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Airbus: Weak Dollar Hurting Costs  
User currently offlineMrComet From Ireland, joined Mar 2005, 561 posts, RR: 8
Posted (8 years 5 months 3 weeks 15 hours ago) and read 2806 times:

Airbus has said they need to cut costs (1.5 billion Euro) to deal with the weak dollar. Will this affect decisions on the A350 and other programs? Why does EADS use the dollar anyway with a strong Euro?

fair use:
=====
"In 2005 the negative impact of the dollar was 720 million euros at the level of EADS and 670 million euros at Airbus ," EADS co-chief executive Noel Forgeard told the company's annual shareholders meeting.

and

Some analysts are nonetheless concerned that dollar exposure will squeeze Airbus as it continues large-scale developments, including a possible redesign of the recently launched A350, which is being outsold by Boeing's 787 Dreamliner.
---

http://today.reuters.com/business/ne...basicIndustries&storyID=nL04594720
[Edited 2006-05-04 17:35:45]

[Edited 2006-05-04 17:37:00]


The dude abides
37 replies: All unread, showing first 25:
 
User currently offlineBoeingBus From United States of America, joined May 2004, 1597 posts, RR: 18
Reply 1, posted (8 years 5 months 3 weeks 15 hours ago) and read 2745 times:

Quoting MrComet (Thread starter):
Why does EADS use the dollar anyway with a strong Euro?

This allows Airbus to better compete with Boeing. Airbus also purchases tons of meterials and parts from the US. Also, these eases any concerns for Airlines concerning currency fluctuations.



Airbus or Boeing - it's all good to me!
User currently offlineScottB From United States of America, joined Jul 2000, 6793 posts, RR: 32
Reply 2, posted (8 years 5 months 3 weeks 15 hours ago) and read 2726 times:

Quoting MrComet (Thread starter):
Why does EADS use the dollar anyway with a strong Euro?

Probably because it's what the customers expect. I'm sure they'd quote a price in Euro if the customers demanded it.


User currently offlineNijltje From Belgium, joined Aug 2005, 241 posts, RR: 0
Reply 3, posted (8 years 5 months 3 weeks 15 hours ago) and read 2690 times:

As Boeing is also buying tons of materials in the EU! So not really an fixed advantage. You can only hope to have a high Euro or Dollar so Boeing will have the advantage for the moment.

User currently offlineBoeingBus From United States of America, joined May 2004, 1597 posts, RR: 18
Reply 4, posted (8 years 5 months 3 weeks 14 hours ago) and read 2661 times:

Quoting Nijltje (Reply 3):
As Boeing is also buying tons of materials in the EU! So not really an fixed advantage. You can only hope to have a high Euro or Dollar so Boeing will have the advantage for the moment.

Yes, but when the A380, the Airbus flagship, is almost 50% US made... Getting paid in dollars for A380 delivery will only have a 50% exposure to the Euro. This is my point...

Global companies will always buy parts from everywhere but Airbus does buy lots and lots parts of the states.



Airbus or Boeing - it's all good to me!
User currently offlineMrComet From Ireland, joined Mar 2005, 561 posts, RR: 8
Reply 5, posted (8 years 5 months 3 weeks 14 hours ago) and read 2648 times:

Quoting BoeingBus (Reply 1):
Probably because it's what the customers expect. I'm sure they'd quote a price in Euro if the customers demanded it.

What is that supposed to mean? Sorry for the rant but I am not sure you have visited the rest of the world lately: EVERYBODY is dropping the dollar like an angry snake. Oil is leaving the dollar...and soon airplanes will leave the dollar. It's unstable and America is bankrupt (although everybody there except most of its Noble-winning economists don't seem to know it yet). The US is what Argentina was -- a country without the political will to curtail spending or raise taxes. The US owes the world $3.7 trillion of its increasingly weak currency -- that's a third of its GNP!!! And it's growing at such a rate the US can't even afford to pay its INTEREST on its debt.

The business trade magazines say the dollar is expected to plunge versus the Euro. Some people might "have to" use it some industries but the dollar but is a last century currency. This will help Boeing over Airbus.

