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Is Airbus Winning The Easyjet Order?  
User currently offlineKtliem@YVR From Canada, joined Aug 2001, 161 posts, RR: 0
Posted (12 years 5 months 3 days 4 hours ago) and read 2874 times:

Yes, very likely, according to the Seatlle PI. Here's the excerpt from Tuesday Seattle Post-Intelligencer:

LONDON -- The Boeing Co.'s top airplane salesman said rival Airbus has sliced prices on its planes so much to win market share that Boeing has lost some key sales rather than match the hefty and unreasonable discounts during the industry's worstslump.

Toby Bright, leader of Boeing's commercial airplane sales, said Boeing could lose the year's biggest airplane order from low-fare carrier EasyJet for more than 100 planes if it comes down to price alone.

Boeing already has lost at least one key sales campaign this year because of pricing, Bright said.

Airbus won the recent hard-fought competition to supply new jets to Air New Zealand, previously an all-Boeing customer, because it went further on pricing than Boeing was willing to go, he said. But we went as far as we could.

Click here for the full article: http://seattlepi.nwsource.com/business/79606_airshow23.shtml

I just want to know what Boeing means by "it (i.e. Airbus) went further on pricing than Boeing was willing to go...". I think emphasizing price as the sole issue way to simplistic.

But on the other hand, read this...

Deutsche Lufthansa AG is on the verge of placing a major order for 10 A330-200 jets. Based on the list price, the order will be worth $1.35 billion. But because of the slump in demand on the global aviation market after Sept. 11, industry observes believe that Airbus will offer a generous discount that is likely to reduce the purchase price to around $1 billion.

Source: http://www.handelsblatt.com/hbiwwwangebot/fn/relhbi/sfn/buildhbee/cn/GoArt!201095,201095,549330/SH/0/depot/0/index.html

$0.35 billion or 26% discount on an order of $1.35 Billion? Not bad, but I think 25-30% is not out of the line for today's economy. I don't know how much discount Boeing gave to KLM for its 777 order, but it must also have been quite substantial. Anybody knows?

I guess all is fair in Love & selling airplanes.

Please no Airbus or Boeing bashing.

44 replies: All unread, showing first 25:
 
User currently offlineAvObserver From United States of America, joined Apr 2002, 2474 posts, RR: 9
Reply 1, posted (12 years 5 months 3 days 3 hours ago) and read 2792 times:

The whole issue comes down to the fact that with a third of the cost of new transport development funded by government loans, Airbus can be more aggressive than Boeing on pricing. As long as this continues, Boeing is fighting a losing battle. The 1992 pact with the E.U. should be renegotiated now that Airbus is beyond market parity with Boeing. The Europeans are determined to dominate this industry and the prevailing situation ensures that they will soon, if not already. Competition is good but the playing field should be level-it isn't. Though Airbus claims Boeing's lucrative defense contracts comprise a subsidization of its' own, Boeing's commercial transports are not funded from these earnings, that division must stand on its' own. I admire Airbus's technical prowess and good products but this funding situation is unfair and should be stopped.

User currently offlineSquigee From Canada, joined May 2001, 652 posts, RR: 4
Reply 2, posted (12 years 5 months 3 days 2 hours ago) and read 2767 times:

AvObserver- you are 100% right. I have read some analysis of the economics of Airbus vs. Boeing, and one of the points raised was the one you mentioned- a level technical playing field, but subsidies that always tip the scales in Airbuses' favor


Someday, we'll look back at this, laugh nervously, and then change the subject.
User currently offlineRayChuang From United States of America, joined Jun 2000, 8037 posts, RR: 5
Reply 3, posted (12 years 5 months 3 days 2 hours ago) and read 2754 times:

However, I'm not sure if U2 choosing the A319 is a good deal for everyone involved.

First, there is the pretty expensive issue of retraining EVERYONE to use the A319, from flight crews to mechanics.

