TaromA380
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Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:43 am

Hello everybody,

I read the Excellent Article On The Qantas 787 Vs A350 Choice (by ClassicLover Dec 16 2005 in Civil Aviation) topic, and the http://www.theaustralian.news.com.au.../0,5744,17591854%255E23349,00.html Australian article about what happened in the underground of the order.

Quote
Gregg says the decision could have gone either way and probably would have gone to Airbus had it been made earlier.

"Boeing must have moved quite a few big boulders out of the way to suddenly give us access to the 787 far, far earlier than we ever expected we could get it.

"Without that, they would have been very hard pressed to have won the deal."



Well, I see a clear loser in this ménage-à-trois outcome :

Qantas ? No way, they got a huge discount ! Above their hopes, after the final rush bid.

Airbus ? Not, because they didn't even compete for real (without knowing it). Qantas needed the airplanes way before the EIS of A350.

Boeing ? The donkey of the day. Why ? Because being pressed by Airbus, they lowered the price. No, I am not saying what you think ! Instead, Boeing lowered the price while being the sole competitor ! From the beginning, only the 787 would have matched the timing of the Qantas order.

Rumours are indicating a 50% discount price offered to Qantas. Around $80 millions/frame. Well, imagine an offer at $85 or $90 millions/piece : They were still sole competitors, still with a good price ; Qantas would have nothing to do but order Boeing.

A minor $5 millions difference multiplied by 65 is $326 millions worth. Frames sold at $90 millions/piece would make $650 millions difference worth.

Boeing has just lost several hundred millions $ without knowing [one of] the principal Qantas condition, the early availability, not knowing they were competing solely, not knowing Airbus is not a threat.

Sure, they got the deal, but still lost several hundred millions $ for nothing.

If you don't call that a paradox ......  Smile
 
dutchjet
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:46 am

Right, Boeing just won an order for 65 new airplanes and they are the loser....you dont seriously believe that, do you? Next, you will tell us that they are celebrating in Tolouse over the loss of the QF order.

Do you really think that the men and women at Boeing dont know what they are doing?

And they say that some Boeing supporters are overzealous....
 
AJRfromSYR
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:47 am

If Boeing kept their price at list, think QF would have waited 2 years, and leased 330's while they waited for A350's?
-AJR-
 
Alitalia744
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:48 am

While Boeing didn't get the list price, I highly doubt they're selling at a lost. I'm not sure if you've ever noticed but Boeing posts record profits yearly - obviously someone knows what they're doing.

I'm suggesting deletion as this is another flamebait in the making...
Some see lines, others see between the lines.
 
Byrdluvs747
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:48 am

Did all the grapes in Europe suddenly turn sour? I'm sure seeing a lot of it on this board.

God only know what the Airbus fanboys will do if SQ chooses Boeing.
The 747: The hands who designed it were guided by god.
 
zoom1018
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:57 am

Quoting Dutchjet (Reply 1):
Right, Boeing just won an order for 65 new airplanes and they are the loser....you dont seriously believe that, do you? Next, you will tell us that they are celebrating in Tolouse over the loss of the QF order.

Do you really think that the men and women at Boeing dont know what they are doing?

If Airbus won the order, would it be a loser as well, in your opinions?
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 10:59 am

Quoting Dutchjet (Reply 1):
Right, Boeing just won an order for 65 new airplanes and they are the loser....you dont seriously believe that, do you?

Not at all. But they could have win the order + several hundred millions dollars more.

Quoting AJRfromSYR (Reply 2):
If Boeing kept their price at list, think QF would have waited 2 years, and leased 330's while they waited for A350's?

I'm not talking about price list, but 45% discount instead of 50% (for exemple). Multiplied by 65, that's a huge sum.

Quoting Alitalia744 (Reply 3):
While Boeing didn't get the list price, I highly doubt they're selling at a lost.

I'm not talking about selling at lost. Re-read again.

Some people are so stressed about the A vs B daily flame that don't realize there are still interesting ideas to debate. My view is that Boeing did compete solely. Let's postpone the A vs B flame for another day. Qantas fooled them, not Airbus.
 
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clickhappy
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:03 am

So, you are saying that Qantas had NO intention of buying the A350, based on a later EIS?

Do you really believe that?
 
