 years.The A380 will surpass Boeing Company’s 35-year-old 747 as the world’s largest passenger plane and is meant to help the Toulouse, France-based plane maker maintain its lead in sales and deliveries over Boeing, said Airbus’s chief executive, Noel Forgeard, on January 12. Boeing reportedly has no plan for a competing aircraft.Airbus last month forecast that it will win as many as 700 contracts for the A380 in the next 20 years, out of a total market for 1,250 planes seating at least 400 passengers and 398 freighter versions. The plane maker expects that the A380 will break even with 250 orders. Boeing’s industry wide estimate for larger airliners, by contrast, is only one-third of Airbus’s.“This is a plane for big airports, flying to other big airports,” said Joseph Campbell, an analyst at Lehman Brothers in New York who has “overweight/positive” ratings on European Aeronautic, Defense & Space Company, Airbus’s parent, and Chicago-based Boeing. “Maybe there’s not room for two planes, but now, there’s only one.”The double-decker A380 has a wingspan of 262 feet, almost the length of an American football field. It’s 239.5 feet long, and weighs as much as 569 tons – 1.2 million pounds – when fully loaded for takeoff. It will have a range of 8,000 nautical miles compared with 7,600 nautical miles for the Boeing 747-400. The first plane is supposed to enter service in June 2006 with Singapore Airlines.The A380’s freighter version, which will begin flying commercially in 2008, will have three decks and be able to carry as much as 152 tons of cargo as far as 5,600 nautical miles.EADS shares have risen 26% over the last 12 months, and Boeing stock is up 18%, on expectations that a recovery in airline passenger traffic will raise demand for new planes. Traffic rose more than 10% in 2004 following a slump that began with the September 11 terrorist attacks.The European plane maker has invited about 5,000 people to attend the A380 inauguration at its Toulouse headquarters. Guests include French President Jacques Chirac, British Prime Minister Tony Blair, and German Chancellor Gerhard Schroeder. France, Germany, Spain, and Britain contributed $4.6 billion in loans to the $15.7 billion development cost.Airbus so far has firm orders for 139 of the planes and commitments for another 10. Customers include Singapore Airlines, Deutsche Lufthansa, Emirates, Air France-KLM Group, Virgin Atlantic Airways, and Korean Air. FedEx and United Parcel Service have ordered the freighter version.Etihad Airways, a 14-month-old carrier based in Abu Dhabi, United Arab Emirates, said yesterday that it signed the final contract for four A380 as well as for four long-range A340-500 aircraft and 12 A330-200s. The preliminary order was placed in July.Korean Air, the world’s second largest air cargo carrier, last year ordered five A380 freighters. The A380 “saves flying time,” enabling the airline to “move more goods on one flight and help save money,” said the president of the Seoul-based airline’s cargo division, Ken Choi, when Korean Air placed its order in March last year.Mr. Forgeard, 58, said on January 12 that the A380 will contribute as much as a third to the company’s sales by 2008 and help revenue rise 50% by 2010 to about 30 billion euros. Airbus plans to build 35 of the planes annually from 2008, he said. The model has a list price of $280 million, compared with $198 million to $227 million for the 747-400. A380 test flights are scheduled to begin in March.Airbus announced yesterday that it will introduce new corporate colors today when it unveils the A380, the company’s first change in livery since it introduced the A310 model in the 1970s.Boeing has received orders for 1,385 of the 747 since the plane was introduced in the mid-1960s, of which 1,353 have been delivered. Contracts have slowed since Airbus started developing the A380. Over the last five years, Boeing received orders for 81 of the 747 and delivered 120, according to information on its Web site. No passenger versions have been ordered since 2002.The American plane maker decided to develop a smaller plane, the 7E7, which would carry about 250 passengers on point-to-point trips such as between Chicago and Dusseldorf, Germany.The A380 will carry passengers between major hub airports, such as London Heathrow to Tokyo, and then passengers would catch connecting flights. Boeing says there won’t be enough demand for that type of travel to justify the A380’s investment expense.“It’s just a big airplane for a small market,” Boeing’s vice president of airline marketing, Randy Baseler, said. “We really believe in our forecast that there’s a good market for about 400 of these.” Some analysts agree.“I suspect that use of this plane will be limited to major hubs, leaving a very significant market for planes such as Boeing’s 7E7,” said Paul Nisbet, an analyst at JSA Research Inc. in Newport, R.I., who has a “buy” recommendation on Boeing shares.Airbus has promised airlines that the A380 will be 15% less expensive to operate than Boeing’s 747.“The aircraft should be a ‘game changer’ in the long-haul market,” wrote a JP Morgan analyst, Chris Avery, in a January 11 report to investors. “Increasing congestion at major airports, such as London Heathrow, and an ever greater focus on costs means that the A380 will deliver valuable benefits to its operators.”The 747, with 413 seats, needs to fly an average 290 passengers to break even, according to Mr. Avery. The A380, with 555 seats, needs 323 people to break even, meaning it has another 227 seats available to sell at a profit, 85% more than the 747-400.The A380 may help Airbus achieve operating margins that are consistently higher than the 10% targeted by its parent company, EADS. Mr. Forgeard said on January 12 that profit margins on the new plane will be higher than on existing models.Nine-month operating profit as a percentage of sales at Airbus was 9.6% compared with a 5.8% margin at Boeing, Mr. Forgeard said.BAA Plc, the world’s biggest operator of airports and the owner of London Heathrow, expects the new plane to account for one in eight flights there by 2016. Heathrow, the world’s third-busiest airport by passenger count, has only two runways. Atlanta, the largest, has four with a fifth under construction.“Eight carriers that fly to Heathrow have ordered it and intend to use it at Heathrow,” said the development director of BAA Heathrow, Eryl Smith, in an interview. “For the international hub airports of the world, many of whom are constrained by runways, the A380 is critical to their growth.”

Airbus Set To Unveil A380, Largest Airliner Ever

Airbus Set To Unveil A380, Largest Airliner Ever

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