Second, Airbus making a huge discount to sell 100 A319's to U2 means that Airbus will have to foot the bill for constructing 100 planes and retraining U2 personnel to operate the plane. Given that Airbus does have partial governmental funding that means the difference between the cost charged to U2 by Airbus for 100 A319's plus training and the true cost of converting to the A319 could end up being footed by French, German and to a lesser extent Spanish taxpayers.


User currently offlineB-HOP From Hong Kong, joined Nov 2000, 657 posts, RR: 1
Reply 4, posted (12 years 5 months 3 days 1 hour ago) and read 2731 times:

Boeing does get susbides from US government and that sum is growing


Live life to max!!!
User currently offlineJwenting From Netherlands, joined Apr 2001, 10213 posts, RR: 19
Reply 5, posted (12 years 5 months 2 days 23 hours ago) and read 2692 times:

B-HOP, Boeing gets no subsidies at all.
They may get more than market value on some military contracts, but that's the way the US military procurement system works.
Maybe there are subsidised jobs for partially disabled people etc., but those exist everywhere and such subsidies are just enough to buy the extra equipment (modified desk, chair, computer stuff) these people need.

Boeing might also get government contracts to participate in development projects of space and military hardware. Nothing wrong with that, that's normal practice all over the world.



I wish I were flying
User currently offlineBrons2 From United States of America, joined Sep 2001, 3017 posts, RR: 4
Reply 6, posted (12 years 5 months 2 days 22 hours ago) and read 2671 times:

Typical European spin.

Boeing has never received subsidies for commerical airplane production. People point to military production as "subsidies" but this is to develop highly specialized airplanes for a very demanding customer. The government pays this because otherwise the manufacturers would never develop them on their own.

Now, the US Government does order Boeing airplanes from time to time but the level of these orders as compared to the general sales census pales. With the possible exception of the 707/KC135....although the government would have considered other jet powered tankers but there were none available at that time. The DC-8 was not offered as a tanker that I am aware of.

Speaking of the 707, lets not forget that Boeing plowed all of their postwar profits into designing the prototype passenger jetliner and military tanker. $16 million to be exact, a huge sum at that time. I'd like to see Airbus do this with the A380(!)

It's also noteworthy to realize that the USAF actually entertained offers from Airbus on the tanker renewal program. They rejected the A332 tanker on the basis that it did not carry much more fuel than the 767 tanker, yet it took up a LOT more space on the ground. (which in the case of a passenger airliner would be the desired feature set...lol).



Firings, if well done, are good for employee morale.
User currently offlineL-188 From United States of America, joined Jul 1999, 29836 posts, RR: 58
Reply 7, posted (12 years 5 months 2 days 22 hours ago) and read 2654 times:

Actually the KC-135 lost the original tanker contract.

Lockheed won with their design, but Curtiss LeMay pushed an interm buy of the KC-135 through. I think it was for 37 airframes. This was because the Boeings could be delivered faster. 750 odd frames later, the USAF nor Lockheed still hasn't flown the winning jet tanker design.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7304 posts, RR: 57
Reply 8, posted (12 years 5 months 2 days 21 hours ago) and read 2611 times:

Bah Humbug from Boeing... Look at how much they reduced the Ryanair Order Price.. So much so that O'Leary stated that Ryanair had 'Raped' Boeing.




The world is really getting smaller these days
User currently offlineGKirk From UK - Scotland, joined Jun 2000, 24964 posts, RR: 56
Reply 9, posted (12 years 5 months 2 days 19 hours ago) and read 2569 times:

I believe Airbus offered to throw in Pilot re-training for free if easyJet ordered Airbus  Smile


When you hear the noise of the Tartan Army Boys, we'll be coming down the road!
User currently offlineRickB From United Kingdom, joined May 2003, 243 posts, RR: 9
Reply 10, posted (12 years 5 months 2 days 19 hours ago) and read 2542 times:

I am absolutely fed up with this Airbus are cheating idea from the American members on here..

The government loans for airbus are much like any other loans - they have to be repaid with interest - okay its a low rate of interest but its not free money. If it was free - it would be illegal under competition regulations so get a grip.

