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Alcoa Take On New A380 Production Delays  
User currently offlineJoni From , joined Dec 1969, posts, RR:
Posted (8 years 4 months 2 weeks 5 days 1 hour ago) and read 5506 times:

"People are going to stick with the aircraft," William Christopher, group president for engineered solutions, told Reuters. "I don't see it changing the underlying market demand for the plane."

http://yahoo.reuters.com/news/articl...13&WTModLoc=HybArt-C1-ArticlePage2

This sounds quite reasonable amid all the clamouring and herd panic that's been going on around this announcement the past few days.

46 replies: All unread, showing first 25:
 
User currently offlineIkramerica From United States of America, joined May 2005, 21544 posts, RR: 59
Reply 1, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5210 times:

Quoting Joni (Thread starter):
This sounds quite reasonable amid all the clamouring and herd panic that's been going on around this announcement the past few days.

Considering Airbus and EADS themselves are fighting and there is talk of a major shakeup, it's great to read from a supplier that it's all just overblown and everything is fine...

Airbus is in disarray. Hopefully they can right the ship. But the ongoing 350/380 drama is not just a bunch of "clamouring and herd panic" and is in fact a quite real problem.



Of all the things to worry about... the Wookie has no pants.
User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5201 times:

Quoting Ikramerica (Reply 1):

Airbus is in disarray. Hopefully they can right the ship. But the ongoing 350/380 drama is not just a bunch of "clamouring and herd panic" and is in fact a quite real problem.

Naturally it's a real problem, however it isn't a critical problem, that would warrant a share price drop of tens of percent.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 3, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5178 times:

Quoting Joni (Reply 2):
it isn't a critical problem, that would warrant a share price drop of tens of percent.

If you understand the situation at Airbus better than the market, then you have an opportunity to make a fortune betting against the market.

Don't rely too much on what Alcoa has to say about it though. They want to sell some very, very expensive aluminium alloys.


User currently offlinePolymerPlane From United States of America, joined May 2006, 991 posts, RR: 3
Reply 4, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5164 times:

Quoting Joni (Reply 2):
Naturally it's a real problem, however it isn't a critical problem, that would warrant a share price drop of tens of percent.

Are you kidding? With EADS losing $2.6 billion in potential revenue, of course the share price drops.

Quoting Joni (Thread starter):
This sounds quite reasonable amid all the clamouring and herd panic that's been going on around this announcement the past few days.

from the article :

Quote:
Given long lead times on airline orders, he said he thought it unlikely that Airbus' delays would cause customers to switch to competing Boeing

With another 6-7 months delay, the availability of 747-8 will be closer to that of A380. It also gives more leeway for the airline to cancel order

Cheers,
PP



One day there will be 100% polymer plane
User currently offlineJonathan-l From France, joined Mar 2002, 506 posts, RR: 0
Reply 5, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5164 times:

Quoting Zvezda (Reply 3):
If you understand the situation at Airbus better than the market, then you have an opportunity to make a fortune betting against the market

The share is coming up. It was at 17 euros at its lowest on Wednesday, and it's back around 20. It's not back to 26 on Tuesday evening, nor above 30 earlier this year but the initial free fall was somewhat artificial.


User currently offlineAirFrnt From United States of America, joined Jul 2004, 2827 posts, RR: 42
Reply 6, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5164 times:

Quoting Joni (Thread starter):
"People are going to stick with the aircraft," William Christopher, group president for engineered solutions, told Reuters. "I don't see it changing the underlying market demand for the plane."

Your pointing to a suplier of Airbus for a issue that seems to revolve more around corporate governence then engineering? Since the rumour is that the problem revolves around wiring in general and using Aluminum wiring (which Alcoa is presumably the provider of at least the raw Aluminum) they may not be the best resource.

More to the point, as a Aluminum manufacturer can you see what Alcoa might not be rooting for the Carbon Composite 787?

As for A380 demand, where is it? So far the A380 has eclipsed great sales records like that of the 717. The plane is still probably only half way to break even.


User currently offlineIkramerica From United States of America, joined May 2005, 21544 posts, RR: 59
Reply 7, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5148 times:

Quoting Jonathan-l (Reply 5):
nor above 30 earlier this year but the initial free fall was somewhat artificial.

Not artificial (it wasn't manipulated) but just reactionary. But that's common in such situations, not unique to Airbus.

If VS does the rumored 380 for 340 swap that some are claiming, expect another drop, even though airbus wouldn't be losing any orders on net.



Of all the things to worry about... the Wookie has no pants.
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 8, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5074 times:

Quoting Joni (Reply 2):
Naturally it's a real problem, however it isn't a critical problem, that would warrant a share price drop of tens of percent.

