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Break Even Numbers For A380, 777, & 787  
User currently offlineBigbird From United States of America, joined Aug 2004, 183 posts, RR: 0
Posted (7 years 1 month 2 weeks 1 day 12 hours ago) and read 12559 times:
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I know that the last published Break Even sales numbers for the A380 was 420. Does anyone know if this has changed? Also, with the increased developement costs just announced by Boeing recently does anyone know what the new Break Even numbers are for the 787? Also the 777 if known.


bigbird from georgia
120 replies: All unread, showing first 25:
 
User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 79
Reply 1, posted (7 years 1 month 2 weeks 1 day 12 hours ago) and read 12405 times:

Quoting Bigbird (Thread starter):
I know that the last published Break Even sales numbers for the A380 was 420. Does anyone know if this has changed?

I don't know of any further hiccups in the program since they said 420 so it seems like it should be as valid as it ever was. Airbus has a huge incentive to keep that number low, and I know there are a lot of people who speculate that the A380 will never break even, so I'm not sure how good an estimate 420 ever was.

Quoting Bigbird (Thread starter):
Also, with the increased developement costs just announced by Boeing recently does anyone know what the new Break Even numbers are for the 787?

It's tough to tell if those were already included in the program cost or not. Boeing had planned and budgeted for significant contingencies on the 787 program. It's not clear if the recent announcements were activiation of existing contingencies (in which case they might have already been in the break-even calculation) or if that's new money.

Quoting Bigbird (Thread starter):
Also the 777 if known.

I believe the intended breakeven on the 777 was 250. Even if it went way over, that program should have been making money quite some time ago.

My basic assumption is that the 737 keeps the lights on, the 747/767 provide a nice but not-assumed bonus, and the 777 is paying for the 787 development.

Tom.


User currently offlineFerret From United States of America, joined Jun 2000, 123 posts, RR: 0
Reply 2, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12263 times:

Quoting Tdscanuck: "...the 737 keeps the lights on, the 747/767 provide a nice but not-assumed bonus, and the 777 is paying for the 787 development."

I'd say that sums it up well!  Smile

What advantage is the stated 420 A380 break-even number if it's not correct?



Murphy lives here.
User currently offlineBringiton From United States of America, joined Sep 2006, 866 posts, RR: 0
Reply 3, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12244 times:

Quoting Tdscanuck (Reply 1):
so it seems like it should be as valid as it ever was

Louis Gallois in an investors confrence sometime back has said that the no. has risen further but hasnt specified what the new number is . You can search the forum for more on that.


Regards


User currently offlineUAEflyer From United Arab Emirates, joined Nov 2006, 1083 posts, RR: 0
Reply 4, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12215 times:

In term of the A380 which most of our colleagues here say it will never break-even. Can't Airbus cover that costs by the profit from the A32X program or by A330 program. As from business prospective i think that should work.

User currently offlineBringiton From United States of America, joined Sep 2006, 866 posts, RR: 0
Reply 5, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12194 times:

Quoting UAEflyer (Reply 4):
Can't Airbus cover that costs by the profit from the A32X program or by A330 program.

No one is disputing airbus's ability to leverage its succesfull aircraft projects to produce profits by offsetting the ones that arent making the profits .


User currently offlineCygnusChicago From United States of America, joined Mar 2007, 758 posts, RR: 1
Reply 6, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12096 times:

The A380 numbers are much higher if you use current selling prices. The 420 number assumes they can regain pricing power.

777 did go way over the 250 number, by close to the same margin that the A380 went over its 250 number. A few months ago, I posted the real breakeven numbers for the a.net community's interest, but someone with a chip on their shoulder had it deleted because you can't get this data using a google search.

If you're interested in the real numbers, PM me, and I will share  Smile



If you cannot do the math, your opinion means squat!
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 7, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12045 times:

Quoting CygnusChicago (Reply 6):
The 420 number assumes they can regain pricing power.

..IIRC, it was under the assumption of around $1.30/Euro....we are $1.38/Euro...doesn't help the situation.. no ..

..that being said, regarding the A380 program, its no longer about "breaking even"..its about getting money from those frames sold.....i.e.-generating cash flow...



"Up the Irons!"
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 35
Reply 8, posted (7 years 1 month 2 weeks 1 day 10 hours ago) and read 12039 times:

I used to earn a living in project analysis, which included cash flow projections. It's a complicated field; but I'll try to explain the basic principles.

