RuudOnline
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A380 Profitable From 2008

Fri Apr 07, 2006 8:03 pm

"PARIS - EADS top man Noël Forgeard expect that the Airbus A380 programme will be profitable from 2008. He says that in the French newspaper 'Les Echos'. Already in 2007, break even point is reached, thus the former CEO of Airbus. The first A380 is delivered end this year to Singapore Airlines.

Forgeard denied recent rumours that the first delivery of the first A380 for Emirates is one months later than planned. The deliveries to the airline company starts, according to plan, in spring of next year. "

Source http://www.luchtvaartnieuws.nl/news/?ID=13235 (Dutch only)

Ruud
 
DfwRevolution
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:15 pm

Quoting RuudOnline (Thread starter):
Already in 2007, break even point is reached, thus the former CEO of Airbus.

Does this not directly contradict all previous statements that the break even point was 250-300 delivered units? I'd like to see how a backlog of approx 150 units with only a small number delivered in 2007 reach "break even."

Positive cash flow is one thing, amortization (what break even typically implies) is totally a different ball game.
 
art
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:19 pm

Quoting RuudOnline (Thread starter):
EADS top man Noël Forgeard expect that the Airbus A380 programme will be profitable from 2008.

A little bit vague.

A380 will have recouped all its development costs? I don't think so.

A380's being built in 2008 will be sold for more than it cost to build them? Perhaps that's what he means.
 
manni
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:35 pm

Quoting RuudOnline (Thread starter):
EADS top man No�l Forgeard expect that the Airbus A380 programme will be profitable from 2008. He says that in the French newspaper 'Les Echos'. Already in 2007, break even point is reached, thus the former CEO of Airbus. The first A380 is delivered end this year to Singapore Airlines.

Since it is a dutch article quoting a french source there's a possibility that something is lost in translation. Unfortunately the french newspaper can only be viewed online by the paying public.

Here's an option what he could have said,

That he expects to have enough orders from 2007. Taken the lowest number of aircraft needed to breakeven, Airbus needs to sell another 91 aircraft. This number excludes the already existing options that could be converted anyday.
Airbus expected to sell its A380 to 3 new customers this year (OZ, CI, BA come to mind). It's not because we dont know, that these and more might already be in an advanced stage. Furthermore Lufthansa and SIA are 2 carriers that could possibly firm up outstanding options in the near future that we know of. If succesfully launched in commercial service at the end of this year we might see a new wave of carriers ordering the jet for the first time (CX, BA, NH come to mind) and of carriers firming up outstanding options. 91 aircraft is absolutely not impossible.
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studentflyer
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:37 pm

Quoting DfwRevolution (Reply 1):
break even point was 250-300 delivered units

Perhaps this was calculated on an 80 or 90% airline discount?  liar 
 
Aither
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:38 pm

The A380 is financed with the current cash flow. As soon as the A380 are delivered (when they receivie the payments), it's pure cash in EADS pockets.
Never trust the obvious
 
mrcomet
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 8:50 pm

I guess Airbus isn't planning on repaying its loans.

This statement is either misquoted or simply another assinine comment from the king of assinine comments. They already said they needs to sell hundreds before they get their money back and thats not counting their discounting. The A380 has a slim possibility of even sinking the whole company. Sounds like Forgeard is fiddling while Airbus burns.
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jush
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 9:16 pm

Quoting MrComet (Reply 8):
The A380 has a slim possibility of even sinking the whole company

Well this possibility is really slim

Anyway either there is a lot lost in translation or this is just a statement which is not really true. Or there are some outstanding orders outstanding Big grin

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jush
There is one problem with airbus. Though their products are engineering marvels they lack passion, completely.
 
sq212
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 9:16 pm

Mounting pressure may have gotten him to say that. I don't think experts in the airline industry will ever believe the 380 program will be profitable in 2008.
 
manni
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 10:19 pm

Quoting Sq212 (Reply 11):
I don't think experts in the airline industry will ever believe the 380 program will be profitable in 2008.

Is that how they are called these days? Richard Aboulafia and his dworfs...  santahat 
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Dougloid
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 10:46 pm

This topic has been scussed and rescussed to death.

When I was working for Douglas, development of the MD11 cost about 6.5 billion 1987 vintage US dollars. The company's position was that they had to sell 450 before the program would turn into a cash cow that would return a significant amount of money to the stockholders. I think that's a fair assessment.

The development of the A380 is ongoing and will be for some years yet as Airbus and its production partners gets the learning curve right and slim the production process-those are the birds that will make the money, not the ones they've got right now. Between the first prototype number 447 and when I got laid off around hull number 500, they'd reduced the manhours necessary to build the MD11 by about 40 per cent.

