Airbus A380 Jet Builds Momentum With Asiana's $1.8 Billion Six-Plane Order
By Andrea Rothman - Jan 6, 2011
Airbus SAS won an order for six A380s from Asiana Airlines Inc., building momentum for sales of the superjumbo after a dry spell of more than three years when the planemaker attracted only one new operator.
Asiana, South Korea’s second-biggest carrier, said today it will take its first A380 in April 2014 in an order valued at $1.8 billion as it challenges larger rival Korean Air Lines Co. on intercontinental routes.
The airline is the second new customer in three months to pick the 525-seater after Skymark Airlines Inc., Japan’s biggest discount carrier, said in November it would order as many as 15. Boeing Co.’s challenger to the A380 passenger model, its 747-8 Intercontinental, has won orders for 33 planes, with no new airline orders since December 2009. Airbus’s A380 now has orders for 240 planes from 18 customers.
“It’s more than a trend, it’s the logic of the industry,” Airbus’s A380 marketing director, Richard Carcaillet, said today. “Airlines are adding capacity, introducing new cabin products, and the A380 is the vector” for much of the growth.
Qantas Blowout
The order is also the first for the model since a Rolls- Royce Group Plc engine exploded during on a Qantas Airways Ltd. A380 in November. Qantas grounded all six of its superjumbos and still hasn’t resumed services with the plane to Los Angeles.
Singapore Airlines Ltd. and Deutsche Lufthansa AG replaced some engines on their Rolls-powered A380s and Airbus says it’s working to resolve associated disruption to the production line.
Airlines are obtaining higher load factors, or seat occupancy levels, and yields, or ticket prices, with the A380 than other planes, Carcaillet said. Lufthansa fills the same percentage of seats in A380s to Tokyo and other cities as it did on using Boeing 747s, spokesman Boris Ogursky said in an e-mail.
“The 747-8 is a very competitive airplane with a strong future and a significant market niche,” said Boeing spokesman Jim Proulx in an e-mail. “Talks continue with several airplanes regarding the airplane, its capabilities and how it could fit into their fleets.”
Shares of Airbus European Aeronautics, Defence & Space Co. rose the most in six weeks. They climbed 3.8 percent, the most since Nov. 24, to 19.08 euros at the 5:35 p.m. close of trading in Paris. That made EADS the day’s leading gainer in France’s benchmark CAC-40 Index.
Repeat Orders
While Airbus has won repeat orders from existing A380 customers, such as Korean Air and Dubai-based Emirates, it’s had trouble winning new customers since the plane began commercial service with Singapore Air in October 2007. The only first-time buyer since a British Airways Plc order in 2007 was Air Austral, a carrier from the Indian Ocean island of Reunion that ordered two in November 2009.
“It’s a big, costly aircraft that’s very much a strategic decision for any airline, as it’s clearly an aircraft to cater for growth,” said Sandy Morris, an analyst at Royal Bank of Scotland. “Given the recession, lack of growth in air traffic and difficulty in getting finance, you wouldn’t have expected very much to happen earlier.”
Morris, with a “buy” recommendation on EADS shares, said he remains a “great optimist for long-term sales of the A380.” The plane has 41 jets in service, according to Airbus.
Asiana, like Skymark in Japan, is using the superjumbo to challenge larger domestic rivals. Korean Air will take delivery of five superjumbos this year, with another five planes set to follow in the next two years.
Long-Haul Routes
Asiana will use the double-decker planes on flights to the U.S. and Europe, the airline’s chief executive, Yoon Young-Doo, said in a statement today.
“There’s huge demand in the long-haul market, especially between Asia and the U.S.,” said Ryu Jae Hyun, a Hong Kong- based analyst at Mirae Asset Securities Co. “Korean Air is earning a lot of profits from that.”
Korean Air and Lufthansa are the only two customers so far for Boeing’s 747-8I, which can seat 467. Boeing in September extended a yearlong delivery delay for the jet by six months to let engineers redesign some parts. Deliveries for the freighter model are set to begin in mid-2011 and for the passenger model later in the year.
The A380 can carry 525 passengers in a typical three-class configuration and more than 800 in a single-class layout, according to Airbus. The plane, which Airbus says is more fuel- efficient than older jets, has a list price of $346 million, though airlines get discounts for multiple purchases.
Engine Choice
Today five carriers fly the A380 -- Singapore Airlines, Lufthansa, Qantas, Emirates and Air France-KLM Group -- and Korean Air and China Southern Airlines Co. will become the sixth and seventh operators this year.
Asiana said it hasn’t decided whether it will order engines from Rolls or a Pratt & Whitney-General Electric Co. venture, the Engine Alliance, that makes a competing turbine and powers A380s including those of Emirates and Air France-KLM Group.
Asiana ordered 30 Airbus A350 planes, worth $7.2 billion at list prices, in 2008, with options for 10 more. The Seoul-based airline expects to take delivery of those aircraft starting in 2016. The carrier has 70 aircraft, including freighters, according to its website.