Battle of the giants

The Airbus A3XX project has been slow to get off the ground, but with an official launch announcement expected this week, the complex multinational project now looks a dead certainty. And rival Boeing, at first sceptical about a super jumbo, has started t

The battle for domination of the commercial airline market is set to intensify if, as expected, Airbus Industries this week announces that it will put the A3XX super jumbo into production.

A much-trailed launch at the Berlin air show earlier this month did not happen. But after months of intense negotiations between the Airbus partners over the creation of a single corporate entity, the consortium insists the project is still on course to launch this year.

Airbus has already been working on the project for four years, with costs running into $500m, though the total project cost will reach $12bn. The result will be a 555-seater double decker super-jumbo, capable of carrying nearly 150 more passengers than the plane it is being targeted against: the venerable Boeing 747. As the largest plane in Boeing’s fleet, the 747 has ruled the skies for over 30 years in the high-volume passenger and freighter market.

Until recently, Boeing has been vehement in its claims that there is no requirement for an aircraft the size of the A3XX, claiming the market is not there. But an increasing number of airlines are committing to the A3XX. There are now eight, Airbus says, of which four have been named: Emirates, Singapore Airlines, Air France, and Virgin Atlantic, along with leasing firm ILFC. All four have signed letters of intent, and total orders from these and the other three unnamed airlines now amount to 50.

Boeing, somewhat belatedly, has changed its tack. It is expected to announce a launch customer for its own super jumbo project – in fact a `stretch’ version of the 747, called the 747X, with the forward upper deck extended rearwards over the length of the plane to make a 500-seat aircraft. The announcement is scheduled for the Farnborough airshow in late July.

`We are assuming that the A3XX will be launched but we believe we have an aeroplane that meets the requirements of the market,’ Phil Condit, chairman of Boeing, says. `We would be willing to proceed with the 747X should sufficient customer interest develop.’

The A3XX will have a list price of $218-$240m, about $40m more expensive than a 747, although Airbus is reportedly offering `handy’ airframe discounts to launch customers.

Boeing executives think the A3XX’s price should be even higher as it is being subsidised by government handouts – such as the British government’s launch aid loan of £520m to BAE Systems.

Despite the ongoing war of words both firms are now examining the potential markets for the aircraft. The main markets are likely to be for the transatlantic, transpacific, Asia-Europe and within-Asia routes – all currently served by the 747. The market is concentrated: both geographically, with over half the new aircraft expected to go to airlines based in the Asia-Pacific region, and in terms of customers, with 20 airlines taking more than 75% of the aircraft.

Airbus claims there is a $320bn market waiting for the arrival of the A3XX. Analysts have calculated that it will have to sell 600 planes (about a third of this market) just to break even, though senior executives within Airbus say the figure is `substantially’ less.

For the airlines currently being wooed by Airbus in an energetic global marketing push, the break-even is measured in passenger numbers, and the economies of scale from shifting large numbers of passengers in one aircraft is the crux of the business case.

Here’s the pitch: Airbus has set the target of a 15-20% reduction in the operating cost of the A3XX measured against the 747. For airlines, this makes the break-even point 323 passengers – just 58% utilisation, Airbus is claiming – leaving 232 seats to be sold to generate profit. This compares to a break-even load of 290 passengers (and a profit margin of 123 seats) on a 747.

In its basic configuration, the A3XX-100, as the first version has been designated, will be a 550-seat aircraft – the Boeing 747-400 seats just over 400 people. The Airbus will have a range of 14,200km and will be able to carry a full passenger load between Asia and Europe, from Europe to the east coast of the US, and on most transpacific routes. The extended range A3XX-100R, which will follow, will be able to fly non-stop from the east coast of the US to almost all destinations in Asia.

All this extra size has created some dramatic engineering challenges. The biggest version of the plane will weigh up to 590 tonnes on take-off, which is 150 tonnes more than the 747. Part of the design phase has involved the creation of a massive vehicle called a turtle that demonstrated that this weight could be spread over the undercarriage without destroying runways.

Another factor has been current airport infrastructure. Airbus has designed the A3XX to operate on most existing airport layouts. Despite its size, the runway length required for the plane will be no greater than that needed for the 747-400. Some of the world’s airports are already building terminals that will cope with the double deck height.

Cruise ship style

The twin decks make the A3XX the first aircraft to feature two wide-body cabins running the full length of the aircraft with wide-access stairs both forward and aft, evoking the style of a cruise ship. In terms of traditional business and first class travel, both cabins can be fitted with wider seats than those found in the largest aircraft built to date. But the potential for what to do with the extra space has got many designers’ imaginations working overtime.

There has been talk of in-flight health clubs, gyms, restaurants and a medical centre, as well as sleeping quarters. In reality, airlines will be able to boost the profitable business class space to a maximum, while serving up hundreds of economy class seats on the same flight.

While the aircraft is scheduled to come into service in mid-to-late 2005, this date is starting to get pushed further back. Airbus has set a clear timetable for the A3XX project, but it does not go into production until the Airbus Integrated Company – a single commercial entity to replace Airbus Industrie’s current loose association of companies – is established. Wrangles over this have delayed the move from concept to development. At present, 80% is owned by EADS – the amalgamation of Germany’s DaimlerChrysler Aerospace, Spain’s Casa, and France’s Aerospatiale Matra – which is aiming to float on the European stock markets next month.

The remaining 20% is in the hands of BAE Systems, which has been in negotiations with Airbus over its profit share from the venture, which it senses is becoming increasingly controlled by its continental European partners, and over its freedom to work with rivals such as Boeing. BAE’s involvement remains crucial for UK manufacturing:up to 22,000 new jobs could be created here from A3XXwing orders.

Airbus has already twice delayed board meetings intended to give the project the go-ahead. And there has been bickering over how to divide the work – specifically between Aerospatiale and Dasa, fighting their corners for Toulouse and Hamburg respectively as bases for fuselage production.

A further complication comes from the fact that the giant Beluga transport plane is too small to handle the parts of planes that are shuttled between Hamburg and Toulouse. The latest plan is to ship fuselages from Hamburg to Bordeaux, continuing the journey by road to Toulouse.

Such problems will have to be resolved in weeks rather than months – not only to keep the project on schedule, but to show potential purchasers that this is a multinational group that really can get its act together.

Shape of the future: the project, rather than the plane, is set to take off by the end of this year. Before then, wrangles over sharing out the work between national partners must be resolved, the consortium must merge itself into a single corporate entity, and the French, German and Spanish partners will have to float their new EADS company, probably next month. If all that happens, and the orders firm up, the first Airbus A3XX will take off commercially by the end of 2005.