Suppose that you have a product that will cost you 1,000 (dollars, pounds, euros, whatever) to develop, cost 50 to build, and sell for 100. Also suppose that it will take a full year to develop; that you will sell 10 units a year; and that you can borrow money to develop it at an interest rate of 10%.

OK – in Year 1, your cash flow will be entirely outward – 1,000 development cost, subject to interest at 10%. Assuming a regular monthly outward cash flow, that will cost you 1,000 plus 50 (10% interest for half the year) = 1,050.

In Year 2, you start selling. Gross sales income on 10 units is 1,000, but production cost is 50 per unit = 500 (net sales income); and you also have to deduct interest on the outstanding development cost (that arithmetic being 1,050 at 10% = 105). So net income is (1,000 – 605 =) 395. You ‘apply’ that surplus to reducing your debt.

In Year 3, net sales income is again 500; but your interest payment is reduced to (605 at 10% =) 60.5, leaving a surplus of 439.5 which you can again apply to reducing your debt.

Carry that arithmetic through and you’ll find that you’ll clear the debt plus accumulated interest (i.e. ‘break even’) some time in Year 5. After that, the 500 p.a. net income is pure profit.

Of course, in real life, things tend to be more complicated. You often have to offer discounts on early sales; interest rates are variable; you usually have to borrow the working capital needed for production as well as the original development cost; you have shareholders clamouring for annual dividends; cash flows have to be analysed on a monthly or weekly basis, not an annual one; etc, etc. Above all, ‘Murphy’s Law’ (“If it CAN go wrong, it bloody well WILL go wrong, at the worst possible time”) invariably applies.

But you will (I hope) gather from the above that Boeing, with nearly 1,000 X 777s and 700 X 787s sold, can probably at least ESTIMATE when they are likely to reach their breakeven points on both models (i.e. all development costs recovered), if costs, interest rates etc. remain under control.

Airbus, with only maybe 160 X A380s sold, are in no position to form any sort of comparable estimate – as things stand, proceeds of sales cannot hope to recoup the costs of development and production, and they are facing a certain and mounting loss on the A380 programme unless they can jack sales up by several hundred units.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 79
Reply 9, posted (7 years 1 month 2 weeks 1 day 9 hours ago) and read 12000 times:

Quoting UAEflyer (Reply 4):
In term of the A380 which most of our colleagues here say it will never break-even. Can't Airbus cover that costs by the profit from the A32X program or by A330 program. As from business prospective i think that should work.

They'll cover it eventually. They took pretty significant losses last year and (probably) this year. There are three distinct metrics that all sound similar but have very different meanings that sometimes get confused in these types of discussions:

1) Project break-even: Does the particular aircraft ever make enough money to pay for its own development? This is a measure of success of the particular design. It answers, in hindsight, the question "Should we have commercialized this airplane?"

2) Company profitability: Does the company generate revenue to cover their costs? This is a measure of success of the overall strategy of the company.

3) Cash flow: Does money coming in cover money going out? Given the long payment times involved with aircraft, this can be very different from profitability. This is (partly) a measure of how well the company's current business is providing for the needs of future growth. All new aircraft have enourmous negative cash flow during development...you need to have profitable aircraft in production or else get someone to loan/give you money.

Tom.


User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 10, posted (7 years 1 month 2 weeks 1 day 8 hours ago) and read 11863 times:

Quoting UAEflyer (Reply 4):
In term of the A380 which most of our colleagues here say it will never break-even. Can't Airbus cover that costs by the profit from the A32X program or by A330 program. As from business prospective i think that should work.

That is exactly what is going to have to happen if the A380 doesn't sell 420 units or whatever the real number is. This program is also why Airbus is finally having to face and do something about its bloated overhead with the Power 8 program.


User currently offlineEA772LR From United States of America, joined Mar 2007, 2836 posts, RR: 10
Reply 11, posted (7 years 1 month 2 weeks 1 day 8 hours ago) and read 11822 times:

I would think that the 777 is WELL past it's breakeven point, and is making Boeing some cash. The 787 with around 700 orders will no surpass the breakeven point sooner than later


We often judge others by their actions, but ourselves by our intentions.
User currently offlineEMBQA From United States of America, joined Oct 2003, 9364 posts, RR: 11
Reply 12, posted (7 years 1 month 2 weeks 1 day 8 hours ago) and read 11813 times:

Quoting Bigbird (Thread starter):
Break Even numbers are for the 787?

