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Euro Zone Crisis And Its Effect On Airbus  
User currently offlinebrilondon From Canada, joined Aug 2005, 4303 posts, RR: 1
Posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5475 times:

Has the present financial crisis in Europe affected Airbus in terms of the financial stability of the countries with an ownership interest in EADS?


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19 replies: All unread, jump to last
 
User currently offlinesweair From Sweden, joined Nov 2011, 1827 posts, RR: 0
Reply 1, posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5438 times:

Hopefully it will become 100% privatly owned. Get the politicians out! Only then will I support it.

User currently offlinesunrisevalley From Canada, joined Jul 2004, 5055 posts, RR: 5
Reply 2, posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5434 times:

Quoting brilondon (Thread starter):
Has the present financial crisis in Europe affected Airbus in terms of the financial stability of the countries with an ownership interest in EADS?

Certainly the weakening of the Euro has to hurt them unless they use currency hedges to reduce the impact.


User currently offlinerotating14 From United States of America, joined Jan 2012, 685 posts, RR: 0
Reply 3, posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5415 times:

[quote=sunrisevalley,reply=2]

Quote:
Certainly the weakening of the Euro has to hurt them unless they use currency hedges to reduce the impact.

How the fact that planes are priced in dollars affect their situation and the compounding of the Euro crisis?


User currently offlineastuteman From United Kingdom, joined Jan 2005, 10112 posts, RR: 97
Reply 4, posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5375 times:
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Quoting sweair (Reply 1):
Hopefully it will become 100% privatly owned. Get the politicians out! Only then will I support it.

I'd be interested to know which other large business you support who you think doesn't have politicians involved in them in some way or other......   

Quoting sunrisevalley (Reply 2):
Certainly the weakening of the Euro has to hurt them unless they use currency hedges to reduce the impact.

  
A weakening Euro (against the US dollar specifically) will generally help Airbus, as it's products will become cheaper in the marketplace.

Quoting brilondon (Thread starter):
Has the present financial crisis in Europe affected Airbus in terms of the financial stability of the countries with an ownership interest in EADS?

The only impact is likely to be if EU carriers delay orders because of financing.
According to hteir website, the European backlog is about 500 frames out of 4 500, which suggests their exposure to European airlines is very low...

Rgds


User currently offlineBMI727 From United States of America, joined Feb 2009, 15781 posts, RR: 27
Reply 5, posted (2 years 3 months 3 weeks 5 days 15 hours ago) and read 5366 times:

Quoting rotating14 (Reply 3):
How the fact that planes are priced in dollars affect their situation and the compounding of the Euro crisis?

It actually kind of helps them. They get revenue in dollars but pay a lot of costs in Euros. Right now $1,000,000 is worth about 790,000 Euros. That same million at the beginning of the year was only worth about 771,000 Euro, so assuming that the costs are fixed, the weak Euro helps a bit. Of course it gets more complicated since European customers are less likely to buy new planes and there are currency hedges too.



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User currently offlinesunrisevalley From Canada, joined Jul 2004, 5055 posts, RR: 5
Reply 6, posted (2 years 3 months 3 weeks 5 days 13 hours ago) and read 5213 times:

Quoting astuteman (Reply 4):
A weakening Euro (against the US dollar specifically) will generally help Airbus, as it's products will become cheaper in the marketplace

True, I was thinking more on the inputs side but I concede that the Euro output as you point out is worth more than the foreign currencies inputs. There were some years when the exchange rate worked against them. Perhaps the pendulum is swinging the other way.


User currently offlineastuteman From United Kingdom, joined Jan 2005, 10112 posts, RR: 97
Reply 7, posted (2 years 3 months 3 weeks 5 days 13 hours ago) and read 5152 times:
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Quoting sunrisevalley (Reply 6):
There were some years when the exchange rate worked against them. Perhaps the pendulum is swinging the other way.

Their greatest operating margins in the last 10 years were when the euro was hovering close to parity with the dollar (c. 2004 and 2005 if I recall correctly). Op margin reached about 10% and 12% in those years

Quoting sunrisevalley (Reply 6):
the Euro output as you point out is worth more than the foreign currencies inputs

It's about double  

Rgds


User currently offlinebrilondon From Canada, joined Aug 2005, 4303 posts, RR: 1
Reply 8, posted (2 years 3 months 3 weeks 5 days 13 hours ago) and read 5122 times:

Quoting BMI727 (Reply 5):


It actually kind of helps them. They get revenue in dollars but pay a lot of costs in Euros. Right now $1,000,000 is worth about 790,000 Euros. That same million at the beginning of the year was only worth about 771,000 Euro, so assuming that the costs are fixed, the weak Euro helps a bit. Of course it gets more complicated since European customers are less likely to buy new planes and there are currency hedges too.
Quoting rotating14 (Reply 3):
How the fact that planes are priced in dollars affect their situation and the compounding of the Euro crisis?

