Seeking Alpha
Profile| Send Message|
( followers)  
Airbus has delayed deliveries of its much anticipated jumbo jet, the A380, for a second time. It will now be more than a year late to market. According to the New York Times:

By 2011, the delivery schedule is expected to be back on track. Airbus has received a total of 159 orders for the $300 million-plane from 16 airlines.

By 2011, it will likely become clear that there is very limited need for jumbo jets. Aside from overnight freight and a few well-traveled international routes, there is little need for that large an aircraft. Now, the delays may simply encourage those who need such a plane to keep their 747s in the air longer. We can only imagine how happy Boeing must be to have “lost” this battle, as its 787 Dreamliner is much more in tune with today’s market: a fuel-sipping medium-sized aircraft to fill out point to point service between mid-range markets.

Even the Dreamliner is starting to appear a little on the chunky side. As we noted in August:

1. The only most successful US airline, Southwest (NYSE:LUV), earned its success by offering non-stop flights from smaller airports. Regional jets could open point-to-point non-stop service to an even larger number of even smaller airports - paving the way for the next Southwest.
2. Smaller jets can be loaded and unloaded quickly, saving precious time for passengers and precious money for the operator - who can keep the jets flying (earning money) rather than sitting on the ground (costing money).
3. Smaller airports allow passengers to pass more quickly through security, further saving time. Plus, greater point-to-point service to more markets means they also save time by not having to connect through hubs.
4. Lacking the dramatic potential of larger jets, regional jets are likely to be avoided by terrorists.

jumbojet

Is the Jumbo Jet following the elephant into extinction?

We don’t have any skin in this game, but if we had to place a bet, we would pick Embraer (NYSE:ERJ) to win, Boeing (NYSE:BA) to place and Airbus [EADS] to show.

Comment on this article

Source: The Jumbo Jet (Airbus) is Fast Becoming Irrelevant