I thought I saw something like 380 or so..... which was long ago passed in sales.

Quoting Bigbird (Thread starter):
Break Even sales numbers for the A380 was 420.

Yea, I think that was the last numbers I saw too... the problem, the longer it takes to get it into service the higher those numbers grow and with current sales trends on the A380 its a tall mountain to climb to break even.



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineEA772LR From United States of America, joined Mar 2007, 2836 posts, RR: 10
Reply 13, posted (7 years 1 month 2 weeks 1 day 8 hours ago) and read 11758 times:

Quoting Jacobin777 (Reply 7):
..that being said, regarding the A380 program, its no longer about "breaking even"..its about getting money from those frames sold.....i.e.-generating cash flow...

 checkmark  Exactly. At this point the 160 or so orders need to be put in 'revenue' service, then worry about creating sales for the program.

Quoting Bringiton (Reply 3):
Louis Gallois in an investors confrence sometime back has said that the no. has risen further

This is a little concerning to me. I hope for the best with the A380  crossfingers .



We often judge others by their actions, but ourselves by our intentions.
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 10023 posts, RR: 96
Reply 14, posted (7 years 1 month 2 weeks 1 day 7 hours ago) and read 11574 times:
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Quoting CygnusChicago (Reply 6):
A few months ago, I posted the real breakeven numbers for the a.net community's interest

Saw that, and it was with interest.

Given that corporate overheads, R+D etc, get assigned out on some sort of pro-rata basis, I was intrigued to see how you could possibly come up with a "definitive" answer to that question, for any model, from any manufacturer.

My own suspicions are that getting even a "relevant" figure for actual break-even for a particular model for a particular manufacturer would be a work of the dark arts (or pie in the sky, if one wasn't blessed with the requisite spiritual skills  Smile )

Regards


User currently offlineCruzinAltitude From United States of America, joined May 2004, 415 posts, RR: 1
Reply 15, posted (7 years 1 month 2 weeks 1 day 6 hours ago) and read 11468 times:

Quoting Tdscanuck (Reply 1):
My basic assumption is that the 737 keeps the lights on, the 747/767 provide a nice but not-assumed bonus, and the 777 is paying for the 787 development.



Quoting UAEflyer (Reply 4):
In term of the A380 which most of our colleagues here say it will never break-even. Can't Airbus cover that costs by the profit from the A32X program or by A330 program. As from business prospective i think that should work.

[disclaimer] The following opinions are just that, opinion. Don't ask me for sources, don't slam me and call me an idiot for being so out of touch from the airliner manufacturing industry. The opinions below make sense to me and my own twisted little mind. [/disclaimer]

I think it is important to highlight the difference between both companies right now.

Boeing is likely using the 737 cash to keep the day to day operations going, and the 777 cash to fund Boeings upcoming projects. I also imagine the profit from the 787 is going a long way to fund the next Y product.

On the other hand, Airbus is likely using the A32x cash to just keep things a float. I'm sure that Airbus had hoped the A380 would help pave the way to further airliner development. However the A380 is probably sucking money out of Airbus at an alarming rate. The A350 has to have been expensive to develop up to this point because of the number and complexity of revisions.

I really think right now the ball is in Boeings court. Boeing has the capital to effectively move on the 787-10 and the 797 projects without feeling to much of a pinch. Airbus is likely to be scraping cash together to move on their next narrowbody.

That is quite a difference in financial situations if you ask me.

Any thoughts?


User currently offlineIkramerica From United States of America, joined May 2005, 21526 posts, RR: 59
Reply 16, posted (7 years 1 month 2 weeks 1 day 6 hours ago) and read 11438 times:

Quoting UAEflyer (Reply 4):
In term of the A380 which most of our colleagues here say it will never break-even. Can't Airbus cover that costs by the profit from the A32X program or by A330 program. As from business prospective i think that should work.

Of course, on a grand scale, this can work. But the problem is, because of state loans and aid, they aren't supposed to account for it that way. It's a per program proposition.