N79969
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:04 am

It is a wonder how Boeing has survived this long without the incisive financial analysis of Tarom A380...How could they make such a glaring and obvious error? Tarom should send Boeing a resume. The financial markets are apparently even dumber than Boeing as evidenced by the stock trading near its 52-week high.
 
AJRfromSYR
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:06 am

Quoting TaromA380 (Reply 6):
I'm not talking about price list, but 45% discount instead of 50% (for exemple). Multiplied by 65, that's a huge sum.

Why if Boeing didn't offer it, it would be worth it to Qantas to take the Airbus deal and lease A330's until the 350 came.
-AJR-
 
zvezda
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:06 am

This is all quite speculative. It is not at all clear that Boeing would have won the order had they not lowered the price. There is some indication in various quotes of QF executives that Airbus would have won the deal had Boeing not lowered their price. Anyway, we're unlikely ever to know for certain.
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:09 am

From the article I read, the EIS was quiet important.

I don't think $5 milions more/frame would have determined Qantas to wait 2 more years, disrupting all fleet plans made. Certainly a bigger difference, yes, but not 5%. They desperately bid till the last minute, while the winner was already known. They bid for nothing, at least in the final rush.
 
AJRfromSYR
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:12 am

Quoting TaromA380 (Reply 11):
They desperately bid till the last minute, while the winner was already known. They bid for nothing, at least in the final rush.

Wow, sounds like you were there...
-AJR-
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:14 am

Quoting N79969 (Reply 8):
It is a wonder how Boeing has survived this long without the incisive financial analysis of Tarom A380...How could they make such a glaring and obvious error? Tarom should send Boeing a resume. The financial markets are apparently even dumber than Boeing as evidenced by the stock trading near its 52-week high.

If you want to say something about my eventual misinterpretation of the article, I'm waiting. It could be possible. It's a debate forum or not ? Don't you think at all that the requested EIS chosen the winner before the final rush bid ? Not even a little ? If not, why ? I'm sure you can write something on topic.


Edit: I was not there, I'm only speculating what I read.

[Edited 2005-12-17 03:17:05]
 
zvezda
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:18 am

Quoting TaromA380 (Reply 13):
Don't you think at all that the requested EIS chosen the winner before the final rush bid ?

That's not clear. It was an important factor, but it was not the only factor. Airbus may have been offering a much lower price. All we know (if reports are true) is that after all the numbers were fed into QF's model, the calculated comparison numbers were very close. The availability date was just one of many factors that produced that very close result.
 
trevd
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:23 am

Tarom - no disrespect but your own post refutes your point. You quote Gregg in the article stating that the decision could have gone Airbus' way, while later suggesting the order was Boeing's all the time and that Airbus was not even in the running.

Quoting TaromA380 (Thread starter):
the decision could have gone either way and probably would have gone to Airbus had it been made earlier.



Quoting TaromA380 (Thread starter):
Boeing lowered the price while being the sole competitor ! From the beginning, only the 787 would have matched the timing of the Qantas order.

I don't think you help your credibility with these contradictory posts...At the same time you indirectly (and unintentionally I'm sure) insult and minimize peoples efforts. I'm sure the Airbus sales team ran a hard fought campaign to win this deal and would not appreciate you minimizing their efforts.

Trev...
 
Cleco
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:24 am

Sometimes I think the only reason that they show the flag of the users origin is so that we know who to argue with in A v B posts

[Edited 2005-12-17 03:25:30]
EMBRY-RIDDLE BABY
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:25 am

Quoting Zvezda (Reply 14):
All we know (if reports are true) is that after all the numbers were fed into QF's model, the calculated comparison numbers were very close.

Yes, financial comparison numbers were very close, while EIS were very different. That makes the bid unbalanced (little or more). This could be translated into $$$ gain or lost. I have only observed this detail, not bashed Boeing. Please feel free to don't harass me. Smile
 
FriendlySkies
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:27 am

Boeing won the order. Does it really matter how? Get over it and move on to the next battle...

But if you insist...the availability date was obviously very important to QF, and Boeing could deliver that where Airbus couldn't, so they won. What again was the point of this thread other than to point out the obvious, that QF might have gone with Airbus.
 
AJRfromSYR
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:27 am

Quoting TaromA380 (Reply 13):
I'm only speculating what I read.

