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A380-How Many Sold W/O Costumer Discount?  
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Posted (8 years 4 months 2 weeks 1 day 7 hours ago) and read 3826 times:

I am curious to find out how long aircraft manufactures usaully offer the Launch costumer discounts for new aircraft types to Airlines ? And how many A380s have been sold without the discount ?

How many for the A380 , 10, 20 , 100 ???

Halibut

[Edited 2006-03-21 17:12:26]

17 replies: All unread, jump to last
 
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 1, posted (8 years 4 months 2 weeks 23 hours ago) and read 3671 times:

This article confirms 40% discounts on the A380 at outset:-

"BusinessWeek has learned that the company is giving extraordinarily generous terms to early buyers. It's selling the cargo model of the A380 for as low as $133 million and the passenger model for just over $140 million--about 40% off list prices and less than the going rate of $140 million to $150 million for Boeing's 747. Airbus is accepting down payments as low as $500,000 per plane while giving customers the option of canceling orders 12 months before delivery without customary penalties. Airbus has offered lenient terms to buyers of established models before. But experts say it's unusual to offer them on a new plane."

http://www.businessweek.com/2001/01_10/b3722107.htm

Gellman's 'Project Appraisal' (revised to July 2004) reckoned 40% discounts on the first 60, 30% on the next 60, and 20% thereafter:-

"The price charged to launch customers for the passenger version of the A380 is $144,000,000. The freighter brings $150,000,000. Fifty passenger aircraft will be delivered to launch customers at the price shown above as well as ten freighters. These represent discounts of 40 per cent (40%) from “catalog” prices for the A380 of $240,000,000 and $250,000,000 for passenger and freighter aircraft, respectively. Beyond these early deliveries, for the next 60 aircraft (50 passenger and ten freighters), prices will be $168,000,000 and $175,000,000, respectively. Thereafter, A380s will be sold at an average discount from catalog of 20 per cent (20%). This results in prices of $192,000,000 and $200,000,000."



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAreopagus From United States of America, joined Sep 2001, 1369 posts, RR: 1
Reply 2, posted (8 years 4 months 2 weeks 22 hours ago) and read 3621 times:

My daughter's sister in law is a costumer, for she sews costumes for the ballet. I wonder if she'd be interested in being a costumer for the 380? Hmm, that would be a big job, wouldn't it?  spin 

User currently offlineQANTASforever From , joined Dec 1969, posts, RR:
Reply 3, posted (8 years 4 months 2 weeks 21 hours ago) and read 3574 times:

Quoting Areopagus (Reply 2):
My daughter's sister in law is a costumer, for she sews costumes for the ballet. I wonder if she'd be interested in being a costumer for the 380? Hmm, that would be a big job, wouldn't it?

Feather boa, some glittered satin - could look good. Not too sure about what the drag (ha!) would do to fuel costs.

QFF


User currently offlineMariner From New Zealand, joined Nov 2001, 25020 posts, RR: 85
Reply 4, posted (8 years 4 months 2 weeks 21 hours ago) and read 3568 times:
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Quoting NAV20 (Reply 1):
This article confirms 40% discounts on the A380 at outset:-

40% is a standard launch customer discount. Frontier got about that for the A318.

Rumors are that Boeing gave ANA a "significant discount" for the 787:

http://www.answers.com/topic/boeing-787

"The 787-8 variant was priced at a list price of $120 million per aircraft, surprising the industry, which was expecting a much higher price tag. Like launch customers of past aircraft, ANA is rumored to have received a significant discount. This may never be easily confirmed, but the practice is very common in the aviation industry."

cheers

mariner



aeternum nauta
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2825 posts, RR: 42
Reply 5, posted (8 years 4 months 2 weeks 21 hours ago) and read 3557 times:

A lot of this depends on how much Airbus believed their own sales projection. Launch discounts are typically done in waves. Each launch on each contintent at a certain bracket, then a number of follow on orders at a different bracket, then list price. Airbus launched the A3XX before 9/11, before SARS and before the .COM bubble. Their sales projections at that point had to look drastically different from what is currently being ordered. Therefore I wouldn't find it all too suprising to find out that most/all of the current orders (before the recent UPS orders) were at sigificant discounts.

User currently offlineSonic67 From United States of America, joined Jan 2005, 292 posts, RR: 0
Reply 6, posted (8 years 4 months 2 weeks 21 hours ago) and read 3533 times:

It almost seems like a used car lot where the sticker pries means nothing making you haggling over a price. Do you think that the B & A sales people play the same game of quoting you a price then when your not happy with it talking to the manger in the back office to ask for better deal then try to screw you with the financing later?