Further, the case against the A380 is that they used false numbers to justify the program. If they had been honest from the start and said they would sell 400, and made the case to the EU that the prestige and job creation are worth the lack of return on investment, then that's different. This is done ALL THE TIME with state aid. I'm working on a film right now where the primary concern of the state of New Mexico is the former, and the prospect for return on investment is just a bonus. If they are only repaid their loan, with no profit, they still win based on the influx of cash and the creation of jobs.

But if the criteria for greenlighting an aircraft program for Airbus is that they will make a ROI, then no, the A320 "making up" for the A380 is not a valid argument. At least not when they continue to build the money losing product.



Of all the things to worry about... the Wookie has no pants.
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 17, posted (7 years 1 month 2 weeks 1 day 6 hours ago) and read 11408 times:

Quoting Bigbird (Thread starter):
know that the last published Break Even sales numbers for the A380 was 420. Does anyone know if this has changed?

It's higher now, but the accounting here is a black dark secret. Airline manufacturors try to keep this number as hidden as possible because it reflects the inner details of how much it costs them to do business. It's the margin information for their product line, and like any other retailer they want to keep it quiet.

I think it's probably fair to estimate that the A380 is costing at least 450 frames to offset costs at this point, given just the currency increases alone (airbus burned through their hedges for most of their orders). Add a few more frames for other unintended costs as well, then +/- 10 frames depending on a lot of factors including rate of repaying loans, etc.

Also bear in mind that 200 tends to be the magic number in the aviation business. Most new programs are slated to be repaid at 200 frames, including the original projections for the A380 and the 777. The 777 went double over it's budget (reportedly) and the A380 is somewhere well north of that. Most projections of the 777 I saw where that break even was somewhere around 390-410 frames.

The 787 is a bit of a different bird. Since there is much more revenue sharing, but also much less capital investment on Boeing's part, the breakeven number should have still been around 330-360 orders (obviously, Boeing is making bank right now). Since a lot of the investment capital was risk shared among the partners, it's going to be different for each company. Boeing also makes a pretty penny with purchases it capitalizes itself.

Quoting CygnusChicago (Reply 6):

777 did go way over the 250 number, by close to the same margin that the A380 went over its 250 number. A few months ago, I posted the real breakeven numbers for the a.net community's interest, but someone with a chip on their shoulder had it deleted because you can't get this data using a google search.

IIRC, you actually posted those numbers as a response to one of my posts, and I still am a bit skeptical of them, given that it really knocked the 330/340 down in terms of profitability. I unfortunitly do not have the numbers any longer as well.


User currently offlineSllevin From United States of America, joined Jan 2002, 3376 posts, RR: 6
Reply 18, posted (7 years 1 month 2 weeks 1 day 6 hours ago) and read 11408 times:

Quoting Bigbird (Thread starter):
I know that the last published Break Even sales numbers for the A380 was 420.

I believe the statement was "at least 420" and there's been no guidance since.

Steve


User currently offlineIkramerica From United States of America, joined May 2005, 21526 posts, RR: 59
Reply 19, posted (7 years 1 month 2 weeks 1 day 5 hours ago) and read 11362 times:

Quoting AirFrnt (Reply 17):
Since a lot of the investment capital was risk shared among the partners, it's going to be different for each company. Boeing also makes a pretty penny with purchases it capitalizes itself.

A good example is the engine companies.

B has likely gone positive on the 777LR program with the delivered frames. but it will take GE longer.

This is because they amortize over not just initial delivery, but replacement engines and parts as well. They may not break even, according to GE, until 2015, even though deliveries will have basically stopped for new 777LR frames (save for the F). But the replacement engine market will be ramping up...



Of all the things to worry about... the Wookie has no pants.
User currently offlineYellowtail From United States of America, joined Jun 2005, 6165 posts, RR: 2
Reply 20, posted (7 years 1 month 2 weeks 1 day 5 hours ago) and read 11356 times:

Quoting EMBQA (Reply 12):
I thought I saw something like 380 or so..... which was long ago passed in sales.


for the 787? Wouldn't this be ironic! that the 787s break even number was 380......funny



When in doubt, hold on to your altitude. No-one has ever collided with the sky.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 21, posted (7 years 1 month 2 weeks 1 day ago) and read 11088 times:

Quoting Ikramerica (Reply 16):

But if the criteria for greenlighting an aircraft program for Airbus is that they will make a ROI, then no, the A320 "making up" for the A380 is not a valid argument. At least not when they continue to build the money losing product.

