Emirates is screwed. Will Airbus come to the rescue?

the a350 1000 is currently the largest plane Airbus builds but according to Sir Tim Clark it's simply not big enough in recent months the longtime Emirates president has been calling on Airbus to think bigger and build a true A380 replacement to some these calls make no sense the A380 was a massive $30 billion boond doggle and Hyper efficient twins like the 787 are just far more economical and far more verstile than massive quad Jets so why then does Emirates want a Next Generation jumbo and more importantly will Airbus actually build them one Let Me Explain real quick folks it's not exactly a secret that Boeing and Airbus have been struggling in the last year both of their stock prices are down down over 30% this is a reflection of the greater economy according to CNN 72% of economists expect a recession in the next year this of course doesn't just affect bowing an Airbus but also people like you who might have their money tied up in the stock market when markets go south Savvy investors often Place their money elsewhere and a growing number of people are turning to Masterworks today's sponsor to help diversify their wealth Masterworks is the very first platform that lets you buy and sell shares of iconic pieces of art without needing millions of dollars and their returns are pretty compelling to date Masterworks art sales have netted investors a 29% return and their latest exit which was just a month ago saw a return of 33% now this is not Financial advice but if you want to learn more about Fine Art investing and how it could protect you during a recession I'd encourage you to check out master Masterworks and while Masterworks usually has a wait list to join my subscribers can actually skip to the front of the line simply visit the link in the description to check it out first let's quickly unpack emirate's desire for a new A380 it's well known that the airline is a bit of an outlier when it comes to the plane most A380 customers lament its poor operating economics but Emirates sings its praises and it's put its money where its mouth is of the 251 a380s ever built Emirates owns 123 of them but why does the jet work so well for Emirates when it clearly doesn't for others well first of all the airlin operating model is uniquely suited to the A380 Emirates is a hub and spoke Airline whose primary focus is connecting major cities in Europe to major cities in the East using its hub in Dubai as a stopover and many of the airports it flies into are either slot restricted or have issues with Capac capacity now the A380 was designed to address these very constraints its massive size helps reduce the number of flights at crowded airports as such it was a natural fit for Emirates from the start but hold on a second isn't every A380 operator a hub and spoke Airline yep they sure are so there must be more to the story here what truly makes Emirates stand out from its peers is the sheer size of its A380 Fleet again Emirates has taken delivery of 123 a380s the next largest customer ordered just 24 this has allowed the airline to achieve economies of scale helping to streamline things like maintenance and crew training in ways that other airlines can't on top of that planes tend to be cheaper when you buy them in bulk Emirates did just that and realized huge savings while operating such a large A380 Fleet clearly has benefits it isn't without risk a few years back the a 380 program was cancelled with Airbus sighting poor demand this has backed Emirates into a corner no other plane comes close to matching its capacity so once its a380s are ready for retirement Emirates will have no natural replacement for them this could force the airline to completely upend its Fleet strategy which needless to say will cost them dearly it's no surprise then that Emirates wants an A380 successor but the question is will Airbus oblige well they but to at least consider it for one Emirates is one of their biggest and most important customers if aabus outright dismisses their wishes it could strain their relationship and cause long-term harm what's more jumbo Jets may be on the verge of a Renaissance like I covered in a recent video the global pilot shortage is only poised to get worse and large planes could help tackle this issue since they carry more passengers than narrow bodies and don't need extra Pilots it's quite possible that planes like the the A380 could become a hot commodity and Airbus might be smart to tap into that demand if you want to learn more about this phenomenon I'll be sure to leave a link to that video in the description but despite all this upside building an A380 successor poses too great a Financial Risk as it stands today Emirates is the only Airline that's expressed real interest the memory of the a380s failer is still quite Fresh So most Airlines seem Keen to take a wait and see approach with it success cessor choosing not to buy it until it actually proves its worth needless to say launching a new plane with just one