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Airbus Sales Assestment Question  
User currently offlineStickers From South Africa, joined Sep 2007, 105 posts, RR: 0
Posted (6 years 10 months 2 weeks 2 days 7 hours ago) and read 2845 times:

Hi,
A while ago while reading a thread on A.net someone summed up the Boeing sales like this.

737 - Keeps the lights on
777 - Funding the development of the 787
747 767 Bonus money

I tried to search for the post, but couldn't find it - sorry.

I was wondering what would a similar assestment of Airbus sales be?

 eyebrow 

30 replies: All unread, showing first 25:
 
User currently offlineStitch From United States of America, joined Jul 2005, 30553 posts, RR: 84
Reply 1, posted (6 years 10 months 2 weeks 2 days 5 hours ago) and read 2772 times:
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A320 - Keeps the lights on and funds the development of the A350
A330/A340 - Funds the development of the A350
A380 - About ready to start funding the development of the A350


User currently offlineCygnusChicago From United States of America, joined Mar 2007, 758 posts, RR: 1
Reply 2, posted (6 years 10 months 2 weeks 2 days 2 hours ago) and read 2677 times:

 Smile

I'd say the A380 is the equivalent of the Boeing Bonus money. I expect all funding is from A320/330/340 sales.



If you cannot do the math, your opinion means squat!
User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 80
Reply 3, posted (6 years 10 months 2 weeks 2 days 1 hour ago) and read 2648 times:

Quoting Stickers (Thread starter):
I tried to search for the post, but couldn't find it - sorry.

That was me (I?). See Reply 1 in this thread:
RE: Break Even Numbers For A380, 777, & 787 (by Ferret Aug 3 2007 in Civil Aviation)

I would agree with Stitch's characterization of the Airbus breakdown, although I'd throw the A400M into the mix as well. Although a fantastic plane, that program is a huge money sink right now.

Tom.


User currently offlineStickers From South Africa, joined Sep 2007, 105 posts, RR: 0
Reply 4, posted (6 years 10 months 2 weeks 2 days ago) and read 2583 times:

Thanks everyone,
I really enjoyed that, keep them coming.

Sorry for not giving you the credit Tom, (Tdscanuck) I just couldn't find the thread.  blush 


User currently offlineSEPilot From United States of America, joined Dec 2006, 6824 posts, RR: 46
Reply 5, posted (6 years 10 months 2 weeks 1 day 20 hours ago) and read 2405 times:

From what I can see the A380 is still consuming a great deal of cash; it will not contribute positive cash flow until deliveries start in earnest, which I believe will not be until late next year.


The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineJdevora From Spain, joined Aug 2006, 351 posts, RR: 7
Reply 6, posted (6 years 10 months 2 weeks 1 day 8 hours ago) and read 2321 times:

Quoting Tdscanuck (Reply 3):
I would agree with Stitch's characterization of the Airbus breakdown, although I'd throw the A400M into the mix as well. Although a fantastic plane, that program is a huge money sink right now.

My understanding was that the A400M program was FULLY paid by the initial customers (plus a fair % of benefit ) and EADS got the real benefit from the next customers
Cheers
JD


User currently offlineHawkerCamm From United Kingdom, joined Jul 2007, 405 posts, RR: 0
Reply 7, posted (6 years 10 months 2 weeks 1 day 2 hours ago) and read 2241 times:

I would say

A320 Turns the lights on
A330/A340 Funding development of A350
A380 Will provide additional A350 development money when A350 R&T expenditure is highest in 2010-2013 (tooling).
Power8 Bonus money in years to come.
A400M Bonus money in years to come

Bonus money = +ve EBIT
2006/2007 has no bonus money
2008 a little bonus money
2009 back to normal or airBUST!

N.B. Dont forget development of A330/A340 are pooled. The whole family shares a lot of commonality.

A300/A310 in service support and spares. ANET never accounts for in service support and spares. This is where Boeing currently has a massive advantage over airbus. Also the older the aircraft in service the better for and A and B. Don't forget all those old Maddog and classic B737s and cargo B747. It is the high cost of spares from A and B start drives the aircraft breaker industry!


User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 8, posted (6 years 10 months 2 weeks 23 hours ago) and read 2167 times:

Quoting CygnusChicago (Reply 2):


I'd say the A380 is the equivalent of the Boeing Bonus money. I expect all funding is from A320/330/340 sales

 laughing   laughing   laughing 
If you call a NEGATIVE return BONUS MONEY...  no   no   no 


User currently offlineDeltaDC9 From United States of America, joined Apr 2006, 2844 posts, RR: 4
Reply 9, posted (6 years 10 months 2 weeks 23 hours ago) and read 2154 times:

Quoting Stitch (Reply 1):
A380 - About ready to start funding the development of the A350

Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?

Quoting HawkerCamm (Reply 7):
A380 Will provide additional A350 development money when A350 R&T expenditure is highest in 2010-2013 (tooling).