Here is a nice discussion: http://www.epinet.org/content.cfm/Issuebrief203



The dude abides
User currently offlineKen777 From United States of America, joined Mar 2004, 8322 posts, RR: 9
Reply 6, posted (8 years 5 months 3 weeks 14 hours ago) and read 2591 times:

CEOs are paid big dollars to manage problems like this. "Cost cutting" might actually be to purchase materials from countries that have their currency tied to the US$, rather than eliminating people, or the tools they use to make the planes better. It might be investing in increased computer power, or getting better at hedging against the dollar.

They also have to responsibility to improve performance in various Divisions, like Sogerma. AA management actually worked with the unions at their maintenance center in TUL and they all worked together to find ways to improve the performance (especially on the P & L) and save jobs. The result is a maintenance center that is actually profitable and starting to do outside work.

Looks like it's time for Forgeard to earn his pay.


User currently offlineNYCFlyer From United States of America, joined Jan 2005, 1388 posts, RR: 9
Reply 7, posted (8 years 5 months 3 weeks 14 hours ago) and read 2561 times:

The weak dollar obviously helps Boeing and hurts Airbus. Boeing planes are comparatively cheaper for the rest of the world. Therefore, Airbus may feel pressured to lower their prices, and find cost-cutting measures to enable those price cuts. That's what I'm sure this is about.

Quoting MrComet (Reply 5):
What is that supposed to mean? Sorry for the rant but I am not sure you have visited the rest of the world lately: EVERYBODY is dropping the dollar like an angry snake. Oil is leaving the dollar...and soon airplanes will leave the dollar. It's unstable and America is bankrupt (although everybody there except most of its Noble-winning economists don't seem to know it yet). The US is what Argentina was -- a country without the political will to curtail spending or raise taxes. The US owes the world $3.7 trillion of its increasingly weak currency -- that's a third of its GNP!!! And it's growing at such a rate the US can't even afford to pay its INTEREST on its debt.

Despite your rant being wholly off-topic, it's mostly true. But you'd be surprised how many of the world's wealthiest countries run a current account deficit, and those with CA surpluses aren't necessarily better off.


User currently onlineStitch From United States of America, joined Jul 2005, 31101 posts, RR: 85
Reply 8, posted (8 years 5 months 3 weeks 13 hours ago) and read 2447 times:
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Quoting MrComet (Reply 5):
Sorry for the rant but...(s)ome people might "have to" use it some industries but the dollar but is a last century currency. This will help Boeing over Airbus.

You may not like the fact that many of the world's transactions are handled in US currency, but that nonetheless is the fact.

So Airbus has to purchase dollars, just as Japan does, even though in the 1980's when the US economy was also in flames the "experts" said the Yen would become the new world currency.

Airbus has done a magnificent job in hedging the Dollar, which has helped push this issue back as long as it has, but two years ago I remember reading reports that around 2007 Airbus would start to feel the squeeze of a high Euro, just as Boeing did shortly after the Euro's introduction when it was trading below a US dollar.


User currently offlineA319XFW From , joined Dec 1969, posts, RR:
Reply 9, posted (8 years 5 months 3 weeks 12 hours ago) and read 2366 times:

Quoting MrComet (Thread starter):
Why does EADS use the dollar anyway with a strong Euro?

Because aircraft are sold in dollars, too.


User currently offlineSupa7E7 From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 5 months 3 weeks 12 hours ago) and read 2325 times:

Quoting MrComet (Reply 5):
that's a third of its GNP!!! And it's growing at such a rate the US can't even afford to pay its INTEREST on its debt.

So what you are saying is, the US debt is relatively small compared to its enormous GNP. It's a lot of money, but not an unhealthy ratio. Could be paid off in no time. The problem is, the government has no desire to pay it off... because it is a rogue regime.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 11, posted (8 years 5 months 3 weeks 12 hours ago) and read 2306 times:

Quoting Supa7E7 (Reply 10):
So what you are saying is, the US debt is relatively small compared to its enormous GNP. It's a lot of money, but not an unhealthy ratio. Could be paid off in no time. The problem is, the government has no desire to pay it off... because it is a rogue regime.

