Airbus spends €263 Million to Keep the A380 Safe because Capitalism makes Safe Airplanes

Posted by PITHOCRATES - May 19th, 2012

Week in Review

Free market capitalism is a beautiful thing.  It’s like a dog having puppies.  You don’t have to do anything but stand back and let it happen (see Airbus Earnings Hit By A380 Wing Cracks by Robert Wall posted 5/15/2012 on Aviation Week).

Airbus is taking another €158 million charge linked to the costs associated with wing component cracking on its A380s.

 That comes on top of a €105 million charge taken in March against 2011 results because of the same problem. “This final retrofit fix is more complex than initially anticipated in March; therefore, the group updated the cost for the retrofit solution leading to an additional charge of € 158 million in the first quarter,” Airbus parent EADS says in releasing its latest results…

Qatar Airways, for instance, has said it will only take A380s once the final fix is installed on its aircraft — the first handover to the Middle East carrier is due next year.

The fix also has hit A380 delivery plans. Airbus has temporarily slowed A380 production, but the impact of that move is not expected to be seen until 2013.

Airbus has a vested interest to make sure their planes are safe.  For an unsafe airplane is very difficult to sell.  Earlier reports stated that these cracks did not affect the safety of these aircraft.  But they have still hurt sales.  And slowed their production. 

Airbus has spent to date some €263 million ($335.85 million) to fix this problem.  Which is quite a sum considering one A380 has reportedly sold for $234 million.  So their spending the money to do what’s necessary to fix this problem.  Spending more than the cost of one A380 so far.  And the reason why they’re doing this is in part to the airworthiness directive issued by the European Aviation Safety Agency grounding A380s.   For you can’t sell an airplane that’s not allowed to fly.  But a customer not taking any more deliveries until the final fix is installed on its aircraft is also a very big incentive.  Because Boeing is out there with their 747.  And Airbus will do whatever necessary to make sure their customers don’t cancel those A380 orders and replace them with 747 orders.

It’s been said before.  Competition makes everything better.  It’s what makes free market capitalism the best system in the world.  And why aircraft built in capitalistic countries are the safest aircrafts in the world.  Because safe airplanes are easier to sell than unsafe airplanes.  And selling airplanes drive profits.  So when your system is based on profits it’s also based on safety.  Because safety drivess profits.  Unlike in the old Soviet Union. 

When they suffered the loss of a state-manufactured aircraft their greatest concern was embarrassment.  Looking inferior to the West.  Their people had no choice but to get on those same airplanes.  Because their state airline had no choice but to use the state-manufactured airplanes.  And the only incentive the state-manufacturer had to spend money on fixing problems was when the costs of those fixes proved to be less than the cost of lost airplanes.  And they would never spend more than the cost of one aircraft to fix a problem that hasn’t caused the loss of a single aircraft.

Airbus has a lot riding on the A380.  It was a very expensive airplane to bring to market.  It has to be a safe airplane to cover their investment costs.  So they will choose to spend what it takes to ensure its safety.  Because that’s what corporations do under capitalism.

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All Airbus A380s to be inspected for Cracks in Wing Brackets

Posted by PITHOCRATES - February 11th, 2012

Week in Review

All Airbus A380s to be inspected for cracks in wing brackets.  They’re not load-bearing but they’re important nonetheless.  These brackets attach the skin of the wing to the wing structural support.  A failure of one of these brackets is not likely to cause a wing to fall off.  But if the surface of the wing peels off it could cause some trouble from severe buffeting to a stall of the wing.  Apparently something Airbus does not believe is likely to happen.  It may be nothing as Airbus sent out a repair kit but didn’t ground the plane.  This may be just ‘erring on the side of caution’.  If one can really say that in aviation (see Safety check ordered for all Airbus A380 jets by The Associated Press posted 2/8/2012 on CBS News).