Don't present your speculation as fact.
-AJR-
 
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ER757
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:31 am

Quoting TaromA380 (Reply 6):
But they could have win the order + several hundred millions dollars more

Yes, well this is part of price quoting and sales in any business. You quote a price and customer either accepts or rejects it, usually after a period of negotiation. There is always 2nd guessing after the fact. If you win the bid, you wonder if you bid too low and could have made more profit. If you lose, you wonder if you got too greedy and could have settled for less profit. Believe me, there is a minimum price below which Boeing would not sell the aircraft. They are NOT taking a loss on these. So please, don't refer to their sales team as the "donkeys" in this deal. Just a guess, but I'll bet they know a little more about selling their aircraft than you do.
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:38 am

Quoting FriendlySkies (Reply 18):
Boeing won the order. Does it really matter how? Get over it and move on to the next battle...

Are you talking to me ? I'm not Leahy not Airbus, I don't own any A380 if you were thinking about my nickname. Enough disclaimers, ok ?


It's a speculation of course (name 3 non-speculation topics on A.net, quickly  Smile), but I found that detail interesting to share with you. Qantas smartly made them fight to death till the end, while their desired EIS was met by one single competitor. Could you say it's not true ?
 
ContnlEliteCMH
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:46 am

Quoting ER757 (Reply 20):
Yes, well this is part of price quoting and sales in any business. You quote a price and customer either accepts or rejects it, usually after a period of negotiation. There is always 2nd guessing after the fact. If you win the bid, you wonder if you bid too low and could have made more profit. If you lose, you wonder if you got too greedy and could have settled for less profit. Believe me, there is a minimum price below which Boeing would not sell the aircraft. They are NOT taking a loss on these. So please, don't refer to their sales team as the "donkeys" in this deal. Just a guess, but I'll bet they know a little more about selling their aircraft than you do.

You took the words right out of my mouth. I am *personally* going through this very process right now. I submitted a bid to a local company to deliver a small BI application. I quoted four FTE's for three months. It's my company's first serious bid to a client who needs a team of people. And it's a lot of money. As in, could easily exceed a quarter million dollars in 13 weeks.

The difference between me and Tarom A380 is that I know exactly what my costs are; he hasn't any clue what Boeing's costs are for the 787. If the client comes back to negotiate, you can bet I'm going to start cutting rate. Their job is to get as much out of me for as little money as possible. My job is to get as much money as they will possibly pay for the work required.

In the past week, I have gone through the very thought process you write many, many times. Am I being greedy with triple figure hourly rates? Can I convince them that this purchase should be made on value, not on cost? Do I have a competitor who thinks they can do it for $50/hour per person? If so, are they using H1B's or something?

If I win, it will still be hugely profitable -- even if they drive my price down by 25%. And win or lose, it will be a meaningful learning experience, because you can bet I'll ask why I lost.
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
StuckInCA
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:50 am

Quoting TaromA380 (Thread starter):
The donkey of the day

Right. It is healthy to find ways to console oneself.

Yet again we have a clear example that Airbus fans need to remember when they get fussy about Boeing fans "bashing" Airbus. It's a two way street.
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:52 am

Everyday life is a bid, in a way or another. However, sometimes we have some remorse after offering a very low price, while the circumstances were more favourable to us than to the competitor. That's all.

I still think Qantas fooled Boeing. A little.  Smile
 
sq212
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:53 am

Airbus could provide A330 as interim to solve the EIS issue. Also QF will become the launch customer of 789 and their EIS is even later than A359.
 
11Bravo
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:54 am

Much of your argument also rests on the assumption that the “rumors” regarding a 50% discount are accurate. As far as I know, those rumors are just that, rumors. Did QF receive discounts on their B787 order? I’m sure they did. They probably received a rather significant discount on an order that size. That’s generally the way this business works; you order lots of planes, and you get a big discount.

Do we have a substantive credible source that specifically quantifies that discount? No, we have rumors, and that makes your position extremely speculative and weak with little or no basis in fact. That may change. We may learn more about the discounts, but for right now, I think it goes in the speculation pile, not the fact pile.

Do you have sources other than users on a.net that quantify this discount?
WhaleJets Rule!
 
