Airbus teamed up with the same airline that canceled 70 A350s on
Wednesday, Dubai's Emirates, and leasing company Amedeo to sell
potential buyers on the merits of the A380 superjumbo.
Emirates is by far the biggest customer of the A380 but is
disappointed that more airlines do not share its vision for the
double-decker and shares an interest with Airbus and leasing partner
Amedeo in developing a market for the $400 million jet.
But the pitch was not made directly to airlines. Instead, the
companies went to New York to convince financiers and Wall Street
analysts that the massive aircraft will not threaten industry profit
margins and in fact would make economic sense.
If U.S. airlines don't use the A380, "they are leaving profits on
the table for others to take," said Mark Lapidus, chief executive of
Amedeo, speaking on the sidelines of a briefing at New York's John
F. Kennedy International Airport.
"We are a little concerned with how the Street will react to
enlarging capacity," he said, noting that the executives of Airbus,
Emirates and Amedeo are here to "broaden their knowledge" of how the
airplane can make money.
By flying 500, 600 or more passengers into airports such as London
Heathrow or Hong Kong, airlines can accommodate growing demand for
air travel without adding additional flights.
"We're able to use it to grow revenue in a way that we wouldn't be
able to do with any other aircraft type," said Nigel Hopkins, an
Emirates executive vice president.
The major U.S. carriers, American Airlines Group <AAL.O>, United
Continental Holdings <UAL.N> and Delta Air Lines <DAL.N>, do not
currently use the A380 but are facing growing competition in the
United States from Emirates and other carriers that do.
With many airports "slot constrained" - at or near the limit of
number of takeoffs and landings they can handle - airlines face
limited scope for revenue growth. But U.S. planemaker Boeing <BA.N>
says there is a more promising market for smaller airplanes that
open up new secondary routes, bypassing hubs.
The briefing came a day after Emirates canceled 70 orders for
Airbus' brand-new A350 aircraft, which is smaller than the A380 but
has newer technology. It also comes as Amedeo seeks lease customers
for 20 Airbus A380s it agreed to buy in February.
As part of the New York briefing, Airbus, Emirates and Amedeo were
due to take some 150 analysts and journalists on a special A380
demonstration flight over Manhattan, showing off the A380's quiet
cabin and ability to climb quickly to altitude.
[to top of second column]
Separately, Airbus took another 150 journalists on a special flight
onboard an A350 in Toulouse, France, earlier on Thursday, a day
after Emirates said it was canceling its entire order for the
airplane, worth $16 billion at list prices.
Airbus officials said the A350 flight, coinciding with an annual
media seminar, was first mooted before the Emirates move.
Lightly loaded and carrying no bags, the A350 climbed steeply but
quietly on take-off and took journalists 31,000 feet above the
Pyrenees for just over an hour.
To the surprise of the A350’s first passengers, the flight was
accompanied at one point by a French Rafale fighter practicing
intercept maneuvers with the agreement of Airbus test crew. It is a
common if little publicized piece of co-operation involving Airbus
test flights carried out in French military airspace. Because
passengers were on board, the French fighter was ordered to stay
well away from the carbon-fiber jet.
“This is a very quiet flight. In some parts of the airplane, up in
first and business, you hear wind noise more than the engines, so I
was very impressed by that,” said Scott Hamilton of Leeham News, an
aerospace analyst from the Seattle area.
Analysts said Airbus would be able to sell the A350s at higher
prices than launch prices offered to Emirates in 2007.
“It was more bad headlines than substance. Deliveries are in 2019,
five years away, and that gives Airbus plenty of time to resell
those slots,” Hamilton said.
Still, JP Morgan said in a note that while the cancellation would
not seriously dent Airbus’s overall order book, it raised questions
over the European planemaker’s product strategy as a revamped
version of Boeing’s 777 will fly more people further.
(Reporting by Alwyn Scott and Tim Hepher; Editing by Steve Orlofsky,
Geert de Clercq)
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