The A380 superjumbo: The white elephant

The latest Airbus, hailed as a model of European co-operation, is running two years' late. So will this project ever truly fly?
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The Independent Online

The superlatives abound. It is wider than a football pitch and almost as long, four times the height of a double-decker bus, and weighs 560 tons. The A380 superjumbo is, in other words, large. Obscenely so, some might say, since the list price is an equally extravagant £166m - enough to build a hospital or three.

Today, its maker, Airbus, will seek to reassure the world that the biggest airliner ever to grace the skies will be a commercial success when it enters service.

But when exactly will that be? There could be no more pertinent question for Europe's answer to Boeing and, until recently, a shiningly successful example of cross-Channel industrial co-operation.

A year ago, Airbus could do no wrong. It had outsold its American rival for the fifth successive year, and was looking forward to putting more clear blue sky between itself and Boeing, which was still struggling to recover from a succession of espionage, ethics and sex scandals of its own.

Twelve months on and Airbus is in a mess. Appropriately enough, it is a big one. By now the A380 should have been in commercial service for the best part of a year. Instead, it is running two years late, leading some to describe it as aviation's latest white elephant.

The blame lies with the wiring. Some 330 miles of cable and 100,000 wires weave through the fuselage, delivering power to the cockpit controls and in-flight entertainment systems. Connecting everything up is proving trickier than thought.

The problem has already blown a superjumbo-sized hole in the profits of the parent company. But further delays could threaten Airbus's very existence, and along with it, tens of thousands of jobs and the many billions of pounds sunk into this grand projet by the taxpayers of Britain, France, Germany and Spain. The plane was supposed to cost $10bn (£5.3bn) to develop - a lot for one aircraft, but a small price to pay, so Airbus and its sponsoring governments thought, for the chance to end Boeing's monopoly of the jumbo market once and for all. At the last count the development costs of the A380 had risen to $14bn.

But the financial pain does not end there. In October, the company which ultimately controls Airbus, EADS, came out with some figures even more stunning than the vital statistics of an A380. EADS admitted that the delays on the aircraft would cost it an additional $6bn in lost profits, meaning that the A380 would not begin to pay its way until some time into the next decade.

Airbus's latest 20-year forecast for the world jet market, to be published this morning, will put demand for the A380 at about 1,500 aircraft - almost four times the number that Boeing thinks will be sold.

But that continues to look like anoptimistic assumption, for everything appears to be conspiring against the A380, not least the value of the dollar, the currency in which all commercial aircraft are sold. When Airbus launched the programme six years ago, it needed to sell 300 aircraft to cover its costs. Because of the way the dollar has weakened, Airbus now needs to sell 420 planes. The order book stands at 149.

The American mail company FedEx has become the first launch customer to cancel its order for 10 freighter versions of the aircraft, and at least one passenger airline has indicated it could follow suit. If the cancellations turn from a trickle to a flood, then the consequences would be catastrophic.

The collapse of the A380 would be disastrous enough in itself. But the added problem for Airbus is that it needs the revenues the superjumbo is expected to generate in order to fund its next aircraft. This is an equally ambitious and expensive model, called the 350XWB (standing for extra wide-bodied). The plane, Airbus's answer to the new Boeing 787 Dreamliner, will cost another $12bn to build. Without those A380 sales, however, Airbus will be in a terrible bind. Tim Clark, the president of Emirates, says simply: "Airbus has got to produce a meaningful competitor to Boeing. If they don't, they will be out of business."

It is all a very far cry from the self-congratulation and hyperbole which attended the formal roll-out of the first A380 from a Toulouse hangar in January last year. To the untutored eye, it looked like the finished article. But inside that giant cigar-shaped aluminium tube was a vast and empty void.

Still, the plane looked the part, and the French President, Jacques Chirac, could scarcely contain his Gallic pride. Flanked by Tony Blair and his German and Spanish counterparts, he said Airbus should become the template for all future European industrial collaboration. After hubris like that, nemesis had to follow. And so it has.