That end of the range is where the money lies, not in flight test and development, which is a money pit.

At present the price of development of the A380 is pegged at around 12 billion 2001 vintage USD, maybe more. That means that to recapture the twelve billion out of the first 250, not saying anything at all about what it costs to service that kind of debt, at least 48 million dollars out of what they receive as payment for each of the first 250 aircraft needs to be set aside. That'll go straight to debt service. Obviously this figure will escalate as the birds in the factory get more profit and less man hours built into them, and it's more of a steady stream as Airbus gets progress payments on work in house. The later ones may be able to pay the loans down at a faster rate.

Still, it's a lot of money to come out of Airbus' pockets any way you slice it.

Depending on who you talk to, I think a reasonable price for the A380 with an interior and a spare set of keys would be around $200 million.

The question is, can they do it? Can they make freaking money???

They've GOT to sell more planes, and to do that, people have to ORDER more planes, and then Airbus has to BUILD more planes.
No orders since last June for the A380 IS something to worry about. They CAN'T bankroll THREE development programs (A380, A350, A400M) out of revenue from the A320-even though that IS a cash cow.

All I hear is a lot of theorizing and spinning figures from both sides of this pissing contest around this place.

Maybe what people ought to do is stop this interminable bickering and jumping all over every piece of good or bad news no matter how silly to start yet another boring scrum and do some hard thinking and research.

[Edited 2006-04-07 15:48:14]
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
NAV20
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 10:51 pm

Can't read Dutch, so I can only guess at what he actually said.

At a guess, then, he's talking about marginal revenue exceeding marginal cost. That is, saying that by 2008 they'll be receiving more cash for a given airframe than that airframe cost them to build.

That isn't really a 'profit' in any language; certainly not any form of discernible profit on a multi-billion-dollar programme. But it doesn't bother me that Forgeard is saying it. It doesn't even bother me that he evidently believes it. After all, I don't own any Airbus shares, and I'm not planning to buy any.

[Edited 2006-04-07 15:59:19]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
mutu
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 11:21 pm

I gues its a case of using accounting tricks!! If you spread the development costs over the selling life of the Whale (say 20 years) then compare order values received in a year against that years "charges" you get a surplus. Of course whithout delivery you dont get revenue so not a real profit, and of course cannot be talking about the real world of cash!!
 
dazeflight
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 11:36 pm

Quoting NAV20 (Reply 16):
Can't read Dutch, so I can only guess at what he actually said.

At a guess, then, he's talking about marginal revenue exceeding marginal cost. That is, saying that by 2008 they'll be receiving more cash for a given airframe than that airframe cost them to build.

That isn't really a 'profit' in any language; certainly not any form of discernible profit on a multi-billion-dollar programme. But it doesn't bother me that Forgeard is saying it. It doesn't even bother me that he evidently believes it. After all, I don't own any Airbus shares, and I'm not planning to buy any.

That's NAV-'steam-machine'-20 at his best: yet another gem of hot air. He does not understand what is said, but doesn't even bother to keep it shut. Instead, he assumes and comes to a conclusion without needing any evidence or facts, just his superior knowledge. We all know you're full of it, so why don't you do us a favor and just say something when you actually have something to say?  butthead 
 
wingman
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 11:37 pm

It is virtually impossible that Forgard actually said this in public. If he did he should be fired by his Board immediately. It is inconceivable that anyone in his position would be allowed to remain in their job with even a shred of confidence from the employees, customers and investors. I hope someone will publish the exact translation from the French piece. Just the brief snippet posted contains two absolute lies and one very misleading statement: 380 profitable from 2008-absolute lie, no delays on EK's 380's-an absolute lie either by Foregard or the customer...hmmmmm? Finally, first deliveries in "Spring" just like we originally said. That is hugely misleading unless EADS operates its manufacturing and delivery schedule according to the seasons. Next thing you know they will be delivering EK's planes when Saturn passes through the nexus of Cassiopeia and the high tide has receded from its highs between the hours of midnight and sunrise during the third week of the high summer season.
 
NAV20
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 11:48 pm

Truly 'gemutlich' response, Dazeflight.

Care to tell us what you reckon he said?

Quoting Wingman (Reply 21):
It is inconceivable that anyone in his position would be allowed to remain in their job with even a shred of confidence from the employees, customers and investors.