Even though its partially owned by various govts....as a publicly traded company, EADS has a fiduciary responsibility towards its shareholders.....

Quoting Yellowtail (Reply 20):
Quoting EMBQA (Reply 12):
I thought I saw something like 380 or so..... which was long ago passed in sales.


for the 787? Wouldn't this be ironic! that the 787s break even number was 380......funny

..its actually between 400-600 (which has been the "traditional" amount for widebodies)....not to mention, there has been a cost increase (along with the B748)



"Up the Irons!"
User currently offlineWingedMigrator From United States of America, joined Oct 2005, 2212 posts, RR: 56
Reply 22, posted (7 years 1 month 2 weeks 21 hours ago) and read 10963 times:

Quoting Ikramerica (Reply 16):
Further, the case against the A380 is that they used false numbers to justify the program.

Is that a case of 20/20 hindsight? Remember, they didn't build the wrong airplane, but they built the airplane wrong. In the process the breakeven point went from 250 to 420+, taking the projected ROI from 'reasonable' to 'slim to none'.

Quoting Ikramerica (Reply 16):
But if the criteria for greenlighting an aircraft program for Airbus is that they will make a ROI, then no, the A320 "making up" for the A380 is not a valid argument.

 checkmark 

Quoting Ikramerica (Reply 16):
At least not when they continue to build the money losing product.

Not building the money losing product would cost them more than building it. On a per-frame basis they said they will make more money than they spend starting in 2010, so continuing is indeed the correct business decision (if they are not deluding themselves again).

Quoting Yellowtail (Reply 20):
Wouldn't this be ironic! that the 787s break even number was 380......funny

It would be even more ironic if the A380's break even number was 787 Big grin


User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 79
Reply 23, posted (7 years 1 month 2 weeks 17 hours ago) and read 10026 times:

Quoting WingedMigrator (Reply 22):
Remember, they didn't build the wrong airplane, but they built the airplane wrong.

It is, at best, unclear if they built the wrong airplane. There may not ever be enough market at that size for the project to ever break even. They certainly did build the plane wrong but, in the grand scheme of things, that will get taken care of.

Quoting WingedMigrator (Reply 22):
On a per-frame basis they said they will make more money than they spend starting in 2010, so continuing is indeed the correct business decision

It's only the correct business decision if the money they make from 2010 and on exceeds the loss they'll take from now to 2010 (plus interest).

Tom.


User currently offlineStitch From United States of America, joined Jul 2005, 30977 posts, RR: 86
Reply 24, posted (7 years 1 month 2 weeks 12 hours ago) and read 9118 times:
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Quoting Ikramerica (Reply 16):
Further, the case against the A380 is that they used false numbers to justify the program.

I think it's more a case of "optimistic" numbers more then "false" ones. Boeing found no traction with any of their 747 variants, the 787 was at best a "concept", and the 777-300ER development program was looking to have no better performance then the 777-200ER.

Airbus probably felt they had a plane that Boeing had no answer to. They likely expected most of the world's 744/744F operators to move to the A380/A388F over time because it would literally be the only option available to them.

Instead, the 77W was better then expected and many 744 operators chose it. And Boeing finally got it right with the 747-8F, which negated most of the market for the A388F. And then the 787 appeared and made it more efficient to bypass the most constrained hubs in many cases. And now Airbus themselves are doing the best job of undermining the case for the A388 by launching the A350.

I don't think the A380 would have been "saved" even if she had EIS'd right on time. I don't believe the scarcity of new customers is because their waiting to see how the plane performs in service. I think it is because most don't see a need for it anymore now that they can get the 787 and A350.


