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Gates: Airbus' Crisis Looks Like Boeing's In 1997  
User currently offlineLeelaw From , joined Dec 1969, posts, RR:
Posted (7 years 11 months 2 weeks 2 days 13 hours ago) and read 7721 times:

Airbus' crisis looks like Boeing's in 1997

By Dominic Gates
Seattle Times aerospace reporter


Airplane parts clog factory floors. Profits evaporate. Customers demand compensation. Heads roll in the corporate suites and new executives sketch costly restructuring moves.

This is Airbus 2006.

It was also Boeing 1997.

Airbus now faces a crisis much like the one that hit Boeing a decade ago because the European plane maker can't get its crucial A380 superjumbo jets finished on time, it's losing the confidence of the airlines. Its new chief executive may be about to bail...


http://seattletimes.nwsource.com/htm...aerospace/2003293167_airbus07.html

A "news analysis" piece form Dominic Gates with some interesting comments from Wolfgang Demisch and others.

[Edited 2006-10-07 14:38:35]

35 replies: All unread, showing first 25:
 
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 1, posted (7 years 11 months 2 weeks 2 days 12 hours ago) and read 7697 times:

Thanks, Leelaw. But the similarities end when one begins to discuss the flexibility and ability to implement reorganizations and/or recovery plans. Does management have the flexibility to control it's destiny? In EADS' case, I'm not so sure. Here is a telling quote from that article:

Quote:
Hostility to that plan from the German government, which has invested heavily in Hamburg to win A380 production work, and from the French unions, reluctant to let go of the humming narrowbody assembly lines, seems to make that idea a non-starter.
"It makes commercial sense," McVitie said, "but Airbus isn't commercial. It's political."
Airbus vice president Rainer Ohler, in an e-mail, acknowledged that European realities mean Airbus cannot restructure its manufacturing model as freely as Boeing did on the 787.
"A certain balance between our sites in France, the UK, Spain and Germany is required," he wrote. "Airbus is different and will never go exactly the same road as Boeing. ... We live in Europe. Things tend to be a bit more complicated here."

Very matter of fact and right on target, IMO.The end result of "Power 8" will likely be a compromise.

[Edited 2006-10-07 14:44:46]


"When all is said and done, more will be said than done".
User currently offlineClassicLover From Ireland, joined Mar 2004, 4636 posts, RR: 23
Reply 2, posted (7 years 11 months 2 weeks 2 days 12 hours ago) and read 7686 times:

It's a good piece, thanks for the link!


I do quite enjoy a spot of flying - more so when it's not in Economy!
User currently offlineLTBEWR From United States of America, joined Jan 2004, 13113 posts, RR: 12
Reply 3, posted (7 years 11 months 2 weeks 2 days 12 hours ago) and read 7550 times:

Boeing is basically all in the USA and has far more flexibility in operations than Airbus has with dealing with several national governments despirate to keep good paying jobs in their respective locations. While Boeing may have to please all members of the Congress and Senate, State, regional and local politicans, to make sure jobs stay in various districts, they don't face the same National restraints on being making decisions. If I am correct, they spun off the Witcha, KS operations to another company with some issues, but not of national politicans making noise.
Boeing also has many Stockholders, unlike Airbus which has several top stockholders (EDAS and others) and thus too may bosses with their own and National agendas.


User currently offlineRevelation From United States of America, joined Feb 2005, 12545 posts, RR: 25
Reply 4, posted (7 years 11 months 2 weeks 2 days 12 hours ago) and read 7544 times:

It seems like Streiff's departure is a done deal: he's already picked out his next job! I guess the status quo has just too much inertia.

Quote:
"The idea that an industrial entity that has substantial state ownership and is viewed as a national champion is going to be curtailed because there is a few billion Euros shortfall over a few years is to underestimate the ingenuity of European accountants and financiers," he said. "I don't think there's going to be any trouble funding this."

Indeed. Airbus screws up, finds some governmental teats to suck on, no problems. The EU will loose all credibility at the WTO. Since the US already has lost all credibility at the WTO, it might as well close up shop.

One reason why Boeing 1997 doesn't look like Airbus 2006: Boeing didn't get a government bail-out in 1997.



Inspiration, move me brightly!
User currently offlineFLALEFTY From United States of America, joined Jan 2006, 468 posts, RR: 3
Reply 5, posted (7 years 11 months 2 weeks 2 days 10 hours ago) and read 7359 times:

The governments and unions need to step aside and allow the management at EADS restructure Airbus in a manner that makes good business sense. It will result in a stronger operation and will save many jobs.

