
Airbus Handed A380 Lifeline With $16B Emirates Order - jamesdgb
https://www.bloomberg.com/news/articles/2018-01-18/emirates-orders-20-a380s-worth-9-billion-in-vital-program-boost
======
nolok
Great news for both, Airbus needed that to save the program, finally have a
chance to reach profitability, and solve the chicken and egg problem of no-one
is buying it because it looks like it will be stopped, it will be stopped
because no one buys it.

Emirates, having half the frames out, keeps the program going which means they
don't get trapped in maintenance hell.

Funny to look back at the messages a few days ago here on HN saying it will
"obviously not happen".

~~~
fyfy18
The real test will be how well they fare on the second hand market, when
Emirates begin to retire their first aircraft over the next few years. Last
year an A380 that had been with Singapore Airlines for 10 years was put into
storage until a buyer is found [0], and an Irish leasing company decided to
start their own airline as they couldn't find anyone to lease their A380s [1].

[0] [http://www.traveller.com.au/first-retired-a380-superjumbo-
pa...](http://www.traveller.com.au/first-retired-a380-superjumbo-parked-at-
tarmac-aerosave-awaiting-sale-or-scrap-gziiuo)

[1] [http://www.telegraph.co.uk/travel/news/leasing-company-
force...](http://www.telegraph.co.uk/travel/news/leasing-company-forced-to-
start-own-airline-because-nobody-wants/)

~~~
alistairSH
Is 10 years really the expected (first-owner) lifespan of a wide-body? Is that
typical for narrow-bodies as well? Seems short, given the cost to purchase.

~~~
tallanvor
Don't think in terms of wide-body vs narrow-body. Think in terms of long-haul
vs short-haul.

The lifespan of a plane tends to have more to do with the number of
pressurization cycles it goes through (and the number of take-offs and
landings) - they go together, after all. Pressurizing the plane stresses the
plane, and eventually the frame just can't be trusted, no matter how good the
airline is at maintaining the plane. Short-haul flights (say going back and
forth between New York and Washington D.C.) could conceivably manage 5 round
trips a day or more, which is much more stress than a plane flying one round
trip per day between New York and London.

Even most planes used for short-haul flights would be expected to last more
than 10 years, and planes used for long-haul flights can be used for 30 years
by major airlines. But keep in mind that airlines will certainly replace
planes earlier if a newer plane has enough efficiency gains that will allow
costs to recouped more quickly.

Singapore Air returning this plane already (and there's a second as well)
means that the plane simply isn't profitable (or profitable enough) for them
to keep flying. Most likely whatever route this plane was used for will
continue with a smaller flight that costs less to fly.

~~~
skgoa
> Singapore Air returning this plane already (and there's a second as well)
> means that the plane simply isn't profitable (or profitable enough) for them
> to keep flying. Most likely whatever route this plane was used for will
> continue with a smaller flight that costs less to fly.

They returned a plane at the end of its lease and got a newly built one on a
new lease as a replacement. They are doing the same with their 4 remaining
planes that are nearing the end of their leases. They seem to be happy with
the 380.

~~~
joelhaasnoot
Also remember that the first few A380s had lots of issues with wiring
harnesses, performance, etc and so may not be completely up to spec.

~~~
skgoa
Exactly. The first 25 airframes (of which 22 were actually build to
completion) have the wiring problems and were never expected to find much
interest on the secondary market.