Looks like the market is voting with its feet, Wingman. EADS shares have dropped E3.00 (around 8.5%) since the BAE/Daimler-Chrysler/Lagardere sell-off began yesterday.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
RichardPrice
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RE: A380 Profitable From 2008

Fri Apr 07, 2006 11:57 pm

Quoting NAV20 (Reply 22):
Looks like the market is voting with its feet, Wingman. EADS shares have dropped E3.00 (around 8.5%) since the BAE/Daimler-Chrysler/Lagardere sell-off began yesterday.

That could also be construed as a stock correction because EADS shares have been unusually high for the past 3 weeks, and the current share price is comparable to the price at the start of March. The price has also been dropping steadily for > 5 days, so I doubt its just the BAE announcement yesterday.

But I have no idea what Forgard actually said, just to remain ontopic  Smile
 
Poitin
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 12:43 am

Quoting Wingman (Reply 20):
It is virtually impossible that Forgard actually said this in public. If he did he should be fired by his Board immediately. It is inconceivable that anyone in his position would be allowed to remain in their job with even a shred of confidence from the employees, customers and investors. I hope someone will publish the exact translation from the French piece. Just the brief snippet posted contains two absolute lies and one very misleading statement: 380 profitable from 2008-absolute lie, no delays on EK's 380's-an absolute lie either by Foregard or the customer...hmmmmm? Finally, first deliveries in "Spring" just like we originally said. That is hugely misleading unless EADS operates its manufacturing and delivery schedule according to the seasons. Next thing you know they will be delivering EK's planes when Saturn passes through the nexus of Cassiopeia and the high tide has receded from its highs between the hours of midnight and sunrise during the third week of the high summer season.

Somebody should tape Noël Forgeard's mouth, and do it soon. He is no longer a member of Airbus and should not be talking as he is. That is the job of Gustave Humbert.
Now so, have ye time fer a pint?
 
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N328KF
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 12:53 am

Quoting Poitin (Reply 25):
Somebody should tape Noël Forgeard's mouth, and do it soon. He is no longer a member of Airbus and should not be talking as he is. That is the job of Gustave Humbert.

How is that? He is Humbert's boss. He can tell Humbert to drink a nice cup of STFU, and Forgeard can speak for Airbus all he wants, especially if EADS buys the rest of Airbus (which is likely.)
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
NAV20
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 12:55 am

Well, lo and behold - here's what he said:-

"PARIS (AFX) - Noel Forgeard, co-CEO of the European Aeronautic Defence and Space Co (EADS), still expects the Airbus A380 superjumbo programme to break even in 2007, and begin turning a profit from 2008, according to a report in French daily Les Echos.

'We will be sufficiently advanced on the profitability curve to be able to generate significant margins,' Forgeard told analysts during a conference call Wednesday, the report said.

"Forgeard had set the 2008 profitability target in January last year."


http://www.forbes.com/markets/feeds/afx/2006/04/07/afx2654537.html

There's an English expression (or maybe an Irish one, Poitin?) that best describes Forgeard's position. He's 'off with the fairies'..........
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
787engineer
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 1:06 am

Hmmm I think the author of the article may have read more into Forgeard's quotes than was actually there. All he was quoted as saying is that by 2008 the planes will be making a profit, not that the whole program would break even. I'm sure with such a big aircraft and so many parts and procedures, it'll take 15-30 frames maybe a year or so to get everything in the assembly plant running smoothly, before then material/parts will be wasted, and they'll be working to meet the expected time to complete different procedures. Of course he could also mean that in 2008 the money recieved from deliveries would exceed the program cost divided over 20 years.
 
Joni
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 1:06 am

I think he meant, that in 2008 they'll have the orders (300 or so) needed to breakeven. Those would then be delivered over the next years.
 
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breiz
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 1:38 am

Quoting Tigerotor77W (Reply 11):
But I'm confused about the disputing the claim -- how do we know that Airbus hasn't secured another 100 orders up its sleeve, just waiting, for, say, Farnborough (or whatever)?

Leahy said several times that he could have sold more A380 if the production output was higher.
Bragging or reality, time will show.
 
PITrules
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 1:57 am

Quoting Aither (Reply 6):
The A380 is financed with the current cash flow.

No, it is financed largely by loans and gov't developement aid, which will hopefully be repaid in the long term with future income generated from deliveries.

Quoting Aither (Reply 6):
As soon as the A380 are delivered (when they receivie the payments), it's pure cash in EADS pockets.

Interesting accounting. Just wipe $12+ billion in developement costs off the balance sheets. By the way, are you available to file my taxes?
FLYi
 
RichardPrice
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:04 am

Quoting PITrules (Reply 32):
No, it is financed largely by loans and gov't developement aid, which will hopefully be repaid in the long term with future income generated from deliveries.



