Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
A380 Break Even In 2015?  
User currently offlinetrex8 From United States of America, joined Nov 2002, 4745 posts, RR: 14
Posted (1 year 5 months 3 weeks 5 days 18 hours ago) and read 15462 times:
Support Airliners.net - become a First Class Member!

Thats what they quote EADS as saying.

http://www.flightglobal.com/news/art...ix-to-be-delivered-in-2014-371961/

"General discussions are on-going with customers. However, this should not jeopardise the reaching of [A380] break-even by the beginning of 2015."

41 replies: All unread, showing first 25:
 
User currently offlinephxa340 From United States of America, joined Mar 2012, 885 posts, RR: 1
Reply 1, posted (1 year 5 months 3 weeks 5 days 18 hours ago) and read 15458 times:

That article is from May 2012 ... I fully expect the cracking issue to cost more than 300 million when you include cost of repairs and in-op payments to carriers.

User currently offlineN14AZ From Germany, joined Feb 2007, 2699 posts, RR: 25
Reply 2, posted (1 year 5 months 3 weeks 5 days 17 hours ago) and read 15406 times:

That article is from May 2012 (some members might get confused when reading this article, e.g. delivery target "this year" 30).

However, Airbus said the same in another article. IIRC when reporting about the 100th A380 to be delivered soon.


Now quickly to the supermarket and buying some popcorn - these kinds of threads can be big fun...


User currently offlineStitch From United States of America, joined Jul 2005, 30877 posts, RR: 86
Reply 3, posted (1 year 5 months 3 weeks 5 days 17 hours ago) and read 15398 times:
Support Airliners.net - become a First Class Member!

And note we are speaking of Production Break Even, which means they will at sell the airframe for at least what it cost them to build and deliver it.

User currently offlinephxa340 From United States of America, joined Mar 2012, 885 posts, RR: 1
Reply 4, posted (1 year 5 months 3 weeks 5 days 17 hours ago) and read 15368 times:

Quoting Stitch (Reply 3):

Stitch when you say production break even does that include any of the R&D costs or is that seperate ?


User currently offlineStitch From United States of America, joined Jul 2005, 30877 posts, RR: 86
Reply 5, posted (1 year 5 months 3 weeks 5 days 17 hours ago) and read 15349 times:
Support Airliners.net - become a First Class Member!

Quoting phxa340 (Reply 4):
Stitch when you say production break even does that include any of the R&D costs or is that separate?

Those costs are all part of Program Break Even.


User currently offlinefcogafa From United Kingdom, joined May 2008, 783 posts, RR: 0
Reply 6, posted (1 year 5 months 3 weeks 5 days 17 hours ago) and read 15249 times:

Flightglobal is also saying that Airbus expect to sell 'considerably more A380s than were sold last year' (9) and Airbus blames the poor sales on the wing issues.

If that is the case (and not an excuse), airlines are taking a very short term view on their A380 purchases.


User currently offlineastuteman From United Kingdom, joined Jan 2005, 10000 posts, RR: 96
Reply 7, posted (1 year 5 months 3 weeks 5 days 16 hours ago) and read 14875 times:
Support Airliners.net - become a First Class Member!

Quoting Stitch (Reply 3):
And note we are speaking of Production Break Even

correct.

Quoting Stitch (Reply 3):
which means they will at sell the airframe for at least what it cost them to build and deliver it.

And fund the delay penalties, and inventory costs incurred by the delay.

Quoting phxa340 (Reply 4):
Stitch when you say production break even does that include any of the R&D costs or is that seperate ?

No. The A380 will only start to recover R+D costs in 2015.
By coincidence, Boeing have said the same about the 787

My caution on the "production break-even" though, is that almost certainly includes paying back the delay penalties on these early frames and covering their extra inventory costs, both costs which usually on a-net (and in the media) get included in the "programme cost overruns".

I.e. although the original R+D won't begin to be recovered until 2015, several E Bn of the "Programme Cost overruns" (somewhere between E3Bn and E4Bn by my estimation, but that's all it is) will have been recovered on these "loss-making" frames

rgds


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4721 posts, RR: 39
Reply 8, posted (1 year 5 months 3 weeks 5 days 16 hours ago) and read 14731 times:
Support Airliners.net - become a First Class Member!

Quoting fcogafa (Reply 6):
Flightglobal is also saying that Airbus expect to sell 'considerably more A380s than were sold last year' (9) and Airbus blames the poor sales on the wing issues.

That would be good news. We know of this one possible order which was debated here extensively. But we still do not know who the customer will be.   