N79969
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:54 am

If you want a classic example of leaving money on the table, look at what Airbus did in Syria...Boeing cannot even compete against them in that country...

http://www.economist.com/displaystory.cfm?story_id=1842124
 
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Stitch
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 11:58 am

I guess by this logic QR is a loser because they're waiting for the A350 while giving up their 787 slots which probably went to QF to meet their EIS demands. So QF will have planes sooner and can better compete against QR, who will be twiddling their thumbs for two years waiting for A350s to roll out of TLS.  Smile

So I guess the next time the A350 scores a win based in part on EIS, we all need to realize that Airbus made a stupid mistake and tossed aside hundreds of millions because, well, Boeing never have had a chance due to having too many sales too fast.  Yeah sure
 
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ER757
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:08 pm

Quoting ContnlEliteCMH (Reply 22):
In the past week, I have gone through the very thought process you write many, many times.

I feel your pain - story of my life at the office every day........
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:10 pm

Quoting 11Bravo (Reply 26):
Do you have sources other than users on a.net that quantify this discount?

Nope. However that doesn't stop me to discuss around this detail. The different EIS could unbalance a close financial match. Maybe I exagerated with the "donkey" term, but that EIS is damn there. Boeing had a "native" advantage. Just my theory.

Quoting N79969 (Reply 27):
If you want a classic example of leaving money on the table, look at what Airbus did in Syria...Boeing cannot even compete against them in that country...

Wow, interesting article. So, Airbus would have been a donk err a bit naive Big grin to bid to death for a Syrian order, alone.

Quoting Stitch (Reply 28):
So I guess the next time the A350 scores a win based in part on EIS, we all need to realize that Airbus made a stupid mistake and tossed aside hundreds of millions because, well, Boeing never have had a chance due to having too many sales too fast.

I think slot delivery/EIS is always a part of negociation thus a $$$ argument. Correct me if I am wrong.
 
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Stitch
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:20 pm

Quoting TaromA380 (Reply 30):
I think slot delivery/EIS is always a part of negociation thus a $$$ argument. Correct me if I am wrong.

I am sure it is, but airlines look at the TCO. QF will not pick the 787 if their models showed the A350 was better, even if it was later.

Unless QF's entire operating model is based on using the two-year advantage of the 787 to run every other operator out of the Australian international market? From what QF is saying, it doesn't sound like they think the 787 is so potent a weapon that it will kill SQ, EK, UA, NZ, BA, and everyone else the moment the first 787-8 taxis out to Botany Bay at Kingsford Smith International.  Smile
 
Gatorman96
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:26 pm

Boeing might have lost a couple "hundred million dollars," but they landed an order that is worth billions, which Airbus will see none of. Plus this order came form a very respectable airline which gave even more credibility to the 787. This order will also have an impact on what other airlines will order in the future (in Boeing's favor). No matter how you interpret those quotes, Boeing got a big win. I doubt the Airbus execs were celebrating Boeing's loss of a few "hundred million."
Cha brro
 
NAV20
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:39 pm

Interesting to speculate on the 'strategic thinking' of both companies.

Airbus must be worried that, for whatever reason, they are selling mostly unprofitable single-aisles; very few midsizes or VLAs. Their strategy has to be to sell as much small stuff as they can, and hope that sales of the A330 and A350 pick up once Boeing has filled up deliveries of the 787 for five years or more ahead.

That gives them a difficult investment decision to make right now; whether to push ahead with the $5M. A350 development programme even though it is simply not selling in anything like decent numbers at the moment.

Boeing must be at a crossroads. With full order books for their whole range, they could 'rest on their laurels' for a bit, and enjoy a few years of high profits. Or they could decide to 'go in for the kill', and aim at knocking Airbus right out.

That would involve big investment decisions for them as well. Besides setting up a complete second production line for the 787, completing the development of the larger 787 variants, and developing the 748, they would ALSO have to spend out on producing a '787-ised' replacement for the 737, to knock the A320 out of contention as well.

But that would involve more heavy spending on production facilities and research and development. Sure, if they get it right, they can hope to regain their old-time 'virtual monopoly' - but only at the price of lower profits, and higher risks, for several more years.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
TaromA380
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:45 pm

Quoting Gatorman96 (Reply 32):
Boeing might have lost a couple "hundred million dollars," but they landed an order that is worth billions, which Airbus will see none of.