Quoting PITrules (Reply 32):
Interesting accounting. Just wipe $12+ billion in developement costs off the balance sheets. By the way, are you available to file my taxes?

Yay more falsehoods! 33% is 33% is 33%, no more, no less, and certainly not $12billion of the origional $13billion project cost (the extra $1.5billion overrun was financed wholely of Airbus).

And interesting enough, the 2008 recoup date was also prominent from Airbus as early as the 2005 January launch:

Quote:

Although the A380 project has run some $1.4 billion over budget, Airbus believes it will recoup its costs in 2008 and be an extremely profitable flagship product for decades to come.

Airbus chief Noel Forgeard told CNN the aircraft had already nearly covered its costs

From http://edition.cnn.com/2005/BUSINESS/01/18/airbus.380/index.html

*shrug*

[Edited 2006-04-07 19:05:20]
 
Poitin
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:09 am

Quoting NAV20 (Reply 27):
"Forgeard had set the 2008 profitability target in January last year."

http://www.forbes.com/markets/feeds/afx/2006/04/07/afx2654537.html

There's an English expression (or maybe an Irish one, Poitin?) that best describes Forgeard's position. He's 'off with the fairies'..........

No, lad, we merely say that "he's been into the Poitín". Others say that he's Bollocks, others use less polite wording. I am sure Gustave Humbert has a few impolite words to say as well -- but in German.

As as psychologist, I can say Forgeard is in denial and self delusional. The sooner EDADS puts him out to pasture, the better for us all.
Now so, have ye time fer a pint?
 
PITrules
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:16 am

Quoting RichardPrice (Reply 33):
Yay more falsehoods! 33% is 33% is 33%, no more, no less, and certainly not $12billion of the origional $13billion project cost (the extra $1.5billion overrun was financed wholely of Airbus).

And $13 billion is $13 billion is $13 billion. OK, so even if Airbus covers 66% of the developement costs, it is still a COST which they must cover before "profitability" should be assumed.
FLYi
 
leelaw
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:25 am

Quoting PITrules (Reply 32):
nteresting accounting. Just wipe $12+ billion in developement costs off the balance sheets.

There's relatively little which has been capitalized on the balance sheet, as the lion's share of development costs are expensed as incurred.
Lex Ancilla Justitiae
 
RichardPrice
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:26 am

Quoting PITrules (Reply 35):
And $13 billion is $13 billion is $13 billion. OK, so even if Airbus covers 66% of the developement costs, it is still a COST which they must cover before "profitability" should be assumed.

Sorry, I took both of your comments together rather than seperate. Yes, $13billion does need to be recouped but its not that far off of a possibility with 159 planes at $280m each, thats $44.52billion (rough figures, we know most of them werent sold at that price). Forgeard could be talking about a point where the income per aircraft can cover the amotized development costs + production costs and start turning a profit taking the entire backlog into account at that time.

I dont know if thats the case, just something I thought of.
 
Poitin
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:32 am

Quoting N328KF (Reply 26):
How is that? He is Humbert's boss. He can tell Humbert to drink a nice cup of STFU, and Forgeard can speak for Airbus all he wants, especially if EADS buys the rest of Airbus (which is likely.)

First and foremost, Humbert is CEO of Airbus. That means it is his job to talk about his company. Period. Second, Forgeard is shooting his mouth off in all directions, usually making incorrect statements, or at least bizarre ones, which only confuses us all, and finally if his company's stock (EDADS) was listed on the NYSE, the SEC would be asking him serious questions about misrepresenting his company. The man is a loose cannon.
Now so, have ye time fer a pint?
 
Poitin
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 3:03 am

Quoting RichardPrice (Reply 37):
Sorry, I took both of your comments together rather than seperate. Yes, $13billion does need to be recouped but its not that far off of a possibility with 159 planes at $280m each, thats $44.52billion (rough figures, we know most of them werent sold at that price). Forgeard could be talking about a point where the income per aircraft can cover the amotized development costs + production costs and start turning a profit taking the entire backlog into account at that time.

I dont know if thats the case, just something I thought of.

Richard, we do not know two important issues here. One is what Airbus charged for those first 159 airplanes, and second what it costs to build one in terms of material and labor.