 Big grin


User currently offlineZeke From Hong Kong, joined Dec 2006, 8884 posts, RR: 75
Reply 7, posted (8 years 4 months 2 weeks 20 hours ago) and read 3489 times:

I am not aware of any aircraft sold by A or B to be sold at "list price".

What can cloud the "discount" is the "list price" is for everything, customers may elect just to buy the airframe and get the powerplants and APU "power by the hour". So effectively buy the airframe, and lease the engines.

For the 380, one could assume you could get the airframe only for less than US$200 million if you were to lease the engines from a third party.

Understand the current "list price" for the A380 is US$295 million, some of the numbers by BusinessWeek seem a little low.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 8, posted (8 years 4 months 2 weeks 20 hours ago) and read 3440 times:

Quoting Zeke (Reply 7):
Understand the current "list price" for the A380 is US$295 million, some of the numbers by BusinessWeek seem a little low.

Not surprising, Zeke - the article is dated 24th. March 2001.  Smile

Additionally, from memory, the $US bought about Euro 1.20 at the time. The prices would have looked pretty good then, Airbus' cost estimates would have been much lower, and in those days they were expecting to achieve delivery in early 2006. And 9/11 hadn't happened. In all fairness, Airbus hasn't had the best of luck with this project.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineEK413 From Australia, joined Nov 2003, 4872 posts, RR: 4
Reply 9, posted (8 years 4 months 2 weeks 17 hours ago) and read 3377 times:

Hmmm...Let's see....Qantas received a neat package when they purchased 12 A380's & 15 options....The package included 4 A330-200s & 10 A330-300's with free rego & no more to pay!  Smile  Wink  Smile
I believe Airbus even included cockpit seats seat covers free of charge  Wink
Great package if you ask me....

EK413



Good evening, ladies and gentlemen. We are tonight’s entertainment!
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9981 posts, RR: 96
Reply 10, posted (8 years 4 months 2 weeks 16 hours ago) and read 3348 times:
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Quoting NAV20 (Reply 1):
Thereafter, A380s will be sold at an average discount from catalog of 20 per cent (20%)

Just shows how much Gellman knows!
What idiot would accept only a 20% discount off list? For any aircraft?

Of course, Gellman's numbers might even have been remotely meaningful if he'd been anywhere near with his estimate of cost.
Fortunately, he was miles out  Wink

To answer your question, Halibut, I don't think you'll ever see an A380, or any other aircraft for that matter sold without a discount.

Should another airline come along with a 20 -30 frame order (God Forbid!), they'll get 40% - 45% discounts too.
Shenzhen sounded pretty authoritative about China getting 47% discounts for its A320's (although this wasn't backed up in any way), and that's after nearly 5000 have been ordered.
If A380 was only attracting 40% discounts for launch, I'd say it had done pretty well in that context, wouldn't you?

Quoting Zeke (Reply 7):
Understand the current "list price" for the A380 is US$295 million, some of the numbers by BusinessWeek seem a little low.

List back in 2001 was $240m - $245m. Businessweek's numbers won't be far away. Anyone buying a reasonable number of A380's today would expect to pay c$200m - $220m on average per frame.
Don't panic though. That's no different to the percentages on any other frame  Smile

Whether Businessweek was accurate regarding "loose order conditions" is a moot point, I mean all of the orders for the "overweight, underperforming, unwinged, cramped, hurricane creating, 8 months's late total disaster of an aircraft"still stand, even after all the negative press.  Wink

BTW this topic is SO old hat it's embarrasing. Can we talk about something a bit more fresh?
Regards


User currently offlineMonteycarlos From Australia, joined Mar 2005, 2107 posts, RR: 29
Reply 11, posted (8 years 4 months 2 weeks 15 hours ago) and read 3253 times:

Quoting NAV20 (Reply 8):
Additionally, from memory, the $US bought about Euro 1.20 at the time.

Who buys A380's in US Dollars? haha. Just kidding Nav. How have you been?

Quoting Astuteman (Reply 10):
Just shows how much Gellman knows!

Well its interesting reading that report now, with the knowledge of the current market position of the A380 and its physical performance. Again, it was a piece of fiction to begin with.



It's a beautiful night to fly like a phoenix...
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 12, posted (8 years 4 months 2 weeks 12 hours ago) and read 3137 times:

Interesting indeed .

Quoting Astuteman (Reply 10):
To answer your question, Halibut, I don't think you'll ever see an A380, or any other aircraft for that matter sold without a discount.

Astuteman ,
I was awear of that & thanks for the indepth reply . Perhaps I should have I have asked " have any A380's been sold at a price that would have have resulted in a profit for Airbus " ????