- the order is obviously a *BIG* win for Boeing
- in my opinion they just could have done "some" economy
- Airbus was already out of the game because it could never match the Boeing EIS
- in my opinion Qantas is laughing rolling on the floor now

Quoting Gatorman96 (Reply 32):
I doubt the Airbus execs were celebrating Boeing's loss of a few "hundred million."

Human nature always finds a little consolation in any small detail. "We lost the battle but we fought with dignity". "We lost the order of the year but our opponent lost his time winning it". Big grin
 
Mexicana757
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 12:49 pm

Quoting TaromA380 (Thread starter):
Airbus ? Not, because they didn't even compete for real (without knowing it). Qantas needed the airplanes way before the EIS of A350.

So your saying that Airbus shouldn't have wasted their time with Qantas just because the A350 is not available when Qantas wants it? Give me a break.

Just because the A350 is not offered when Qantas needs it, this will not stop them from offering the product and getting it sold. I'm sure Airbus had a few tricks up their sleeve to get that huge order from Qantas.

Boeing did what they had to do to grab this order. And I'm sure Boeing didn't lose money with this order. If you want your business to survive you do what is necessary to keep it alive.
 
Gatorman96
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 1:35 pm

Quoting TaromA380 (Thread starter):
Boeing has just lost several hundred millions $

You can't lose something you never had. As long as Boeing turns a profit from this order, it doesn't really matter.




Quoting TaromA380 (Reply 34):
Human nature always finds a little consolation in any small detail.

I got ya...I hope Leahy and his boys feel the same way  Smile
Cha brro
 
dhefty
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 1:39 pm

Quoting NAV20 (Reply 33):
Besides setting up a complete second production line for the 787, completing the development of the larger 787 variants, and developing the 748, they would ALSO have to spend out on producing a '787-ised' replacement for the 737, to knock the A320 out of contention as well.

True, but a second 787 line isn't all that difficult, since it is only final assembly. The ability of the various subcontractors to ramp up production is critical.

Airbus' strength in the last 5 years has been entirely due to the dramatic fall in orders and deliveries by Boeing in the wide-body market. With over 400 sold this year to only 130 for Airbus, the next few years deliveries will provide all the funds Boeing needs to take the actions you suggest.

I think Airbus did everything possible to save the Qantas order by offering interim 330's. That's all they could do. Over the next 2 years I also think the same strategy will apply - sell 330's until the 350 is available. The 787 EIS is getting mighty close and over the next 18 months Boeing will be getting all the publicity.

Another factor often overlooked is the awesome idle manufacturing capability that Boeing has for wide-body production. Airbus has sometimes produced around 75 per year and may hit 90 this year, but Boeing has been known to produce 170 or more. With the Airbus wide-body backlog relatively stagnant, they will have to wait until 2011 or later to achieve higher output.

I believe both companies have narrow-body replacements on the drawing boards. Who will blink first?
 
777STL
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 2:05 pm

Quoting TaromA380 (Thread starter):
Boeing ? The donkey of the day. Why ? Because being pressed by Airbus, they lowered the price. No, I am not saying what you think ! Instead, Boeing lowered the price while being the sole competitor ! From the beginning, only the 787 would have matched the timing of the Qantas order.

Rumours are indicating a 50% discount price offered to Qantas. Around $80 millions/frame. Well, imagine an offer at $85 or $90 millions/piece : They were still sole competitors, still with a good price ; Qantas would have nothing to do but order Boeing.A minor $5 millions difference multiplied by 65 is $326 millions worth. Frames sold at $90 millions/piece would make $650 millions differenceworth.

Boeing has just lost several hundred millions $ without knowing [one of] the principal Qantas condition, the early availability, not knowing they were competing solely, not knowing Airbus is not a threat.

Sure, they got the deal, but still lost several hundred millions $ for nothing.

If you don't call that a paradox ...... Smile

There's a couple things wrong with your conjectures.

Number one, overall you're basing your conclusions on second hand information and rumors, not the most credible of evidence.

Number two, you're assuming Airbus was out of this to begin with, which probably isn't true. If Airbus could have offered a comparable airplane for close to the same price, QF very well could have ignored the fact that it would be delivered later. The simple fact is, the 350 is an inferior airplane that happens to be a few years behind the 787. Boeing will make money off of this order, Boeing is a business. The sole goal of a business is to be profitable. Selling airplanes at below cost != profitable.

