BA faces superjumbo 'threat'

THE launch of the 555-seater A380 superjumbo will spell bad news for British Airways for years to come, whether the carrier decides to buy the new airliner or not, top broker Goldman Sachs is warning the City.

BA is the only major carrier in the world ? apart from the cash-strapped US airlines ? not to sign up to the launch next year of the A380. Chief executive Rod Eddington says he has never been keen on launch products, an in any case BA's debt mountain leaves it without the spending power.

Goldman Sachs aviation analyst Hugo Scott-Gall believes the launch of the A380 will spark a dive in average long-haul fares because of the size of the aircraft. Its launch will pump a large number of spare seats into the market, hitting airlines such as BA which have large fleets of Boeing 747 jumbo jets.

'The A380 is the closest thing the industry has had to category killer since the 747 was launched, and ironically it is the 747 that the A380 is going to kill off,' Scott-Gall said.

He added that the lower costs and 'novelty factor' of the A380 'will lead to a big fall in yields over the rest of this decade for the 747'. The 747 will become much less profitable and BA, as the largest owner of 747s, is 'clearly exposed', Scott-Gall added.

The Goldman Sachs analyst's views appear to be echoed at Boeing, which last night said it was on course to deliver 320 aircraft this year and between 375-385 in 2006. This compares with just 285 in 2004 but still falls well short of the deliveries likely to be achieved by Airbus.

Unlike Airbus, which has spent millions developing the giant A380, Boeing is putting its money into the 787, a much smaller jet which uses 20% less fuel than comparable planes. The new aircraft has 126 orders on file and firm commitments from eight airlines.