Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Eads "Strongly Denies" 20% Airbus Stake Sale  
User currently offlineTugger From United States of America, joined Apr 2006, 5502 posts, RR: 8
Posted (7 years 6 months 3 weeks 5 days 2 hours ago) and read 2622 times:

Just found this report in Business Week apparently speaking to a report in France:
"EADS denies report on Airbus stake sale"

Fair Use Excerpt:
"European Aeronautic Defence & Space Co denied on Monday a French news report that it might sell a 20 percent stake in its Airbus commercial jet division to Russian state interests.

"We strongly deny" the report, a spokesman for EADS in Munich told Dow Jones Newswires.

According to the article posted on the Web-site of business magazine Capital, Russia is interested in acquiring a 20 percent interest in Airbus from EADS through a Russian state-owned bank or company."

I'm sure this story will develop as we discuss, but as we all know this would be huge and potentially problematic for Airbus. I really doubt that it will happen but....?

I have been looking but I can't find the "French report". Has anyone seen/heard more on this?

Edited to add the link: http://www.businessweek.com/ap/financialnews/D8MV36F80.htm

Tug

[Edited 2007-01-29 22:11:39]


I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
15 replies: All unread, jump to last
 
User currently offlineStitch From United States of America, joined Jul 2005, 30877 posts, RR: 86
Reply 1, posted (7 years 6 months 3 weeks 5 days 2 hours ago) and read 2575 times:
Support Airliners.net - become a First Class Member!

I believe this rumor has been around for a bit now since Russia bought their initial 5% stake.

With the French, German and Spanish governments rumored themselves to want a more direct stakeholding, I agree that Russia getting 20% is pretty much out of the question.


User currently offlineGbfra From Germany, joined Sep 2006, 448 posts, RR: 0
Reply 2, posted (7 years 6 months 3 weeks 5 days 2 hours ago) and read 2575 times:

The Russians would like to buy a minority stake in Airbus. This has been known for a long time. But they would like to have their say, whereas BAE had no strategic influence at all when they owned 20 per cent of Airbus.

EADS want to fully control Airbus. So I do not think that they will sell 20 per cent to the Russians.

For a long time French media knew quite well what was happening at EADS/Airbus. Recently their reports have no longer been always reliable. I suppose they dearly miss M. Forgeard.



The fundamental things apply as time goes by
User currently offlineTugger From United States of America, joined Apr 2006, 5502 posts, RR: 8
Reply 3, posted (7 years 6 months 3 weeks 5 days 2 hours ago) and read 2543 times:

If this is incorrect or old news (yeah I remember hearing it last year) I guess the one thing that I want to know is who is "Capital" the French news website where BW found this little gem.
I mean I respect BW as a decent provider of news, they are not particularly great aviation-wise but there are generally good and don't just report tripe.

Tug

[Edited 2007-01-29 22:38:23]


I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlineGbfra From Germany, joined Sep 2006, 448 posts, RR: 0
Reply 4, posted (7 years 6 months 3 weeks 5 days 1 hour ago) and read 2479 times:

"Capital" is a French business mag.

It's a respected paper in France but usually not known for inside information.

If a French company of international reputation wants to spread inside information they usually feed an international publication like the Financial Times or the WSJ or a leading French paper like Le Figaro, Le Monde or Les Echos.



The fundamental things apply as time goes by
User currently offlineLHStarAlliance From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 6 months 3 weeks 5 days 1 hour ago) and read 2463 times:

Quoting Stitch (Reply 1):

With the French, German and Spanish governments rumored themselves to want a more direct stakeholding, I agree that Russia getting 20% is pretty much out of the question.

I agree , this governments would never allow it . But maybe a +3-4% could be possible , they have 7% now , Am I right?