I guess the German, French, Italian, Japanese and numerous other governments are all rogue regimes as well, as they have greater debt to GDP ratios.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineSaturn5 From United States of America, joined Apr 2006, 313 posts, RR: 0
Reply 12, posted (8 years 5 months 3 weeks 12 hours ago) and read 2306 times:

Quoting Supa7E7 (Reply 10):
off... because it is a rogue regime.

Do you know what "rogue" regime even means?? What kind of nonsense it is.


User currently offlineArt From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 13, posted (8 years 5 months 3 weeks 11 hours ago) and read 2268 times:

Quoting Atmx2000 (Reply 11):
I guess the German, French, Italian, Japanese and numerous other governments are all rogue regimes as well, as they have greater debt to GDP ratios.

You're talking domestic debt, aren't you, not foreign debt? If I remember correctly, Italy's national debt exceeded its GDP.


User currently offlinePoitin From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 5 months 3 weeks 11 hours ago) and read 2259 times:

Quoting A319XFW (Reply 9):
Quoting MrComet (Thread starter):
Why does EADS use the dollar anyway with a strong Euro?

Because aircraft are sold in dollars, too.

A319XFW is quite correct -- airliners and Oil are quoted USD, or at least may be for a while yet. Will the Euro replace the dollar, maybe. We will see.

Airbus has hedged their money until 2007, so the 20% or so increase of the Euro in the last few years has not really hurt them -- yet. But their hedge funds are drying up so unless something changes, Airbus as yet another problem.


User currently offlineSaturn5 From United States of America, joined Apr 2006, 313 posts, RR: 0
Reply 15, posted (8 years 5 months 3 weeks 11 hours ago) and read 2245 times:

I read somewhere that Euro still doesn't have "liquidity" necessary for it to become the standard currency for international transactions. The US dollar is still favored.

User currently offlineLightsaber From United States of America, joined Jan 2005, 13252 posts, RR: 100
Reply 16, posted (8 years 5 months 3 weeks 11 hours ago) and read 2206 times:
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Quoting MrComet (Reply 5):
Some people might "have to" use it some industries but the dollar but is a last century currency.



Quoting Saturn5 (Reply 15):
I read somewhere that Euro still doesn't have "liquidity" necessary for it to become the standard currency for international transactions. The US dollar is still favored.

The liquidity of a currency is based upon the native economy that currency is supported by (GNP) as well as those sattelite economies that trade heavily in that currency.

You might not like the dollar but I still find that almost everywhere in the world two currencies are accepted: The local currency and the dollar. While the dollar is weakening... Until *all* of Europe, including Sweden and Britain, unite under the Euro, there will be more people willing to trade in dollars than Euros.  spin 

I do expect that within 20 years we'll be back to the situation where two currencies are utilized to facilitate world trade. Once upon a time it was the British pound and the dollar. In the future? Its quite possible that Chinese currency will dominate in Asia, the Euro in Europe, and the Dollar in North America. But how will they trade amoung themselves? I expect the dollar will still be strong for that but EU-Asia to be in Euros. Just my  twocents 

Fully on topic: Most non-European countries sign aircraft purchase contracts in dollars. I've yet to hear of a contract from Asia, Australia, South America, or the middle east signed in Euros. If you have a link to one, please share. I have no doubt LH and others now buy aircraft in Euros...

Quoting Supa7E7 (Reply 10):
So what you are saying is, the US debt is relatively small compared to its enormous GNP. It's a lot of money, but not an unhealthy ratio. Could be paid off in no time. The problem is, the government has no desire to pay it off... because it is a rogue regime.

Good god. Congress spends the money! Read the constitution... Man, what have education standards dropped to...

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineBoeingBus From United States of America, joined May 2004, 1597 posts, RR: 18
Reply 17, posted (8 years 5 months 3 weeks 11 hours ago) and read 2161 times:

Quoting Lightsaber (Reply 16):
Good god. Congress spends the money! Read the constitution... Man, what have education standards dropped to...