But since you know everything, let's assume you're right. What would Boeing's logic be in closing a deal that loses them a few hundred million dollars? C'mon now, I'm waiting.

It will never cease to amaze me the line(s) of reasoning people use to make themselves feel better at night. But then again I expect nothing less from someone with 380 in their screenname. Some of you can't stand that Boeing won this order and it really shows.

Long on speculation, rumors and guesses, short on hard facts or otherwise credible evidence, why am I not surprised.
PHX based
 
Islandboy
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 2:26 pm

This thread might have been a little objective if someone with a un-biased opinion had started it.

It's quite clear your only stipulating rumours and trying to past them off as facts.

A) You don't know how much QF paid for their jets..so how can you call Boeing is a donkey for winning the order. Why would any company sell it's product at a loss....is a mystery to me.

B) You say that Airbus was not in the running because of the EIS for the A350. Bull to be honest, considering any smart person would rather wait for the better product for them...than settling for one that's inferior and not as well suited for your needs.

If that makes Boeing the donkey of the day. Airbus would love to bleat some of their brays atm.
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hz747300
Posts: 1906
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 2:58 pm

Quoting TaromA380 (Thread starter):
Boeing has just lost several hundred millions $ without knowing [one of] the principal Qantas condition, the early availability, not knowing they were competing solely, not knowing Airbus is not a threat.

Sure because Airbus has never given anything away. They always hold on pricing and never offer discounts. They don't have to, because they offer European made products and everyone knows if it is from Europe, it's better. Except coffee.

I would argue that you are wrong, and that most of the more recent orders for the A330 are really A350 orders in disguise.
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707lvr
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 3:31 pm

We seem to be under the impression that Boeing is in a begging and pleading mode, throwing out all the rules to make sales. The fact is that the U.S. airline industry is going to shake out much sooner and more dramatically than anyone would imagine, (do we really think it can continue to lose billions of dollars on to 2010-11?) and will order unheard of numbers of 787's. Just count up all the old 757's and 767's and then compare with the entire rest of the world.

Somehow in this forum we've come to assume that U.S. aviation is simply going to fold up and let Emirates do the flying. You know, people who do this for a living aren't stupid, and the delivery slots are safe for when the time comes. Everybody knows it, including QF, and they didn't get those planes for anything near $80 million. The article projects the exact spin Qantas wants at this time, and I expect Boeing is fine with it too..
 
astuteman
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 5:22 pm

Quoting ER757 (Reply 20):
Believe me, there is a minimum price below which Boeing would not sell the aircraft. They are NOT taking a loss on these

Absolutely right. This rule applies to both manufacturers, BTW.

Quoting AJRfromSYR (Reply 2):
think QF would have waited 2 years, and leased 330's while they waited for A350's?

Right again.

Quoting ER757 (Reply 20):
You quote a price and customer either accepts or rejects it, usually after a period of negotiation. There is always 2nd guessing after the fact. If you win the bid, you wonder if you bid too low and could have made more profit. If you lose, you wonder if you got too greedy and could have settled for less profit

Sums it up perfectly. Nothing else needs to be said on this thread.

Quoting NAV20 (Reply 33):
they are selling mostly unprofitable single-aisles;

Nice try. The A32X series are actually very profitable for Airbus (profitable enough to support the A380 development costs over the last 5 years..)  Smile.

Quoting NAV20 (Reply 33):
and enjoy a few years of high profits

One thing that will positively affect profitability considerably in the next few years is increased turnover, something that Airbus will benefit from too.
A
 
UALMMFlyer
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 5:56 pm

Based on the analogy of the OP, then does that mean Airbus is a loser in all the A380 deals? There is no competing aircraft to the A380, therefore for every A380 sold at less than full published price, Airbus fools with itself..... Yeah sure
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zvezda
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 6:51 pm

Quoting TaromA380 (Reply 17):

Yes, financial comparison numbers were very close, while EIS were very different. That makes the bid unbalanced (little or more).

EIS were plugged into the financial model. The close numbers spat out by QF's model had already accounted for the difference in EIS.
 
cfalk
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 7:05 pm

Quoting Alitalia744 (Reply 3):
While Boeing didn't get the list price, I highly doubt they're selling at a lost.