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 6, posted (7 years 6 months 3 weeks 5 days ago) and read 2376 times:

Quoting Tugger (Reply 3):
If this is incorrect or old news (yeah I remember hearing it last year)

Last year the Russians cheerfully announced that they had acquired at least 5% of EADS' stock on the open market and advised that they would be open to acquiring a "blocking stake" (IIRC around 20%) and that they were after representation on the EADS board. I believe that when Merkel and Chirac met with Putin, the idea was quashed and Putin was rebuffed. This report, as another poster noted, is more narrowly targeted at Airbus (how they would separate a 20% stake from it's EADS parent, I have no idea!) Since then, the Spanish have announced that they would like to double their 5% stake. EADS stock has been very resilient since news of the last A380 delay. Could be the result of large institutions buying in the background. There were also rumors that Dubai Inc. wanted in as well.... No doubt the Russians are still very interested in closer ties to the European aerospace industry.

There are several threads in the archives on this if I'm not mistaken....



"When all is said and done, more will be said than done".
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 7, posted (7 years 6 months 3 weeks 5 days ago) and read 2341 times:

Quoting Lumberton (Reply 6):
Last year the Russians cheerfully announced that they had acquired at least 5% of EADS' stock on the open market and advised that they would be open to acquiring a "blocking stake" (IIRC around 20%) and that they were after representation on the EADS board. I believe that when Merkel and Chirac met with Putin, the idea was quashed and Putin was rebuffed. This report, as another poster noted, is more narrowly targeted at Airbus (how they would separate a 20% stake from it's EADS parent, I have no idea!) Since then, the Spanish have announced that they would like to double their 5% stake. EADS stock has been very resilient since news of the last A380 delay. Could be the result of large institutions buying in the background. There were also rumors that Dubai Inc. wanted in as well.... No doubt the Russians are still very interested in closer ties to the European aerospace industry.

There are several threads in the archives on this if I'm not mistaken....

...the company is structured so that power (in other words-key decisions) will remain in the hands of the French and German.....(at least it is for Airbus, can't say about parent company EADS)....



"Up the Irons!"
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 8, posted (7 years 6 months 3 weeks 4 days 19 hours ago) and read 2254 times:

Quoting Jacobin777 (Reply 7):
...the company is structured so that power (in other words-key decisions) will remain in the hands of the French and German.....(at least it is for Airbus, can't say about parent company EADS)....

Actually the other way round - the Spanish Government has the right to appoint one of the 11 EADS directors, The French Government appoints five, and Daimler-Chrysler (effectively the German Government) appoints the last five.

Since seven votes are required for any decision to carry, this is a recipe for deadlock. Neither the French nor the German government can force a decision - if the two disagree, the result will be a 'non-decision' (which one suspects has happened more than once recently).

A percentage share in just the Airbus Division (such as BAE owned until recently) gives the owner absolutely NO control over either EADS or Airbus.

I think this paragraph of the story is important, because it suggests that the idea that Russia and EADS are talking 'has legs':-

"The report said Russian Deputy Prime Minister Boris Aleshin will be in Paris later this week, and that he has scheduled meetings with EADS and Airbus chief executive Louis Gallois, as well as French President Jacques Chirac."

However, my guess is that all the Russians are being offered is the 'opportunity' to take over BAE's role - subscribe 20% of Airbus' capital but put up with having no say in how EADS/Airbus is run.

That would suit EADS - they are on record as needing to raise up to E4B. in extra capital by May this year, and someone buying a 20% share in Airbus would probably provide half of that or more.

But I can't see the Russians agreeing - they wouldn't want to put that sort of money in without having their fair share of management control.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 9, posted (7 years 6 months 3 weeks 4 days 9 hours ago) and read 2091 times:

Quoting NAV20 (Reply 8):

Actually the other way round - the Spanish Government has the right to appoint one of the 11 EADS directors, The French Government appoints five, and Daimler-Chrysler (effectively the German Government) appoints the last five.

Oh..thanks for the correction NAV20...... Smile

...regardless, I don't see the European section of the consortium yielding any meaningful power away...



"Up the Irons!"
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 10, posted (7 years 6 months 3 weeks 4 days 3 hours ago) and read 1991 times:

Quoting Jacobin777 (Reply 9):
...regardless, I don't see the European section of the consortium yielding any meaningful power away...

Oh yes, agree absolutely; the last thing they want to do, particularly the French. But it does raise the interesting question of what they do instead?

