Iran’s outline deal for 12 A380s, announced Thursday, and the sale of three planes to Japan’s All Nippon Airways Co., disclosed in order data on Jan. 12 and confirmed Friday, provide some cheer for Airbus after the double-decker failed to find a single new airline buyer in three years.
Moreover, the 15 jets, worth $6.5 billion at list prices, will provide at least six months of work for the A380 line. Airbus is currently producing close to 30 of the aircraft a year to break even on a per-plane basis and is seeking to reduce costs enough to drop the rate to 25 or fewer.
Japan Breakthrough
The Iranian commitment, likely to be for flag-carrier Iran Air, is especially welcome since Airbus has been seeking to sell the A380 to companies beyond the best-known first-tier operators for years, with only limited success. The last new airline buyer, No. 2 Russian carrier Transaero, collapsed last year after agreeing to buy four planes.
Confirmation of Japan’s ANA deal also comes as a coup, with the Asian nation not only a long-established customer for Boeing Co. but also a leading market for the 747 jumbo, which remains in production as the 747-8 Intercontinental. A bid to penetrate Japan in the past failed when Skymark Airlines Inc. went in to bankruptcy protection with six A380s on order.
While two new orders won’t by themselves save the world’s biggest commercial aircraft, the deal signed by Iranian President Hassan Rouhani opens up a new opportunity. Airbus will now likely step up sales campaigns in other Muslim nations, both for their own network needs and as mass transport during the Haj pilgrimage.
Denser Layout
PT Garuda Indonesia is seen as a prime candidate, as is Turkish Airlines. Saudi Arabia could be targeted with a higher-density version of the plane that Airbus has begun offering. Iran’s seating plans haven’t been revealed, though it’s likely to configure its A380s with more than the standard 550 berths, helping to reinforce the model’s credentials as an industry workhorse.
The A380 has also received a recent vote of confidence from British Airways owner IAG SA. The carrier, which already has 12 A380s in operation or on order, said last week it was evaluating whether to add a batch of five or six used planes.
While Airbus would prefer to sell new superjumbos, such a move would be valuable in establishing a second-hand market for the plane. That’s something the manufacturer is keen to do given that the oldest examples in service with Singapore Airlines Ltd. and Emirates could become available as early as next year.
Ultimately, though, Airbus needs hundreds of new A380 orders if the plane is to remain in production for another decade or longer. By that time, the company reckons more crowded airports will create a much bigger market. Bridging that gap means securing a deal from Emirates for 150 or even 200 more aircraft -- something the Gulf carrier says must be accompanied by a costly makeover that includes new engines.
(Andrea Rothman - Bloomberg Business News)
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