Airbus is in deep do-do (2). The company that was heralded as the role model of a European Corporation, is well, getting bogged down in the reality of Europe. If there is one thing that the European governments and the American Federal government share it’s getting bogged down in details and bickering. Conventional wisdom says that Airbus is a dud stock! After all there are financial problems, A380 shipping problems, and let’s not even talk about the hen pecking between France and Germany.
The A380 was supposed to be the flagship product for Airbus. It was supposed to revolutionize air travel. The A380 will carry at least 555 with a maximum of 853 people, and that scares me. To understand the dimensions of this size, while waiting for a plane at the Frankfurt airport I was timing how fast a 747’s luggage can be unloaded. If you have ever seen the 747 unloaded there are no individual pieces of luggage, instead huge boxes are mechanically transported off the plane. A 747 can carry a maximum of approx 524 people, and unloading this particular 747 required 28 minutes. Extrapolating passenger count, I am guessing an A380 will require about 45 minutes to empty. Think about that, imagine waiting over an hour for your luggage to come rolling down the conveyor belt!
Now imagine trying to board a plane of such dimensions. The A380 is an example of cattle class where the only solution to boarding will be to herd people. And of course the airports that are already stressed with too many travelers are going to have a field day with a dozen A380’s on the tarmac. The economics of this beast for traveling is horrible, and I for one am going to avoid this beast like the plague.
Yet I am bullish on EADS, Airbus, and the A380. The reason why I am bullish relates to a topic my sister and I discussed. It seems Ecuador is trying to become one of the world’s largest rose producers. As I talked to her about this a light-bulb went off. Roses cannot be shipped by water, but have to be shipped by air. And companies like Fedex, and UPS do quite a bit of shipping. Recently UPS expanded its European operations at the Cologne/Boon hub. The Cologne Boon hub is a small airport, but UPS does fly quite a few flights. This asks the question are Fedex and UPS buying A380’s? Yes they are (1,2).
The fact that FedEx and UPS are interested in the A380 should tell us that shipping could be revolutionized. The A380 has intercontinental reach with a huge payload while still remaining efficient, meaning kiwi’s from New Zealand could be shipped to a local European or North American market within 24 hours. It will bring new meaning to freshness and globalization. It will also mean that I in the future could buy my computer directly from Asia, instead of a middle person in my local market. That monetary potential should make us all bullish on the A380, and the shipping companies. Though, it does not mean I will buy Airbus stock tomorrow, but might later on.