------
_ph_
Great news. That should keep the A380 alive long enough to clearly see how the
airplane market is developing. Currently, its all about 2-engined airplanes,
but I cannot believe, that there is no need for the large airplanes like 747
and the A380. The amount of air travel is still growing year over year and
once the production is shut down, it would means a certain class of airplanes
is just unavailable.

~~~
candiodari
The problem is not technical. The problem is government.

You have 2 types of aircraft carriers: direct and hub-and-spoke. Direct means
that they either have a direct flight between A and B, or have no way to get
from A to B at all (in most cases, of course no carrier is 100% hub or 100%
direct). Since A and B tend to be routes like Marseille to New York there
aren't going to be enough passengers to fill an A380, so smaller more
efficient airplanes are where it's at.

In short: Big, huge airplanes make sense for hub-and-spoke carriers and don't
for direct carriers. Small airplanes, lots of them, make sense for direct
carriers.

For consumers, the difference is twofold. Direct carriers are faster, and they
will be more expensive, because a number of costs can't be shared between as
many passengers as in the hub networks. Hub carriers are slower, but a (lot)
cheaper.

But that doesn't even really matter. Governments have decided that most
airports won't be upgraded to support more planes and/or more passengers. This
has resulted in airports that would normally be hub airports, like London,
Paris or New York aren't hubs, because they are incredibly oversubscribed. For
the same reason they become very expensive, very slow, and generally bad for
passengers. But there is no competition, because only the government can
approve airports, and they don't.

This means that unless you're a carrier that happens to be in a location where
such government concerns don't exist, like in the UAE where the government is
the carrier and doesn't care about the local population at all, you can't have
a hub network.

So superjumbo's are threatened. Despite, of course, the market clearly
pointing out that the cheaper flight almost always wins, if it's up to the
customers, and therefore hub networks should win. I would say that therefore
it is pretty correct to say that customers want A380s. But governments are
standing in the way. For no good reason.

But governments have decided that having everyone pay significantly more for
every flight, and generally have an utterly awful experience flying is
absolutely worth it. After all, the alternatives would mean slightly more work
for them ...

~~~
Chriky
It must be cool to be a Libertarian because you are an immediate expert at
everything.

~~~
matthewmacleod
That was a detailed comment that didn't say "government is bad." It laid out a
pretty reasonable interpretation of why that decision might have taken place,
including quite clearly pointing out that some governments care less about the
effects of airports on local populations, which could explain why some markets
still have hub airports.

It definitely tallies with the impression I have – looking at London Heathrow,
for example, where the controversy about expanding the airport has been
rumbling on for an age, and governments are consistently jittery about taking
an obvious view on it. I'd say there are pretty good reasons for avoiding
expansion, but obviously this other comment disagrees.

There's nothing here that screams "libertarian," just a possibly inaccurate,
but hardly unreasonable, point of view.

~~~
matt4077
> that didn't say "government is bad."

Yet it did start with "The problem is government".

~~~
maehwasu
It turns out, shockingly enough, that there are many situations in which
government creates problems.

If a poster lays out his/her reasoning as to WHY the government is the problem
in a specific instance, simply yelling "libertarian" as a refutation doesn't
look great.

~~~
mcv
> It turns out, shockingly enough, that there are many situations in which
> government creates problems.

True of course, but not in this case. Many governments want their airports to
expand, but they simply can't, because there's no space for it, and they're
not totalitarian enough to screw over the millions of people living in those
areas. It's not a case of governments being unreasonably obstructive, it's a
case of governments actually caring about the interests of the people for a
change.

------
exabrial
Bluff called! That was one expensive game of poker

~~~
gjem97
I'm with you. I think the correct poker metaphor, though, is that the bluff
worked. The way I see this is that Airbus knew that Emirates was generally
happy with the A380, but unwilling to agree to whatever terms Airbus had on
the table for new planes. Airbus then puts out a press release that they may
cancel the line if there are no forthcoming customers, effectively saying
"it's now or never if you want an A380"\--i.e. the bluff. At which point
Emirates folded. (in all likelihood, it just brought them back to the
negotiating table). If Emirates had called the bluff, they would have said
"Ok, good luck then!" and waited for Airbus to admit that they weren't
cancelling the line.

~~~
detuur
If Emirates wasn't buying, it was actually quite possible that they would've
shut down the line, and try to focus more on getting A350 orders out the door.
Whatever Emirates was offering, it was a pittance, because you don't go
publicly on record threatening to shut down a flagship product unless it's
your best course of action.

~~~
gjem97
Maybe it was a "semi-bluff", then.

[http://www.pokerlistings.com/10-essential-texas-hold-em-
move...](http://www.pokerlistings.com/10-essential-texas-hold-em-moves-the-
semi-bluff)

------
raverbashing
16 Bi for edit: 20 planes + 16 options is around 440Mi ea. seems they didn't
get as large as a discount as I was expecting