Your good friend Richard Aboulafia and friends put the build cost at $199(USD) and that the first 100 or so were sold in the range of $130 -140M (USD). [Read the summary on page 3 of
http://www.speednews.com/A380-CPA.pdf

Naturally, I assume you will discount what he says, but that is about all I can find on those figures. Perhaps you have another source? However, if Airbus has been selling most of those planes for a lost, then they are merely that much more deeply in the hole.
Now so, have ye time fer a pint?
 
Toulouse
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 3:36 am

Quoting Poitin (Reply 38):
The man is a loose cannon.

A loose cannon that lead Airbus to its position is the world's number 1 civil aircraft manufacturer over the past few years, so depite his AWFUL English, he can't really be that bad, can he?
Long live Aer Lingus!
 
Poitin
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 3:48 am

Quoting Toulouse (Reply 40):
Quoting Poitin (Reply 38):
The man is a loose cannon.

A loose cannon that lead Airbus to its position is the world's number 1 civil aircraft manufacturer over the past few years, so depite his AWFUL English, he can't really be that bad, can he?

He is the genius who said "Put everything into the A380 and A400M" time and again, at the expense of the middle of the market. He is largely responsible for Airbus's present problems. And as for number 1, that is very debatable for last year, given the Chinese order that really wasn't, as well as the fact Boeing out sold them in dollar volume as well.

And 2006 looks like a really interesting one for Airbus, given EK deferment of A300-600 HGWs, Hazy's complaints about the A350 and estimate of no more than 400 A380s.

Noel should go off in the corner, sit down and shut up and let Gustave get on with his job.

As for his AWFUL English, I am sure it is better than my French.
Now so, have ye time fer a pint?
 
ikramerica
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 4:12 am

Quoting Poitin (Reply 39):
Richard, we do not know two important issues here. One is what Airbus charged for those first 159 airplanes, and second what it costs to build one in terms of material and labor.

Considering they haven't built or tested the A380F, they can't exactly count all 159 in the column.

This is new math, nothing more. If it really was this easy to turn a profit on such a huge plane, it wouldn't have taken either carrier so long to decide to do it, and the MD12 would have been flying already...
Of all the things to worry about... the Wookie has no pants.
 
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N328KF
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 4:19 am

Quoting Poitin (Reply 38):
First and foremost, Humbert is CEO of Airbus. That means it is his job to talk about his company. Period. Second, Forgeard is shooting his mouth off in all directions, usually making incorrect statements, or at least bizarre ones, which only confuses us all, and finally if his company's stock (EDADS) was listed on the NYSE, the SEC would be asking him serious questions about misrepresenting his company. The man is a loose cannon.

Huh? You don't get it. Humbert reports to Forgeard. That means Humbert can't do anything that Forgeard doesn't want him to do. We're in agreement on the rest of what you said.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
RichardPrice
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 5:52 am

Quoting Poitin (Reply 39):
Richard, we do not know two important issues here. One is what Airbus charged for those first 159 airplanes, and second what it costs to build one in terms of material and labor.

I agree, we have no idea and the first few were certainly sold at some sort of discount (but the margins on aircraft are a lot more than what people think they are, a 30% discount is unlikely to mean the aircraft is sold at a loss - if Airbus was selling aircraft routinely as costly as the A380 at a loss, howcome they make a fair profit each year? If they sold vast quantities of A380s at a loss, EADS should have issued a stock profit warning by now). If we assume an average sale price of $170m per frame for the entire 159 aircraft alrady sold, which amounts to a huge 39.3% discount over the oft quoted $280m pricetag, they still net $27billion in income over that production run. So long as the production itself doesnt amount to $14billion or so, Airbus are home free. This is ignoring the possibility that Airbus has secured further orders to trigger the quote in the thread starter.

There are a lot of unknowns, which is why pretty much every thread on this is speculation (and probably always will be), but Airbus is unlikely to be stupid enough to position themselves into a loss leading position with their last 10 years major project. As much as everyone likes to dislike them, you must give them credit for being a profitable business - Airbus isnt in this to lose money, they arent propped up by any government and several major european companies stand to lose a lot of money if Airbus was to fail. Easily put - Airbus will cut corners to make themselves market leaders (2005 order tally) but dont expect them to run themselves into the ground to do it.
 
Dougloid
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 5:59 am

Quoting RichardPrice (Reply 21):
That could also be construed as a stock correction because EADS shares have been unusually high for the past 3 weeks, and the current share price is comparable to the price at the start of March. The price has also been dropping steadily for > 5 days, so I doubt its just the BAE announcement yesterday.

