Comment: A380 must pay its way

The rumours something big was brewing began at the International Air Transport Association gathering which preceded the ILA air show in Berlin. Emirates' chairman Sheikh Ahmed Al Maktoum leaves the running of the airline to president Tim Clark and the royal presence at an industry talking shop seemed out of place. Clark himself began dropping hints it would be worth journalists turning up to ILA on Tuesday.

When it happened, the order for 32 A380s was staggering. In one move, Airbus's superjumbo - sales of which have been stuttering for two years - has been given a huge boost to its credibility and towards its supposed break-even of 300 units. Emirates, already the biggest A380 customer by some margin, will dominate the type's fleet in such a way that one of three conclusions must be drawn.

One is that Emirates' rivals - even those that have opted for the double-decker in more modest numbers - have underestimated the revenue- and efficiency-generating potential of the 500-seater. Two is that these airlines see the A380's value, but simply cannot finance this sort of jaw-dropping acquisition. The third is that the Dubai flag-carrier has massively over-reached and like the emirate's overheated property market in 2008 will find itself with capacity it cannot fill.

How likely is that? In 25 years, Emirates has scarcely put a foot wrong. Unencumbered by unions, a space-constrained hub or awkward shareholders, its seasoned ex-pat bosses have delivered consistent growth and profits. They worked with Dubai's rulers to create a continental crossroads and run an airline that provided a better passenger experience than their competitors.

For Airbus the ideal scenario would now be that airlines east and west, fearing Emirates stealing business, opt for the A380 in numbers. That will make the superjumbo the true successor to Boeing's 747. The fight for passengers will be messy if capacity outstrips demand, but this is a problem more for airlines than airframer.

A bigger headache for Airbus will be turning a profit on its grandiose project. Thirty-two more orders are a huge fillip, but few believe Airbus is making much of a return from them. Defining a break-even point for such a hugely complicated and troubled programme is near- impossible. Many costs will simply have been written off. The mood in the EADS chalet at ILA was upbeat. But shareholders realise that - with the A400M still draining funds and the A350 development to fund - the A380 must start paying its way, and soon.

Source: Flight International