WINGS From Portugal, joined May 2005, 2831 posts, RR: 70 Reply 4, posted (6 years 3 months 1 week 1 day 23 hours ago) and read 3715 times:
This is indeed both excellent news for Airbus and Thai Airways. It also puts to rest the theory that Thai was a likely candidate to cancel it's A388 order. With this move I'm more than confident that Malaysian Airlines will also opt to keep it's A388 order in order to compete at the same level as it's closet rivals (SQ, QF,TG).
Thai Airways opting for the A333 is also the most logical choice as it will permit Thai to retire it's aging A306 fleet. I imagine that this order will also include some options for the future. Thai will have plenty of time in the future to place additional A388 orders. Currently they have to concentrate on renewing it's A306 fleet, which seems that is exactly what they are doing.
Is this the first Pax Widebody order for Airbus this year?
Also seems to be more evidence that the "compensation" for the A380 delays is of the order of $10m - $15m per frame, depending on the influence of the customer.
According to this article TG is paying about US$90 million for the A330's, down from a listprice of about US$140 million (these are prices for the aircraft without the engines it seems).
Also interesting to note is that the Bangkok post claims that the deal is worh about US$2.4 billion. This can't be listprice, but does seem a little high, if you consider the heavily discounted A330s) Assuming the Bangkok Post is correct, or somewhat correct, TG would then pay US$2.4 billion - US$720 million (for 8 A330 @ US$90 million each) = US$1.68 billion for the 6 A380s. That's a surprising US$280 million for each A380.
Astuteman From United Kingdom, joined Jan 2005, 9137 posts, RR: 96 Reply 9, posted (6 years 3 months 1 week 1 day ago) and read 2538 times:
Quoting Manni (Reply 8): According to this article TG is paying about US$90 million for the A330's
The interesting point for me is that the discount on the A330's IS the compensation for the A380 delay.
From that I infer that the price paid by TG for the A380's has NOT in fact changed, therefore the margin has not changed (any production cost increases excepted..)
And yet, a $10m reduction in an A330 still probably results in a marginally profitable airframe, particularly if it forms part of a production rate increase for the A330's.
I also infer from this that those who believed that airlines like QF have been given both cash penalty payments AND firesale price A330's are in fact double-dipping.
Slz396 From , joined Dec 1969, posts, RR: Reply 12, posted (6 years 3 months 1 week 21 hours ago) and read 2230 times:
Quoting Astuteman (Reply 6): This seems to be more evidence that the "compensation" for the A380 delays is of the order of $10m - $15m per frame, depending on the influence of the customer.
Indeed.
Compensation is around $10M/frame, which is in line with rough calculations made after Airbus provided guidance about the cost (not revenue shift) of the A380 delays and falls nicely in line with the numerous remarks compensation payments foreseen in the contracts are limited in amount and cumulative delays have made the airlines hit these limit some time ago....
Quoting Astuteman (Reply 10): The interesting point for me is that the discount on the A330's IS the compensation for the A380 delay. From that I infer that the price paid by TG for the A380's has NOT in fact changed, therefore the margin has not changed (any production cost increases excepted..). It also infers from this that those who believed that airlines like QF have been given both cash penalty payments AND firesale price A330's are in fact double-dipping.
Correct observation.
Some airlines may indeed have received cash payments and discounts on additional sales, but this combined compensation method is likely NOT going to have surpassed the $10M/frame limit either.
6thfreedom From Bermuda, joined Sep 2004, 3266 posts, RR: 22 Reply 13, posted (6 years 3 months 1 week 21 hours ago) and read 2217 times:
TG also announced that they are dropping ALL their non-stops to the USA, and may operate via PVG and ICN.
I wonder if they'll do these with the A345s? I think the capacity is too low, and a waste.
There aren't any other sectors that their optimal for either!
If anything, perhaps put them on the SYD sector, which at the moment is overcapacity and they're wasting more than 3 aircraft on.
EI321 From Iraq, joined Jul 2009, 0 posts, RR: 0 Reply 14, posted (6 years 3 months 1 week 21 hours ago) and read 2176 times:
Quoting Scouseflyer (Reply 5): And I can't think who the final two are - help!
Quoting Manni (Reply 8): This can't be listprice, but does seem a little high, if you consider the heavily discounted A330s) Assuming the Bangkok Post is correct, or somewhat correct, TG would then pay US$2.4 billion - US$720 million (for 8 A330 @ US$90 million each) = US$1.68 billion for the 6 A380s. That's a surprising US$280 million for each A380.
Leelaw From , joined Dec 1969, posts, RR: Reply 16, posted (6 years 3 months 1 week 19 hours ago) and read 1977 times:
Quoting Slz396 (Reply 13): Compensation is around $10M/frame, which is in line with rough calculations made after Airbus provided guidance about the cost (not revenue shift) of the A380 delays and falls nicely in line with the numerous remarks compensation payments foreseen in the contracts are limited in amount and cumulative delays have made the airlines hit these limit some time ago
How much was Airbus' "rough calculation" of the total "cost" of compensation expenses related to the A380 delays to which you refer, and has a loss reserve in that amount been recorded on the EADS/Airbus books?
Stitch From United States of America, joined Jul 2005, 26707 posts, RR: 83 Reply 17, posted (6 years 3 months 1 week 19 hours ago) and read 1905 times:
Quoting Manni (Reply 7): That's a surprising US$280 million for each A380.