guaranteed customer is an intolerable risk no matter how important that customer is and frankly airbus's efforts are better spent elsewhere there are other more lucrative market segments it should tackle with its next plane ostensibly called the a360 I'll be doing a deep dive into the a360 in an upcoming video so make sure you're subscribed so you don't miss said so if Airbus won't build an A380 successor what other options does Emirates have perhaps they could push Airbus to build an A380 Neo this solution seems much more feasible for some context the A380 program cost Airbus $34 billion and building a clean sheet successor could cost even more in comparison refreshing its design could cost as little as $2 billion as was the case for the A330 Neo so the Financial Risk seems much more tolerable as a matter of fact Airbus has already explored an A380 Neo concept that happened in the late 2010s when Airbus proposed a refreshed design utilizing new engines derived from the Trent xwb the type of engine that powers the a350 all things told this would improve fuel burn by 12 to 14% but at the end of the day this change wasn't quite enough to drum up sufficient demand and the planes were abandoned but engine technology is in a much different place today than it was even 5 years ago Rolls-Royce for instance is about to start testing its new Ultra fan this engine features two new technologies Advanced composite fan blades and a geared turbofan architecture in conjunction they could deliver a 20% fuel burn advantage over the Trent 900 the engine that powers today's a380s pair these engines with a new composite wing and all of a sudden the A380 Neo looks pretty compelling but even so it remains a pipe dream not because it isn't compelling but because Airbus needs to allocate resources elsewhere again the last A380 rolled off the factory floor in 2021 and the second it did so Airbus began converting its final assembly line to build a320s the A320 family has a gargantuan backlog of over 8,000 units and at current production rates it would take over 13 years to clear it by converting the a380s factory Factory space Airbus is able to increase A320 production and at the end of the day addressing the sky high demand for its best-selling plane is way more important than building a few new jumbo that's especially true now that the 737 Max is experiencing a comeback its backlog has swelled in recent months in part because of its availability Airlines can get their hands on new Maxes much sooner than new NEOS so Airbus isn't like likely to revert these resources back to the A380 program as it would work to diminish the a320s appeal with nether an A380 successor nor an A380 Neo on the horizon where does Emirates turn well naturally they turn to Boeing Boeing's largest plane the 747-8 is close to the A380 in capacity however Boeing plans to shutter 747 production later this year Well I'm sure Boeing would would keep the assembly line running for Emirates and as much as we'd all love more 747s to be built there's just a far more enticing option on the table just below the 747 in capacity is the 7x and it's the plane best suited to replace the A380 at first it feels like an imperfect solution the average A380 carries about 100 more people than the largest 7x variant the 7-9 however there's nothing preventing Boeing from building buing an even bigger version of the plane likely called the 7-10 the 7-10 would be very cost effective according to Boeing Leadership building a bigger variant is pretty straightforward to do it would make room for four additional rows increasing the plane's capacity from 420 to 460 this is still shy of what the A380 can carry but it's about as big of a plane as Emirates can hope to get plus Emirates is already a massive 7X customer with 115 of them on order adding the 7-10 to the fleet is a no-brainer this solution would be a boon for both sides and the timing couldn't be better from Boeing's perspective they've really struggled to sell the tri 7x so a massive order infusion would deliver a much needed Boost from Emirates perspective they plan to phase out the A380 starting in 2035 and if the tri 7-10 is launched in the next year or two that means it'll likely hit the market in the early 2030s allowing Emirates to gently transition its Fleet ultimately this solution wouldn't be quite what Emirates wants but it could be exactly what Emirates needs so what do you guys think should Airbus build an A380 successor or should they just let Boe take Emirates business let me know in the comment section down below thank you so much to my patrons for helping to make this video possible if you like what I do and want to help the channel grow go ahead visit this link right here and as always if you learn something new today leave a like And subscribe to keep learning and until I see you again don't forget to look up

Channel: Coby Explanes

Views: 1,484,666

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Id: RfAjdnyEJxI

Length: 11min 18sec (678 seconds)

Published: Fri Sep 23 2022