A 10 to 20% drop in in earnings per share for a three to four year period due to a surprise delay that hadn't been hinted at at all, combined with a scent of scandal involving insider trading, discord in management and disarray in future product plans is a good reason for a stock dropping "tens of percent"



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3397 posts, RR: 9
Reply 9, posted (8 years 4 months 2 weeks 4 days 17 hours ago) and read 5026 times:

My 2p

"With EADS losing $2.6 billion in potential revenue, of course the share price drops."

They're not losing $2.6 B it's just spread out over a longer timeframe - the money will still come in.

"If VS does the rumored 380 for 340 swap that some are claiming, expect another drop, even though airbus wouldn't be losing any orders on net"

Does that come from the same source as VS dropping the A380 for the T7?


User currently offlinePolymerPlane From United States of America, joined May 2006, 991 posts, RR: 3
Reply 10, posted (8 years 4 months 2 weeks 4 days 16 hours ago) and read 4987 times:

Quoting Scouseflyer (Reply 9):
They're not losing $2.6 B it's just spread out over a longer timeframe - the money will still come in.

There's not how the market works. They are still losing $2.6 billion potential revenue in the next several years. The financial performance of a company is evaluated on yearly basis. The so-called potential revenue might be recouped 10 years or 20 years from now, or never. You just do not know.

Next year when the income outlook is much better than now, the price will increase. That's how the market works. It's based on the expectation, with shorter term matters the most.

Nevertheless, even if you want to see it that way, You are forgetting the time value of the earnings, delay penalties and shifts in break even point. Also with the delay, the cancellation is becoming more probable, thus increases the risk of the program.

Cheers,
PP



One day there will be 100% polymer plane
User currently offlineIkramerica From United States of America, joined May 2005, 21544 posts, RR: 59
Reply 11, posted (8 years 4 months 2 weeks 4 days 16 hours ago) and read 4895 times:

Quoting Atmx2000 (Reply 8):
surprise delay that hadn't been hinted at at all

worse, flatly denied up and down up until this point, insisting that EK would get their jets on the new timescale, SQ would EIS by December, etc.

Then, they turn a 180 when the BAE sale is pending.

Sounds like Enron and Global Crossing type management to me, with the similar (but not the same) government ties that these two companies had (to both parties in the USA, btw).



Of all the things to worry about... the Wookie has no pants.
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 12, posted (8 years 4 months 2 weeks 4 days 15 hours ago) and read 4835 times:

Quoting Scouseflyer (Reply 9):
They're not losing $2.6 B it's just spread out over a longer timeframe - the money will still come in.

Not exactly. They are predicting $2.5 billion in reduced profits. The reduced profit may be attributable to interest bearing costs like loans and already purchased parts and fixed costs for utilities, rent and payroll that has to be paid regardless of whether they are leading to revenue generation. You won't recoup some of that money because you still have to pay it during actual production. Delays are very expensive because of all the things you have to pay for on a time basis.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineMrComet From Ireland, joined Mar 2005, 561 posts, RR: 8
Reply 13, posted (8 years 4 months 2 weeks 4 days 15 hours ago) and read 4749 times:

Ohhh. That's a really surprising comment from an Alcoa executive. I translate as this: "The company that accounts for hundreds of millions of dollars of sales per year for us is in really good shape and they're really cool guys. " This is followed by a distinct slurping sound.

Sorry. I don't give this one much credit.



The dude abides
User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4693 times:

Quoting Ikramerica (Reply 1):

Airbus is in disarray. Hopefully they can right the ship. But the ongoing 350/380 drama is not just a bunch of "clamouring and herd panic" and is in fact a quite real problem.

The drama is all going on here on a.net and the press. The "problems" at Airbus will help no one in the industry.

Well done to ILFC and EK for destroying the competition that they so craved for in the market place. With egomanic public rantings they've smashed already brittle confidence to pieces leaving Boeing full play in the market place. Mr Clark, don't cry foul when Boeing charge list price for your new planes.

Airbus also come in for some criticisms. Their reactions in private and public to attacks from their customers have been shambolic, not even to mention reactions to their main rival's offerings.

The only ones that can restore the confidence in Airbus are ILFC and EK with orders by the bucket load at Farnborough, I believe, or at least by year end.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 15, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4653 times:

Quoting EbbUK (Reply 14):
The only ones that can restore the confidence in Airbus are ILFC and EK

IMO, the only ones who can restore confidence in Airbus are Airbus by delivering on their promises rather than making excuses, denying problems, and blaming their customers.


User currently offlineSeJoWa From United States of America, joined May 2006, 361 posts, RR: 0
Reply 16, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4637 times:

Quoting EbbUK (Reply 14):
...

What you write is of no consequence.