26 9252fly : Excellent post!
27 Wsp : If I understand you correctly then the LH 747-8I order is just a bridging order for later A350s ?
28 Post contains images Stitch : I'd find that highly unlikely because the 747-8Is would enter into service only a half-decade or so before the A350-1000s and LH's A340-600s themselv
29 474218 : Lets say you own a taxi company with three cars and three drivers. Two of the drivers always turn a profit, but the third never has enough fares to c
30 Stitch : That time has, unfortunately, passed, though it never really existed since Airbus would have had to cancel the program around MSN005. The situation i
31 Egronenthal : Call me cynical, but it is not really in Airbus' best interests to ever break even on a program (or at least publicly announce such a milestone), beca
32 Ikramerica : The projected 900-1100 sales over 20 years (from 2000), including a 1:1 replacement for the 744. That still required hundreds of more sales to custom
33 Flying_727 : I would say the 737 pretty much pays for everything, the 777 helps out a little bit, Boeing is now giving 767's away to keep the line open for the ta
34 Gbfra : If all this is so obvious, why is Boeing predicting in its current market outlook a demand for 960 VLAs until 2026? Why did they decide to develop th
35 Maddog888 : I'm no financial/airline industry expert but...could the case not be made also for the 380 to be a (admittedly enormous) loss leader. If selling it k
36 474218 : Please explain. Airbus has orders for 160 A380, what is to stop them from saying "we will build what we have orders for and that is all we are going
37 Pygmalion : People seem to forget that Boeing has gotten something like $8 billion dollars in deposits for the 787 so far... I dont see any reason that any other
38 Post contains images Astuteman : Misinformed would probably be a better adjective...... The loans have to be repaid whatever. Profitable sales are always worthwhile. The development
39 Post contains images Wsp : So VLAs are dead. Except for the cases where they aren't. The payments you are referring to are made upon aircraft delivery. Rational thought. They a
40 Stitch : While there is some debate on how much, if any, of the RLA needs to be actually repaid in the event a program never generates a profit, it is not in
41 Post contains images Stitch : It is not my intent to say that VLAs are "dead". Instead, I am saying that airlines now have options, and will have even more in the future, that "pe
42 BoomBoom : That's the total VLA market: A380, and 748 combined. A lot of those will be freighters, and Boeing owns that market now. Didn't Airbus initially pred
43 Gbfra : No, they really haven't. Their cash balance at the end of second quarter was quite impressive as well as their cash flow prediction for the whole yea
44 Wsp : Boeing has a separate freighter airplane forecast.
45 WingedMigrator : They have never done that. They predicted 1500 VLA sales, of which they expected to take half (about 750). Some (minority) folks in the Boeing sales
46 Post contains links Gbfra : This was reported by www.leeham.net, iirc.
47 Post contains links BoomBoom : I found this amusing article from 2004: http://www.iht.com/articles/2004/12/17/t16_5.php
48 Azhobo : On the 748 vs a380 discussions... If a company has a route that is suited for 748i sized aircraft, is there any economic benefit from buying an a380,
49 Stitch : Yes, in that even with similar percentages, an A388 will have more people per class, which reduces CASM. It also tends to reduce RASM, but it appears
50 474218 : Just how many people in the general population do you think actually care (or even know) what type of airliner they fly? I worked for a airframe manu
51 Tdscanuck : The huge difference between the 747-8i and the A380 is that the 747-8i is a relatively straightforward derivative of the 747 while the A380 is a new
52 FlyDreamliner : Well, yes and no. A330 profits first and foremost go to cover the admittedly modest losses of the A340NG program, and the A320 profits are what keeps
53 Stitch : They care about the cabin, and if the A388 is the only plane that offers that cabin, then they will care that they are on an A388. An example is SQ a
54 SSTsomeday : It's difficult to know which costs are being included in the "breakeven" figure and which are not. In addition to the costs of 2 extra years of testi
55 Keesje : I heard nineties development of the Boeing 777 was famously overbudget, costing Boeing somewhere between $10 billion and $12 billion, although you won
56 Post contains images Jacobin777 : ...I'm sure there are a few more here.. ...while I think Stitch is correct on a "theoretically basis", IIRC, when SQ launched their B773ERs to certai
57 Post contains images Keesje : Yes, its bigger, better and sold to all the good names, but .. pushed the 747 out of the passenger business and is not made in the US, which proved u
58 Gbfra : But this is history. Look at their current predictions for VLAs for the next two decades: Airbus: 1260 Boeing: 960 BOTH manufacturers see a market fo