I'd hate to see Airbus be forced to pull the plug on the A380 program because its production and business plan gets too damaged to fix.


User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 11 months 2 weeks 2 days 10 hours ago) and read 7272 times:

Quoting LTBEWR (Reply 3):
Boeing is basically all in the USA and has far more flexibility in operations than Airbus has with dealing with several national governments

This was true until the B787, when e.g. the Japanese government became very much involved.


User currently offlineIkramerica From United States of America, joined May 2005, 21529 posts, RR: 59
Reply 7, posted (7 years 11 months 2 weeks 2 days 10 hours ago) and read 7226 times:

Quoting FLALEFTY (Reply 5):
unions need to step aside

ROFL

When does this ever happen, anywhere?



Of all the things to worry about... the Wookie has no pants.
User currently offlineTeamAmerica From United States of America, joined Sep 2006, 1761 posts, RR: 23
Reply 8, posted (7 years 11 months 2 weeks 2 days 9 hours ago) and read 7152 times:

Quoting Joni (Reply 6):
This was true until the B787, when e.g. the Japanese government became very much involved.

Nonsense. The Japanese goverment has no direct connection to Boeing at all. The French and Spanish governments hold shares in EADS, and the German government certainly asserts itself as well. Very different situations.



Failure is not an option; it's an outcome.
User currently offlineCHIFLYGUY From United States of America, joined Aug 2006, 141 posts, RR: 0
Reply 9, posted (7 years 11 months 2 weeks 2 days 9 hours ago) and read 7140 times:

I've harped on this before but there is one key difference between Boeing 1997 and Airbus 2006. Yes, manufacturing glitches look the same, but the financials are very different. Boeing's problem was underinvestment. Airbus' is overinvestment in models like the A380 with limited market potential (arguably the A340NG falls into this category as well). Boeing's problem was much easier to solve than Airbus'. The A380 overhang is not going away for a while. Among other thing, it likely means a large future (albeit non-cash) writeoff).

User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 10, posted (7 years 11 months 2 weeks 2 days 9 hours ago) and read 7095 times:

Another important point is that Boeing didn't fire Condit when the 1997 lines collapsed (like they should have, IMHO). Hopefully Airbus has already gotten rid of the people in charge on the A380.

User currently offlineBoomBoom From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 11 months 2 weeks 2 days 8 hours ago) and read 6915 times:

Quoting Joni (Reply 6):
Quoting LTBEWR (Reply 3):
Boeing is basically all in the USA and has far more flexibility in operations than Airbus has with dealing with several national governments

This was true until the B787, when e.g. the Japanese government became very much involved.

You got it backwards. Outsourcing to Japan is part of the flexibility Boeing enjoys.


User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12146 posts, RR: 51
Reply 12, posted (7 years 11 months 2 weeks 2 days 2 hours ago) and read 6559 times:

Quoting AirFrnt (Reply 10):
Hopefully Airbus has already gotten rid of the people in charge on the A380.

Then why hasn't Airbus said that? That one little step alone would go a long way to restoring confidence in Airbus, and the A-380 project. Somehow, I doubt many of the political appointed representitives from the different EU states were fired.

Quoting CHIFLYGUY (Reply 9):
Airbus' is overinvestment in models like the A380 with limited market potential (arguably the A340NG falls into this category as well). Boeing's problem was much easier to solve than Airbus'. The A380 overhang is not going away for a while. Among other thing, it likely means a large future (albeit non-cash) writeoff).

You might as well include the bungled A-350 Mk. I, Mk. II, Mk. III, Mk. IV, and XWB programs. With the various A-350 programs, the shortage was not cash, but engineers, because the A-380 program ate all of them up. The several differently offered A-350 didn't generate the sales interest Airbus hoped for because it kept changing every month or so up until Farnborogh. How can any airline expect to see the airplane they thought they ordered under those situations?


User currently offlineStitch From United States of America, joined Jul 2005, 30978 posts, RR: 86
Reply 13, posted (7 years 11 months 2 weeks 2 days 1 hour ago) and read 6472 times:
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Quoting Joni (Reply 6):
This was true until the B787, when e.g. the Japanese government became very much involved.