Fast-forward 20 months, and a very different image of Airbus emerges. It is hardly one that others are likely to rush to imitate. The revolving door has been spinning at those Toulouse headquarters, and Airbus is on its third chief executive since the summer. One of them, Noel Forgeard, was forced out with the whiff of insider dealing in the air after it emerged that he had sold shares in the parent company, EADS, shortly before Airbus dropped its first bombshell in June about the A380 delays. M. Forgeard strenuously denies any wrongdoing.

Worse than that, the company stands accused of being mismanaged, of being run as a series of shadowy fiefdoms, of having a culture which encourages the suppression of the truth and of playing fast and loose with other people's money. The indictment comes not from Boeing or one of its many supporters on Capitol Hill, but from Christian Streiff, a former executive with the French glass maker St Gobain, who was drafted in to head Airbus in July. Three months into the job, he came up with his master plan for rescuing Airbus: a combination of swingeing job cuts and an end to the cosy arrangement whereby production work had been shared out for political convenience.

M. Streiff's solution and his critique of the company's past failings were too much for the major shareholders, the French government and Germany's DaimlerChrysler, to swallow. M. Streiff was replaced by Louis Gallois, a technocrat and civil servant who won his spurs rescuing the state-owned rail company SNCF from the abyss.

But it is worth recalling M. Streiff's parting shot: "It is Airbus as a whole which failed, the management on several levels and with several passports who failed, and certainly not the teams on the shopfloor. Airbus is not yet an integrated company."

His words will have been as manna to the critics of Airbus, who look at the company and see not a sleek European corporate success story but a loose-limbed creature of government kept aloft by state handouts. A giant job creation programme, if you like.

The contribution of the UK taxpayer alone towards the A380 programme is £530m. In return for that, Broughton in North Wales and Filton near Bristol get to make the wings. But it also means that each completed set of wings has to make a remarkable journey to the final assembly site in France by way of container ship, river barge and specially adapted road trailer. With the main fuselage having to travel from Germany and the tailfin from Spain, no wonder M. Streiff thought there was a simpler way. Analysts believe that Airbus may need to close down as many as half of its 14 production sites around Europe.

One third of each new Airbus programme is funded by repayable launch aid from the taxpayer. This, and the fact that it does not have to answer to a conventional set of shareholders, may have played a part in the original decision to develop the A380. For the market for such a huge beast is unproven. In standard three-class seating, the A380 will carry 555 passengers, which is 130 more than the biggest Boeing 747. Stripping out the galleys and making everyone sit 10 abreast, as some Asian carriers will be tempted to do, would increase capacity to more than 800 passengers. Virgin Atlantic, on the other hand, wants to convert the A380 into a flying gin palace, complete with on-board casinos and gymnasiums.

The dispute between Airbus and Boeing over the size of the market for the A380 comes down to a basic difference in philosophy: would people prefer to fly point-to-point in smaller, longer-range aircraft, or will they be content to be herded 600 at a time on to a very big aircraft flying hub-to-hub, and then take a connecting flight to their final destination?

Airbus says that economics and concerns about the environment will push airlines down the latter route as congestion at airports and constraints on carbon emissions force airlines to fly more people in fewer aircraft to keep pace with the growth of the overall market.

Boeing, on the other hand, says people want greater choice and more direct flights. As evidence, it points to the collapse in sales of the 747 jumbo and the growth in demand for smaller twin-aisle aircraft.

Should the A380 flop, it would merely be following in a long tradition. Concorde may have been a technically brilliant design, but it was commercially naïve. Only 20 were ever built, and of those just 14 went into service, losing the British and French governments the equivalent of what the A380 is costing today.

It would be madness to write off Airbus in quite the same way. Disillusioned as its customers may be, they have a vested interest in ensuring its survival. Without Airbus, Boeing would have a complete monopoly over large commercial aircraft.

Whatever happens, it is inconceivable that the French would let Airbus fail. As President Chirac said of the A380 at its roll-out in Toulouse: "This veritable ocean liner of the sky will go down in history like the Concorde." Perhaps not the best of analogies, but you know what he was trying to say.

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