The prices that the airlines pay are adjusted with the currency fluctuations so that when the contacts are signed the cost works out to be about the same. The contracts are airline specific and thus the prices are adjusted when the pricing is fixed into the contract. The fluctuations in the currency are a price of doing business with any international company. When they benefit one company obviously the other partner in the agreement already realizes that there may be fluctuations in the exchange.



Rush for ever; Yankees all the way!!
User currently offlinemagyar From Hungary, joined Feb 2000, 599 posts, RR: 0
Reply 9, posted (2 years 3 months 3 weeks 5 days 13 hours ago) and read 5122 times:

Quoting sunrisevalley (Reply 6):
assuming that the costs are fixed, the weak Euro helps a bit. Of course it gets more complicated since European customers are less likely to buy new planes and there are currency hedges too.

Yes, but the slow EU market is a bad news for Boeing, too. Europian airlines not only buy busses!


User currently offlinepar13del From Bahamas, joined Dec 2005, 7381 posts, RR: 8
Reply 10, posted (2 years 3 months 3 weeks 5 days 12 hours ago) and read 5039 times:

Quoting astuteman (Reply 4):
A weakening Euro (against the US dollar specifically) will generally help Airbus, as it's products will become cheaper in the marketplace.
Quoting astuteman (Reply 7):
Their greatest operating margins in the last 10 years were when the euro was hovering close to parity with the dollar (c. 2004 and 2005 if I recall correctly).

Makes you wonder if the governments behind the Euro were thinking of their investments in Airbus when they were
"designing" the currency.

Quoting magyar (Reply 9):
Yes, but the slow EU market is a bad news for Boeing, too. Europian airlines not only buy busses!

Yes, but for Boeing the largest buyers are now wide bodies and those unit numbers are much lower. The last big order in terms of units was from Ryan Air and Boeing ain't writing home about that one.  

For both OEM's Europe is not the largest market as per the back log numbers listed earlier, so if there is much of a hit it will be roundabout in terms of whether third countries are / were relying on European banks to provide financing for their a/c, so far most of the stories I'm reading about the banks problems are tied to real estate.


User currently offlinesweair From Sweden, joined Nov 2011, 1827 posts, RR: 0
Reply 11, posted (2 years 3 months 3 weeks 4 days 22 hours ago) and read 4766 times:

Quoting astuteman (Reply 4):
I'd be interested to know which other large business you support who you think doesn't have politicians involved in them in some way or other......

I just think it could be a better corporation without the political input, we all know not the brightest persons become politicians..Hey I live in a very leftist country, I know how bad efficiency you get when things are run by people who want to win elections. 60% of our economy is the governmental sector if not more.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7381 posts, RR: 8
Reply 12, posted (2 years 3 months 3 weeks 4 days 22 hours ago) and read 4752 times:

Quoting sweair (Reply 11):
I just think it could be a better corporation without the political input, we all know not the brightest persons become politicians..

Ever consider that business people like it that way because the "not so bright" politicians are cheaper to bribe and or influence when a business wants to do something not in the best interest of the persons within a particular nation?

Politicians are charged with looking after the interest of their constituents, no different than business leaders, its a relationship which both sides have to work on for nations and business to grow and prosper.


User currently offlineLJ From Netherlands, joined Nov 1999, 4461 posts, RR: 0
Reply 13, posted (2 years 3 months 3 weeks 4 days 22 hours ago) and read 4682 times:

Quoting par13del (Reply 10):
For both OEM's Europe is not the largest market as per the back log numbers listed earlier, so if there is much of a hit it will be roundabout in terms of whether third countries are / were relying on European banks to provide financing for their a/c, so far most of the stories I'm reading about the banks problems are tied to real estate.

AFAIK Norwegian had to refinance a few 737s due to the fact that the bank which would have financed the purchase couldn't fulfil its obligations. The financial crisis will hit both Airbus and Boeing as European demand for air travel decreases (already visible in the traffic figures of the European airports), but also financing for airlines will be more expensive or not possible (which mean the ability for an airline to purchase aircraft is less). The latter effect will be visible over time as many of the current orders have already been financed.



Quoting astuteman (Reply 4):
The only impact is likely to be if EU carriers delay orders because of financing.
According to hteir website, the European backlog is about 500 frames out of 4 500, which suggests their exposure to European airlines is very low...

However, this will impact Airbus ability to get new orders from EU airlines (and it will need these orders). The only positive thing is that Boeing experiences the same problems, thus it's not that EU airlines will go to the competition). Moreover, if the overall demand for air travel decreases (which is visible in the traffic figures of all EU airports), this may also impact airlines outside Europe (though the effect depend on the exposure to Europe).


User currently offlineMillwallSean From Singapore, joined Apr 2008, 1270 posts, RR: 6
Reply 14, posted (2 years 3 months 3 weeks 4 days 19 hours ago) and read 4529 times:

May I remind the people that its not Greece and Ireland that owns EADS...

