Airbus A350 Break Even Target Achieved In 2019

Airbus’ long range widebody A350XWB has reached break even point. This means that the costs of setting up the program have been paid back, and the aircraft can now start making the manufacturer money. As it’s only been flying since 2015, a break even within five years is an impressive feat for the European manufacturer.

A350
The A350 has reached ‘break even’ point. Photo: Getty

The A350 breaks even

Airbus announced in its full year earnings release that the A350 program had reached the break even point. The A350 remains a key product for Airbus, and has become a popular choice for long-haul, dense routes that require a modern, efficient solution.

Over the course of 2019, Airbus received orders for 32 A350 aircraft. Right now, the A350 makes up 8% of the Airbus order backlog. A staggering 81% is the ever-popular A320 family of narrowbodies. During the year, Airbus delivered 112 A350s to customers all over the world, including many who were receiving their first of the type.

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British Airways, United States, Airbus A350
British Airways took delivery of its first A350 in 2019. Photo: Tom Boon – Simple Flying

Airbus stated that one of its priorities going forward was to stabilize the profitability of the A350 program. It also estimated that, going forward, the A350 would achieve a monthly delivery rate of nine to 10 aircraft, around what it achieved in 2019.

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What does this mean?

While most people understand that break even means the point where income and cost on a product are in line with each other, the terminology in aviation can be a little trickier to get our heads around. After all, selling airframes at a loss is never a good move, so why does it take time for the program to reach this point?

Air China A350
What does break even actually mean? Photo: Getty

The projected cost to Airbus to manufacture an A350-900, as an example, is $110m. The list price of each aircraft is $317.4m for the -900, and $366.5m for the larger -1000. If Airbus was selling A350s at list price, then it would be making around $200m on each aircraft sold. With the research, development and certification of the A350 program estimated to have cost Airbus €11bn ($12bn), Airbus could have broken even on the overall project with the sale of just 60 aircraft.

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However, that’s not the whole story. As the A350 is a relatively new aircraft, having entered service in 2015, airlines placing early orders would have received a substantial discount on the purchase price. Bulk orders too would have attracted a discount, as would early orders of the larger -1000 which only entered service in 2018.

Over the course of the program, 349 A350s have been delivered in total, a fair few more than our original 60 aircraft break even point. This just goes to show the substantial discounts applied to commercial aircraft orders, that have meant Airbus only just broke even on the program.

A350-1000
The A350 reaching break even within five years of operation is a great sign. Photo: Getty

Do all aircraft break even?

In the majority of cases, an aircraft program will not be sustainable unless it does break even within the first decade or so. Boeing predicted a break even on the 787 after 10 years back in 2011, and is still a way off that point now. Even if it hits 1,000 aircraft delivered in 2020, the break even point keeps being pushed out (the latest estimate was at 1,600 aircraft) so despite its success, the 787 is yet to make Boeing any money.

Airbus’ own white elephant, the Airbus A380, never did break even. With the program coming to an end next year, it never will either. The fact that the A350 has broken even so early in its career is testament to Airbus driving operational efficiencies and sticking to a solid pricing strategy on this aircraft.

A380
The much-loved A380 never did reach break even. Photo: Getty Images

Overall, the A350 reaching break even point in 2019 is a very good sign for the program. The sales figures aren’t huge, so Airbus is clearly making good money on every aircraft it sells in order to achieve this. It’s a great sign for the program going forward, as every A350 Airbus sells from here on in is pure profit for the company once the manufacturing costs have been covered.

What do you think about the A350? Flown it yet? Let us know in the comments.

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Guest

A350 has always been claimed as the best aircraft ever made.
This article proves that “A350 is the best aircraft for not only tech but also for money making”.
And we will see that A220 will be another big success for the Airbus though Pratt & Whitney Engines.

Joe

If Pratt & Whitney pull themselves together and fix those engine issues, there will be no reason not to buy the A220 for many airlines.

Frank

Great article, Joanna. You can now see why an aerospace manufacturer would choose something like a re-tread over a new design. It was just reported by Flight Global that the A220 program will break even around mid decade. You gotta have deep pockets to roll out a new design – just ask Boeing who is some $20 Billion behind on the 787 and is undoubtedly part of the reason why they went with the Max over a clean sheet .

Anonymous

Great article indeed. And that explains a lot about the MAX program rush and the issues Boeing is going through .

Niklas

Fantastic article, and well explain.