Halibut


User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 4 months 2 weeks 2 hours ago) and read 2969 times:

Quoting Halibut (Reply 12):
" have any A380's been sold at a price that would have have resulted in a profit for Airbus " ????

Anyone have any idea on this ?

 confused 

Halibut


User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 14, posted (8 years 4 months 2 weeks 1 hour ago) and read 2944 times:

There probably has never been a single airframe sold at list price by any manufacturer to any end user.

N


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9981 posts, RR: 96
Reply 15, posted (8 years 4 months 2 weeks ago) and read 2881 times:
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Quoting Halibut (Reply 13):
Quoting Halibut (Reply 12):
" have any A380's been sold at a price that would have have resulted in a profit for Airbus " ????

Anyone have any idea on this ?

I've got some comments but they're not an answer, Halibut.

I've seen nothing that particularly says that discounting on the A380 up to now has been any different to the discounting strategies on other aircraft programmes. To date, those strategies deliver c 10% - 11% operating margin for Airbus, and an "underlying" margin of 7% - 8% for Boeing (i.e. ignoring the effect of strikes etc).
I personally expect both of these to stay at (A) or reach (B) double figures for the next 5 years or so.

I've seen a fair amount of data and evidence (not proof) that suggest that Gellman was some $30m-$40m over in his estimate of A380 production cost.
Commercial confidentiality prevents more expansion (yes I know, how can I be trusted  Yeah sure, but keep reading - it may not matter)

I'm uncomfortable that this figure gives a clear view even if it is more representative.

There are a number of things that will influence the "break-even" price of an A380:-

1. Despite hedging, Airbus are exposed to some currency fluctuation exposure, so the B/E price may move between contract award + delivery.
2. Because of "fixed" company overheads, ANY throughput change affects pricing. EG raising A320 production from 25 frames/month to 30 frames/month could reduce the break-even price for an A380 by some $5m or so, as an increasing portion of corporate costs is borne by the A320. If throughput changes between Contract award and delivery, so does break-even pricing.
3. R+D is a "fixed" overhead i.e. not directly related to throughput. Airbus R+D has been around $2Bn - $2.1Bn for 3 years now. In that time, it has fallen from 9% of turnover to 6% of turnover, because turnover has gone up. Ergo, the break-even price of an A380 (and every other frame) has fallen 3% in the period.
4. I detect an increasing trend for airframers to discount more up front, offset by greater support and spares involvement downstream (much like the engine manufacturers already have) - others may have a view on this.
5. I also detect a movement towards increased levels of customer financing by the airframers that may result in fairly positive cashflows/profitability. (again, others may wish to comment)
6. Productivity gains made between contract award and delivery will alter the break-even cost (and are)
7. The escalator clauses placed in the contract, and their relation to real price index increases can alter the break-even cost.

Obviously both Airframers will have some forward view of many of these influences, but I have to assume that some pricing adjustments get made year-on-year to account for some of these items not quite panning out as planned.
AFAIK, it's entirely possible for an A380 frame sold below cost in 2001 to make quite strong profit for Airbus a) at the time of delivery, and possibly b) post-delivery also.
Obviously the converse is also possible (and undoubtedly happens). Judging by the financial performance of both Boeing and Airbus, these guys get it right more often than they get it wrong.

I apologise if this is a long-winded way of saying "I'm not sure if there actually IS an answer to your question, except for "it depends""....

It's the only sensible (I hope) answer that I personally can come up with. As an aside, I think we are frequently guilty on A-net of trivialising "profitability" relating to a particular sale. I suspect the real answers are much more convoluted than we might think.  Smile

Regards


User currently offlineSwissy From Switzerland, joined Jan 2005, 1734 posts, RR: 4
Reply 16, posted (8 years 4 months 2 weeks ago) and read 2862 times:

[quote=Sonic67,reply=6]It almost seems like a used car lot where the sticker pries means nothing making you haggling over a price. Do you think that the B & A sales people play the same game of quoting you a price then when your not happy with it talking to the manger in the back office to ask for better deal then try to screw you with the financing later?

Agree 100%, discount is given out by all aircraft manufacturer....
 cry 
[quote=Halibut,reply=13]Quoting Halibut (Reply 12):
" have any A380's been sold at a price that would have have resulted in a profit for Airbus " ????

Anyone have any idea on this ?

What is your point ?????

Cheers,


User currently offlinePlaneDane From , joined Dec 1969, posts, RR:
Reply 17, posted (8 years 4 months 1 week 6 days 18 hours ago) and read 2773 times:

Quoting Gigneil (Reply 14):
There probably has never been a single airframe sold at list price by any manufacturer to any end user.

How about the early years of the B747-400? The airlines were standing in line to order that plane at the time.


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