Joni
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BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 5:48 pm

Info for the guys who suspect Airbus is facing a liquidity crisis:

http://news.bbc.co.uk/1/hi/business/4528219.stm
 
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kc135topboom
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 6:37 pm

Quoting Joni (Thread starter):
Info for the guys who suspect Airbus is facing a liquidity crisis:

I wasn't one who said they were. Airbus is doing just fine, for now. But, I hope they don't make sales of the A-380, A-350, and A-400M vital to their survival without massive substedies. Sales and backlogs of the A-300-600, A-32X, A-330-300, and A-340-500/600 seem to be going good for them.

But, the BBC is just about as creditable as CNN, both of which are less creditable than "Baghdad Bob".

During the Iraqi War, the Royal Navy CV, HMS Ark Royal turned the BBC off, on board ship, because their reporting was so inaccurate and misleading.

I wouldn't believe the BBC (or CNN) if a printed/broadcasted story saying the sun will raise in the east.
 
NoUFO
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 6:50 pm

Quoting KC135TopBoom (Reply 1):
But, I hope they don't make sales of the A-380, A-350, and A-400M vital to their survival without massive substedies.

Sorry, you are hoping all three aircraft will continue to need loans provided by governments of EU member countries?

Quoting KC135TopBoom (Reply 1):
A-300-600, A-32X, A-330-300, and A-340-500/600 seem to be going good for them.

The A300-600 has hardly seen any orders recently. Some freighters, and that's about it.

Quoting KC135TopBoom (Reply 1):
But, the BBC is just about as creditable as CNN, both of which are less creditable than "Baghdad Bob".

During the Iraqi War, (...)

BBC is usually reliable and is not the only source reporting that Airbus/EADS made more profit than expected in the first quarter of 2005.
And please leave the war on Irak out of this.
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Joni
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 9:57 pm

Quoting KC135TopBoom (Reply 1):
But, the BBC is just about as creditable as CNN, both of which are less creditable than "Baghdad Bob".

Um, pardon? The BBC is much more reputable than CNN. Besides, this particular piece was obviously based on EADS's quarterly report, so it's unlikely even Fox News could warp it.
 
Danny
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:15 pm

 
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sebolino
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:25 pm

Quoting KC135TopBoom (Reply 1):
I wasn't one who said they were. Airbus is doing just fine, for now. But, I hope they don't make sales of the A-380, A-350, and A-400M vital to their survival without massive substedies.

Massive subsidies ? (It seems that will never end  Smile ).
Please give us the numbers (the money given to Airbus in subsidies, I mean given not borrowed).
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:27 pm

The BBC report is fine, the figures have been published elsewhere as well. EADS has its AGM on Wednesday - the interesting part will be, not the figures for the current year, but the outlook for the next couple of years.

Airbus still has a pretty full order book - but over the next couple of years it is going to have to complete testing of the A380, and then produce and sell the 'launch' aircraft at a loss, given that most of them were sold at discounted prices which are lower still now, given the devaluation of the $US.

If you add to that several billion to develop the A350 design, with no returns from sales of it for maybe three years, it's difficult to see, from Airbus/EADS' present profit levels, where the cash is going to come from to support both the A380 and the A350 programmes.
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monteycarlos
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:33 pm

You know guys... it is all under the accounting notes in EADS annual report for financial year 2004! I believe the wording is something like government loans or something like that... I can't find a point anywhere within that document that states that they do not have to pay the money back.

If anyone finds it, let me know what the actual note says! Cheers.

Quoting Danny (Reply 4):
Just for comparison:
http://money.cnn.com/2005/04/27/news...reut/

Yeah, financial results tend to depend more on what aircraft are actually delivered, because that is when the money starts moving. So technically, you would expect Airbus to be up this year and Boeing down, at least until next year or the year after and then the sales kick Boeing got from this year will start moving... might move slower since the 787 deliveries aren't due for a long while yet!
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PanAm_DC10
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:36 pm

Quoting KC135TopBoom (Reply 1):
I wouldn't believe the BBC (or CNN) if a printed/broadcasted story saying the sun will raise in the east.

