Friday, October 20, 2006

Airbus needs $78 billion worth of A380 orders for break-even.

Bidness: That is if nothing else goes wrong.

AIRBUS needs to win orders worth approximately $78 billion (£40 billion) before its troubled A380 superjumbo project breaks even. Airbus, which is a division of the European aerospace and defence group EADS, has increased the break-even point for the project to 420 aircrafts from last year’s forecast of 270. The aircraft manufacturer told analysts at a presentation in Hamburg yesterday that increased costs and compensation payments for delivery delays have pushed back the point of profitability. The Toulouse-based company has so far sold 159 of the double-decker aircraft in the six years since its official launch. It must now sell a further 261 before it can turn a profit on the project. The A380 has a list price of about $300 million, meaning that the company must win orders worth $78.3 billion before breakeven. Despite this daunting figure Airbus remains confident that it can eventually sell 750 of the aircraft, although analysts are becoming sceptical of this claim. One analyst said: “The A380 is going to be a white elephant. There is no way they are going to sell that many planes.” However, Airbus sees hope in the long life of Boeing’s 747 — the smaller rival to the A380. The 747 entered service in 1970 and after a difficult start has gone on to be an enormous success.

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