A good friend of mine is a real airplane fanatic. Upon walking into the National Air & Space Museum in Washington last year, he began hyperventilating at the enormity and diversity of the displays. Really. Although I'm not a plane nut like him, even I can appreciate the technological achievement epitomized by the new Airbus A380 "superjumbo" plane.
The plane is enormous. The double-decker, three-cabin design features four aisles to move some 555 passengers and a wingspan some 262 feet wide. Its tail stands seven stories high, and the aircraft is so large that airports such as New York's Kennedy Airport will have to be remodeled to accommodate it. It is going to have so much space that a shopping mall, complete with stores, bars, casinos, and even nurseries, is planned. Virgin Atlantic's Richard Branson has ordered six of the behemoths and plans to have private cabins offering double beds installed as amenities.
Air France (NYSE:AKH) and Singapore Air (OTC BB: SPAAF) have also placed orders for the plane, while FedEx (NYSE:FDX) and United Parcel Service (NYSE:UPS) have ordered the cargo-carrying versions.
The A380 is being hailed as a technological milestone in civil aviation history. More to the point, it is being viewed as a resurgence of European dominance; Airbus surpassed Boeing (NYSE:BA) as the No. 1 maker of airplanes in 2003. That may be, but it's not the whole view.
Boeing, surviving as it does on government contracts, is often subject to the vagaries of political whim, and occasionally it brings on the bad karma itself. But Airbus is partially a government-subsidized business. Airbus is 80% owned by EADS, an agglomeration of private and state interests, including the governments of France, Germany, and Spain. Thus the $13 billion development project to build the A380 -- $3 billion over budget -- is financed by the taxpayers in those countries.
While demand for the planes is ahead of expectations, with firm orders for 139 of them in place and a total of 700 expected, there's no guarantee Airbus will not run into a strong headwind. Not every airport can accommodate the plane. LaGuardia Airport would have its runway piers buckle if a fully loaded plane -- which weighs in at 1.2 million pounds -- were to land on its runway. Only major airports in the U.S., such as Los Angeles International or Chicago's O'Hare, can handle the plane. Even international airports such as Heathrow in London have to undertake multimillion-dollar improvements so the plane can taxi in and out.
While demand for the plane might be high, airlines are cash-strapped, particularly those in the U.S., which have not ordered any of the planes. At $280 million apiece, they're 40% more expensive than the Boeing 747 they're attempting to supplant. Recouping that money will mean that airlines install fewer frills. Stripped of the amenities, they might be able to cram 800 passengers inside, which would create a logistical nightmare of getting all those people on and off the plane without interminable waits.
The prototype for the colossal airplane was unveiled today in France and test flights will begin in March. It's not expected they'll actually begin commercial flights until 2006. While unproven, unlike the 35-year history of the 747, one can still marvel at the feat Airbus accomplished in bringing it to fruition. I just hope my friend doesn't pass out if gets to see one up close.
Fool contributor Rich Duprey will be visiting the National Air & Space Museum in February. He does not own any of the stocks mentioned in this article.