One man's correction is another man's "everyone's buggering off!"....I do not put much faith in the up and downticks on the market-seems like it's a running popularity poll and not a good measure of value and prospects. Airbus is Airbus pretty much today as they are yesterday and tomorrow with the same assets and liabilities. Another reason I do not have much faith in the market to make intelligent decisions is Enron.

Quoting Breiz (Reply 29):
Leahy said several times that he could have sold more A380 if the production output was higher.
Bragging or reality, time will show.

Yeah, it will. That's the bottom line. This is going to be an interesting year, especially in the runup to Farnborough.

My experience with the Canadair Challenger program and watching guys like Jim Worsham was that if someone had front money and an interest in the product they were going to get sold an airplane and the order was going to be booked. Part of that was the reality that some customers bail or fall out, and that means if you've got an order on the books you might get moved up quite a bit. That happened with two MD11s that were being built for JAT before Yugoslavia went tits up when the airplanes were about fifty per cent built.

The airplanes got sold to American Airlines, a customer with ready cash. American got a nice discount and two planes a lot sooner than they thought they'd have em.

Nobody ever got rich telling credible customers with ready cash "You can't have what you want so don't ask." You take the orders, line up the work, and figure out what you're going to do with it later on.

Once you've got the deposit, you have a lot more control.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
pbottenb
Posts: 403
Joined: Sun Sep 11, 2005 9:29 am

RE: A380 Profitable From 2008

Sat Apr 08, 2006 6:08 am

Quoting Toulouse (Reply 40):
A loose cannon that lead Airbus to its position is the world's number 1 civil aircraft manufacturer over the past few years, so depite his AWFUL English, he can't really be that bad, can he?

An extremely valid point that is rarely if ever brought up here...its pretty hard to argue with success....That said, the plane is still damn ugly (sorry)
 
tockeyhockey
Posts: 880
Joined: Fri Feb 04, 2005 10:57 pm

RE: A380 Profitable From 2008

Sat Apr 08, 2006 7:12 am

Quoting StudentFlyer (Reply 5):
Quoting DfwRevolution (Reply 1):
break even point was 250-300 delivered units

Perhaps this was calculated on an 80 or 90% airline discount? liar

before this turns into an "al gore said he invented the internet" kind of rumor, what the article says is that airbus is dropping their prices for the a340 by 75% of the profit margin they are originally listing it for.

i don't doubt that this is true.
 
User avatar
glideslope
Posts: 1423
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 7:20 am

Quoting MrComet (Reply 8):
I guess Airbus isn't planning on repaying its loans.

This statement is either misquoted or simply another assinine comment from the king of assinine comments. They already said they needs to sell hundreds before they get their money back and thats not counting their discounting. The A380 has a slim possibility of even sinking the whole company. Sounds like Forgeard is fiddling while Airbus burns.

Airbus never has any risk. Thats the only reason they are around. Once again the hard working EU Taxpayer will foot the bailout. Again, and again, and again....... It's one of the worst business models in history.  Sad
To know your Enemy, you must become your Enemy.” Sun Tzu
 
RichardPrice
Posts: 4474
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 7:35 am

Quoting Glideslope (Reply 50):
Airbus never has any risk. Thats the only reason they are around. Once again the hard working EU Taxpayer will foot the bailout. Again, and again, and again....... It's one of the worst business models in history

Care to show when Airbus hasnt repayed any of the loans? Let me remind you British Government is on record saying they have made a tidy profit (returns of twice the loaned amount) from the A320 loans and the A330 repayments will have tripled UK Launch Investment by 2017.

Sounds to me as if the taxpayer is actually making one hell of a good investment, not bailing out Airbus at all.
 
Poitin
Posts: 2651
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 9:03 am

Quoting Ikramerica (Reply 38):
Considering they haven't built or tested the A380F, they can't exactly count all 159 in the column.

I would be happy with real number for ANY A380. Not likely,are they?
Now so, have ye time fer a pint?
 
lehpron
Posts: 6846
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 10:22 am

Quoting RuudOnline (Thread starter):
Already in 2007, break even point is reached, thus the former CEO of Airbus.

That sentence translation is hard to follow.

Quoting RuudOnline (Thread starter):
Forgeard denied recent rumours that the first delivery of the first A380 for Emirates is one months later than planned

Hmm. Official EK statements, porported by articles and linked by A.net members with their perspective biases, now become rumors. I wonder if that is HIS opinion of what is going on...?
The meaning of life is curiosity; we were put on this planet to explore opportunities.
 
elvis777
Posts: 346
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:32 pm

Hi RichardPrice,

So if as you claim the British taxpayer received some monies for their loan I have a couple of questions- I am not a finance guy so please bear with me.