Its Germany and France.

Germanys economy is growing, its un employment is relatively low and its interstrates are very low. GDP growth is above average.
France had higher debt but only by a few percent. Higher unemployment and lower GDP growth.

Boeings USA has higher GDP ratio debt than both germany and France. they see lower real GDP growth and higher unemployment (if you count the same was as unemployment is counted in Europe) All this in 2011...

Where is the problem?

I see problems in regards to uncertainty and thus unwillingness to order planes. I see these problems in every western country. As long as Northern Europe continue to see economic growth Airbus will do just fine.

Quoting sweair (Reply 11):
I just think it could be a better corporation without the political input, we all know not the brightest persons become politicians..Hey I live in a very leftist country, I know how bad efficiency you get when things are run by people who want to win elections. 60% of our economy is the governmental sector if not more.

Yeah those horrible swedes. 4.5% real GDP growth making them the highest of all western economies in 2011. A government debt of about 30% *compared to germany with the 87%, France mid 90ies and US over 100%.
And public sector isnt 60% of the economy. 29% to be more exact (Source SCB)
Hmm and they were just the economy The Economist (hardly a left wing newspaper) called best managed...



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User currently offlinepar13del From Bahamas, joined Dec 2005, 7381 posts, RR: 8
Reply 15, posted (2 years 3 months 3 weeks 4 days 18 hours ago) and read 3994 times:

Quoting MillwallSean (Reply 14):
May I remind the people that its not Greece and Ireland that owns EADS...

Its Germany and France.

Germanys economy is growing, its un employment is relatively low and its interstrates are very low. GDP growth is above average.
France had higher debt but only by a few percent. Higher unemployment and lower GDP growth.

All true, except those countries who do not own Airbus along with France are pushing for the Germans - in my simple terms - to underwrite the debts of those nations without following the German program of first ensuring that fiscal prudence is mandated.
Do you believe that it will have no effect on the German economy and the deicsions made by its politicians?

The other countries may not be owners of Airbus but the collectives which are the EU and the Eurozone are working as hard as they can to keep the alliance in place which in some quarters means either sharing the pain or having those that have bail out the have nots.

It really is a complicated issue, no simple answers.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7620 posts, RR: 17
Reply 16, posted (2 years 3 months 3 weeks 4 days 14 hours ago) and read 3238 times:

Quoting MillwallSean (Reply 14):
May I remind the people that its not Greece and Ireland that owns EADS...

Its Germany and France.

Let's establish who actually owns Airbus. It is 100 per cent owned by EADS.

49.86 per cent odf EADS equity is "free float" equity of which 49.41 per cent is publicly traded on the stock market. Of this freely traded element of EADS equity 0.06 per cent is owned by the French State and 49.35 per cent by institutions, private investors and employees. The remaning 0.45 per cent are Treasury shares that have no voting rights.

22.35 per cent of EADS equity is owned by Daimler AG. The largest Daimler AG shareholders are Aabar Investments (UAE) (9.0 per cent), Kuwait Investment Authority (6.0 per cent), Renault (France) (1.55 per cent) and Nissan (Japan) (1.55 per cent).

22.35 per cent of EADS equity is owned by SOGADE which is owned by the French State.

5.45 per cent of EADS equity is owned by SEPI which is owned by the Spannish State.

Source for all but the second section of the above data is from the EADS Investor Relations web site at:

http://www.eads.com/eads/int/en/inve...rmation/shareholder-structure.html

So there is no German government investment but there is French (22.41 per cent), Spanish (5.45 per cent), UAE (90.0 per cent) and Kuwait (6.00 per cent) direct and/or indirect government investment in EADS.


User currently offlinetim171080 From Germany, joined Dec 2001, 86 posts, RR: 0
Reply 17, posted (2 years 3 months 3 weeks 3 days 11 hours ago) and read 2570 times:

Well, to be exact, the UAE and Kuwait indirect investment in EADS are 2% (9% of 22.35%) and 1.3% (6% of 22.35%) respectively.

User currently offlineChiad From Norway, joined May 2006, 1160 posts, RR: 0
Reply 18, posted (2 years 3 months 3 weeks 3 days ago) and read 2349 times:

Quoting VV701 (Reply 16):
So there is no German government investment but there is French (22.41 per cent), Spanish (5.45 per cent), UAE (90.0 per cent) and Kuwait (6.00 per cent) direct and/or indirect government investment in EADS.

Thanks a whole bunch!
  


User currently offlinebabybus From , joined Dec 1969, posts, RR:
Reply 19, posted (2 years 3 months 3 weeks 2 days 20 hours ago) and read 2198 times:

Maybe the question should be how the 'euro crisis' is going to affect Boeing?

With government interests in the project it would be in their favour to promote Airbus fleet buying ahead of Boeing to get more euro jobs.

Jobs=income, income=spending. To get out of the crisis we need people to work and to spend.


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