"They are not customers until they sign, but there are two very interested parties," Richard Gaona, vice president of Airbus' executive and private aviation unit, said in an interview Monday in Dubai, United Arab Emirates. "It's going to be a private jet," Gaona said, adding that one of the customers was in the Middle East.
The A380 is at least two years late, and spending on the program will result in an $8.2 billion cash shortfall through 2010, Airbus said in October. Airbus' parent, European Aeronautic Defense and Space Co., said Jan. 17 that the unit will record a loss for 2006, the first in its history.
"Airbus could sell 400 Flying Palaces and it won't save the program," said Doug McVitie, managing director of Arran Aerospace, a Dinan, France-based consulting company. "Airbus won't make a lot of money on sales like this because these guys want everything done their own way, so with highly customized planes, you reduce by a large percentage the number of components Airbus could provide."
Airbus began offering its jets configured as business aircraft in 1999, initially using mainly the A319, normally a 124-seat jet. Since 1999 it has doubled the sale of its corporate jets and wants to tap increasing demand, particularly in the Middle East.
The plane maker is expanding from the Airbus Corporate Jetliner, based on the A319, to bigger planes, including the widebody A330 and A340, "and soon the A380 flying palace," it said on its Web site.
The Middle Eastern market is one of the most important in the world as a result of the booming economies of the oil-rich Persian Gulf states, Gaona said. He estimated global demand to be 30 to 35 private aircraft a year, from the 20 aircraft Airbus sold in 2006 and 15 in 2005. Airbus has sold 80 private jets to date.
"Most probably the demand will keep at 30 aircraft a year and I think this is already a good number in the market," Gaona said. The Middle East will represent 30 percent to 40 percent of private jet sales.
Gaona also said Monday that Airbus has won two orders for the private "VIP" versions of its long-haul A340, one for the A340-500 and one for the A340-300. He said one of the buyers is from the Middle East, but he declined to be more specific. "It's too confidential," he said.
Airbus' sales of the four-engine A340 have dwindled in the past two years as customers choose either Airbus' two-engine A330 or The Boeing Co.'s 777, which also has two engines. The additional engines on the A340 increase fuel costs by roughly 10 percent per trip.
Private aviation in the Middle East, the world's third-largest market after the U.S. and Europe, is expected to continue growing at 10 percent to 12 percent annually and be valued at around $800 million in 2012, double its current worth, said Ali al-Naqbi, chairman of the Dubai-based Middle East Business Aviation Association.