1 what was the term of the loan.
2. What interest did they receive.
3. Combine the two and tell me if EADS got a sweetheart deal or if the British taxpayers received top dollar for their money. In other words, if the british taxpayer invested that money on say a large fund index in the Tokyo market would they have received a higher yield for their money (you are welcome to pick out another example)? Or what if EADS had applied for loans through standard commercial markets would they have gotten the same terms?
4. How About other European taxpayers are they making money on this or is it a public works project? B/c if it is a public works project then that is fine and dandy (I believe in govt investment to keep high tech jobs at home.. But I also believe in Fiscal transparency).

Now As I mentioned before I am not a finance guy, so I my be way off base, but at the very least I'd like to have some of these points addressed before I would accept that these loans are the best thing for the taxpayer.


Peace

Elvis777
Leper,Unevolved, Misplaced and Unrepentant SportsFanatic and a ZOMBIE as well
 
NAV20
Posts: 8453
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 2:48 pm

Quoting Dougloid (Reply 42):
One man's correction is another man's "everyone's buggering off!"....

Dead right. One can always speculate on the causes of any share-price slide. Though in this case the fact that all three of the large private-sector partners in EADS/Airbus (BAE, Daimler-Chrysler, and Lagardere) have begun selling off their stakes at exactly the same time is highly likely to have persuaded some at least of the smaller investors to do the same.

Beyond that, there are really only two more questions about a share-slide.

1. Will it stop?

2. Assuming that it stops, WHEN will it stop?
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
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PanAm_DC10
Crew
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 4:33 pm

Quoting NAV20 (Reply 52):
Beyond that, there are really only two more questions about a share-slide.

1. Will it stop?

2. Assuming that it stops, WHEN will it stop?

A1: Yes, it will stop. Professional Traders "front running" for Hedge Funds and large Investment Banks can see a "no brainer" when presented with it to help them make their budgets. Those "short" positions will be covered at a point.

A2: When Spain increase their shareholding, something they've privately wanted to do for quite sometime

Regards, PanAm_DC10
Ask the impossible to achieve the best possible
 
iwok
Posts: 979
Joined: Wed Jan 26, 2005 2:35 pm

RE: A380 Profitable From 2008

Sat Apr 08, 2006 5:29 pm

Quoting Poitin (Reply 20):
Somebody should tape Noël Forgeard's mouth, and do it soon. He is no longer a member of Airbus and should not be talking as he is. That is the job of Gustave Humbert.



Quoting Poitin (Reply 29):
As as psychologist, I can say Forgeard is in denial and self delusional. The sooner EDADS puts him out to pasture, the better for us all.



Quoting Poitin (Reply 34):
shooting his mouth off in all directions, usually making incorrect statements, or at least bizarre ones,



Quoting Poitin (Reply 34):
The man is a loose cannon.



Quoting Poitin (Reply 37):
Noel should go off in the corner, sit down and shut up and let Gustave get on with his job.



I suspect old Noel will be running into difficulties in the near future.

iwok
 
trex8
Posts: 4618
Joined: Sat Nov 02, 2002 9:04 am

RE: A380 Profitable From 2008

Sat Apr 08, 2006 5:35 pm

Quoting Elvis777 (Reply 51):
1 what was the term of the loan.
2. What interest did they receive.
3. Combine the two and tell me if EADS got a sweetheart deal or if the British taxpayers received top dollar for their money. In other words, if the british taxpayer invested that money on say a large fund index in the Tokyo market would they have received a higher yield for their money (you are welcome to pick out another example)? Or what if EADS had applied for loans through standard commercial markets would they have gotten the same terms?
4. How About other European taxpayers are they making money on this or is it a public works project? B/c if it is a public works project then that is fine and dandy (I believe in govt investment to keep high tech jobs at home.. But I also believe in Fiscal transparency).