Besides as for pricing - didn't Ryanair get a 40%+ discount of 73NG's ???

Its a competitive world out there, sometimes Boeing win, sometimes Airbus win, stop complaining, US products are not automatically the best, neither are European products.

I may be European but im a huge Boeing fan, but all I hear is Americans complaining about anti Boeing sentiment on here, whereas from the threads I read - the vast majority of it is the other way round...how many A340 is cr*p threads do we have to wade through ????

Rant over !!

I would like to see Airbus win this because Im fed up looking at 737's all day flying over my house on their way into Liverpool !!

RickB







User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 11, posted (12 years 5 months 2 days 19 hours ago) and read 2526 times:


The r&d loans given to Airbus have precious little to do with Easyjet's putative 319s.

The idea that Boeing doesn't receive state aid is ludicrous. According to a recent EU panel, the EU should level the playing field and triple its aerospace subsidies to EUR3B, since presently the EU gives 1B annually and the US gives 3B to its own aerospace industry.

With regard to direct production subsidies, so far Airbus hasn't been nailed for receiving them. This is unlike Boeing, which receives production subsidies that violate WTO rules in the form of Ex-Im bank loans to finance its sales.

Boeing is complaining about prices, and there they have a point. Boeing, like many other US exporters, is not a very efficient producer. In the US, salaries across the board are higher - from the factory floor all the way (and particularly) to top executives. Also the production technology used by Boeing is older and less efficient than Airbus'. This means that they have to charge a higher price for their products in order to match Airbus' margins. EADS publishes its financials quarterly and it is a known fact that Airbus doesn't sell at, or even near, a loss.

So, to sum the issue up Boeing is hurting in market share because, despite receiving more subsidies than Airbus (and specifically, despite receiving internationally condemned production subsidies), Airbus is still able to outsell them because of its leaner cost structure and strong product portfolio.



User currently offlineRabenschlag From Germany, joined Oct 2000, 1021 posts, RR: 0
Reply 12, posted (12 years 5 months 2 days 18 hours ago) and read 2516 times:

the point is that when one identifies oneself with a company, football team, nation, or whatever, one may start to see things how one want them to be, not how they are. also, eventually one may become a bad loser. this is true for european and american people.

the subsidies topic has been discussed to death, leading to the insight that both companies get taxpayers money injected by their governments.

the argument "airbus wins on price and thats because of subsidies" is one sided. has anyone thought of production efficiency as an alternative cause for airbus ability to give higher discounts?

r.


User currently offlineVoodoo From Niue, joined Mar 2001, 2101 posts, RR: 0
Reply 13, posted (12 years 5 months 2 days 18 hours ago) and read 2508 times:

BestWestern's point about Ryanair's rape of Boeing on discount price is quite important. No doubt Easy is demanding that Boeing bend over once more, and Boeing now wants its price virginity back. Airbus has a good chance depending on how it sees its cash flow in the next few years.


` Yeaah! Baade 152! Trabi of the Sky! '
User currently offlineLj From Netherlands, joined Nov 1999, 4477 posts, RR: 0
Reply 14, posted (12 years 5 months 2 days 18 hours ago) and read 2472 times:

Please no Airbus or Boeing bashing.

Wishfull thinking!!




User currently offlineRepublic From Canada, joined Dec 2012, 0 posts, RR: 0
Reply 15, posted (12 years 5 months 2 days 18 hours ago) and read 2462 times:

It all seems fairly asinine to me.

If there are only two major suppliers, there should be some semblance of price integrity. What are the airlines going to do, not order any new planes if the prices are more rational?

The point of business is to turn a profit. Not to garner national prestige. (It seems many of these deals are made just to keep the production lines, ie: jobs, going.

The ultimate losers in a situation as it is now is the stockholders/taxpayers.

Joe


User currently offlineEugdog From United Kingdom, joined Apr 2001, 518 posts, RR: 0
Reply 16, posted (12 years 5 months 2 days 17 hours ago) and read 2453 times:

Regarding subsidies - until the merger with McDonald Boeing had less military business in value terms then Aerospatiale and BAE did - Boeing was almost a wholly civilian operation.