Thats a little more like it.



Dont take life too seriously because you will never get out of it alive - Bugs Bunny
User currently offlineCygnusChicago From United States of America, joined Mar 2007, 758 posts, RR: 1
Reply 10, posted (6 years 10 months 2 weeks 22 hours ago) and read 2119 times:

Quoting HawkerCamm (Reply 7):
A400M Bonus money in years to come

Isn't the A400M a project of a different EADS subsidiary?

Quoting Flysherwood (Reply 8):
If you call a NEGATIVE return BONUS MONEY...

Welcome back! See you didn't do your Cash Flow 101 homework from our last discussion on this topic  bored 



If you cannot do the math, your opinion means squat!
User currently offlineScorpio From Belgium, joined Oct 2001, 5014 posts, RR: 44
Reply 11, posted (6 years 10 months 2 weeks 22 hours ago) and read 2113 times:

Quoting DeltaDC9 (Reply 9):
Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?

No, he is talking about cash flow.


User currently offlineStitch From United States of America, joined Jul 2005, 30553 posts, RR: 84
Reply 12, posted (6 years 10 months 2 weeks 20 hours ago) and read 2057 times:
Support Airliners.net - become a First Class Member!

Quoting DeltaDC9 (Reply 9):
Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?



Quoting Scorpio (Reply 11):
No, he is talking about cash flow.

Bingo.  Smile

Airbus has already spent the majority of the development funds necessary for the A380 program. The A300, A320, A330 and A340 programs all did their part in contributing the cash necessary to pay for those expenses.

The monies each A380 sale generates over and above the cost of producing the plane will go back into Airbus' "general" fund, which will be used to both make payments on the RLA amount as well as to fund existing operations and future programs like the A350 and A320RS.


User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 13, posted (6 years 10 months 2 weeks 19 hours ago) and read 2032 times:

Quoting Stitch (Reply 12):
The monies each A380 sale generates over and above the cost of producing the plane will go back into Airbus' "general" fund, which will be used to both make payments on the RLA amount as well as to fund existing operations and future programs like the A350 and A320RS.

I think you have materials, labor and general overhead for each frame to worry about too, don't you?...  Wink


User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 14, posted (6 years 10 months 2 weeks 19 hours ago) and read 2029 times:

Quoting CygnusChicago (Reply 10):

Welcome back! See you didn't do your Cash Flow 101 homework from our last discussion on this topic

Cygnus, when you actually finally run a for profit business instead of consult for them, come talk to me about cash flow!  Wink


User currently offlineCygnusChicago From United States of America, joined Mar 2007, 758 posts, RR: 1
Reply 15, posted (6 years 10 months 2 weeks 17 hours ago) and read 1975 times:

Quoting Flysherwood (Reply 14):
Cygnus, when you actually finally run a for profit business instead of consult for them, come talk to me about cash flow!

What makes you think a consulting business is not for profit?

One day, when you understand cashflow, I'll take you up on the offer. Right now, my consulting fees will be like taking candy from a baby with you  Wink



If you cannot do the math, your opinion means squat!
User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 80
Reply 16, posted (6 years 10 months 2 weeks 16 hours ago) and read 1972 times:

Quoting CygnusChicago (Reply 10):

Isn't the A400M a project of a different EADS subsidiary?

It's from Airbus Military...I'm a little fuzzy on how that's financially worked into Airbus itself.

Tom.


User currently offlineRacercoup From United States of America, joined Jan 2007, 157 posts, RR: 0
Reply 17, posted (6 years 10 months 2 weeks 16 hours ago) and read 1953 times:

Let me understand this the A380 in the year of its first delivery is as of the end of August at -1 net sales for the year is going to help fund a plane of the future?

User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 18, posted (6 years 10 months 2 weeks 12 hours ago) and read 1910 times:

Quoting Scorpio (Reply 11):
No, he is talking about cash flow.

Get tired of mentioning this over and over again - but EADS/Airbus themselves are forecasting a negative cash flow on the A380 (i.e. having to spend more on production than they receive in sales revenue, leaving alone any question of recouping any of the development costs) until late in 2010.

By which time they expect to have built and delivered around half the A380s currently on order.