Definately not. Unlike what Airbus has done in the past, when they were trying to gain market share and using subsidies to do it, Boeing is 100% privately owned and the shareholders would fire the management if they did market dumping. I'm a shareholder myself, and I would be pretty pissed.

Boeing and Airbus almost never get list price. We know that Easyjet got around 50% off their Airbus purchases.

For Qantas, it was not just a matter of the purchase cost of the aircraft. They built a financial model which included:

- Purchase cost
- Payment terms
- running costs
- maintainance costs
- crew training
- seat capacity
- range
etc. etc. etc.

All these elements have to be matched with the routes Qantas has planned. If you change any element, such as price, or you manage to squeeze in one more seat next to the toilets, you have to go back to the model.

So it is entirely possible that the 787 might cost 20% more than the A350, but that its advantages in running costs more than make up for the extra cost, or vice versa.
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Alessandro
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 7:07 pm

Well, money isn´t only made from selling airplanes but spare parts and maintenance is also a big cash-cow´s. So I don´t think Boeing make any mistakes by selling at low price.
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Glareskin
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 8:06 pm

Tarom, I think you're having a point. And the Syrian Airbus case that N79969 pointed out is not the only other case. In all business negotiations there is a point where the choise is fixed but the game continues in order to get better conditions from the chosen vendor.
So you are probably right that Boeing left some money on the table while the choice had been made. But maybe if they didn't do that the order would have been for less aircraft or QF would have waited longer. And I'm sure that Boeing still has some profits left in this order.....
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glideslope
Posts: 1422
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 8:13 pm

Quoting TaromA380 (Thread starter):
Well, I see a clear loser in this ménage-à-trois outcome :

Qantas ? No way, they got a huge discount ! Above their hopes, after the final rush bid.

Airbus ? Not, because they didn't even compete for real (without knowing it). Qantas needed the airplanes way before the EIS of A350.

Boeing ? The donkey of the day. Why ? Because being pressed by Airbus, they lowered the price. No, I am not saying what you think ! Instead, Boeing lowered the price while being the sole competitor ! From the beginning, only the 787 would have matched the timing of the Qantas order.

Rumors are indicating a 50% discount price offered to Qantas. Around $80 millions/frame. Well, imagine an offer at $85 or $90 millions/piece : They were still sole competitors, still with a good price ; Qantas would have nothing to do but order Boeing.

A minor $5 millions difference multiplied by 65 is $326 millions worth. Frames sold at $90 millions/piece would make $650 millions difference worth.

Boeing has just lost several hundred millions $ without knowing [one of] the principal Qantas condition, the early availability, not knowing they were competing solely, not knowing Airbus is not a threat.

Sure, they got the deal, but still lost several hundred millions $ for nothing.

If you don't call that a paradox

LOL. Sour grapes. If you can't take the heat, get out of the oven. It's 2005, not 1955. You do what you need to in order to win. Boeing is pounding Airbus at their own game.

Airbus makes the same deals. Every year. The price on these two frames was very close.

Qantas simply purchased the better product. Be it from a technical standpoint, an operational standpoint, or simply having faith in one company and not the other.

Your concern would be better placed worrying about what Airbus is going to do with the 380, and their response to the 737 replacement.

The 350 / 787 debate is over. The 787 is a superior product in too many ways.  Smile
To know your Enemy, you must become your Enemy.” Sun Tzu
 
manni
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RE: Boeing Fools Itself With Qantas Deal

Sat Dec 17, 2005 8:51 pm

Quoting Glideslope (Reply 49):
and their response to the 737 replacement.

Please enlighten us, to what exactely does Airbus need to respond when it comes to the 737? As it stands now, Airbus has had significantly more orders and commitments signed up this year than their competitor in the market for 737 sized aircraft.

Quoting Glideslope (Reply 49):
The 350 / 787 debate is over.

Good, looking forward seeing you no longer posting on the subject.  cheerful 

Quoting Glideslope (Reply 49):
Qantas simply purchased the better product.

As simple as it looks to you, it took Qantas a lot of effort to come to a decision.

Quoting Glideslope (Reply 49):
having faith in one company and not the other.


You dont really believe your own posts, do you?  boggled 
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