That is good! In this case the BBC is reporting the facts as provided by a publicly listed Corporation called EADS to the relevant Regualtory Authorities as required by law. So the next time the BBC (or CNN) tells you Boeing's Quarterly results make sure you don't believe those either too.  Yeah sure

This doesn't surprise and we should expect more similar reports in the future as we see Airbus increase deliveries to meet their recently announced production increases. Also, maybe Airbus is delivering more widebodies and that is helping their revenues given bulk of payment is on delivery. I'd also expect that they are surely benefitting from their increased market share via greater sales of spare parts and increased maintenance and training revenues.

Regards
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whitehatter
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:40 pm

Quoting NAV20 (Reply 6):
If you add to that several billion to develop the A350 design, with no returns from sales of it for maybe three years, it's difficult to see, from Airbus/EADS' present profit levels, where the cash is going to come from to support both the A380 and the A350 programmes.

Same place that the current capital budgets are financed from. Revenues and commercial lending where needed.

Profits are profits over and above monies set aside for capital spending such as new aircraft development and repayment of existing loans. Their order book is healthy, aftermarket sales and support a cash cow, and military/space doing nicely as well. EADS is healthy and can always call on its shareholders should they need additional liquidity for expansion, just like any other private sector company.

As for the cheerleader tendency comments above, BBC Business reporting is considered to be one of the best business news sources in the world and is laden with awards. When you get out of kindergarten you might understand that business reporting is not the same as political and reporter opinions have no useful place in cold repeating of financials.
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ken4556
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:46 pm

Figures lie and liers figure
 
trex8
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:47 pm

Quoting KC135TopBoom (Reply 1):
But, the BBC is just about as creditable as CNN, both of which are less creditable than "Baghdad Bob".

the likes of Robert Mugabe don't wake up in the morning and check on Fox or CNN to see if they are still in power, they check the BBC Worldservice!
 
monteycarlos
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 10:55 pm

Quoting WhiteHatter (Reply 9):
When you get out of kindergarten you might understand that business reporting is not the same as political and reporter opinions have no useful place in cold repeating of financials.

 rotfl 

I guess anyone who has any doubts - just check the financial statements. They're readily available, and are required by law to be correct!

Or does that take the fun out of it all?
It's a beautiful night to fly like a phoenix...
 
eha
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:01 pm

Quoting NAV20 (Reply 6):
If you add to that several billion to develop the A350 design, with no returns from sales of it for maybe three years, it's difficult to see, from Airbus/EADS' present profit levels, where the cash is going to come from to support both the A380 and the A350 programmes.

Requirements for cash were at its highest in 2004. The investment on A380 will be winding down in the next two years. A350 is by no means comparable to A380 in term of cash requirement.

Talking about order book (as it was mentioned in this thread), then Airbus has a brighter outlook than Boeing for now.

E.
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:15 pm

Whitehatter, time will tell. It's pretty accepted that Airbus will make a loss of about $US40M. per aircraft on the first batch of A380s; if they build say 75 over the next 18 months, that's a loss of around $US3 billion. Adding in say another billion for the testing programme, and another $US3 billion for A350 development, gets you to $US7 billion.

As you say, they can borrow that - at a cost. But figures like that are going pretty well to wipe out their profits for the next couple of years, since they've only averaged about $US2 billion p.a. recently.

And that's assuming that orders for the other aircraft in their range stay as healthy as they have been for the last two years. If competition from the 787/777 substantially reduces Airbus' orders during the same 18-month period, the picture in say early 2007 may not look at all rosy.
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eha
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:31 pm

Quoting NAV20 (Reply 14):
It's pretty accepted that Airbus will make a loss of about $US40M. per aircraft on the first batch of A380s; if they build say 75 over the next 18 months, that's a loss of around $US3 billion. Adding in say another billion for the testing programme, and another $US3 billion for A350 development, gets you to $US7 billion.

What do you call the first batch ?
Test program...it is included in the whole program costs/investments up to certification...

Do you know how much an A/C cost to manufacture, how much it is sold?
Nobody has any clue how much concession/commitment Airbus will have during the first A/C delivery...

So it is without all this information quite impossible to have an estimation on a per A/C basis..

Now the figures you mention (wrong for A380) are to spread over several years, and you do not mention revenues from A/C deliveries and services, and Airbus costs globally (Airbus is doing more than just financing two A/C developement program)..

All this seems pretty simplified...

E.
 
Joni
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:43 pm

Quoting NAV20 (Reply 14):
Whitehatter, time will tell. It's pretty accepted that Airbus will make a loss of about $US40M. per aircraft on the first batch of A380s; if they build say 75 over the next 18 months, that's a loss of around $US3 billion. Adding in say another billion for the testing programme, and another $US3 billion for A350 development, gets you to $US7 billion.

Are you assuming they intend to make a loss of 40MUSD for each of the first 75 a/c? The "launch" prices were offered to SQ and QF. Branson was publicly complaining that he had to pay more than Qantas for A380s because the program was already "go" by the time Virgin placed its orders.

Doubtless also Emirates got a good price from ordering to many. When an order is placed for 20 planes they are also more economical to produce - this is why both Airbus and Boeing can offer -50% discounts when someone buys 100 narrowbodies: economies of scale.

It would be beyond the pale to rack up 3BUSD of losses on launch orders.
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:48 pm

Quoting Eha (Reply 15):
All this seems pretty simplified...

Fair go, Eha, I'm not doing another Ph.D thesis  Smile

'First batch' is what I said - 75 A380s over 18 months. An Airbus spokesman on the radio yesterday was talking about a production rate of 40-50 aeroplanes per annum.

The discounted price of $US150M. for the launch aircraft is well-established from press reports when the orders were placed (Year 2000). The Gellman Report went further, said that ALL the 155 ordered aircraft are priced at '$130M.-$150M."

I took production costs at $190M. - there are higher estimates, Gellman (again) says $199M.

Now, if, as you say -

Quoting Eha (Reply 15):
Now the figures you mention (wrong for A380)

I'd be grateful if you would give us the correct figures?
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
eha
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:51 pm

Quoting Joni (Reply 16):
Doubtless also Emirates got a good price from ordering to many. When an order is placed for 20 planes they are also more economical to produce - this is why both Airbus and Boeing can offer -50% discounts when someone buys 100 narrowbodies: economies of scale.

I agree with you on the price thing...But I think the -50% thing is a myth...

About the economy of scale...Airbus (and neither Boeing I assume for the 737) is not waiting for orders to book the A320 FAL completely and therefore adjust accordingly resources to produce.

Another aspect to make savings : work on reducing time to produce the A/C. A320 today still takes much more time than B737 to be build...But they are constantly reducing this time, thus reducing the cost on a per A/C basis.

E.
 
Joni
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:55 pm

Quoting NAV20 (Reply 17):
The discounted price of $US150M. for the launch aircraft is well-established from press reports when the orders were placed (Year 2000). The Gellman Report went further, said that ALL the 155 ordered aircraft are priced at '$130M.-$150M."

NAV20, I think you can safely forget the Gellman report.
 
Joni
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:56 pm

Quoting Eha (Reply 18):
I agree with you on the price thing...But I think the -50% thing is a myth...

I recall reading an estimate that Boeing sold 737s at 50% off to Ryanair, and Ryanair bragging that they'd "raped" Boeing. But as noted, the order was huge enough to make even these kinds of discounts possible, and still show some kind of profit from the deal.
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Mon May 09, 2005 11:57 pm

Quoting Joni (Reply 16):
It would be beyond the pale to rack up 3BUSD of losses on launch orders.

Couldn't agree more, Joni - just thankful I'm not a shareholder!