Given EADS/Airbus' recent poor financial performance, and its reduced prospects for future profits, I don't see anyone (government OR private) putting in the up to E4B. of extra capital EADS says it needs unless they are also granted a share in control.

There are really only three ways for EADS to raise extra working capital. Interestingly, I personally don't see any of them working in present circumstances:-

1. The private sector won't invest on the required scale because of poor prospects/too much risk (unless it gets government guarantees).

2. Other governments (like the Russians) won't invest because they would have no share in control.

3. The existing partner governments can't offer guarantees to attract private-sector finance, or simply pay out the money themselves in the form of further loans, because the US Government/Boeing will just add any such additional aid to its on-going World Trade Organisation complaint.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 11, posted (7 years 6 months 3 weeks 4 days 2 hours ago) and read 1968 times:

Quoting NAV20 (Reply 10):
1. The private sector won't invest on the required scale because of poor prospects/too much risk (unless it gets government guarantees).

Actually NAV20, in the end, this is the more likely scenerio..if Airbus gets a few more A350 orders, then there is a large probability of the program generating money..and that what the investors are looking for..+ROI....

..regardless of what the final version of the A350 is going to be, I think it will be a good money maker for Airbus...

Quoting NAV20 (Reply 10):
2. Other governments (like the Russians) won't invest because they would have no share in control.

....knowing the "Ruskies"..I'm sure they will find a way..in fact, that is what they are stating (i.e.-the want to invest and have some kind of controlling interest to a certain extent)...which I personally think would be a disaster..if anything, EADS/Airbus should try to eliminate all governmental influence....



"Up the Irons!"
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 12, posted (7 years 6 months 3 weeks 4 days 2 hours ago) and read 1939 times:

Quoting Jacobin777 (Reply 11):
that what the investors are looking for..+ROI....

Agree once again. But Airbus' medium-term outlook, as shown in EADS' recent statements, appears to include:-

1. Loss-making A380 production until at least 2010.

2. Heavy (and as yet unquantified) compensation payments to both A380 customers and airlines that ordered the 'old new' A350; in the form either of cash or of cut-price A330s etc., or both.

3. Up-front expenditure of some billions per year for at least five years on designing and developing the A350XWB, which now looks likely to involve a crash programme to catch up with Boeing on one-piece composite construction.

4. Substantial re-structuring costs (redundancy payments etc.) while implementing 'Power-8'.

Quoting Jacobin777 (Reply 11):
..regardless of what the final version of the A350 is going to be, I think it will be a good money maker for Airbus...

Have to disagree there. Whether it becomes a money-maker depends entirely on how good said 'final version' turns out to be, in competition with what Boeing can offer. And any investors will have to bear in mind that Boeing won't be 'standing still' either; Boeing have an assured positive cash flow for many years, which will give them virtually unlimited scope for further product improvement.

In any case, the A350 (whichever version) cannot possibly be delivered until about 2014 at the earliest. Cash flow on the A350 programme will be heavily negative until that time. Which makes the A350 a medium-term liability, not an asset, from an investor's point of view.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 13, posted (7 years 6 months 3 weeks 3 days 21 hours ago) and read 1879 times:

Quoting NAV20 (Reply 12):

1. Loss-making A380 production until at least 2010.

 checkmark 

Quoting NAV20 (Reply 12):

2. Heavy (and as yet unquantified) compensation payments to both A380 customers and airlines that ordered the 'old new' A350; in the form either of cash or of cut-price A330s etc., or both.

 checkmark 

Quoting NAV20 (Reply 12):

3. Up-front expenditure of some billions per year for at least five years on designing and developing the A350XWB, which now looks likely to involve a crash programme to catch up with Boeing on one-piece composite construction.

 checkmark 

Quoting NAV20 (Reply 12):

4. Substantial re-structuring costs (redundancy payments etc.) while implementing 'Power-8'.

 checkmark 

Quoting NAV20 (Reply 12):
Have to disagree there. Whether it becomes a money-maker depends entirely on how good said 'final version' turns out to be, in competition with what Boeing can offer. And any investors will have to bear in mind that Boeing won't be 'standing still' either; Boeing have an assured positive cash flow for many years, which will give them virtually unlimited scope for further product improvement.

....given that even the original A350 was close to selling 200 LoI/done contracts/etc....it seems that the A350MK-I would have probably broken even..now that Airbus is coming out with a [i]much[/m] improved version of the A350, even with the higher costs, it will certainly be a good seller...of course, we'll know in a year or so if that's the case...but I'm sure Airbus will have no problems getting a plethora of carriers to sign up for it...

Quoting NAV20 (Reply 12):
In any case, the A350 (whichever version) cannot possibly be delivered until about 2014 at the earliest. Cash flow on the A350 programme will be heavily negative until that time. Which makes the A350 a medium-term liability, not an asset, from an investor's point of view

 checkmark 



"Up the Irons!"
User currently offlineKen777 From United States of America, joined Mar 2004, 8220 posts, RR: 8
Reply 14, posted (7 years 6 months 3 weeks 3 days 16 hours ago) and read 1825 times:

Quoting Jacobin777 (Reply 13):
....given that even the original A350 was close to selling 200 LoI/done contracts/etc....it seems that the A350MK-I would have probably broken even..now that Airbus is coming out with a [i]much[/m] improved version of the A350, even with the higher costs, it will certainly be a good seller...of course, we'll know in a year or so if that's the case...but I'm sure Airbus will have no problems getting a plethora of carriers to sign up for it...

The 350 Mk I might have been close to break even, much like Boeing with the 748. Unfortunately they went around in circles, increasing costs on each turn. When you add in the unusable investment in all of the discarded versions to the cost of developing the current version I believe Airbus faces a far greater challenge in breaking even - especially if Boeing is able to continually improve the 787.

It may be ironic if the majority of the 350 sales are based on unavailability of the 787 - based on a long backorder for the 787. Airbus might well have picked up those orders with the Mk I and made more profits than the newest version could bring in.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 15, posted (7 years 6 months 3 weeks 3 days 10 hours ago) and read 1758 times:

Quoting Ken777 (Reply 14):
The 350 Mk I might have been close to break even, much like Boeing with the 748. Unfortunately they went around in circles, increasing costs on each turn. When you add in the unusable investment in all of the discarded versions to the cost of developing the current version I believe Airbus faces a far greater challenge in breaking even - especially if Boeing is able to continually improve the 787.

It may be ironic if the majority of the 350 sales are based on unavailability of the 787 - based on a long backorder for the 787. Airbus might well have picked up those orders with the Mk I and made more profits than the newest version could bring in.

I agree, in fact, I wrote a long comment regarding it on another thread...



FI: 787-10 To Face A350-900 Challenge

reply#88

..take a look at that, maybe there are some points you can discuss with that also.... Smile

Regards..



"Up the Irons!"
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Strikes At Eads Planned Over "Power 8" In Germany posted Tue Jan 23 2007 14:47:25 by Lumberton
WSJ: Airbus To Unveil "Major" Plane Order Monday 2 posted Tue Jan 9 2007 00:14:20 by ANCFlyer
Eads To Reveal "Power8" Restructuring Imminently posted Fri Jan 5 2007 16:00:24 by Leelaw
WSJ: Airbus To Unveil "Major" Plane Order Monday posted Thu Jan 4 2007 17:40:33 by Leelaw
Airbus Should Sell A332 "NxGen" Alongside A350 posted Tue Dec 12 2006 17:21:02 by DIA
Airbus Can't "guarantee" A380 Q3 07 Delivery posted Tue Nov 28 2006 04:42:20 by QF744
Boeing Won't Imitate Airbus' "Symbolic" China FAL posted Tue Oct 31 2006 09:03:15 by Leelaw
Boeing Feels "Compassion" For Airbus' Troubles posted Sun Jul 16 2006 22:31:19 by BoomBoom
SQ:why "only" 20 787s? posted Mon Jun 19 2006 11:11:02 by LY777
BAE Forces Eads Purchase Of Airbus Stake posted Wed Jun 7 2006 18:19:54 by NAV20