Europe’s air safety authority [EASA] ordered checks Wednesday on the entire global fleet of Airbus A380 superjumbo jets for cracks on parts inside the wings — extending a previous order for nearly a third of the planes to be inspected…

“These brackets are located on wing ribs which are not main load bearing structure, and, thus, the safe operation of the aircraft is not affected,” Airbus said in a statement. “Nearly 4,000 such brackets are used on the A380 to join the wing-skin to the ribs. Only a handful of brackets per aircraft have been found to have been affected.”

Still, EASA in its directive said that “this condition, if not detected and corrected, could potentially affect the structural integrity of the airplane.”

And here’s why Airbus is probably being honest and doing the right thing.  And probably would have even without the EASA stepping in.

Shares in Airbus parent company EADS were down 1.3 percent at euro26.61 ($35.00) in Wednesday afternoon trading.

If there is a problem and Airbus tries to hide it they have bigger problems on their hands.  For if a plane falls out of the sky because they tried to hide something they’ll be more than a 1.3% drop in the stock price.  For nothing will destroy the profitability of an aircraft manufacturer than an unsafe aircraft.  A state-owned company has no such pressure.  Because they don’t answer to stockholders.  Or have to make a profit.  Airbus does.  So hopefully this is a minor issue to resolve.  And the A380 will continue to fly safely.

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Airbus says Cracks found on A380 are not Serious

Posted by PITHOCRATES - January 21st, 2012

Week in Review

There are few things more dangerous to an airplane than cracks.  Whether in the fuselage.  Or on a wing.  Some horrific accidents were caused by small hairline stress fractures that grew under the stresses and loads of flying.  The greatest loss of life in a single aircraft accident was a 747 flying out of Haneda.  Japan Airlines Flight 123.

On a previous landing the pilot stuck the tail on the runway, requiring repairs on the rear pressure bulkhead.  But they did these repairs incorrectly.  They used a single row of rivets instead of a double row.  As the plane took off and landed the plane pressurized and depressurized putting great stress on that repaired bulkhead.  The metal fatigue produced hairline cracks.  And then on August 12, 1985 after the plane gained altitude and pressurized the rear pressure bulkhead failed and blew out causing an explosive decompression.  The force was so great it tore the tailfin from the plane and took out all four hydraulic control systems.  The plane was uncontrollable.  And crashed killing 520 of the 524 aboard.

So cracks on an airplane are very serious.  And now they found some cracks on the largest commercial jet in service today.  The Airbus A380 (see More cracks found in Airbus A380 wings by Tim Hepher posted 1/19/2012 on Reuters).

Airbus said the cracks were found on a number of “non-critical” brackets inside the wings of two aircraft during routine two-year inspections, after similar flaws showed up in five aircraft in early January.

It said the cracks did not prevent the A380 flying safely, but the Australian engineering body which handles routine servicing and engine checks on the superjumbos operated by Qantas Airways (QAN.AX) said Airbus’s reaction was concerning.

“They (Airbus) have described these as tiny cracks, but every crack starts off as a tiny crack and they can grow very quickly ,” said Stephen Purvinas, Federal Secretary of the Australian Licensed Aircraft Engineers Association.

“I would be worried that Airbus aren’t taking seriously the ever increasing number of cracks being found in the wings of their A380 aircraft .

Now nothing will hurt the sales of an airplane more than a reputation for not being safe.  So if the aircraft was unsafe the manufacturer would normally not try to hide that.  They would instead try to fix the problem as quickly as possible.  This is the miracle of capitalism.  If you produce an inferior product you won’t sell it.  If Boeing had a problem on their 747 they would do everything within their power to fix the problem before something bad could happen.  As would Airbus.  However, Airbus isn’t your run of the mill capitalistic manufacturer.  They are heavily subsidized by their governments.  In what is more state capitalism than free market capitalism.  So Airbus will do the right thing.  Unless pressured by their governments not to.  For political reasons.  Such as maintaining A380 sales to boost their collective ailing economies.

Let’s hope that the governments involved are letting Airbus manage this issue.  They will do the right thing.  For no one in the aircraft community wants any plane to be unsafe.

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