In fairness to Airbus, though, a lot of it isn't their fault. $US150M. was about 185M. Euros when the orders were placed; only about 120M. Euros now.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
daedaeg
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:00 am

NAV20 are you Airbus' official doom and gloom reporter? I swear if I was an average Joe not knowing much about the industry, one could easily surmise that Airbus is in its last days based on your posts. LOL
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eatmybologna
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:02 am

This is fantastic news!  praise  I'm always happy to hear that businesses (AB,BA,Emb,Bomb. etc) in the airline industry are doing well and will build new and exciting aircraft for the future. Fair competition is healthy, as it only brings out the best in all involved.

How do you feel about Airbus acquiring low cost government loans and/or subsidies to develop new aircraft (A350 comes to mind) during profitable times?

Thanks,

e-m-b
Isn't knowledge more than just the acquisition of information? Shouldn't the acquired information be correct?
 
eha
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:04 am

Quoting NAV20,reply=17'First batch' is what I said - 75 A380s over 18 months. An Airbus spokesman on the radio yesterday was talking about a production rate of 40-50 aeroplanes per annum.
][/quote]

The FAL is configured for a max delivery rate of 4 per month. That does not mean it is going to be achieved from Day 1. One should have a look at the delivery slots promised to each of the customers to extrapolate a rough delivery rate estimation. Too lazy to do that now Smile

[quote=NAV20
(Reply 17):
The discounted price of $US150M. for the launch aircraft is well-established from press reports when the orders were placed (Year 2000). The Gellman Report went further, said that ALL the 155 ordered aircraft are priced at '$130M.-$150M."

I cannot believe these figures be won't elaborate more Smile...There is no commercial sense to price an A/C at 230-260M$ and for each and everyone of the existing order offer them half the price or so. This makes no sense and is far from reality IMO. There is a lot of crap/nonsense/whatever written out about prices, and you will never find someone even knowing the answer, talking publicly on that, strictly confidential...Part of the story A vs B, where B cries foul saying "A drives the prices down", and A says they want to position themselves as the Mercedes of the A/C industry allowing customers pay premium prices to premium products...

Quoting Eha (Reply 18):
I'd be grateful if you would give us the correct figures?

The estimation I quoted wrong from yourself was your estimation of the testing costs. As I say, these costs are part of the multi-billion $ program to develop the A380, up to certification of the A/C. And I mention also (for the A350 to be out in 2010) that these overall costs are to spread over several years.

Cordially,
E.
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:09 am

Quoting Daedaeg (Reply 22):
one could easily surmise that Airbus is in its last days based on your posts.

Not at all, Daedaeg - they'll probably hang on for years yet. Maybe as many as three or four. More if the EU bails them out for a while  Smile

If my figures are wrong, I'm open to someone telling me what the correct figures are, and I'll duly apologise.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
eha
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:11 am

Quoting Eatmybologna (Reply 23):

How do you feel about Airbus acquiring low cost government loans and/or subsidies to develop new aircraft (A350 comes to mind) during profitable times?

I feel good, because this comes from a bilateral agreement signed between UE and USA in 92, and for that matter Boeing has its list of similar "perks" (shares of program financed by NASA etc....).

They say if they are allowed to do so, why won't they do it, even they could afford the program with the loans...But we're off topic and on a largely irreconciable difference type of thing for which many couple divorce these days  Smile.

Cheers,
E.

E.
 
NAV20
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RE: BBC: Airbus Profits Up On Rising Sales

Tue May 10, 2005 12:35 am

Fair enough, Eha - I accept that the testing costs may be lower, and that the A350 costs may be spread over a longer period. Let's say I over-estimated by a billion - that still leaves a deficit of $US6 billion.

On the launch prices, have a look at this. The story relates to Qantas, but it's hard to believe that anyone else agreed to pay more than they did, for bigger orders. There really isn't any reasonable doubt about the first lot, ordered in 2000. There may be about the prices for the orders that came in in 2002/3, but I was only estimating the figures out to 18 months (i.e. the 'first batch' of 75):-

"The airline received deep discounts for being an early buyer of Airbus' all-new superjumbo jetliner. The list price is $220 million, but industry experts say the European plane maker has been selling them for as low as $150 million per jetliner.

http://www.unionrecord.com/biz/display.php?ID=386
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci