Bizwatch

Still Up In the Air
European planemaker Airbus dominated the skies last week, even as business back on ground hit some turbulence. A crowd of some 30,000 gathered around Toulouse ‘s Blagnac airport to cheer on the successful maiden flight of the super-jumbo A380, the plane Airbus has spent €13.2 billion developing in a bid to eject Boeing’s 747 as the reigning big bird of long-haul air transport. Airbus predicts a 5% annual growth in passenger volume over the next 20 years, which is one reason for the A380’s larger capacity of 555-840 seats, versus the 747’s 416-524 limit. The aircraft, which enters service next year, sports new fuel-efficient technology and larger cargo space, and it’s astoundingly quiet for its size — 73 m long, with a wing span of nearly 80 m. Claiming it can achieve 15-20% cost savings per seat, Airbus has already sold 154 of the 250 planes it says it needs to break even.

But even as the A380’s trial flight unleashed a wave of French and European pride — President Jacques Chirac hustled down to Airbus’ Toulouse headquarters to congratulate staff — the company got a jolt when Air Canada bought 14 of Boeing’s 787 Dreamliners, part of an order worth more than $5 billion. The Dreamliner seats 223-300, and Boeing promises peerless fuel efficiency. Air India ordered 50 Dreamliners of its own for $7 billion. Airbus responded with reminders that the Dreamliner is still in the concept phase, leaving its performance and delivery dates unknown. But the share price of Airbus’ parent, EADS, still dropped 2.35% on analyst fears that Airbus invested too much in the super-jumbo market. “Bulls__t,” Airbus CEO Noël Forgeard said in response.

“I don’t think we’ll really see whether the massive A380 gamble pays off until 2007 and beyond,” comments Joe Gill, head of equity research at Goodbody Stockbrokers in Dublin . “Any sign the A380 won’t pan out will also shape new airport construction, since the 787 can be serviced with the kind of infrastructure we already have.” Either way, airport expansion needs to take off; European airport operators group ACI Europe last week warned of “chaos” if infrastructure fails to expand sufficiently. As long as travel continues to grow, the skies might just be big enough for both models.

Songs In The Keys Of Nokia
Recovering mobile king Nokia last week flew American rhythm-and-soul star Alicia Keys to Amsterdam to help launch the N91, the company’s response to Apple’s iPod music player. Keys dazzled the crowd with piano wizardry and powerful vocals. Nokia boss Jorma Ollila is hoping she can do for the N91 what rocker Sheryl Crow did for the iPod. The stylish device holds 3,000 songs and doubles as a phone. It can fetch tunes from mobile networks and wireless Internet connections; iPod can’t. But the $910 price will probably turn off consumers unless mobile operators subsidize it. IDC analyst Paolo Pescatore wonders if the show was a “last gasp” effort to regain hipness. Nokia lost market share a year ago, but although it’s been scratching back lately, growth in the handset sector is skidding. Ollila predicted Nokia will sell 40 million music phones this year, but for Nokia to win the music mantle, it’s got to out-cool and underprice Apple. — By Mark Halper