Actual Performances vs Forecast / Benchmark 787- Jumbo
The closer approximation to the A380, from either the technical side as well as the type of market served, is the Boeing 747 “Jumbo”. In terms of size the two giants are comparable. Both over 70 meters in length two decks and targeting long distance routes (for both the maximum distance above 8000 nautical miles). Given those similitudes it will be interesting to compare the performances in sales and market penetration. However one caveat would be taking into consideration the different market characteristics of the prosperous markets of 60s and 70s compared to the actual stagnant scenario.
Sales
We compared the sales of the two models (specifically matching the orders received for the first 11 years). It is clear that in both cases after the initial saturation of the premium market segment, sales are slowing down. However in the subsequent years, new clients and new product configurations increased boosted sales again. The difference comparing the two volumes is pretty considerable (357 of 747 units vs 262 of A380 units).

Figure 1 Sales first 11 years comparison
Another approach that the industry is taking in consideration for the market success of an aircraft is the sales benchmarked to the first delivery. This different indicator compares the sales performance aligning data of the two airplanes considering as 0 the year of first flight. This info is fundamental because airline companies are often skeptical of placing orders without having seen the first plane in operation.

Figure 2 Sales comparison benchmark to first plane delivery
In this new view we can notice how differences are more limited. It is noticeable how orders for A380 started way in advance (up to 6 years before the first take off). This phenomenon is due to the suffered genesis of the European aircraft as well as due to the need of the manufacturer to assure a sufficient order basis in order to pursue the venture. In this new view the advantage in sales of Boing is consistently eroded. Overall in the timeframe considered we calculated 262 Airbus vs 281 for Boing.
Given this two prospective how we can consider the actual performances of A380 then? A pivotal point of view would to understand how performances on the total life of the product would look like. The forecast of sales of big twin aisle airplanes for Boing in the next 20 years is 600 units vs the 1,300 calculated by Airbus. Below the detailed figures:

The difference in view is related to the type of hub and spokes model (with more and more people moving in urban areas) vs a more regional setting. In conclusion it is true that A380 sales aren’t performing well as much as its direct competitor. However the success or failure of the venture is tightly related to the market outlook as well as to the speed and willingness to adopt infrastructures to the requirements introduced by the new European very large aircraft. Given this statement are the technical differences among the two airplanes enough to justify the airbus success?
Development and Tech specs
In the 70s 80s and 90s the airplane industry was booming as well as intercontinental flights. The development of Boing was relatively short. Advanced design started in the 1965 and by 1969, following an incredible project schedule, the first airplane has been delivered. Differently to Boing the A380 had a troubled genesis. Ironically the first product development in 1991 included also Boing. Airbus proposed a JV to develop a conjunct study on Very Large Commercial Transport (VLCT). The motivation behind that request were the huge cost of designing a plane from scratch as well as leveraging the experience gathered by the Seattle manufacturer with the 747. Boing decided to stop the collaboration in the 1993. What was the strategy behind that decision? First of all the future A380 would have been a direct competitor of the 747, cannibalizing the internal sales of Boing. Second the market forecasts indicated that the entire industry was moving out from an hub and spoke system to a more capillary infrastructure. This new model would have required less mega planes and more regional planes. Finally the story taught that entering such a niche market with two competitors automatically would make the venture a high risk. The market wouldn’t be big enough to generate enough profits for two players. In the past the introduction of similar planes, Douglas DC-10 and Lockheed L-1011 Tristar, targeting the same niche market killed the performances of both companies.
In the end the A380 was developed independently by Airbus. Without the technical support of Boing Airbus had to design from scratch the aircraft. This venture ended to be incredibly expensive (total cost raised from $10.6B to $15.6B). The soar in cost was linked to an increase in terms of complexity.
Following we reported the main technical figures of the two carriers: Column1 | A380 | 747 | Capacity | 467 (3 class configuration) | 525 (3 class configuration) | Length | 72 M | 76 M | Cabin width | 6.5 M | 6.1 M | Price | $375M | $317M | Cruising speed | 0.85 Mach | 0.86 Mach | Range | 8300 Nautical Miles | 8000 Nautical Miles | Wing span | 79 M | 68 M | Fuel efficiency | 2.9 L (/100 km) | 2.8 L (/100 km) |

