Airbus? I don’t see any Airbus

I wrote the other day about the Airbus situation and that EADS, the parent company, having had problems with the delivery of the new A380. I was talking about the delays announced earlier. Little did I know Airbus would announce yet another major slip in the delivery schedule.

AviationWeek , the industry standard magazine for this kind of story, reported yesterday

The EADS board of directors met Friday and will meet again today to discuss details of the restructuring proposed by Airbus CEO Christian Streiff. Airbus is also expected to tell its customers this week about the updated A380 delivery schedule.

Industry sources say the A380 could be delayed by up to one more year, which would mean the aircraft is delivered two years later than originally planned. The current delay is the third incurred by the program so far. But according to people familiar with the situation, executives are split over the new timetable: Some would like to announce an aggressive schedule to ease tensions with customers, while others say that the new schedule should be conservative enough for Airbus to be able to meet under any circumstances.

The new delay is expected to cost the manufacturer several billions of euros. The latest six-month shift in the program cut profits for the next four years by $2.5 billion. [my emphasis]

The German news (ZDF) reported 9 months for the Emerates and up to a year for Lufthansa but ouch! The Washington Post lays it on even thicker pointing to the fact that Airbus’ major client might be getting cold feet.

Airbus parent EADS said Tuesday that the flagship A380 superjumbo jet will be delayed for another year and Virgin Atlantic and Emirates, the plane’s biggest customer , hinted that the new setbacks could lead to order cancellations.

For the aerospace industry, this is like having another French Revolution. Having cancellations for a new aircraft would probably doom the A380 to a sideline similar to the role played by the Concorde. Here the problem isn’t fuel economy and noise* problems; here the issues seem to be production and management problems. Even if those get solved, the air industry looks like it is moving more towards small to mid-size puddle jumpers, Airbus A320’s or Boeing 737’s, and not superjumbos. I’ll be surprised if more than 30 or 40 A380 end up getting built. If more get built, they may end up being used as cargo aircraft and not people movers.

*For those that never heard it, the Concorde was amazingly loud, I used to hear it whenever I would stay in Paris. I was staying something like 30 miles from Charles de Gaulle Airport and could always recognise the Concorde on its distinctive ‘Is an airplane about to come through the window?’ sound.

The problems at Airbus have been simmering just under the front-page-headline level for several months lately. For eclectics like me, it’s just something I watch because I find the aircraft manufacturing business interesting. (These things cost HOW much? I find the engineering and logistics involved oh-so-cool.)

One issue is how the German government is going to react to this. Germany is currently trying to solve problems with a relatively high unemployment level brought on, in my opinion, through the major restructuring of the economy after the reunification. Most of the ‘new federal states’ (neue Bundesländer, the area from former East Germany) still have very high unemployment rates and none of the government projects to rebuild the infrastructure and jumpstart industry have really worked. Again quoting from AviationWeek

In Germany, the federal government is mulling an investment in EADS, should DaimlerChrysler further reduce its stake. Officials are concerned that work share in the A380 program could be shifted from Hamburg to Toulouse because of the current production issues — installing the complex wiring in the cabin has been at the root of the current flawed production ramp-up. The investment could be made through state-owned bank KfW.

If EADS tanks in Hamburg, that would put a major stress on the German economy just as things were starting to look up.

Anyway, just though you might like to know. You won’t be seeing any A380’s taking off near you any time soon.

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