~~~
Neracked
The 16 Bi$ figure is for 36 aircrafts (including the 16 options) and means a
price per unit of 445 Mi$. This is exactly the unit cost listed on Wikipedia.
So we can assume the real price for the contract is lower.

~~~
sho
> So we can assume the real price for the contract is lower

Very much so. Common discounts for airframes can be 40-50%. Given the
circumstances I'd assume Emirates got somewhere near 50; who knows. But both
parties needed this deal and as other comments correctly point out the
unusually public manoeuvring has been going on for months.

Of course, no-one in the media has any idea about this very closely guarded
commercial information and so they simply go by the list price.

------
perseusprime11
This is a tangent but I really love flying Emirates. Their economy feels like
luxury in United or Delta.

~~~
swarnie_
US airlines are a terrible measure of quality. United and Delta are easily the
worst two airlines i've traveled with.

~~~
vinay427
Have you never traveled on low-cost airlines, in any country? There's nothing
quite like a transoceanic flight with extra-thin seats and no water, let alone
snacks, provided.

(Of course, this is made clear to the customer, but my point is that United
and Delta are better than many airlines in most countries.)

------
gandreani
Here's a great video that explains partly the reason the A380's have struggled
compared

[https://www.youtube.com/watch?v=NlIdzF1_b5M](https://www.youtube.com/watch?v=NlIdzF1_b5M)

~~~
patrickk
Fascinating stuff.

------
gerardnll
Link goes to AMP page. Here's a link to the desktop one:
[https://www.bloomberg.com/news/articles/2018-01-18/emirates-...](https://www.bloomberg.com/news/articles/2018-01-18/emirates-
airline-orders-36-airbus-a380s-worth-16-billion-jckc224w)

~~~
profsnuggles
Standard 80x24 terminal with elinks.

Number of times needed to hit page down to read article content of desktop
page 13. Number of times to start reading content on amp page 0.

Don't really get the amp hate.

~~~
ulfw
Yea because in 2018, using an 80x24 terminal is THE WAY to browse the web.
Cool. Thanks.

~~~
samfriedman
HackerNews is often a fertile garden for Poe's Law-level satire.

------
shadowbantruth
Can somebody tell me how long does it take for then to make a plane and how
long until the next "alarm"? I ask because I see 20 ordeals fulfilled per year
on wiki and at his rate it seems like this is just for one year (without
understanding their pipeline)

~~~
alkonaut
And how much of their pipeline is completely bespoke and how much of that
space/people/machinery could just produce A350 instead?

~~~
JoeAltmaier
Facilities are part of the equation. But people have to be trained and
measured and certified. Those processes have to be designed and documented.
The population needed for any process varies with the task - it'd be a
coincidence if it was the same for a different pipeline.

And the facility is full of jigs and benches and tools and doorways and props
and a million things that are bespoke to a process too.

Making very complicated things isn't the same as making toasters.

~~~
alkonaut
I get its terrifying complexity here - and lots of it is bespoke (and
international, but outsourced parts probably _helps_ in this case as it
becomes someone else’s problem). But when e.g a car manufacturer makes 2 new
models they try to keep many components similar. Planes aren’t cars but you’d
think at least some systems are common to both A350 and A380.

------
phatboyslim
Did anyone catch the Emirates videos put together by Casey Neistat? I often
wonder if YouTube celebrities will usher in a new form of advertising, where
content and marketing are blended into an entertainment experience. The videos
were wildly popular and I wonder if this aided significantly in bookings for
Emirates flights, thus leading to the $9B order.

~~~
rco8786
> I often wonder if YouTube celebrities will usher in a new form of
> advertising, where content and marketing are blended into an entertainment
> experience.

This goes on all around you, and isn't really a new form of anything. Movies,
TV, YouTube, even music all blend marketing and entertainment.

------
stirlo
Seems like the bare minimum face saving order they could make. Still wouldn’t
consider this anything but a token gesture to try to hold up the value of
their existing purchase. A380 is headed to the graveyard soon rather than
later

~~~
pmyteh
Airlines don't sink several billion dollars to 'save face'. It's not a high
enough margin business.

~~~
stirlo
The value of the 100+ they have already purchased will drop at least 20% if
Airbus were to cease production. Hence this move to prop up their value

