The A380 is facing yet another delay (the third), again over wiring problems.

 

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According to Aviation Week, the latest delays may undercut the launch of the A350, Airbus's direct competitor for the Boeing 787.  The last delay cost Airbus an estimated $650 million in lost revenue and late penalties (probably more).  The latest delay not only cuts their revenue (we don't know how much) but also further reduces the value of the parent company's stock.  In short, the new incarnation of the A350 will cost billions to develop and Airbus maynot be able to cobble together enough financing to do the job until the A380 problems are overcome.

 

A380 customers have remained with the progam through previous delays, but one can't help but wonder how much more they will tolerate.  And if the delay cascades into the A350 (which has also been delayed),  it could cause similar problems.

 

Airbus is now facing the very real prospect of being shut out of the lucrative medium and large commercial jet market for years to come.  And if enough customers pull out, it could lead to the cancellation of either or both programs.  We are talking about a finacial hit in the $20+ billion range.

 

That would leave Airbus to survive on the narrow margins of the successful-but-ageing A320 family at a time when Boeing is rushing to produce a smaller version of the 787 to replace its 737.  If Boeing can beat Airbus to the market with a successful narrow-body jet, it will have cornered all three categories of the market.

 

Airbus is too big and prestigeous for the EU to allow it to fail, but it is heading for an implosion if it does not manage a turn-around in a hurry.

 

 

 

 

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I personally have no doubt the A-380 will survive and be quite successful.  Its an incredible piece of engineering. At the same time, Airbus's current problems are obviously helping Boeing substantially. It happens.  Boeing is taking huge risk with the 787 as well.  They've had some small glitches. They may have more yet. Boeing has not yet totally won the race. Now, if Airbus messes up any more on the A-350, they'll have serious problems. You could see Boeing pull ahead big, big time. But both the A-380 and A-350 will survive. And both Boeing and Airbus will survive.

 

It will be very, very interesting to see what happens with the tanker competition. Sen. McClain seems determined to give Airbus a leg up on that contract. There are enough tanker aircraft involved to make either company much happier.

 

The news on the latest A380 delays are even worse than past delays.  The six-month delay announce last spring affected only planes not already in production.  Last Wednesday the company announced a 1 year delay of the entire program which is expected to cost the company $6 billion in profit through 2010.

 

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