Quoting Zvezda (Reply 15):
IMO, the only ones who can restore confidence in Airbus are Airbus by delivering on their promises rather than making excuses, denying problems, and blaming their customers.

 checkmark 


User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 17, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4615 times:

Quoting Zvezda (Reply 15):

IMO, the only ones who can restore confidence in Airbus are Airbus by delivering on their promises rather than making excuses, denying problems, and blaming their customers.

that alone, won't help them in the short to medium term. Perception in the market place is at an all time low, it will need more than on the button spec to turn it around.


User currently offline11Bravo From United States of America, joined Feb 2005, 1720 posts, RR: 10
Reply 18, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4600 times:

Quoting EbbUK (Reply 14):
Well done to ILFC and EK for destroying the competition that they so craved for in the market place. With egomanic public rantings they've smashed already brittle confidence to pieces leaving Boeing full play in the market place. Mr Clark, don't cry foul when Boeing charge list price for your new planes.

Blaming customers for failing to deliver products on time is one of the big reasons Airbus finds itself where it does. The only entity Airbus should blame is Airbus.



WhaleJets Rule!
User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 19, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4600 times:

Quoting SeJoWa (Reply 16):
What you write is of no consequence.

A lot more than yours, friend. For I have offered some background to show my reasoning.

Yours is pretty vacant. Perhaps you fired off prematurely? It does happen


User currently offlinePlanesNTrains From United States of America, joined Feb 2005, 5637 posts, RR: 29
Reply 20, posted (8 years 4 months 2 weeks 4 days 14 hours ago) and read 4572 times:

Quoting EbbUK (Reply 14):
Airbus also come in for some criticisms.

Ya think?

Quoting EbbUK (Reply 14):
Well done to ILFC and EK for destroying the competition that they so craved for in the market place.

Airbus is more than capable of righting the ship. Change in leadership, new focused vision, etc. But this blame-the-customer crap has got to stop. If a company - any company - isn't doing it for the customers, then they have only themselves to blame.

Besides EbbUK, there is a lot of speculation that some INSIDE Airbus encouraged the public comments made by these customers.

-Dave



Next Trip: SEA-ABQ-SEA on Alaska
User currently offlineSeJoWa From United States of America, joined May 2006, 361 posts, RR: 0
Reply 21, posted (8 years 4 months 2 weeks 4 days 13 hours ago) and read 4543 times:

One would expect that most orders will stand this test. The CASM of the A380 has not spun out of control, it has merely been rendered less appealing by advanced technology. Most airlines that first stepped up to Airbus' till were those with the best potential routes, a savvy head office as well as a solid digestive tract. They still stand to gain from the Big One's release into regular service.

Emirates is even using the A380 to provide an entirely new level of pre- and post-flight experience.

Furthermore, many of those planes probably just got substantially cheaper.

Simply incredible, and of consequence, is the obfuscation and cluelessness of the top decision makers. Airbus had more than enough time to warn their best costumers about this, when they were actually telling them not long ago everything was just about on schedule.

We actually had our own very sharp observer on a.net proferring his evidence for a complete stop of planned assembly work.

If Airbus had a clear grasp of their current manufacturing problems and possible solutions, and had briefed their customers accordingly, this would have been stated by all and sundry, with emphasis on the details provided, even if these were confidential.

Airbus has been showing an increasing lack of focus lately. Boeing has a good plan. One wonders where this all might be headed?

[Edited 2006-06-16 21:18:44]

User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 4 months 2 weeks 4 days 13 hours ago) and read 4535 times:

Quoting PlanesNTrains (Reply 20):

But this blame-the-customer crap has got to stop. If a company - any company - isn't doing it for the customers, then they have only themselves to blame. quote]



[quote=PlanesNTrains,reply=20]Besides EbbUK, there is a lot of speculation that some INSIDE Airbus encouraged the public comments made by these customers.

Let's be true about this, they never blamed the customer. It is widely pervceived that they did. What they did say about the early a380 delay is that they were caught unaware about the size of the task to customize the planes. And this has been the case ever since.

Who is to know that Campion told Noel at the outset that it would take a year to fix the but was ordered to turn it around in 6months?
May I say that I too at the time subscribed to this idea and with hindsight that person or people need to go. to play the game with the press you must be really savvy and play as one.

It's backfired big time, we talk of a 2 billion loss of earning but perhaps we can triple that, this year alone?. shocking


User currently offlinePlanesNTrains From United States of America, joined Feb 2005, 5637 posts, RR: 29
Reply 23, posted (8 years 4 months 2 weeks 4 days 13 hours ago) and read 4457 times:

Quoting EbbUK (Reply 22):
Let's be true about this, they never blamed the customer.

With all due respect, EbbUK, you can spin it any way you want, but perception is reality. It doesn't matter, though, because I wasn't referring solely to Airbus' statement, but rather to yours:

Quoting EbbUK (Reply 14):
Well done to ILFC and EK for destroying the competition that they so craved for in the market place. With egomanic public rantings they've smashed already brittle confidence to pieces leaving Boeing full play in the market place. Mr Clark, don't cry foul when Boeing charge list price for your new planes.

In other words - blame the customer.

-Dave



Next Trip: SEA-ABQ-SEA on Alaska
User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 24, posted (8 years 4 months 2 weeks 4 days 13 hours ago) and read 4415 times:

Quoting PlanesNTrains (Reply 23):
but perception is reality

Never one to argue semantics but perception is NOT reality, it may be king in the market place, but reality, it is not

Quoting PlanesNTrains (Reply 23):

In other words - blame the customer.

Let's not play this blame game, it's cancerous and counter-productive.

But we can look back and understand what actions led up to the mess. Airbus have their responsibility just as much as the public rants of dissatisfaction have affected the shaky confidence. If EK and ILFC knew of the delays with the A380 would they have been as candid with the press about their feelings with the A350? A question that we will ask for years to come.

Which is why when we get a measured response like this one from Alcoa, we can all breathe a sigh of relief that despite the madness, there is some good stuff going on at Airbus and sooner rather than later, perhaps, the fortunes will return


25 Joni : If they did lose that much revenue, it would be a significant hit. However this isn't the case as the revenue is only deferred, not "lost".
26 Post contains links PolymerPlane : It's so hard to argue when a person does not read the other's argument. Just for refresher: 1. Airbus IS losing those revenue, both the time value of
27 DAYflyer : It may not change the underlying need for the airplane, but that dont mean your customers won't be looking at the 747-8 now.
28 Mham001 : No, it's lost. The slots in 2007, 2008, 2009 are gone - forever. Those planes will now be built in slots meant to be sold to other customers.
29 PlanesNTrains : Well, you managed to contradict yourself in one sentence. I'm sorry the point of what I was saying was lost on you. If you don't want to play the bla
30 EbbUK : If you don't want to play the blame game, then skip statements like: Quoting EbbUK (Reply 14): Well done to ILFC and EK for destroying the competition
31 WingedMigrator : " target=_blank>http://www.bloomberg.com/apps/news?p...sq3Fs Operating profit or revenue? I strongly suspect the latter. You guys would be right if Ai
32 Leelaw : Wait a minute, hasn't Airbus, particularly John Leahy, been saying for the last year (before announcement of the "second" program delay), that new or
33 Post contains links and images Joni : 2.6B is probably the total revenue associated with the delays, i.e. the revenue from the planes whose delivery dates are affected. From the EADS rele
34 B707Stu : At this point I would have to guess it's later. The A-350 fiasco, more than the A380 trouble is the real blind spot. A huge miscalculation in the mar
35 Post contains links and images Slz396 : Quoting Joni (Reply 33): Curiously, if the 500M figure didn't include other costs, then we could calculate a good estimate for the A380 margin from kn
36 PolymerPlane : EBIT is earnings before interest and tax. So yes it is profit. Operating profit to be exact. So, EBIT = operating income - operating expense = operat
37 Atmx2000 : There may be penalties to be paid to suppliers if they don't take parts on the delivery scale indicated. Alternatively, Airbus may have to pay for pa
38 Joni : Yes, the 500M figure is EBIT as the release says. The 2B figure is very likely revenue, and that was my point in the previous post. Yes, but again as
39 Atmx2000 : The 2 billion euro figure is the total drop in profits from 2007 to 2010 from what I understand. 500M is the per year figure for those four years.
40 Zvezda : Sorry, no. Do the arithmetic. How many aircraft will be delayed? $2.6B divided by how many? Can that be the purchase price per?
41 PolymerPlane : Actually that's the best case scenario for Airbus, as it can fill up all their delivery slots. Regardless, profit is calculated per year basis, with
42 Post contains images PlanesNTrains : Speaking of semantics... Anyhoo... And that's all that matters. Here's looking forward to the A380's first revenue flight! -Dave
43 EbbUK : God the start of another bashing chapter I am sure. Big mama A380 is going to be on the recieving end of some flak for years to me. A lot of a.net pe
44 Post contains images PlanesNTrains : I'm sure it will be fine. By then the first 787 will roll out and look like botox-gone-wild, delays will begin, and the B bashers will be on top of t
45 Joni : This is certainly true, as can be seen from the reaction in EADS' stock to the delay news. The best case, naturally, is if they can catch up in the d
46 Post contains images Zvezda : If Airbus is to catch up and deliver the first WhaleJet as planned, they don't have much time left until March 2006. Even if you mean the second plan
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