James

Amazing to see such a great aircraft break even so early. Really good article as well.

Gerry S

Certainly glad that airlines overwhelmingly refused Airbus first A350 design. They considered it as just another A330 design. Airbus listened, went back to the drawing board and gave them this. Success!….Fully intend to fly on A350. Everyone's using them so no problem there.

Joe

Having flown on several A350s, I can confirm that it is a great aircraft for passengers.

Michael F

In hindsight, simplistically put the originally rejected A350 appears to have re-emerged as the A330NEO which nicely complements the A350.

I do not subscribe the Airbus/Boeing debate as I like both manufacturers however I have taken several A350 flights and agree that (along with the A380) it is the most pleasant aircraft to travel in, either in business and economy, and is far more comfortable that the 787 which I have also flown on several times.

William

Their original A350 was supposed to be a A330 with new engines and a composite wing, somewhat like the B777-X. I think it would have been a fine aircraft. Certainly better fuel burn and range due to the composite wing than the A330neo.

Arthur

Very interesting article. The fact that with just 349 units sold with all the discounts, Airbus reched the break even target, and Boeig with 1,000 units still not make it, tells us that Airbus is more efficient in resource management (at least in the A350 vs. 787 programs).

Nate Dogg

Joanna….how on Earth did you originally estimate the break even at 60 aircraft?? Airbus said way back in 2014 that the BE point was unusually estimated at about 350 units!! The programme cost $11BN so what you actually calculated was selling 60 aircraft to hit that $11BN ? Dohhh!

High Mile Club

She said if the plane was sold at its LISTED price; i.e. the actual amount the aircraft costs without discounts thrown in. All planes are never sold at their exact price, which is why it took five years to reach that point. Do some math, then come back.

Henning

60 aircrafts sold with an net profit of 200 million US dollar each. That’s what she said

Nate Dogg

High Mile Club…..thats the sale price before discount. You are obviously forgetting the cost of building each unit on top of programme cost. Absolutely not a cat in hell chance. $60m of that purchase price is heading to Rolls Royce. The margin on each aircraft after airlines get a huge discount is about 12%. Obviously we know this figure to be around $30m from the programme cost and numbers so far. If someone thought airbus was making $200m profit per frame they could just take a look at the annual profit figures to check how far fetched that is.

Sujay Palsolé

I’ve flown the A350XWB on the transatlantic route from JFK to DOH !! Superb aircraft, silent, great lighting and very good air quality.. !!

Peter Raes

Flown the Ethiopian A350-900 from JNB to ADD. Spacious, quiet and absolutely relaxing flight experience. Really great machine !

John Ebert

Love flying BOS – MUC – SIN with the A-359 !!

Mulder

We have flown in the A350-1000 January 2020 and is a very nice Aircraft however we have had quite a few flights in the A380 and that is a better and not as noisy Aircraft inside!!!

Michael Sheargold

Great article Joanna the one point I’ll add is Airbus CEO has said on a number of occasions that the A350 was possible to produce for the development costs because of A380. Keep up your great work! So excited Qantas made the right decision to bring A350’s to Project Sunrise.

OldestGrumpiest

You need to get it straight. Breakeven is just as you described it earlier, where a product sales price pays for manufacturing of that product. It says nothing about paying off the development costs. That remains a distant goal, and may never be reached. The A380 reached breakeven for a period of 6 to 12 months which left Airbus with a multi-billion euro hole, but it did reach breakeven (look up the old articles). Do not dream that Airbus is in profit on the A350 at this time anymore that Boeing is with the 787 (which is doing much better… Read more »

OldestGrumpiest

For all those who do not like what I am saying, take a look at a knowledgeable writer on the 787 program which ‘broke even’ years ago, but still has over 20 billion in development costs to pay off (Down from an original 30 billion). Airbus still has around the same, but now that Airbus has reached breakeven, it can start paying it off.

https://seekingalpha.com/article/4324981-boeing-787-profits-are-flattening-after-strong-year

William

Airbus has however 3.6 billion in fines, the big loss making A380 to terminate, the A400M big cost over runs. It’s noteworthy that the US Government would have made sure that enough A400M were ordered to keep the aircraft profitable as it did with C17 for Boeing McD. A400M composite Technology made the A350 possible. That’s how the US keeps Boeing strong, by making sure it doesn’t loose on military programs. Airbus now has the successful A320 program, the successful A350 program and I think the marginally successful A330neo program. A220 is a few years away from profit I think.