FFlyer From United States of America, joined Nov 2001, 732 posts, RR: 0 Posted (10 years 9 months 3 weeks 1 day 19 hours ago) and read 1811 times:
I touched this in another topic, but thought that the issue is worth mentioning on its own:
The US dollar has devaluated remarkably against the Euro lately. Must be several % units. Actually the dollar was overvalued for many years (and still is, but less so).
This gives Boeing an advantage in pricing. They had really suffered from the high dollar rate and this might mean that the orders start to come and the profits improve. That's how it is; in poor economy the currency rates go down, but that is good for export businesses.
Anyone has the time to look for the rate figures? If it is 5% (in a year) it is a lot of $$'s and if even more....
FFlyer From United States of America, joined Nov 2001, 732 posts, RR: 0 Reply 4, posted (10 years 9 months 3 weeks 1 day 17 hours ago) and read 1696 times:
I should have used another expression. Actually the situation means that Airbus is loosing its advantage in pricing (Boeing not getting it), when the dollar rate is normalizing. The playing field is becoming more even in that respect.
Spacepope From Vatican City, joined Dec 1999, 2813 posts, RR: 1 Reply 7, posted (10 years 9 months 3 weeks 1 day 17 hours ago) and read 1650 times:
In agreement with Saintsman (what's up with the religious thing here? hehe) I have read recently that Airbus does indeed sell in dollars, but much of its expenses are in euros. If this is the case, then every time the dollar drops, so do their profits. Boeing deals strictly with dollars, so this fluctuation is not felt. Now, this is overly simplistic, since many components for both manufacturers are sourced from overseas. The only place that I can see Boeing having too much of an advantage is in labour costs.
FFlyer From United States of America, joined Nov 2001, 732 posts, RR: 0 Reply 8, posted (10 years 9 months 3 weeks 1 day 16 hours ago) and read 1628 times:
Even though you sell in dollars you have to sell those dollars to get your local currency. With the same $ amount you get less of Euros. Boeing on the other hand gets more dollars if they sell in Euros or in any other client's currency. But when they obviosly sell in dollars, the same plane is cheaper for an overseas client - or Boeing might be able to raise the price tags (in principle).
If Airbus sells in dollars, they might want to keep that money in dollar accounts, but not for ever.
Greg From United Kingdom, joined May 2005, 0 posts, RR: 0 Reply 9, posted (10 years 9 months 3 weeks 1 day 16 hours ago) and read 1607 times:
The exchange rate reversal goes hand in hand with Boeing's initiative in strengthening their financing arm. It's been a much neglected area--relying primarily on the EX/IM Bank, World Bank (or such) to hedge any big currency differences.
To me this means they intend to be very competitive in both prices AND financing.
Airbus has been brilliant in this area in the last five years. Their financial folks are far more astute than Boeings. It appears that the field will be leveled a bit more with this initiative.
Spacepope From Vatican City, joined Dec 1999, 2813 posts, RR: 1 Reply 10, posted (10 years 9 months 3 weeks 1 day 15 hours ago) and read 1559 times:
I found an article that sheds some light on this. The last couple sentences state that Airbus sells aircraft in dollars, but about 50% of its costs are in euros, giving Boeing a comparative advantage in areas where they compete (commercial aircraft manufacture).
Prebennorholm From Denmark, joined Mar 2000, 6131 posts, RR: 55 Reply 13, posted (10 years 9 months 3 weeks 1 day 13 hours ago) and read 1497 times:
LJ: The trading currency in aviation is still the USD and European / Japanese suppliers will probably quote prices in USD and not in EUR.
Oh yes, that's right. But it doesn't matter at all. Any European company producing stuff for for instance Boeing, they may write the invoice in $$, but they will either:
- write a $$ invoice amount big enough to cover Euro costs and profit
- or switch to other customers/products who are willing to pay that amount
- or go bust.
But these currency fluctuations are quite trivial. Those of us, who can remember five years back, will know that at that time the Euro cost 1,18 dollar. We didn't have the Euro coins yet, but that doesn't matter at all. Then it dropped to less than 0,90, while it is now back to roughly 1,10.
Always keep your number of landings equal to your number of take-offs, Preben Norholm