59 Tdscanuck : Most of the people who fly in premium cabins aren't the ones paying for the premium cabins. The majority of premium travel is business. I love flying
60 Azhobo : So that is 50-60 aircraft a year. If that is passenger only that speaks well for airbus. Airbus is looking for production of 45 a380s a year starting
61 Ikramerica : I'm not going to touch that. There are people who will always believe Airbus and EADS are private companies, and that's fine. But there is so much go
62 BoomBoom : Boeing changed their mind? They said there wasn't a market for two new VLAs . Given the low number of sales of the A380 after seven years, it appears
63 Azhobo : Well it seems each year both companies "change their minds" and provide updated predictions for the next 20 years. It appears over the last 7 years b
64 Gbfra : They are talking about the B748 and larger a/c. Will Y3 be larger than the B748? Nobody said Boeing were claiming they will sell 960. Where do you ge
65 Stitch : And yet the folks who do pay for those tickets - corporations - do so because there is a benefit to having their employees arrive rested and ready to
66 Azhobo : The company I work for does allow employees to book all overseas travel in business class for all employees for the reasons you have stated. It is up
67 Post contains links Keesje : Until very recently Boeing estimates that two-thirds of 747-8 orders will be for the passenger version. http://www.atwonline.com/news/story.html?stor
68 BoomBoom : So are you saying that someone who flies 1st class on a 748i, 777 or 787 is going to arrive tired? Is the 1st class product on SQ going to be really
69 Gbfra : If perfect or not: At the beginning of the decade, when Airbus launched the A380, Boeing predicted a demand for only 360 VLA (which means a market fo
70 Stitch : Unlikely, but they may not be as rested as on the A388. The "bed" on SQ's 77W is much wider then the "bed" found on SQ's 744. I can stretch out more
71 BoomBoom : The A380 won't. It doesn't matter how many times they stretch it, it's still not a new VLA. Their forecast was better than Airbus'. Do you think Airbu
72 AirFrnt : Then you didn't look very hard. I personally have referenced that fact several times, and numbers that reflect that have arrisen. Just like the A380
73 Azhobo : The 400 VLA Boeing prediction from 2000 was for aircraft larger than 500 passengers. Aibus was predicting 1500 aircraft greater than 400 passengers a
74 Stitch : True, but they have also sold 209 77Ws. No doubt a significant number of those have gone to replace 744s and I think it reasonable to consider that A
75 Post contains links and images BoomBoom : In fact, there's a thread running right now that mentions it.: Seattle PI: Airbus A350 Muscles In On The 777 (by Douwd20 Jul 31 2007 in Civil Aviatio
76 SSTsomeday : If it was "famously" over-budget, then why would we not have a thread about it? A vast, anti-Airbus A-net conspiracy...? The 747 had already seen it'
77 JayinKitsap : There are a lot of things to consider on break even, many have not been noted here. The figures I am noting are approximate and do not have a specific
78 Post contains links Ikramerica : no, 400+ seats/747 or larger (a VLA). Y3 will be of that size, should it be built. At least the largest model(s). Further, Boeing's projections inclu
79 Post contains images Astuteman : I suspect it's premature to write off the A380F just yet....... you might just get an "Arnie" impression out of it yet.. Interest figures will be a f
80 NAV20 : Astuteman, I'm afraid that that's not so. EADS is quite highly-geared (about 40%, from memory); they owe money to other people besides the EU governm
81 Astuteman : Don't disagree, but EADS average interest on borrowing is c. 4.5%, not 10%. Regards
82 Stitch : The interest on RLA will be no more then what the European Central Bank Discount Rate is at the time, but the balance will be at least a few points hi
83 JayinKitsap : What I was trying to point to was that there are 4 key elements for a program's evaluation: actual sale price, actual cost (NIC R&D), interest on cap
84 NAV20 : Fair enough, A'man, but I was responding to your original view that only interest on the launch aid counted; clearly, interest should be debited on A
85 AirFrnt : A interesting side point, to many discussions that don't count the internal airbus cashflow as part of the development cost. (not saying that this is
86 Post contains images Astuteman : I'm more pointing towards the burgeoning "retired, and not rich, but wealthy enough to travel before I die" market. I see more and more of these when
87 BoomBoom : So people flying business class on the A380 won't be able to work, because they're not in a private cabin? That's complete nonsense.
88 Post contains images Stitch : Of course not. If it was, nobody would fly Business Class, would they? A number of airlines have abandoned First Class completely, but many continue
89 Gbfra : It's up to the airlines but what you can hear they will offer hardly more than 15 to 20 F-cabins on the A380. There will not be many but it appears t
