Hope Diminishes for the Airbus A380
When European Aeronautic Defense & Space Co. (EADS) first announced plans to manufacture the Airbus A380-800, it was projected to be the world’s largest passenger airline. Its freight-carrying offshoot, the A380-800F, would be second in payload size only to the Antonov An-225.
Unfortunately, almost from the beginning, various problems with production of the A380 have delayed delivery of the airplane and drastically increased its production cost. Bloomberg is reporting that EADS will have a 2006 fourth-quarter loss of $1.08 billion euros. Compare that with a net income of 405 million euros that the company enjoyed just a year ago. EADS has already projected a loss of 4.8 billion euros through 2010 because of the A380.
The passenger version of the plane is already two years behind schedule. The A380F freight version is in even worse shape. UPS, the last remaining customer for the A380F, cancelled their order in early March of 2007. This was after EADS suspended development of the freight aircraft and diverted its diminishing resources toward production of the A380 passenger plane. With forecasted layoffs of 10,000 EADS employees over the next four years, and EADS worker strikes now occurring across France, the future isn’t so bright for the company.
The entire A380 situation reminds me of the fiasco that occurred when the Hughes H-4 Hercules was under development. The 8-engine airplane that we know as the Spruce Goose was originally ordered from Hughes Aircraft Company by the U.S. military for use during World War II. It took Hughes so long to complete the project that the war was over before the plane was ready. Out of sheer stubbornness, Hughes spent an additional $7 million of his own money to finish it and make it flyable. It was mothballed after only one flight.
Unfortunately for EADS, they don’t have Hughes’ deep pockets. Or maybe it’s just that as much as the man overcommitted himself, EADS has overcommitted itself so much more.