Quoting astuteman (Reply 7):
My caution on the "production break-even" though, is that almost certainly includes paying back the delay penalties on these early frames and covering their extra inventory costs, both costs which usually on a-net (and in the media) get included in the "programme cost overruns".

I.e. although the original R+D won't begin to be recovered until 2015, several E Bn of the "Programme Cost overruns" (somewhere between E3Bn and E4Bn by my estimation, but that's all it is) will have been recovered on these "loss-making" frames

That would be my guess as well. And of course this is much later then originally planned, but finally the goal is within reach now.  .


User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12134 posts, RR: 51
Reply 9, posted (1 year 5 months 3 weeks 5 days 15 hours ago) and read 14667 times:

Quoting EPA001 (Reply 8):
but finally the goal is within reach now. .

Is it?

Don't forget that assumption is based on what was said some 9-10 months ago.

Quoting astuteman (Reply 7):
I.e. although the original R+D won't begin to be recovered until 2015, several E Bn of the "Programme Cost overruns" (somewhere between E3Bn and E4Bn by my estimation, but that's all it is) will have been recovered on these "loss-making" frames

I agree, but were there not some portion of the A-380 R&D costs already written off and will not be recovered? I believe Boeing has done that, too, with the B-787.


User currently offlineKarelXWB From Netherlands, joined Jul 2012, 11230 posts, RR: 33
Reply 10, posted (1 year 5 months 3 weeks 5 days 15 hours ago) and read 14604 times:

Tom Enders today confirmed that the A380 is on track to break even in 2015.


Only two things are infinite, the universe and human stupidity. And I'm not sure about the universe.
User currently offlineabba From Denmark, joined Jun 2005, 1334 posts, RR: 2
Reply 11, posted (1 year 5 months 3 weeks 5 days 15 hours ago) and read 14521 times:

Quoting astuteman (Reply 7):
I.e. although the original R+D won't begin to be recovered until 2015, several E Bn of the "Programme Cost overruns" (somewhere between E3Bn and E4Bn by my estimation, but that's all it is) will have been recovered on these "loss-making" frames

I suppose that the cost of the set up of the production facilities is part of the R & D? Or how is your view on this?


User currently offlineStitch From United States of America, joined Jul 2005, 30877 posts, RR: 86
Reply 12, posted (1 year 5 months 3 weeks 5 days 14 hours ago) and read 14334 times:
Support Airliners.net - become a First Class Member!

Quoting abba (Reply 11):
I suppose that the cost of the set up of the production facilities is part of the R & D? Or how is your view on this?

It's definitely capital investment related to the program, so I would view it as program costs. Operating overhead for those facilities would be considered part of production costs. IMO.


User currently offlineN14AZ From Germany, joined Feb 2007, 2699 posts, RR: 25
Reply 13, posted (1 year 5 months 3 weeks 5 days 14 hours ago) and read 14335 times:

Quoting fcogafa (Reply 6):
Flightglobal is also saying that Airbus expect to sell 'considerably more A380s than were sold last year'

I am getting a little bit tired of Airbus using the word "considerable" when it comes to A 380-sales. Practise what you preach! as the British say...


User currently offlinefcogafa From United Kingdom, joined May 2008, 783 posts, RR: 0
Reply 14, posted (1 year 5 months 3 weeks 5 days 14 hours ago) and read 14293 times:

Quoting N14AZ (Reply 13):
I am getting a little bit tired of Airbus using the word "considerable" when it comes to A 380-sales. Practise what you preach! as the British say.

Don't forget 'Significant' as well.....


User currently offlineastuteman From United Kingdom, joined Jan 2005, 10000 posts, RR: 96
Reply 15, posted (1 year 5 months 3 weeks 5 days 12 hours ago) and read 13955 times:
Support Airliners.net - become a First Class Member!

Quoting KC135TopBoom (Reply 9):
I agree, but were there not some portion of the A-380 R&D costs already written off and will not be recovered? I believe Boeing has done that, too, with the B-787.

True.
But "written off" doesn't mean that they might not one day be recovered.....
The "write-offs" are almost certainly done for the purposes of Corporation Tax avoidance.
They certainly were in Airbus's case.
It gave them at least 2 years with virtually no tax bill at a time they were conserving cash.
Of course like everything, it must catch up eventually

Quoting abba (Reply 11):
I suppose that the cost of the set up of the production facilities is part of the R & D? Or how is your view on this?