90 SSTsomeday : The problem or liability I foresee with regard to premium passengers and the 380 is not the on-board service per-ce, which can be as wonderful (and s
91 NAV20 : On the subject of investor confidence, I notice that EADS shares just dived below E21.00 on quite large volume (2.5M. shares). When Forgeard and Co. s
92 Post contains images BoomBoom : That was just an unfortunate coincidence.
93 Post contains images Jacobin777 : ....the lower it goes, the more shares I'll be able to eventually purchase..
94 Post contains images Flysherwood : How many A380 have been sold in the last 3 years? Because that is when the 747-8 was launched.
95 Astuteman : And you think that this is the only reason that an aircraft whose development has been right royally screwed up, and delayed for a good 2 years hasn'
96 Post contains images Flysherwood : Absolutely not. I was simply reminding Keesje that reports of the demise of the 747 family as a viable option have been vastly overstated.
97 Post contains images Flysherwood : I would have loved to see Forgeard and Co. try to pull that off here in the US! I know one thing, he wouldn't have gotten his $10 million golden para
98 CygnusChicago : Hmmm, if I recall correctly, weren't you the one requesting inside information for the purposes of material trade in EADS shares? No, it couldn't hav
99 AirFrnt : Go take a look at the prices for the aforementioned services. They are typically between a business and first class fare in terms of price.
100 Olle : Airbus (as I remember) has during the last 10 years generated more profits then the part of Boeing that makes commercial airplanes... They has also su
101 Post contains images Flysherwood : Let me get this straight. You are calling this debacle a small bump in the road to success at Airbus? You do realize that 10,000 people are going to
102 Gbfra : The figure is incorrect. Airbus will reduce their staff by about 10 000. But not all of them will lose their jobs because a couple of factories will
103 Olle : well; I remember that a lot of Boeing people lost their jobs a few years ago as well. Then they got their house in a better shape. I do not call it a
104 Flysherwood : You are quite right. However, there is one huge difference. Boeings problems occurred when they tried to expand production of a frame that was sellin
105 Olle : I do agree.... The top management at EADS and Airbus has been fighting to improve there own positions more then make a job that is in line with the in
106 Olle : But the big question is when or if Airbus starts to take correct decitions. The Power 8 for me is one of them. My point is that a company that start t
107 Post contains images Flysherwood : Unfortunately for Airbus, the A380 will start to generate cashflow, but there will be no profits from the A380 in the near future. But I agree that M
108 Wsp : Airbus said they are firing people who are overhead for the company. Are you suggesting they keep people on the payroll that fulfill redundant work?
109 Gbfra : Europeans are, because of their history, less inclined to jingoism than others. Others might still have to learn this lesson. It is never helpful to
110 Post contains images Flysherwood : Since when am I bashing Airbus from trying to learn from their mistakes. I have always written the comment of 10,000 jobs being lost as a consequence
111 Post contains images Flysherwood : What exactly would you call World War I and World War II?
112 Wsp : Wrong, they became redundant when EADS was formed. If anything, Foregard artificially kept these jobs when he should have laid them off years ago. Th
113 Post contains images Flysherwood : Forgeard didn't even know that he had an overlap in these jobs. Remember, he had no idea that the A380 was going to be delayed!!! I think you are for
114 Flysherwood : I said I qualified for an EU passport. I am quite aware that I would be subject to paying taxes to the government of his Majesty King Juan Carlos de
115 Art : I suspect that what happened was that Forgeard and others had an option to buy a number of shares in the future at a certain price. When the date to
116 Post contains images Flysherwood : And conveniently timed days before the official announcement of the delays in the A380 which he as the CEO had absolutely no idea was going to happen
117 Art : I think the date at which the options could be exercised would have been fixed before the A380 program encountered weight + wiring problems. But as y
118 Flysherwood : ABSOLUTELY!!! If he had tried to pull that here in the US, he would be facing the SEC, the Department of Justice, the District Attorney of the city h
119 Wsp : The authorities are investigating this possibility and will if they have sufficient evidence bring it before court. They fired him (or probably disso
120 Post contains images Flysherwood : If you want to keep sounding like an Enron lawyer go ahead. They did make management changes however, authorities and the Board were also looking int
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