Tokyo is not in the position to dictate to Boeing how or where they assemble the 787. They also do not control Boeing's corporate head-count. Nor do they influence which products Boeing pursues.

They may influence how Mitsubishi and Fuji Heavy Industries deliver their sub-assembles to Boeing, but as long as they deliver those assemblies to contract...


User currently offlineDfwRevolution From United States of America, joined Jan 2010, 977 posts, RR: 51
Reply 14, posted (7 years 11 months 2 weeks 2 days ago) and read 5997 times:

Quoting Leelaw (Thread starter):

This is Airbus 2006.

It was also Boeing 1997.

Airbus now faces a crisis much like the one that hit Boeing a decade ago because the European plane maker can't get its crucial A380 superjumbo jets finished on time, it's losing the confidence of the airlines. Its new chief executive may be about to bail...

This is a fundamentally flawed argument. The magnitude of crisis that Boeing faced in 1997 doesn't begin to compare with what Airbus now faces.

Imagine if Boeing had launched the Sonic Cruiser. That's where Airbus is today.


User currently offlineYVRlonghauler From , joined Dec 1969, posts, RR:
Reply 15, posted (7 years 11 months 2 weeks 1 day 21 hours ago) and read 5103 times:

Quoting DfwRevolution (Reply 14):
The magnitude of crisis that Boeing faced in 1997 doesn't begin to compare with what Airbus now faces.

So, which one you think is worse?


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 16, posted (7 years 11 months 2 weeks 1 day 21 hours ago) and read 4852 times:

Quoting DfwRevolution (Reply 14):
This is a fundamentally flawed argument. The magnitude of crisis that Boeing faced in 1997 doesn't begin to compare with what Airbus now faces.

Actually, I also thought that the problem was remniscent in terms of the wide ranging effects that the 1997 production problems had on Boeing.

Quoting YVRlonghauler (Reply 15):
So, which one you think is worse?

I suppose he thinks Airbus's problems are worse. That is my feeling as well. This one is worse because its is both a design and production problem, and its effects will be felt far longer because it is placing additional demand on Airbus engineering resources and delaying future products significantly. It has the likely effect of reducing the marketable lifetime of the current A380 version, meaning less revenue than previously expected will be generated from an investment significantly larger than expected. Given that market for very large aircraft is inherently low, the development costs per unit sold will increase markedly.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineAdria From , joined Dec 1969, posts, RR:
Reply 17, posted (7 years 11 months 2 weeks 1 day 12 hours ago) and read 2988 times:

Quoting TeamAmerica (Reply 8):
Nonsense. The Japanese goverment has no direct connection to Boeing at all. The French and Spanish governments hold shares in EADS, and the German government certainly asserts itself as well. Very different situations.

Who's then funding the costs to built factories in Japan??

Quoting Atmx2000 (Reply 16):
I suppose he thinks Airbus's problems are worse. That is my feeling as well. This one is worse because its is both a design and production problem, and its effects will be felt far longer because it is placing additional demand on Airbus engineering resources and delaying future products significantly. It has the likely effect of reducing the marketable lifetime of the current A380 version, meaning less revenue than previously expected will be generated from an investment significantly larger than expected. Given that market for very large aircraft is inherently low, the development costs per unit sold will increase markedly.

The problems are worse but not for that reason like you mentioned. The A380s performance is believed to be better than expected and a long list of important carriers have put many orders. Although there are many that publicly think about cancellations I don't believe many will (if any). Also the A380 will improve eventually so while the current version could suffer I believe that there are going to be improved models that will push the lifespan of the A380 farther (like Boeing does with the 747). The market for VLAs is probably bigger than most here on a.net want to believe. Boeing was also loud on saying "point-to-point" is the way to go...but here they are stretching the 747-8 to make it more competitive against the A380. Why bother if the market is really so small?


User currently offlineBrendows From Norway, joined Apr 2006, 1020 posts, RR: 4
Reply 18, posted (7 years 11 months 2 weeks 1 day 12 hours ago) and read 2951 times:

Quoting Adria (Reply 17):
Who's then funding the costs to built factories in Japan??

But why doesn't Airbus out source work to Japan if that's the case?

Quoting Adria (Reply 17):
The market for VLAs is probably bigger than most here on a.net want to believe. Boeing was also loud on saying "point-to-point" is the way to go...but here they are stretching the 747-8 to make it more competitive against the A380. Why bother if the market is really so small?

If the VLA market was as big as Airbus had predicted, Boeing could have built a completely new aircraft to compete with it, but they don't. Instead, they are making a much cheaper derivative, that can be very competitive. Boeing has never said that there were no VLA market, just that it wasn't big enough for two new aircraft that would compete with each other, hence the 748. Look at the number of sales for the last few years, it clearly show you what market that will dominate the future.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 19, posted (7 years 11 months 2 weeks 1 day 12 hours ago) and read 2947 times:

Quoting Revelation (Reply 4):
The EU will loose all credibility at the WTO. Since the US already has lost all credibility at the WTO, it might as well close up shop.

The WTO has lost all credibility. The American and European farm subsidies are continuing to devastate Africa.

Quoting Adria (Reply 17):
The A380s performance is believed to be better than expected

Believed by whom? Expected by whom?

Quoting Adria (Reply 17):
Also the A380 will improve eventually so while the current version could suffer I believe that there are going to be improved models that will push the lifespan of the A380 farther (like Boeing does with the 747).

I don't believe the WhaleJet program will survive that long.

Quoting Adria (Reply 17):
The market for VLAs is probably bigger than most here on a.net want to believe. Boeing was also loud on saying "point-to-point" is the way to go...but here they are stretching the 747-8 to make it more competitive against the A380. Why bother if the market is really so small?

As has been pointed out many times, Boeing has been able to produce a competitive product for a very small investment.


User currently offlineAdria From , joined Dec 1969, posts, RR:
Reply 20, posted (7 years 11 months 2 weeks 1 day 12 hours ago) and read 2905 times:

Quoting Brendows (Reply 18):
If the VLA market was as big as Airbus had predicted, Boeing could have built a completely new aircraft to compete with it, but they don't. Instead, they are making a much cheaper derivative, that can be very competitive. Boeing has never said that there were no VLA market, just that it wasn't big enough for two new aircraft that would compete with each other, hence the 748. Look at the number of sales for the last few years, it clearly show you what market that will dominate the future.

?? Boeing ALWAYS believed there is a VLA market but they were publicly playing it down since the A3XX came to the table (like they did when the A320 was developed...). Boeing has some weird culture in the company because they are always directly and moronically bashing the competition. This is weird. The current sales are slow due to the phase before EIS for the A380 and the 748 (pax) is currently not competitive that's why they are stretching it.

Quoting Brendows (Reply 18):
But why doesn't Airbus out source work to Japan if that's the case?

I have nothing against Boeing and Japan but if someone mentions Airbus and subsidies then we have to look at Boeing and Japan and also the loans they have got from Washington for the 787...

Quoting Zvezda (Reply 19):
Believed by whom? Expected by whom?

Believed by Airbus and the airlines (or do you really think so many airlines are so wrong about the A380??), But since you are so sure the A380 will fail I could ask you the same thing...

Quoting Zvezda (Reply 19):
As has been pointed out many times, Boeing has been able to produce a competitive product for a very small investment.

That's why there are so many orders for the passenger version of the 747-8...(and please spare me with your CASM thing...you are to subjective about the A380 it's like reading boeing.com).


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 21, posted (7 years 11 months 2 weeks 1 day 11 hours ago) and read 2882 times:

Quoting Adria (Reply 20):
That's why there are so many orders for the passenger version of the 747-8.

Since its launch, the B747-8I has outsold the WhaleJet. I've always maintained that the VLA market is small and shrinking. I don't have a lot of confidence that there will be more than 100 B747-8I deliveries ever, though it's possible. It would have been very risky for Boeing to develop the B747-8I without the B747-8F.


User currently offlineAdria From , joined Dec 1969, posts, RR:
Reply 22, posted (7 years 11 months 2 weeks 1 day 11 hours ago) and read 2861 times:

Quoting Zvezda (Reply 21):
Since its launch, the B747-8I has outsold the WhaleJet. I've always maintained that the VLA market is small and shrinking. I don't have a lot of confidence that there will be more than 100 B747-8I deliveries ever, though it's possible. It would have been very risky for Boeing to develop the B747-8I without the B747-8F.

Ohhh come on Zvezda, the airlines are on a wait and see mode when they consider the A380 (even you mentioned it yourself in one of your previous posts), this happens to all other projects (yes it even happened to the 777...shocking) when they reach this stage of the development... but I still wonder who ordered the 748 pax version (since you claim that it outsold the A380)?

And it was very risky for Boeing to develop the 747 40 years ago so the "risky" argument is way off. Boeing was always ready to offer bigger versions of the 747 (even before the A3XX was considered). Basically they are doing now with the 747 what Airbus has done with the A330 and the first A350 version...

As a freighter the 747 is ok since it was built for that purpose in the first place, but as a pax version the A380 has an advantage. I know this may seem hard to you but the latest developments around the 747-8 show that airlines want something bigger or more competitive to the A380 and also a look at the orders table says it all...


User currently offlineHamster From United States of America, joined Sep 2006, 201 posts, RR: 0
Reply 23, posted (7 years 11 months 2 weeks 1 day 11 hours ago) and read 2841 times:

I think Airbus will eventually get their act together. They have built up too much of a presence not to. As the "world" economy grows so too shall the travel from Asia to the West. Who knows, perhaps the 380 will be a dominant force in the airline industry

User currently offlineBrendows From Norway, joined Apr 2006, 1020 posts, RR: 4
Reply 24, posted (7 years 11 months 2 weeks 1 day 11 hours ago) and read 2824 times:

Quoting Adria (Reply 20):
Boeing has some weird culture in the company because they are always directly and moronically bashing the competition. This is weird. The current sales are slow due to the phase before EIS for the A380 and the 748 (pax) is currently not competitive that's why they are stretching it.

When have they bashed their competition, can you provide a source where they do that? The only thing they have stated is that the VLA market isn't big enough for two new aircraft, is that bashing? If you want to know what bashing is, I would recommend you to read the thread that summarized all quotes on the 7E7/787 that some Airbus representatives has made during the last few years...

Quoting Adria (Reply 20):
I have nothing against Boeing and Japan but if someone mentions Airbus and subsidies then we have to look at Boeing and Japan and also the loans they have got from Washington for the 787...

Boeing got a tax cut from Washington state, Airbus can probably get that too in Toulouse, Bremen and Hamburg and at all other manufacturing sites, I would guess they have gotten that earlier too. It's a well know trick to prevent industry from moving, or to get industry to the local area. Japan granted funds to its industry, and that would benefit Airbus too, and all other aircraft manufacturers, if they bought parts from Japan. Are you suggesting that Boeing chose the Japanese manufacturers just because they got subsidies? Get real Adria.

Quoting Adria (Reply 20):
That's why there are so many orders for the passenger version of the 747-8

They have up until now evaluated, together with several airlines, what the 747-8i would be like, that's why there haven't been any orders from a pax airline. Wait a few months, and you will get a little surprise on this front.

[Edited 2006-10-08 16:22:43]

25 Post contains links Lumberton : Sadly, I must agree with you. Even if the aircraft "subsidies" issue were to be resolved, the over reaching priority must be the agricultural situati
26 Zvezda : Of course, just before EIS is not the time we would expect to see a rush of WhaleJet orders, however, if there were unmet demand, we would expect to
27 Post contains images Rheinbote : Boeing's manufacturing crisis was triggered by a steep ramp-up in production, not by digital design snafus with subsequent loss of configuration cont
28 OldAeroGuy : A380 EIS is now so far in the future that there had better be a pick up in sales very soon. As dicussed in other threads, this needs to be in the 40-
29 Stitch : Even if the Japanese government is funding those factories, they cannot tell Boeing to buy their product from them because Boeing is not held, in who
30 BoomBoom : They are not Boeing factories. They are Fuji and Mitsubishi factories which are subcontractors for Boeing. So it is not a direct subsidy to Boeing. A
31 Osiris30 : Those factories in Japan aren't Boeing factories IIRC. They are 'owned' by subcontractors, not Boeing.. I might be wrong, but last time I checked it'
32 Zamaria : I am a bit confused. Can anyone succintly summarize the problems Boeing had in the late '90s including major root causes and what was done to solve th
33 DfwRevolution : I would say Airbus in 2006. The magnitude of A380-800 delays are really unprecedented and Airbus was hit at a time when launching a new products was
34 Zvezda : As has been discussed before, it is difficult to sell airliners in the two years or so leading up to EIS. With the WhaleJet's EIS repeatedly slipping
35 Post contains links Stitch : Here are a few: http://archives.seattletimes.nwsourc...2567641&date=19971022&query=Boeing http://archives.seattletimes.nwsourc...2731946&date=1998020
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