The first factor that strikes the attention is the wing span. Specifically the wings should have been totally redesign given the higher weight to carry. This decision impacted dramatically on the commercial success of the aircraft. This technicality required larger runway in order to reach the wingtip clearance needed by the aviation regulation. This small detail made the A380 difficult to adapt to the ecosystem compared to the 747. The airbus was considered a sort of plug and play product, where there were minimal ecosystem adaptations required to adopt that carrier. A380 is a revolution, a revolution that would be justified only if the utilization of this aircraft would be frequent enough by airports and airlines. In order to better understand the steps in the A380 genesis and the technical implications we drilled down that factor as follow.
Production Delays
Since the beginning, the production of A380 has faced many troubles that caused delays in the production of the aircraft. The complexity of the wiring on the airplane, coupled with the degree of customization that is available to the customers, made the production of the aircraft tougher than anticipated.
The technology of the aircraft itself had been proven to be achievable, proven by the flight tests that were done, both above Europe and across the ocean to the United States. However, the production of the aircrafts proved to be a challenge. First, there was no manufacturing facility that was large enough to build the entire plane in one place. The different parts had to be built in different parts of Europe and then transported by barge, air, and trucks to be assembled. To accommodate such huge components, an entire infrastructure had to be created, including special river and seagoing vessels that allow parts to "roll on and roll off," customized port facilities and widened roads. The complex manufacturing process introduces co-innovation risk to assembling the aircrafts. The successful assembly depended not only on the different Airbus factories being able to build their parts in time, but also the transportation methods to be in place to transport those parts around.
Airbus announced the first delay in June 2005, which would reduce the planned deliveries by almost 25% by the end of 2009. A second delay announced a year later would reduce the planned deliveries by an additional 20% around the same timeframe. Another delay, announced just months after the second delay, reduced the planned delivery further by almost 40%. At this point, Airbus was planning to deliver around 40 aircrafts by the end of 2009, around a third of their original plan of 120 aircrafts.

Figure 3. Projection in 2006.
At the end of 2009, only 23 A380s have been delivered.
Break Even
Due to these delays, the costs of producing A380s increased dramatically. The falling exchange rate of Euros towards the US dollar did not help either. Initially, the project should break-even after selling 270 units. After the delays and the Euro setback, the break-even for A380 increased to 420 units. This number could be pushed even higher by the fact that even though the list price of A380 was US$ 404 million in 2013, the actual prices are much lower due to negotiated discounts.
In 2007, Airbus forecasted that there would be 520 deliveries of Very Large Aircrafts (VLAs), a category of aircrafts broken down by size that A380 is a part of, between 2007 and 2016. However, to date, there have only been 111 deliveries of A380. Seven years later, Airbus has only delivered a little more than 20% of its ten-year-projected demand.

Figure 4. Airbus orders and deliveries.
Assuming that the exchange rate stays constant, the manufacturing costs stay the same, the number of orders exceeds 420, and starting in 2014 Airbus would be able to produce the aircraft at its projected maximum speed of 3 aircrafts per month (36 aircrafts per year), Airbus would not break-even until 2022, long after its current projected break-even year of 2015. However, these are all big assumptions. There are no signs of improvement in the Euro zone. Looking at the historical production problems, manufacturing costs are likely going to increase, and the rate at which Airbus is able to produce the aircrafts is never going to reach 36 per year, at least not in the near future. Finally, with all the production problems, lack of demand, and delays, the number of orders might not be sustainable.

Figure 5. Projected production of A380.

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