Well, I personally include congress in this called rogue regime... So Supa7e7 is right... its regime... and not just one person but many idiots running the show.. sad.



Airbus or Boeing - it's all good to me!
User currently offlineMrComet From Ireland, joined Mar 2005, 561 posts, RR: 8
Reply 18, posted (8 years 5 months 3 weeks 10 hours ago) and read 2116 times:

My understanding is that while oil is officially traded on markets in dollars, that there is strong pressure to change this. Many countries work bilaterally directly in euros now which has led to some of the dollars drop. Iran is actually trying to set up a euro-based oil trading exchange. Other ME countries are also planning such exchanges. The problem is not ideological but financial. The Bush regime has allowed relatively wild swings in the dollar which fouls up everybodies world. In the past, the US made many more attempts to keep the dollar steady.

Why this matters is that many countries must keep either dollars (fairly small amounts relatively speaking) or US investments (rather large amounts) to buy oil on the world market. This forces the world to invest in America. Clever. The growth and innovation in US markets made this okay for everyone for years. However, the US debt, currency instability, and a general lack of trust in the people who now run the US economy is making people question that.

Experts say the dollar will drop again significantly because of the US debt. That will force more people to trade in Euros which will pull more international investment out of the US and suddenly no one will be paying to sustain US consumers. It will likely happen very quickly and over a matter of weeks or months. The dollar could drop in half in value.

Boeing, while it might benefit in relative costs, might find the severe resulting recession will be far more damaging than any gains.



The dude abides
User currently offlineSaturn5 From United States of America, joined Apr 2006, 313 posts, RR: 0
Reply 19, posted (8 years 5 months 3 weeks 10 hours ago) and read 2091 times:

Quoting MrComet (Reply 18):
That will force more people to trade in Euros which will pull more international investment out of the US and suddenly no one will be paying to sustain US consumers. It will likely happen very quickly and over a matter of weeks or months

This sort of doomsday scenerio although widely distributed on internet by US-haters (who can't wait to see it happen) has been widely dismissed by most international financial experts writing for magazines like Financial Times, WSJ and Economist. Keep on dreamin ....  Yeah sure


User currently offlineDeltaDC9 From United States of America, joined Apr 2006, 2844 posts, RR: 4
Reply 20, posted (8 years 5 months 3 weeks 10 hours ago) and read 2082 times:

Quoting MrComet (Reply 5):
And it's growing at such a rate the US can't even afford to pay its INTEREST on its debt.

Source?

Quoting NYCFlyer (Reply 7):
. But you'd be surprised how many of the world's wealthiest countries run a current account deficit, and those with CA surpluses aren't necessarily better off.

Exactly, George was wise to allow deficit spending as a rule. George WASHINGTON that is. Seems like 200 years of mostly deficit spending hasn't been all that bad an idea considering the 11 trillion GDP.

Every year there will be expenses like natural disasters, epidemics, and other events that cannot be put in a budget because they may not happen. Because of this, we will always be prone to borrow. That's how the economy works, it is based on debt. How many jobs would be lost if the national debt did not exist? You cant plan for everything, and if you include funds for unforeseen events, they will be spent no matter what.

Quoting Atmx2000 (Reply 11):
I guess the German, French, Italian, Japanese and numerous other governments are all rogue regimes as well, as they have greater debt to GDP ratios.

Debt is an industry that contributes to GDP, ironic ain't it?



Dont take life too seriously because you will never get out of it alive - Bugs Bunny
User currently offlineBraybuddy From Ireland, joined Aug 2004, 5758 posts, RR: 32
Reply 21, posted (8 years 5 months 3 weeks 10 hours ago) and read 2051 times:

Quoting NYCFlyer (Reply 7):
The weak dollar obviously helps Boeing and hurts Airbus

Not necessarily. With 35 per cent of the 787 workshare coming from Japan, plus other components made outside the USA a weak dollar is going to hurt Boeing too. Gone are the days when an aircraft is made in one continent, let alone country.