I agree.
especially as the "production facilties" were almost exclusively the target of the RLI advances

Quoting N14AZ (Reply 13):
I am getting a little bit tired of Airbus using the word "considerable" when it comes to A 380-sales. Practise what you preach! as the British say...

What makes you think they're not? 25 sales is "considerably" more than 9 by any measure  

Rgds


User currently offlineWingtips56 From United States of America, joined Dec 2010, 385 posts, RR: 0
Reply 16, posted (1 year 5 months 3 weeks 5 days 12 hours ago) and read 13508 times:

How many firm 380 orders are on back-log now? Are they likely to roll-out before new orders come in, if operators are indeed waiting for the wing fix, economic recovery or other issues to place them?


Worked for WestAir, Apollo Airways, Desert Pacific, Western, AirCal and American Airlines
User currently offlinelightsaber From United States of America, joined Jan 2005, 12981 posts, RR: 100
Reply 17, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12907 times:
Support Airliners.net - become a First Class Member!

This is earlier than I expected and probably involves some right off of costs...

But it is good to hear orders are expected. IMHO the delivery delays have been holding up orders and now that there are signs of economic growth, I expect further A380 orders.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlinequeb From Canada, joined May 2010, 664 posts, RR: 3
Reply 18, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12756 times:

Quoting phxa340 (Reply 1):
I fully expect the cracking issue to cost more than 300 million when you include cost of repairs and in-op payments to carriers.

€336 million ($440 million) at least

http://www.flightglobal.com/news/art...charges-reach-250m-in-2012-382795/


User currently offlineart From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 19, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12618 times:

Quoting Wingtips56 (Reply 16):
How many firm 380 orders are on back-log now?

About 150 "firm" firm orders on back-log (disregarding firm orders that may never be delivered eg Kingfisher, Virgin).

If Airbus are going to start breaking even on deliveries sometime in 2015 they will have produced 150+ at a loss assuming production of 20 in 2013 then 30 a year from 2014 onwards.


User currently onlineAzure From France, joined Dec 2012, 620 posts, RR: 16
Reply 20, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12502 times:

Quoting N14AZ (Reply 13):
I am getting a little bit tired of Airbus using the word "considerable" when it comes to A 380-sales.
Quoting fcogafa (Reply 14):
Don't forget 'Significant' as well.....

Lucky you ! You must be two quite wealthy residents of Germany and Great Britain if your are in a position to consider approx € 10 billion of potential revenue (25 orders x € 400 million) "not considerable" or "not significant" !


Quoting Stitch (Reply 12):
It's definitely capital investment related to the program, so I would view it as program costs.

Correct, I remember Airbus CEO Fabrice Brégier saying something like this during his press conference in Toulouse earlier this year.


Quoting Wingtips56 (Reply 16):
How many firm 380 orders are on back-log now?

262 firm orders, 97 deliveries, ie 165 still to be delivered (ie backlog full for the next 5 to 6 years at current rate of production). Source : Airbus website http://www.airbus.com/aircraftfamilies/passengeraircraft/a380family/

On top of that, 53 options. Source : wikipedia (!)



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinetravelhound From Australia, joined May 2008, 919 posts, RR: 12
Reply 21, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12479 times:

From what I am reading from the Flight Global article break even may not occur in 2015 as deliveries will not be as previously planned.

Quote:
Airbus recently indicated it would deliver 25 A380s in 2013. EADS says the "avenue for break-even in 2015" is "set at 30 deliveries".
http://www.flightglobal.com/news/art...charges-reach-250m-in-2012-382795/


User currently offlinecmf From , joined Dec 1969, posts, RR:
Reply 22, posted (1 year 5 months 3 weeks 5 days 11 hours ago) and read 12424 times:

Quoting astuteman (Reply 7):
My caution on the "production break-even" though, is that almost certainly includes paying back the delay penalties on these early frames and covering their extra inventory costs, both costs which usually on a-net (and in the media) get included in the "programme cost overruns".

I can't see how it covers delay payments on earlier frames. I expect delay penalties and other directly attributable additional costs are included in the calculation of production break even.

Just my guess based on how we have calculated costs in companies I have been involved.

Quoting KC135TopBoom (Reply 9):
I agree, but were there not some portion of the A-380 R&D costs already written off and will not be recovered? I believe Boeing has done that, too, with the B-787.

There are multiple levels of reporting. They differ in how costs and revenue are accounted and thus it is important to understand the type of reporting the number you use is coming from.