unfortunately you will have trouble fiding out the actual details in terms of interest rates etc, though the launch aid in recent years has to be repaid in 17 years. Multiple times in Parliament, the actual amount of launch aid given and the actual amounts repaid have been publicly documented in parliamentary questions, go search Hansard if you got nothing better to do.
If that money was not used for industrial launch aid, it certainly wouldn't be sitting in a large fund index anywhere! Probably been wasted on subsidizing a bunch of sheep farmers in Wales or increasing the EU surplus cheese mountain or something similar! Not to mention the significant amount of economic activity the UK gets from its participation in Airbus. Tens of thousands if not more of highly paid jobs contributing to their local economy. If you want, you can call it a public works project but one which probably brings far more return than any usual project and one where the UK has also made almost a billion in royalties from the A320 program. If all public works projects were like this maybe its time the politicans in Washington did the same!
As for what interest they could have gotten commercially, who knows for sure but AWST has said before that if Airbus had to pay commercial rates for the 25% of launch aid they get at the government rate, it would probably only increase the cost of every Airbus delivered by several hundred thousand dollars at most.
Why is there less fiscal transparency? Who knows, maybe they do want to be able to hide something especially if the project failed, but the proof is in the pudding. At least for the UK taxpayer, this is one project, along with launch aid for Rolls engines (which everyone seems to forget about especially Boeing who don't seem to mind them getting it so they can benefit), which has been a great investment and paid back so far handsomely in direct and indirect economic benefits. Even the Thatcher administration came through everytime with Airbus launch aid during its tenure. This has been one industrial policy which has worked very well so far and while it maybe philosphically difficult for some to swallow it actually makes great sense and has been very productive so far. Even if some of these Airbus projects end up failing, the economic benefits the workforce produce probably more than adequately compensates for the initial investment even without any payback on the actual aid.
 
RichardPrice
Posts: 4474
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RE: A380 Profitable From 2008

Sat Apr 08, 2006 7:05 pm

Quoting Elvis777 (Reply 51):
1 what was the term of the loan.
2. What interest did they receive.

I have no idea as to the exact terms of the financing, but it is known that as well as interest on the origional sum, Airbus has to repay a royalty on each airframe delivered for the entire life of the production run. The investment made will only cease to bring an income in when Airbus withdraw the aircraft the money was loaned for. Pretty sure derivative types are included in those payments (so the entire A319/20/21/18 series).

Quoting Elvis777 (Reply 51):
3. Combine the two and tell me if EADS got a sweetheart deal or if the British taxpayers received top dollar for their money. In other words, if the british taxpayer invested that money on say a large fund index in the Tokyo market would they have received a higher yield for their money (you are welcome to pick out another example)? Or what if EADS had applied for loans through standard commercial markets would they have gotten the same terms?

As I said above, the terms for the A320/A330 loans arent really known (they are buried somewhere in the Treasury Department releases but I cant be bothered to go find them) but its unlikely that a royalty clause would have been enacted for funding from a commercial source. To have a loan repayments double or triple the original amount is something that would rarely happen in the commercial sector, so yes I think the British taxpayer got a very good deal, and with the royalty payments linked to production rather than simple ability to pay for X months, an income is guaranteed.

Yes, we could have invested the money elsewhere, but if it hadnt gone to Airbus it would have been spent elsewhere - theres no chance of the Government having invested the money unless it was into a company. It would have gone on another project, and rarely have such projects been as lucrative for the treasury than Airbus' loans.

Quoting Elvis777 (Reply 51):
4. How About other European taxpayers are they making money on this or is it a public works project? B/c if it is a public works project then that is fine and dandy (I believe in govt investment to keep high tech jobs at home.. But I also believe in Fiscal transparency).

I have no idea on the status of the loans from other countries, I dont speak their language and Im not interested in their governments financies to be honest. I would be surprised however if coincidentally it was only Britain that had made a large profit from loans. Airbus employs nearly 13,000 people in the UK, so we arent that much different from France or Germany when it comes to jobs with Airbus - there would be no reason for the UK to cut a hard bargain and come out with good loan terms and the other countries not to.

Airbus has never really been a public works project, it was started as a competitor to the US dominance of the commercial aircraft sector but it was basically a cooperative effort from several preexisting aviation firms rather than a complete new company. However it is in the EU governments best interests to see the company succeed.
 
Dougloid
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RE: A380 Profitable From 2008

Sun Apr 09, 2006 12:08 am

Quoting NAV20 (Reply 52):
Dead right. One can always speculate on the causes of any share-price slide. Though in this case the fact that all three of the large private-sector partners in EADS/Airbus (BAE, Daimler-Chrysler, and Lagardere) have begun selling off their stakes at exactly the same time is highly likely to have persuaded some at least of the smaller investors to do the same.

True. Although I do not own stock in anything, I'm a reasonably good judge of the character of people who fancy themselves traders.

The world is full of suckers who call themselves "investors" waiting to be fleeced, hanging on the every word of so-called analysts. The analysts in turn are often times shills for the moneyed interests who know what the REAL game is-and it's rigged from top to bottom. By the time the rubes get on to the next good thing, the people who know what's going on in the market have gotten in and gotten out. The schmuck with his 401K stands about as much chance as a lamb among the wolves.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn