Saturday, March 2, 2019

Death of A380 Superjumbo Opens New Battleground: Airbus can now fight Boeing’s 777X with a stretched version of its popular A350

The Wall Street Journal
By Jon Sindreu
March 1, 2019 6:08 a.m. ET

The demise of the A380, the largest commercial liner ever built, has left a superjumbo-sized hole in the aircraft market. Investors can expect a race to fill it.

Airbus said earlier this month that it will stop assembling the A380 in 2021, following the cancellation of a big share of the few remaining orders for the 555-seat jet. This is a bitter pill to swallow for the European giant, but it is also an opportunity.

Airbus previously shied away from developing an extra-large version of their state-of-the-art A350 liner for fear of cramping the A380’s style. With the superjumbo out of the way, its engineers in Toulouse may finally get the green light to go after a slightly different market niche: The 400-seat plane.

Over the next five years, many airlines will start to retire their fleets of 777-300ER liners, the long-range version of Boeing’s best-selling wide-body model, which seats 396 people. Many of those built in the 1990s are already being replaced. Boeing will start delivering its newer 777X next year. It has already locked in more than 300 orders for the model upgrade, which will seat up to 425 passengers.

Yet a large slice of the cake is still up for grabs. By 2025, a further 200 or 300 aging 777-300ER jets could be substituted for more fuel-efficient ones.

Airbus could win some of those orders by stretching its A350-1000 to seat about 400 people, up from 366 now—a possibility it has already explored. The A350’s smallest variant has had resounding success so far, and this should eventually help its larger versions win customers. Airlines like Air Canada , Air France and Aeroflot are all big buyers of the A350 and have old 777-300ER fleets.

One of Airbus’s problems is its greater dependence on engines built by U.K. manufacturer Rolls-Royce, which have had delivery and reliability problems. This hasn’t happened on the A350 so far, but airlines are likely weighing the risk that it could. British Airways parent IAG, which has voiced dissatisfaction with Rolls-Royce many times, said Thursday it would buy 18 777X from Boeing and take options for up to 24 more.

Another reason for caution is that demand for large planes has been weakening. Lackluster orders of the 777X, not to mention the A380’s failure, should be a warning flag for both companies. Unlike in the narrow-body market, where plane makers are right to pull out all possible stops, demand for wide-body planes has slowed following a buying spree in 2013 and 2014. Low oil prices weaken the incentive to replace them.

Still, the power of the A350 franchise probably gives Airbus the ability to complete its catalog without overextending itself. Unlike the A380, which was alone at the top of the hill, the new plane would be part of a family in which all variants share parts and overhead costs—a business model that has proven enormously fruitful.

The A380 is dead, but the battle for large planes is poised to heat up.

Original article can be found here ➤

1 comment:

Anonymous said...

Come on Boeing! Whip their butts!!!