Branson warns of threat to A380 maker

The chairman of Virgin Atlantic, Sir Richard Branson, one of the launch customers for the new Airbus A380 super jumbo has warned that the aircraft is likely to be a "financial disaster" for its manufacturer.

Sir Richard, whose long-haul airline has placed a $2bn (£1bn) order for six A380s, said he feared the 555-seater aircraft would never sell in sufficient numbers to cover its development costs.

His comments are a major setback for Airbus, which has invested a huge amount of its reputation on the success of the delayed and heavily over-budget aircraft.

Airbus is investing $15bn in the A380 - 30 per cent more than the original estimate - but has so far sold only 149 aircraft, compared to the 450 it needs to sell to break even. The aircraft will be two years late entering service when it begins flying with Singapore Airlines this autumn.

Sir Richard praised the A380, saying it would be a highly efficient aircraft for Virgin, but he questioned whether it would ever pay its way for Airbus. "I think it will be a financial disaster because I can't see how Airbus will ever sell sufficient numbers of the aircraft," the Virgin chairman said.

He was speaking as Virgin prepares to announce a major new order for wide-bodied aircraft, possibly as early as today. The choice is between the Boeing 787 Dreamliner and the Airbus A350, both of which are twin-engined aircraft.

Historically, Virgin has always operated four-engined aircraft on its long-haul transatlantic routes, arguing that passengers feel safer than flying in a jet with only two engines. But Virgin will justify the switch in approach on the grounds that twin-engined aircraft are more fuel-efficient and environmentally friendly.

The airline will also announce today that it is to become the first carrier in the world to use green aviation fuel. Virgin Atlantic is planning to launch trials next year with Boeing and the US engine manufacturer General Electric, flying a 747 aircraft using a mixture of bio-fuel and conventional aviation fuel.

Aviation is one of the fastest growing sources of greenhouse gas emissions and is likely to be brought into the European Union's carbon emissions trading scheme from 2012.

The trial will experiment with a mix of 60 per cent bio-fuel and 40 per cent kerosene, potentially enabling Virgin Atlantic to halve its carbon emissions. Sir Richard said Virgin Fuels, the group's new green energy division, was looking at the possibility of developing butanol as an aviation fuel in preference to ethanol which freezes at the altitude flown by jet aircraft.

Bio-fuels can be produced from a wide variety of crops including sugar beet and wheat. Sir Richard said it was possiblethe crops could be grown in Africa, thereby helping to alleviate poverty on the continent at the same time as safeguarding the environment.