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 5 months 3 weeks 10 hours ago) and read 2051 times:

Quoting Saturn5 (Reply 19):
This sort of doomsday scenerio although widely distributed on internet by US-haters (who can't wait to see it happen) has been widely dismissed by most international financial experts writing for magazines like Financial Times, WSJ and Economist. Keep on dreamin ....

Ahhh, the good old days. Does remind me of the same talk 20 years ago about Japan. There was a lot of talk about how the US had to change and do things the Japanese way, how Japan was buying all the good properties, etc. And what has happened to Japan in the last 15 years?

There are many different ways of looking at debt. Right now, I owe $250,000 dollars on my house, for example. But I only make a third of that a year. Does it mean that I am spending way beyond my means? No.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 23, posted (8 years 5 months 3 weeks 9 hours ago) and read 1994 times:

Quoting Lightsaber (Reply 16):
I do expect that within 20 years we'll be back to the situation where two currencies are utilized to facilitate world trade. Once upon a time it was the British pound and the dollar. In the future? Its quite possible that Chinese currency will dominate in Asia, the Euro in Europe, and the Dollar in North America. But how will they trade amoung themselves? I expect the dollar will still be strong for that but EU-Asia to be in Euros. Just my

I blame Dr. Sir Alan Greenspan for single-handedly possibly destroying the dollar with his financial policies......or should I say, reckless financial policies......can't say too much of current Federal Reserve Chair Ben Bernanke either, but his "helicopter printing press" doesn't leave me all too sanguine either... no 

Also, removing the dollar from the gold standard didn't help....as the dollar can now basically be considered a form of "fiat currency" backed by the promise of the United States Govt/Federal Reserve.....which by the way, is a scary thought... spin 



"Up the Irons!"
User currently offlineBoomBoom From , joined Dec 1969, posts, RR:
Reply 24, posted (8 years 5 months 3 weeks 9 hours ago) and read 1968 times:

Quoting MrComet (Reply 5):
It's unstable and America is bankrupt (although everybody there except most of its Noble-winning economists don't seem to know it yet). The US is what Argentina was -- a country without the political will to curtail spending or raise taxes.

Oh yes, maybe America should strive to be like Germany and France. High unemployment, low growth, declining population. Or maybe like that bastion of peace and stability, Bosnia and Herzegovina. Yes, that's something to strive for. NOT!


25 Stitch : If it does, China's screwed because we soak up so much of their output. On the other hand, the EU raises all sorts of trade and protectionist barrier
26 Post contains images Lightsaber : Simply put, the US has a quick answer to strengthen the dollar. I think most of us know the biggest weakness to the US economy right now is partially
27 SEAPlane10 : This erroneous tirade ends on an ironic note..."This will help Boeing over Airbus"...I guess Boeing and other related firms have little impact in the
28 MrComet : Don't get me wrong. I am not a US hater as accused. I lived there. I know it well. Allow someone to disagree or criticize without accusing them of ha
29 DeltaDC9 : Your understanding of economics and trade is impressive. Excellent post. I explained in another post somewhere that it is inherently American to embr
30 Post contains images Lightsaber : First, I enjoyed reading your post and thank you for the compliment. I like your analogies on production. I would expand and say that now we have UC
31 Post contains images Zkpilot : What a crock of sh*t... Japan and several other countries actually owe more than their GNP! Yes the US is borrowing at a rate beyond which it should
32 AndesSMF : Then you have a strong way of showin it. By using the word 'rant' and a lot of generalizations about not just US economic problems but complete colla
33 Katekebo : Going back to the original subject.... I think Airbus has realized that the "golden years" are over and there is some tubulence ahead. Their financial
34 DeltaDC9 : I don't think we disagree, my point was that there was no overriding issue that makes one plane significantly better than the other for this use, so
35 Post contains images Lightsaber : I alluded to this in post 26 but you did a much better job of detailing the imbalance and the impact. Thank you. I happen to agree with you. Oh, I wo
36 BoomBoom : I never accused you of being a a US hater. I never called you a hypocrite.
37 Art : Regarding US-China trade and the dollar dropping in value, that would be the same as China revaluing the yuan. Which is what the US wants China to do
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