User currently offlineboeing773ER From United States of America, joined Dec 2011, 423 posts, RR: 0
Reply 23, posted (1 year 5 months 3 weeks 5 days 9 hours ago) and read 11629 times:

Quoting art (Reply 19):

Why does everyone have the doubt the Virgin will ever take delivery of the A380? Is their orders not confirmed or something?



Work Hard, Fly Right.
User currently offlineRevelation From United States of America, joined Feb 2005, 12424 posts, RR: 25
Reply 24, posted (1 year 5 months 3 weeks 5 days 8 hours ago) and read 11225 times:

Quoting boeing773ER (Reply 23):
Why does everyone have the doubt the Virgin will ever take delivery of the A380? Is their orders not confirmed or something?

Because they first ordered them in 2001, have already pushed them back to 2017, and because of articles like Virgin’s A380 order depends on economy and oil price: Ridgway where their CEO says:

Quote:

"We don't need to make a decision about [our six A380 orders] now, it very much depends on the state of the global economy and the oil price," he says.

"It's a lovely quiet aircraft but it's very big and you need to operate it on some very big trunks and you need to have a big enough fleet - we always knew we'd have a small fleet and is that fleet too small? And that is a challenge for Virgin Atlantic but it's not something we need to worry about right now."



Inspiration, move me brightly!
25 lightsaber : Too small of a fleet to be economical and VS simply is not performing at the level to up-gauge the routes to take in the aircraft. Besides the deferr
26 jayunited : How many aircraft did Airbus predict they needed to deliver in order to break even before the wing issue came up? And now since the wing issue how man
27 Stitch : More than 400. Assuming 30 deliveries a year going forward, they have enough orders to last them until mid-2018. With the extra expenses from the win
28 brilondon : Here is the quote ""General discussions are on-going with customers. However, this should not jeopardise the reaching of [A380] break-even by the beg
29 astuteman : We appear to be in agreement, unless I missed something fashion. They've had 12 years to cancel this order. But it's still there.... what is it then,
30 Azure : Sources please ?
31 art : IIRC Airbus originally predicted the program would break even at 250 frames. They raised that number to 275 before the CATIA wiring problem came to l
32 Post contains images Pellegrine : Thanks. I was about to post that, but you beat me to it again! Anything else in this thread is hogwash, or was covered in the last when is A380/B787
33 Revelation : As is the Kingfisher order, and about as likely to be taken up.
34 Stitch : I could see a scenario where VS was allowed to apply their A380-800 deposits towards their A330-300 order so keeping the A380 order on the books woul
35 brilondon : I did not read as such but if that is what you read into it then by all means, believe it. I don't see it as a break-even until all costs associated
36 Stitch : As the article is written, it is not unreasonable for one to assume that EADS is referring to Program Break Even - the point at which all costs in de
37 abba : I believe that it is more than a break even on a per frame basis. The milestone when they made more money producing a frame than its production costs
38 astuteman : It's not unreasonable to expect an airline which is not financially viable enough to actually operate not to take up its order they've had 12 years t
39 crownvic : I'm not buying it. How could this program possibly be at breakeven by this date? Then again, if it is coming from Flight Global and it is related to A
40 gemuser : Go and read the thread again! Nobody is saying the PROGRAM will break even in 2015, they are saying that PRODUCTION (ie per frame produced) will brea
41 Post contains links Unflug : From the press release dated Feb 27th: Regarding the A380, the wing rib issue has been resolved with repairs on-going on deployed aircraft and design
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...
WSJ: A380 Break-even Has Risen -Gallois posted Fri May 4 2007 16:39:36 by N328KF
Will American Will Break Even In 2005 posted Wed May 18 2005 16:53:00 by Incitatus
A380 Break-even: 300+ posted Wed Mar 9 2005 17:45:17 by Mham001
GF May Break Even In 2004 posted Fri Dec 20 2002 16:19:29 by Taloush
Break Even Numbers For A380, 777, & 787 posted Fri Aug 3 2007 15:29:54 by Bigbird
420 A380 Units To Break Even posted Wed Jan 17 2007 20:56:49 by Badge
Break-even Outlook For A380 Now At 420...- Part 2! posted Sun Oct 22 2006 23:13:36 by Gilesdavies
Break-even Outlook For A380 Now At 420 Aircraft posted Thu Oct 19 2006 13:17:06 by Leelaw
WSJ : Boeing Needs To Sell 1100 787s To Break Even posted Thu Aug 30 2012 20:18:35 by phxa340
UBS Estimates MAX Break-even At 200 Frames posted Fri Jun 15 2012 07:23:23 by Stitch