Yes....someone did. The airlines. They have LOST 20 "firm" orders now. So that slips from 150 to 130. They needed about 254 orders before the catastrophic design SNAFUs emerged.
Face it, the A-380 is going down the drain. They are not getting new orders. Those are permanently on "on hold" to put it politely. And if the French and German governments intervene with still more-flagrantly non-commercial susbsidies... the U.S. government will object. GATT and the WTO will be left with no choice but to sanction the violatory AirBus subsidizing countries and the Company. With major fines and penalties such as permitting the aggrieved party, the U.S. and Boeing the right to tariff the hell out of all of AirBusted products.
So, it's Clint Eastwood "Dirty Harry Time" with our gun pointed squarely at the AirBusted thieves heads...."Do you feel Lucky, Punk? Well, do you?"
I'll "see" your sarcasm, and raise you three /sardonicisms!
June 2006 Letter :Dear Fellow Stunned Observers,
Mapping failure in our industry is easy. Aircraft fail due to technical reasons or market reasons or both. Technical failures include the A-12 and the Comet 1 jetliner. Market failures include the 717, F-20, and Concorde. Finding combinations of both types of failure is rare. Most of these get quashed before they leave the drawing boardlike Sonic Cruiser. You need to search history for aircraft that represented both types of failure, like the Spruce Goose.
Ive always thought the A380 would be a market failure. But we might be witnessing an unusual dual market and technical failure.
Whats bizarre about the recent Airbus A380 announcement is its excuse. Some wires are tough to install. So production will be cut by 70% next year, and the delays will continue after that. Damn that Radio Shack. This is the dumbest effort to deflect blame for the disaster (okay, second dumbest; first prize goes to Noël Forgeards pinning the blame on Gustave Humbert: Mon Dieu! Leave the company in this Germans hands for a few months and this happens!). What to make of all this?
First, no, its not just the wiring harnesses. Something looks wrong here. Most likely, they are finishing planes already in production, but making design tweaks for future aircraft, trying to get the weight down and improve performance. The initial planes will likely be overweight.
Second, theres the markets comment on this aircrafts technical appeal. Aircraft delays happen all the time. But if a new plane came with a compelling case, people would wait for it. When people back out, or talk about backing out, that speaks to a serious ambivalence about the planes performance. ILFCs Steve Udvar-Hazy knows more about airline economics and residual values than anyone; if he cancels thats a serious warning.
Ill put on my analyst hat and offer some free advice. Airbus and its stakeholders should do a brutally honest assessment of the A380. First, look carefully at the customer contract terms and pricing. Can it ever make money? Can the performance be improved? What will the penalty payments look like for missed performance promises and for late delivery? If the next few weeks see more than one or two customers cancel, thats a good indicator that this plane will just suck cash.
Next, assess company resources. How quickly can money and engineers be shifted from the A380 to the A370? The A380 (along with the 747-8) is chasing 5-10% of the market by value; that middle market widebody segment is 50%. And, if theyre late with the A370, they run the risk of losing the narrowbody franchise, the other 40-45% of the market, to a Boeing 737 replacement. The situation was bad enough before the new delays. The new schedule implies an ongoing ulcer that distracts from the other 90-95% of the market.
In the interests of fairness, heres some free (and obvious) advice to Boeing: as soon as the 787 is out the door, launch the 797 narrowbody. Do to the A320 what the 777 and 787 are doing to the A330/340.
To sum, if there is no hope of quickly turning the A380 into a competitive plane with decent economics and then shifting design and production resources to more important segments, kill it. The write-offs and political shame will be terrible. But national, continental, and corporate pride should have nothing to with what is essentially a business decision. More importantly, the alternativeto keep going and risk losing everythingis worse. There isnt a lot of time here, and its tough to learn from fatal mistakes.
The A380 problems are much bigger than a big plane. France, Europe, heck, everywhere, needs to look at this experience and learn from it. Many governments monkey around with their nations industries. Many allow strategic planning and forecasting to be corrupted by politics. Many fill top industry leadership jobs with incompetent party hacks. All of this is really bad. Period. Separation of government and economy (i.e. capitalism) is a great idea. It means the damage government can do is restricted to the public sector. Its not just in Europe; clueless officials everywhere spent tens of millions in taxpayer cash on airport upgrades, just to accommodate a marginal requirement.
But old habits die hard. As the A380 news broke, French President Jacques Chirac said he had total confidence in the A380 (shades of G.W. Bush and FEMA director Michael Brown; Youre doing a heckuva job, Forgie ). Much worse than that, the debate now concerns the French Government taking a much bigger role in EADS/Airbus ownership and management. This would not go over well with the Germans. It would very definitely not go over well with the US Congress, obliterating chances of a tanker contract. It wouldnt go over well with any capital provider or investor or global markets either.
Sure, major changes are needed at EADS France; but it needs less government control, not more (best recommendation Ive heard: bring back Jean Pierson, last seen fishing in a boat off Corsica). And in the weirdest twist yet, Frances Socialist party is criticizing the governments Airbus policy. Of course, we dont know what they want. It isnt likely that fans of free enterprise will be in the awkward position of rooting for the Socialists. Its more likely that the Socialists will use the crisis as a talking point on the evils of a market economy.
I have no idea what will happen in France, but I have a bad feeling about it. It would take years to undo re-nationalization and de-globalization. If the big government crowd succeeds, the petty tyrants in charge of the French economy will one day suffer a Ceausescu moment: the sudden realization that the crowd in the square is yelling, not cheering.
Another lesson. The A380 illustrates why risk is spread through outsourcing. For all the talk, the only parts of the A380 that were globalized were the systems (some, thankfully, were off-the-shelf). The airframe itself is basically 100% European. This means an unpleasant level of exposure for Airbus companies, including BAE Systems, which is now trying to extricate itself from Airbus, rather like a fox from a cruel fur hunters trap. Contrast this with Boeings approach. If the 787 test fuselages start fizzing like Alka Seltzer, Boeings total exposure is relatively light. Much of the damage would be spread to Japan, Italy, and Vought. Of course, the European taxpayer politely provides Airbus with some insulation, much as Japanese and Italian taxpayers help insulate Boeing.
Ill close this note with a defense of Airbus. Despite the industrial malpractice that has brought Airbus to this point, the market doesnt want a monopoly. Customers will encourage anything Airbus does to reinvent its product line. Thats another reason to think about canceling the A380 and moving on. If Airbus admits defeat with this fratricidal behemoth and turns everything to the A370 and then the A320-X, airlines and lessors might step up to the plate and do what they certainly wont do with the A380: order planes.
Weve updated the A380 report this month, along with the Trainer overview, A400M, PC-9/T-6, Tornado, ALH, LCA, and the ATR family. See you at Farnborough.
Yours, Til the Flying Asylum Opens for Business,
Richard Aboulafia