TG may have been willing to "pay list" and accept better terms on spares and training or other services.
If true, it may explain why they didn't want to cancel their order as even if the bulk of that cash is due on delivery, the initial deposits were probably in the tens of millions per frame so the total was probably over one hundred million USD. That's a lot of cash to just walk away from.
So a bit extra discount on the A330s TG wanted would have probably been enough incentive and both Airbus and TG conclude both deals to their mutual satisfaction.
Manni From South Korea, joined Nov 2001, 4221 posts, RR: 23 Reply 18, posted (6 years 3 months 1 week 19 hours ago) and read 1845 times:
Quoting Stitch (Reply 17): the initial deposits were probably in the tens of millions per frame so the total was probably over one hundred million USD. That's a lot of cash to just walk away from.
IIRC it has been reported that the deposit payed for the 6 A380s was US$97 million. A lot of cash!
If TG really payed about US$280 million for their A380s it begs the question what others (especially airlines with similar sized orders) payed. US$280 million is quiet a difference with what some notorius 'analysts' would like us to believe...
Manni From South Korea, joined Nov 2001, 4221 posts, RR: 23 Reply 21, posted (6 years 3 months 1 week 18 hours ago) and read 1681 times:
Quoting EI321 (Reply 19): What percentage of the aircrafts price does the deposit usually make up?
Not sure but to give you an idea, US$97 million would be about 5% of the listprice for 6 A380s.
Quoting PM (Reply 20): ATW Online is reporting that they are A330-200s. An error?
Possibly. All the other reporters are writing that the deal is for A333s. However, considering the price they get them for, Airbus A332s sounds more plausible.
Slz396 From , joined Dec 1969, posts, RR: Reply 22, posted (6 years 3 months 1 week 16 hours ago) and read 1559 times:
Quoting Slz396 (Reply 12): Compensation is around $10M/frame, which is in line with rough calculations made after Airbus provided guidance about the cost (not revenue shift) of the A380 delays and falls nicely in line with the numerous remarks compensation payments foreseen in the contracts are limited in amount and cumulative delays have made the airlines hit these limit some time ago....
Quoting Leelaw (Reply 16): How much was Airbus' "rough calculation" of the total "cost" of compensation expenses related to the A380 delays to which you refer, and has a loss reserve in that amount been recorded on the EADS/Airbus books?
From the EADS regulatory statement on October 3rd last year on the impact of A380 delays:
The revised A380 delivery schedule results in a cumulative EBIT shortfall of € 4.8 billion compared to the original baseline plan for the years 2006 to 2010 (at $1.30 per €1.00):
Thereof, close to € 2 billion cumulative EBIT previously expected between 2006 and 2010 will be postponed beyond 2010 as a result of the delivery shifts to later years.
In addition, cost overruns and late delivery payments will result in irrecoverable expenses corresponding to a € 2.8 billion reduction in previously expected cumulative EBIT over the 2006 to 2010 period.
There you have it: €2.8bn (or $3.6bn) for cost overruns plus penalty payments combined....
Going by the most quoted figures, the A380 is about $2bn over budget, which leaves about $1.6bn for penalty payments. Divided by about 160 planes, gives $10M/frame.
When this figure was first floated by me (and a few others), many jumped over me for being way too optimistic and underestimating the penalty payments, yet the figures TG has been putting forward in public without all too much hesitation fall nicely in line with our conclusions based on the info EADS provided us through their regulatory announcement.
DAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 4 Reply 23, posted (6 years 3 months 1 week 16 hours ago) and read 1544 times:
Quoting WINGS (Reply 4): It also puts to rest the theory that Thai was a likely candidate to cancel it's A388 order.
True. But the future of the 900 remains seriously in doubt.
Airbus is having a great start to 2007.
I wonder how negatively all these cheap A-330 are impacting potential A-350 sales??
Stitch From United States of America, joined Jul 2005, 26707 posts, RR: 83 Reply 24, posted (6 years 3 months 1 week 16 hours ago) and read 1478 times:
Quoting Manni (Reply 18): If TG really payed about US$280 million for their A380s it begs the question what others (especially airlines with similar sized orders) payed. US$280 million is quiet a difference with what some notorius 'analysts' would like us to believe...
I imagine it depends on what each airline valued more. An airline like EK, taking so many, would be building up a huge maintenance and training facility, anyway, so they may have put more emphasis on purchase price.
An airline taking less, like QR or EY, might have viewed training and maintenance support as more valuable then a straight discount. So they may have traded $25 million off on the plane for, say, $30 or $40 million off training or spares. Since training and spares probably have higher mark-ups, the revenue "hit" to Airbus would probably be the same (or even less), even though the "value" of the discount was greater.
Quoting EI321 (Reply 19): What percentage of the aircrafts price does the deposit usually make up?
To listen to Boeing on their tour, it's one-third. However, to listen to some of the airlines themselves, it's probably closer to 5% or so. I imagine 5-10% makes sense, plus some progress payments as the plane starts to take shape. I expect by the time she's done, the airline has paid for at least half, and then the balance is handed over at delivery.
But it probably depends on the plane and the customer. Airlines with large orders or established histories (or both) no doubt get better terms then start-ups or new customers. For example, I am sure QF did not need to put down 1/3rd on each of their 45 787s.
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Wow, the A330 is really on the roll this year too, congrats to Airbus!
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