"From an Income Statement perspective, the management estimates that the A380 series production will generate a cumulative programme EBIT* loss of around € 2.8 billion for the years 2006 to 2010, of which approximately € 1.1 billion is anticipated in 2006 and approximately € 0.7 billion in 2007. The A380 programme shall deliver a first positive EBIT* contribution in 2010. The management estimates that the A380 programme contributions will be substantial beyond 2010."

http://www.eads.com/1024/en/investor...06/20061003_eads_airbus_adhoc.html



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 19, posted (6 years 10 months 1 week 5 days 2 hours ago) and read 1799 times:

Quoting CygnusChicago (Reply 15):
Right now, my consulting fees will be like taking candy from a baby with you

You know why I don't pay for consultants? Why the heck would I pay for advice from someone who couldn't make it in the real world? And take a look at the last post from NAV20 for your lesson on Airbus' interpretation of cash flow!  Wink


User currently offlineCygnusChicago From United States of America, joined Mar 2007, 758 posts, RR: 1
Reply 20, posted (6 years 10 months 1 week 5 days 1 hour ago) and read 1771 times:

Quoting Flysherwood (Reply 19):
And take a look at the last post from NAV20 for your lesson on Airbus' interpretation of cash flow

NAV20 quotes the Oct 2006 press release. The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

Anyway, word of advice - be careful of NAV20 interpretations of cash and cash flow. NAV20 believes that 6bn euro in free cash at EADS is a "cash crisis".

Quoting Flysherwood (Reply 19):
Why the heck would I pay for advice from someone who couldn't make it in the real world?

Hehe. Whenever I get my profit-sharing from my partnership share, it certainly seems like "real world" money to me  Smile



If you cannot do the math, your opinion means squat!
User currently offlineMrComet From Ireland, joined Mar 2005, 519 posts, RR: 8
Reply 21, posted (6 years 10 months 1 week 5 days 1 hour ago) and read 1753 times:

Here is my guess:

A320 Funds development of A350/operating costs/executive bonuses for Leahy
A330/A340 Funds development of A350 and pays for French and German unions
A380 Funds its own bloated development costs.
French and European no repay loans keep the lights on and fund development



The dude abides
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 22, posted (6 years 10 months 1 week 5 days 1 hour ago) and read 1751 times:

Quoting CygnusChicago (Reply 20):
The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

That's more than debatable, CygnusChcago. Since when did cancelling orders and paying substantial compensation ot the orderers tend to IMPROVE cash flow? In any case, if the cash flow situation has indeed improved, why haven't EADS/Airbus amended their advice to shareholders, as they are legally bound to do?

Quoting CygnusChicago (Reply 20):
NAV20 believes that 6bn euro in free cash at EADS is a "cash crisis".

Inclined to agree with Flysherwood that you don't understand business. Having cash in hand amounting to E6B. is one thing. But if you spend it (given that EADS did not make a material profit last financial year, and is forecasting that they won't make one this year either) all you'd achieve is a E6B. loss?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineFlysherwood From United States of America, joined Jul 2006, 1115 posts, RR: 0
Reply 23, posted (6 years 10 months 1 week 5 days 1 hour ago) and read 1739 times:

Quoting CygnusChicago (Reply 20):
NAV20 quotes the Oct 2006 press release. The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

How does that improve the perspective when you have cancelled orders and returned deposits? Besides, weren't you the one saying that the development money had already been used and so everything coming in is a bonus?

Quoting CygnusChicago (Reply 20):
Hehe. Whenever I get my profit-sharing from my partnership share, it certainly seems like "real world" money to me

There isn't a consultant in the world that knows what real world money is!!!  Wink


User currently offlineSSTsomeday From Canada, joined Oct 2006, 1276 posts, RR: 1
Reply 24, posted (6 years 10 months 1 week 5 days 1 hour ago) and read 1723 times:

Quoting Stitch (Reply 1):
A320 - Keeps the lights on and funds the development of the A350
A330/A340 - Funds the development of the A350
A380 - About ready to start funding the development of the A350

The 330 is a great asset and will be for some time.
The 320 shows no signs of stopping. Airbus' cash cow, to be sure.
The 340 I believe is a liability and not a source of serious profit, unless it added profitability to the line it shares with the 330 by keeping things humming. But I doubt it gave a return on it's own development costs.

As to the 380, because of the monumental development costs for this A/C which serves what has been called a niche market, and including the billions of dollars in additional costs related to the delay, I think positive cash flow on this A/C will go to paying for it's R+D plus interest for many years to come. I don't know much about financing, but I don't see how an A/C that has to pay for itself to the tune of 15 billion or more dollars, and is under-ordered, can also be funding the A350 project.



I come in peace
25 Stitch : I expect that, at worse, the A343 is "raw cash" since the costs to produce it would be leveraged a good deal by the costs needed to produce the A332
26 SSTsomeday : You have shown yourself to be very knowledgeable, of course. Are you saying the 340 is as cash positive asset to the 330/340 program? Or that the 330
27 CygnusChicago : That is definitely one of the most illogical statements I have ever read.
28 CygnusChicago : 1) Development of the freighter was not complete = near-term cash savings (longer term pain, if they ever reintroduce it) 2) No late delivery penalti
29 Stitch : The A340 family has sold ~400 frames to the ~800 of the A330, so I see it as an asset to both, to be honest.
30 DeltaDC9 : OK, but I dont look at these things in terms of "monopoly money". If I pay 1000 bucks for a car, and sell it for 500, thats 500 in cash flow and 500
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