I find it very hard to believe that Airbus can assemble aircraft cheaper then Boeing! Boeing planes are simpler and lower tech.

But airbus is now a private company - so I cannot believe its owner will sell plane at a loss

I do think it is time for no more subsidies - Airbus is a fully mature company and must survive on it own!

I think it is terrible mistake for airlines manufacturers to go for market share and not overall profit - that is a recipe for disaster esp if markets go into a downturn.

I also think that in 50 years time aircraft will be made in India and Asian and not in high cost Western countries.


User currently offlineUssherd From United Kingdom, joined Feb 2000, 329 posts, RR: 0
Reply 17, posted (12 years 5 months 2 days 17 hours ago) and read 2449 times:

I find it annoying when people complain about the rights and wrongs of sbusidies received or not received by major US and European aerospace companies. Is it only unfair when one developed nation "discriminates" against one of their fellow developed nations? I don't hear anyone complaining about the way the rich nations protect certain of their industries against imports from poorer nations, in effect curtailing those countries chances of inproving their economies and directly affecting the quality of life of millions in the developing world. The fact is that a worldwide level playing field does NOT exist.


Cada loco con su tema...
User currently offlineGKirk From UK - Scotland, joined Jun 2000, 24964 posts, RR: 56
Reply 18, posted (12 years 5 months 2 days 17 hours ago) and read 2440 times:

Didnt a Go study prove that in terms of trchnical side of things, the Airbus was more advanced than the 737NG?? So, I think it will come down to cost....
BTW, Why do a large majority of Yanks bash the Airbus?



When you hear the noise of the Tartan Army Boys, we'll be coming down the road!
User currently offlineGreg From United Kingdom, joined May 2005, 0 posts, RR: 0
Reply 19, posted (12 years 5 months 2 days 17 hours ago) and read 2428 times:

I think going Airbus was a foregone conclusion particularly with Easyjet being European.

You can argue all you want about technology...but the 73G and 319 are identical birds when it comes to operating costs. Clearly they are going for the purchase price, spares prices...and training costs.

It will be interesting since Eastsjet just took delivery of their 25th 73G last month and have three more on the ground in Seattle awaiting delivery.

EADS is in a good period to go for market share. European shareholder do not demand anywhere near the same returns or growth in equity as US companies.

Secretly, I do hope that Boeing can pull it off.


User currently offlineRickB From United Kingdom, joined May 2003, 243 posts, RR: 9
Reply 20, posted (12 years 5 months 2 days 17 hours ago) and read 2420 times:

Greg,

Ryanair are in Europe and they chose the 737, Easyjet are not interested in buying European for the sake of it - they want the best deal, they want to buy the aircraft which will make them the most money on their investment be it 737NG or A319.

If European airlines automatically bought Airbus just to avoid buying American products, how come BA have such a large Boeing fleet, what about AF, LH, KLM, Iberia, all with substantial Boeing fleets not to mention a whole host of other airlines with smaller Boeing fleets (CSA, LOT, etc). Okay most of them also have Airbus in the fleet, but then again I think this is more down to economics of a particular aircraft rather than just politics.

Europeans are not anti US - quite the opposite, we are just fed up of the minority of Americans who believe everything non-American is cr*p. Patriotism is all well and good, Europeans generally just aren't as 'rabid' about it as some Americans.

RickB


User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 21, posted (12 years 5 months 2 days 16 hours ago) and read 2393 times:


Eugdog,

Businessweek magazine did a comparative study on Airbus and Boeing some time back and came to the conclusion that Airbus spent fewer hours, and less expensive hours, assembling planes than Boeing did. This is in part because Airbus is overall a newer and leaner organization, but also because they had adopted more progressive production methods.

The cost of the work hours was cheaper in Airbus because Airbus uses more lower-level workers and salaries across the board are lower in Europe.

Cost of production and overall sophistication of the product don't necessarily correlate. Modern planes are "designed to be produced", so the production efficiency is in the equation from the start of product development.


