Posted on 04/28/2005 4:50:43 PM PDT by Cornpone
After the A380's successful maiden flight on Wednesday, German editorialists mull the future of Airbus's new superjumbo. Some papers see the plane as a success story for European industry and integration. Others see a long battle with Boeing ahead that could hit taxpayers deep in their pocketbooks.
Millions sat, eyes glued in front of their TV screens on Wednesday as stations provided non-stop live coverage of the maiden flight of the Airbus A380 superjumbo. The lion's share of viewers were European -- it is after all, the most exciting technological development in Europe since the Concorde took off from the same runway in Toulouse, France in 1969. But, undoubtedly, there were also some sheikhs in Dubai tuned in. That's because Emirates Airlines has ordered 43 of the giant birds in its bid to become the world's largest liner for long-haul flights.
When the spectacular bird lifted off just after 10:30 a.m., it was a moment of tremendous pride and unity for Europeans. German Chancellor Gerhard Schroeder said the flight was a "major success for the innovative power of European companies" and shows "we can be better than others."
Of course, in Germany, the A380 means jobs -- 40,000 of them, in fact. And the plane has been a long time in coming and suffered numerous setbacks, making it far from certain that it would ever reach the runway. In Hamburg, where the planes will be painted, interiors outfitted and many deliveries made to customers, the company brawled nonstop with residents and environmentalists over the required 140 hectare expansion of the main German Airbus plant, which required the company to replace a former wetland with landfill. The company is still battling in courts for an extension of the runway to accommodate the cargo version of the plane. Just getting a prototype of the superjumbo airborne brought a collective sigh of relief here -- and of course, cheers.
The company also faces serious competitive and financial challenges that make the plane's commercial viability uncertain. Total development costs were close to €12 billion -- with a considerable chunk coming from "start aid" loans provided by European governments. The company has 154 orders for the A380 on the books, with a total of value of €40 billion, but it will need to sell about double that before it can strike pay dirt with this gamble.
German papers on Thursday offer everything from rhapsodic blow-by-blow accounts of the maiden flight to admonitions about the coming competitive bloodbath between European and American archrivals Airbus and Boeing. "Europe at its Best" -- reads the headline in the Frankfurter Allgemeine Zeitung. Alluding to the German poet Friedrich Schiller, the Berliner Zeitung headlines its main piece "Joy, Beautiful Spark of the Gods." "We Can Fly," exclaims the Financial Times Deutschland. And the Sueddeutsche Zeitung writes of "Joy for the Giant."
With the A380, the largest passenger jet now comes from the Old World, exclaims the center-left Sueddeutsche. "And it has broken the monopoly of the Boeing 747, which was the No. 1 player up until now," it adds. "The Europeans are proud of the achievement, but does the world need such a huge plane?" The paper notes Boeing has delayed plans to build anything larger than the 747 and is instead focusing its efforts on the 787 Dreamliner, a mid-size plane which can travel long-distances using less fuel. Boeing's idea is that most travellers want to travel directly from mid-sized cities and not have to catch connecting flights at major hub airports. "The passengers will now decide whether it will be Airbus or Boeing that succeeds," it concludes. "They will determine whether they catch connecting flights at major hubs in large planes like the new Airbus, which offer all types of comfort and service, or whether they will take medium-sized planes a direct flights because connecting is too bothersome for them."
In an Op-Ed titled "Into Thin Air," the financial daily Handelsblatt also riffs on the issue of competing visions at Airbus and Boeing. Most experts are convinced, it writes, that Airbus will continue to dominate the world aircraft market for the next two or three years. But this leadership isn't written in stone, it warns. "The European aviation industry is registering with some respect the reality that Boeing, which has lately been a sick patient, is on its way back to recovery after scandals and business setbacks." The company is also developing the 787, which is just as ambitious as the A380 project. With its focus on direct flights rather than hubs, the Boeing 787 represents a "threat" to Airbus. The European company knows it must introduce a similar plane in its fleet, but the one it has chosen exists only on paper -- the A350. It won't be introduced until 2010 and it's based on the A330, a plane which, as the paper notes, "isn't getting any younger." Yet another serious threat lurks for Airbus: the unstable dollar. "Plane sales are calculated in dollars," the paper notes, "while the majority of the costs for the A380 are calculated in euros. Originally Airbus wanted to reach profitability with its 250th jet sale. But now the company says that with the current exchange rate it will have to sell 300." Translation: it will take at least five or six years before Airbus knows if the A380 will provide any investment returns.
On the ever-prickly issue of subsidies, which has sharply divided Brussels and Washington and threatens to spark a trade war, Germany's other major business daily, the Financial Times Deutschland, argues that the A380 should be a one-time deal. With the test flight, Europe has come one step closer to knocking the Boeing 747 from the stage, it writes, "and even European tax payers who financially backed the Airbus project should be happy." Then it asks: Shouldn't Europe undertake more projects like this in the future? "NO!" screams the paper. "The Airbus project is in no way suitable as a role model for a new, aggressive EU-wide industrial policy. And it would be catastrophic if political strategists, who in Paris and Berlin have always daydreamed of this, were to now make the A380 program their model." The subsidies paid for the A380 were "justifiable" in order to break Boeing's monopoly, it argues, but it was a "special instance." Even the promise-filled A380 still faces its toughest economic challenge. "The market still has to show whether or not this concept of an efficient, huge plane can succeed," it writes, before reminding its readers that there's nothing romantic about capitalism. Shares in Airbus's parent company, EADS, didn't even react to Wednesday's super flight.
This is interesting. You have a government run plane factory in competition with a private airplane company. Now if Airbus wants to compete with a US government airplane company ......
I hope this falls so hard it becomes a pancake no bunny will touch.
Funny how the Euros like to criticize the US for it's big, gas-guzzling cars while they drive smaller more fuel efficient ones. Yet when it comes to aircraft...
Concorde Redux
Ah the Concorde....great at breaking the sound barrier and the bank accounts of many involved.
Boeing has taken sales away from Airbus this year and the success of the 787 is on it's way to dooming the A350 before it is even built.
Boeing is on track to sell more planes than Airbus this year.
It will fall, I just hope it doesn't land on a poor bunny.
Do you know how mad that would make PETA?????
No! Europe at it's best would be a bunch of Germans with guns marching into Paris while a bunch of Frenchmen stand around with their hands in the air!
I find it interesting that the a380 is priced in dollars. I bet that really irks the EUrocrats.
I think the reason that Airbus though the mega-airport concept was the way to go is because the EU is seeking centralized ussr style governance. They are institutionally anti-insividualistic and could not see that regional airports WANT BUSINESS.
I wonder how much business the regional airports will take from the bigger airports.
This plane is not going to be profitable.
It's a defacto make-work socialist program, using government subsidies to artificially lower the unemployment rate.
It is sucking money from European taxpayers.
Twofer!
You got it. The Franco/European concept of industrial 'national champions' is nothing more than another tax scheme disguised behind national pride...poor fools.
"We Can Fly!"
Whoopee. The Wright Brothers did it in 1908 without a govenment subsidy.
But just think of all the grief the media could celebrate when one of the city-states crashes.
Investor Relations
Eads stock charts upper left.
Can't wait to see how the gents in Dubai react to Europe's brand of "customer service".
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