Airbus is still bullish on its A380 jumbo

Associated Press

FRANKFURT, Germany —This wouldn’t seem like the best time to be selling the world’s biggest passenger jet. Airlines are slashing staff, cutting routes and idling planes.

But Airbus insists its planned 555-seat jumbo jet, the A380, will soar from the drawing board into the sky on schedule, despite the dramatic airline downturn after the Sept. 11 terror attacks on the United States.

Aimed at dislodging Boeing’s Everett-built 747 as the dominant jumbo, the A380 is a prestige project in the European jet maker’s long-running battle with its Chicago-based competitor. Not surprisingly, Airbus views the current slump as temporary turbulence.

"We’ll see a repeat of what happened after the Gulf War. You had a sharp dropoff in traffic in 1990-91, but in less than 12 months things were back where they were before the war," Airbus chief commercial officer John Leahy said in a recent interview.

Airbus says the $250 million plane with two wide-body decks will make its first flight as scheduled in 2004 and enter service in 2006. The company also is sticking with its prediction of steady growth in passenger traffic and a solid market for big airplanes toward 2010 and beyond.

"The program is very much on track," Leahy said.

Still, Germany’s Lufthansa put talks about an order of up to 15 planes on hold after Sept. 11 as part of a freeze on all big investments. But Airbus says 10 other companies that have decided to buy the first 67 planes remain on board.

The A380’s selling points include comfort on long flights — it is supposed to allow wider seats than the 747 — and two below-deck compartments that could be used for money-spinning casinos and duty-free shops.

Some aviation analysts are skeptical, saying the plane is more of a gamble than ever and may never pay back its development and production costs.

Richard Aboulafia, an industry watcher at Teal Group in Fairfax, Va., predicts the flat world economy will sap sales of Airbus’ current line of jets, squeezing earnings just as the A380’s estimated $10.7 billion development costs kick in.

"If those revenue expectations are dashed, then that money has to come out of profits," Aboulafia said. "I’m not so sure the plane will be built on time."

He also said that Airbus is discounting the airplane so deeply that even if sales are good, the company could still lose money on it.

Airbus offered substantial discounts for locking up early orders, a standard industry practice. The company says it’s charging enough to make money.

Already signed up as buyers are Air France, leasing company International Lease Finance Corp., Quantas, Singapore Airlines, Virgin, Emirates Airlines, Qatar Airlines and Federal Express.

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