User currently offlineHoons90 From Canada, joined Aug 2001, 3078 posts, RR: 52
Reply 22, posted (12 years 5 months 2 days 16 hours ago) and read 2385 times:
AIRLINERS.NET CREW
CHAT OPERATOR

Easyjet should get Airbus! They will look FANTASTIC! Airlines with a mix of Airbus and Boeing have great fleet  Smile jetBlue should also order some B737-800s  Big grin


The biggest mistake made by most human beings: Listening to only half, understanding just a quarter and telling double.
User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 23, posted (12 years 5 months 2 days 15 hours ago) and read 2346 times:

M27,

Fresh off the wires we have EADS' H1/02 report, according to which:

"Airbus contributed an operating profit of 874 million euros in the first six months of 2002, up 10 percent. "

This is consistent with my earlier statement that Airbus doesn't sell at a loss.



User currently offlineRickB From United Kingdom, joined May 2003, 243 posts, RR: 9
Reply 24, posted (12 years 5 months 2 days 15 hours ago) and read 2334 times:

M27,

Which bit?

Thank you for your very constructive contribution to the conversation.

RickB


25 EGGD : .........and are you sure that any discount is doing a favour for the industry, in such a downturn (as Boeing keep saying) in buisness in the aviation
26 Klaus : Eugdog: I find it very hard to believe that Airbus can assemble aircraft cheaper then Boeing! Boeing planes are simpler and lower tech. That´s a misc
27 N79969 : Airbus really, really wants in to the low cost market. No telling what they will offer EasyJet. Boeing gets tax breaks along with GE and few other (in
28 Silverangel : My understanding is that Airbus does NOT have the market cornered in terms of efficency & market superiority. The 320 is a good start & arguably be be
29 Wingman : If Airbus beats out a 40% discount from Boeing on the 737, then that would be 100% all natural product dumping. I don't care what the arguments are fr
30 Joni : N79969, The fact that the money is borrowed from governments doesn't imply it isn't "the best use of economic resources". Markets often prefer invest
31 N79969 : Joni, Actually the fact that governments rather than the capital markets are lending is a subsidy in and of itself. Governments are not banks and bank
32 Donder10 : I don't hear anyone complaining about the way the rich nations protect certain of their industries against imports from poorer nations, in effect curt
33 Wingman : If they're profitable, why don't they repay the "loans"? Or is a large part of their "profitability" due to the fact that they don't? Surely the compo
34 Dutchjet : The Easyjet order is all about price, Easyjet could care less if the aircraft are made in Seattle or Toulouse. Look for Boeing to get this order in th
35 QatarAirways : DutchJet "Easyjet could care less if the aircraft are made in Seattle or Toulouse. Look for Boeing to get this order in the end, simply because of the
36 AvObserver : I'm glad to see that most here see the loans to Airbus in an unfavorable light. Our government should get tough with the E.U., even to the point of sa
37 Joni : N79969, If Boeing defaulted on bond payments, the US government would bail it out just like it bailed out the major airlines. In fact the government
38 N79969 : This discussion is endless because we acknowledge a subsidy when it occurs. See my 767 tanker lease example. Most Europeans will not call a subsidy by
39 M27 : At the risk of having another post deleted in this topic due to it being a "personal message" and it being the only one I suppose that was, I will ask
40 Joni : N76679, I wonder how you are privy to how the US government would bail Boeing out. Under no circumstances would they let Boeing lose any key part of
41 Post contains links RickB : Airbus DO pay off their loans :- http://www.defense-aerospace.com/data/communiques/archives/1999Dec/data/1999Dec1220/ for example and you can see that
42 BestWestern : Guys, This topic is getting really longwinded. Lets face facts: Both aircraft makers get grants and discounted loans. Both airlines discount aircraft
43 Post contains images Englandair : Hi guys, I've only had time to skim-read this post, so I apologise if this has already come up, but I have a question: I thought that before the EZY t
44 Post contains links and images Englandair : .........anyone? View Large View MediumPhoto © Dean Barnes
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