This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Airbus Hopes Lift With A380

The flight carried 200 passengers, including at least half a dozen executives from airlines that are Airbus customers. Gangwal, for instance, has ordered 100 A320s for Indigo. Also aboard was Dave Barger, president of JetBlue (JBLU - Get Report), which will celebrate the arrival of its 100th A320 on Friday.

"We want this airplane to be wildly successful," Barger said. "A strong Airbus is good for JetBlue and good for the industry. And I think there is definitely a place for (the A380)."

Both Gangwal and Barger compared the A380 to the 747, which was considered far too large to succeed when Boeing (BA - Get Report) introduced it with about 366 seats in 1970. Today, more than 1,350 747s have been sold, some seating as many as 500 passengers.

Storied History, Hopeful Future

The A380 took off Wednesday beside a hangar once occupied by Pan American World Airways, which operated the first commercial 747 flight from Kennedy to London in 1970.

At the time, the DC8 and the Boeing 707 dominated transatlantic travel. But they quickly became obsolete, as the 747's introduction triggered an immediate demand for the aircraft. Airbus COO John Leahy said he expects a similar reaction to the A380's introduction.

"I expect a big ramp-up in 2008, just the way it happened with the 747," Leahy said. By the end of that year, Singapore Airlines and Qantas will fly the A380 in the Pacific, and Emirates will fly it in Europe and Asia. U.S. airlines may even become customers, he said, particularly 747 operators United (UAUA) and Northwest (NWACQ).

"Both are big carriers in the Pacific and this is an Asia airplane," Leahy said. "At some point in time an operator who competes (there) will, I believe, want a competitive aircraft." Are they actual prospects? Leahy, considered one of the world's best aircraft salesmen, allowed that he will have dinner Thursday night with United CEO Glenn Tilton in Chicago.

Airbus estimates that about 1,600 large widebody models will be sold over the next 20 years, and Leahy said Airbus expects to garner more than half the market. But industry experts say Leahy is dreaming because airlines don't want great big airplanes. Instead, they have overwhelmingly endorsed the Boeing 787 Dreamliner, placing nearly 500 orders for the 200 to 300-seat aircraft. "Everybody has been looking for smaller long-range planes," said consultant Richard Aboulafia of the Teal Group.

Flying a plane as big as the A380 means offering less frequent flights, while passengers prefer to have a wide choice of flight times, said consultant Robert Mann. Thus, the A380 makes sense only at highly congested airports like Tokyo Narita and London Heathrow, where access is severely limited. Yet "you can count those sorts of markets on two hands," he said.

Leahy says there is room for both airplanes. And JetBlue's Barger noted: "Boeing and Airbus look at the world totally differently. The question is 'which horse do you bet on?'"

To view an interview with Ted Reed on this story, please click here.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
BA $131.72 0.83%
JBLU $23.70 0.72%
AAPL $112.01 -0.29%
FB $89.13 -0.85%

Markets

Chart of I:DJI
DOW 16,507.92 +156.54 0.96%
S&P 500 1,974.07 +25.21 1.29%
NASDAQ 4,798.0960 +48.1170 1.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs