pygmalion
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New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:06 am

New article in the times about the A350 and possible new delays due to the management shakeup... Fair use excerpt:

"AIRBUS may be forced to delay the launch of its £7 billion A350 project because Christian Streiff, the group’s new chief executive who has still not formally started work, needs time to approve the venture, The Times has learnt.
Details have also emerged for the first time of how NM Rothschild & Sons came to its valuation of BAE Systems’ 20 per cent stake in Airbus, casting doubt on the effectiveness of work done by other City institutions.

Sources close to EADS, the majority shareholder in Airbus, have given warning that M Streiff, former deputy chief executive of the French conglomerate Saint-Gobain, may not be able to make a decision about the A350 by the company’s self- imposed deadline of the Farnborough Air Show, which starts on July 17.

Officially, EADS insists that a decision on the A350 is still possible by Farnborough but neither it, BAE or Airbus has been able to confirm exactly when M Streiff will be confirmed as chief executive.


Full article can be found at the TimesOnline.
New blow to Airbus as A350 faces delay
 
MSYtristar
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:12 am

It would be nice to see US ditch the 350 and jump on some of the new 787 slots which have opened up after Primaris officially gave them up.
 
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Stitch
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:13 am

I imagine Airbus is still polling current and potential A350 customers. If the latest version is a significant depature, there may be friction amongst the customers who like what the current iteration is and what the latest version is.

Quoting MSYtristar (Reply 1):
It would be nice to see US ditch the 350 and jump on some of the new 787 slots which have opened up after Primaris officially gave them up.

US is probably better off sticking with the A330. Their international service is not as...robust...as many and the A330 seems to be serving them well.

[Edited 2006-07-07 01:15:10]
 
MSYtristar
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:16 am

Quoting Stitch (Reply 2):
US is probably better off sticking with the A330. Their international service is not as...robust...as many and the A330 seems to be serving them well.

True. I guess unless US wanted to try to open up some Asian destinations, the 333 will work well for them.
 
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Stitch
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:22 am

Quoting MSYtristar (Reply 4):
True. I guess unless US wanted to try to open up some Asian destinations, the 333 will work well for them.

It (along with the A332) seems to work well for NW.  thumbsup 
 
steeler83
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:26 am

Quoting Stitch (Reply 2):
Quoting MSYtristar (Reply 1):
It would be nice to see US ditch the 350 and jump on some of the new 787 slots which have opened up after Primaris officially gave them up.

US is probably better off sticking with the A330. Their international service is not as...robust...as many and the A330 seems to be serving them well.



Quoting MSYtristar (Reply 4):
True. I guess unless US wanted to try to open up some Asian destinations, the 333 will work well for them.

Yeah, I don't thing US will ditch the A350 for the 787; they're quite happy with the way the airbus aircraft have served the airline. I agree that the A330s are doing fine for US; they seem very happy with the A330s.
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
87dreamin
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:29 am

"Sources close to EADS," in PR/journalist source speak, mean, "intentional leak by EADS."

Ninety-five percent chance this is a prepare-the-market leak.
 
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mariner
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:30 am

"New Blow To Airbus As A350 Faces Delay"

I'm not clear why it is "a blow"?

mariner
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Lumberton
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:41 am

Quoting Mariner (Reply 10):
I'm not clear why it is "a blow"?

Perhaps the market will view this the same way you do, Mariner?

This is what caught my eye:

Quote:
Airbus�s initial designs for the A350 did not receive a warm reception from airlines and the jet-builder was forced to draw up new proposals. This is thought to have caused a significant increase in development costs, with estimates now up to �7 billion.

That's about USD$12.8 billion right? Wasn't the re-design originally rumored at USD$10billion tops? This is starting to sound like a defense project!
"When all is said and done, more will be said than done".
 
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mariner
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:48 am

Quoting Lumberton (Reply 9):
Perhaps the market will view this the same way you do, Mariner?

I have no idea what the market will do. Some will buy 787's, I would guess.

But perhaps it is better to get the A350 right than get it out, so I still don't know why it is "a blow".

mariner
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Lumberton
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:51 am

Quoting Mariner (Reply 9):
have no idea what the market will do. Some will buy 787's, I would guess.

Actually, greedy capitalist that I am, I was referring to the stock markets!

And I wholeheartedly agree, get it right. Better to have the Steven U-H's of the world rave than rant....
"When all is said and done, more will be said than done".
 
AerospaceFan
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:52 am

It might be that July 17 as a self-imposed deadline is basically too early, anyway. I see no reason why a company should be so bound to the start date of an airshow, no matter how prestigious.

What harm could it do for Streiff to take a couple of weeks to study the situation?

Basically, I don't agree that this is necessarily a "blow". It's just another factor, in my view.
What's fair is fair.
 
boeingbus
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 8:54 am

Mariner, a blow could be a good thing...  Wink

Honestly, this is nothing new and nothing unexpected. Airbus just got new leadership and of course an expenditure of 10 billion needs to be reviewed. I think right now Airbus wants to do what is right for its future...

Airbus can't afford to be distracted on paper airplanes. Airbus needs to protect the 14 billion dollar A380 investment by making sure deliveries happen and customers are satisfied. Right now, nothing else matters...
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Lumberton
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:04 am

Quoting BoeingBus (Reply 12):
an expenditure of 10 billion needs to be reviewed. I think right now Airbus wants to do what is right for its future...

Not according to Rothschild, if the Times has it's numbers right. The symbols from the portion of the article I quoted didn't copy and paste correctly, but Rothschild is saying the costs are now at Pounds Sterling 7 billion, or $12.8 billion U.S. Dollars. This is very significant cost escalation,if true.
"When all is said and done, more will be said than done".
 
AerospaceFan
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:05 am

Well put, BoeingBus. Airbus has good reason to be careful these days, because another false move, and the "corporate vultures" of the world (meaning, by this reference, not anyone in particular, but simply the many hypothetical financial interests who may be looking for divestiture for salvage reasons, etc.) will want to swoop in for the kill. EADS is already facing the music concerning its stock value. And all of this is on top of rather unpredictionable nationalistic impulses pertaining to Airbus of which I, personally, have become bored.

Again, I give Airbus a matter of years, not months, to return to rationality. A few weeks or a month or two to study the proposed design changes and implement the approval process seems to be a reasonable thing to do.

Like many Americans, I hold Airbus in high esteem for a number of reasons -- as a peer of Boeing, but also as an economic factor that promotes prosperity among its suppliers. Both Boeing and Airbus have become so internationalized in significant ways, it seems a bit churlish to take too negative of a position when either one stalls.

From a more general standpoint, the prosperity of Europe as a whole seems to me to have been a foreign policy goal of American governments for many decades. Seen in that light, a strong Europe is far better than a weaker one regardless of how much easier weak competition may be for American companies, and we should have our share of pride for the way that Europe has recovered from the disaster caused by war and strife merely sixty years ago. By extension of this reasoning, promoters of the interests of a prosperous global aviation industry should welcome a healthy Airbus.

I'm not sure why the Times describes the delay as a blow. To me, it's simply a much-needed pause for reflection, and in my view, not really objectionable merely because of it.

[Edited 2006-07-07 02:10:48]
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ikramerica
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:36 am

Quoting Stitch (Reply 2):
US is probably better off sticking with the A330. Their international service is not as...robust...as many and the A330 seems to be serving them well.

I think US would rather have the 330. They don't have routes that require the range of the 350. I only think they ordered them as a favor to Airbus for the loan, and they reportedly have an easy conversion clause to 330s, with conditions already met by the 350 program changes/delays.
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F4N
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:37 am

Quoting Mariner (Reply 7):
"New Blow To Airbus As A350 Faces Delay"

I'm not clear why it is "a blow"?

Mariner:

I think that the last thing airbus needs right now is more bad news. Perhaps "blow" is not necessarily the correct journalistic device, but it gets the point across. While you are correct in that it is better to get it right than get it out, the credibility of the new management team may dictate otherwise.

We shall see...

regards,

F4N
 
gigneil
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:39 am

I think that they'd like to be more than they currently are... they're the 5th largest US airline, and with feed from Star Alliance partners could certainly fuel European growth and maybe even some spotty Asian growth.

N
 
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mariner
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:46 am

Quoting F4N (Reply 19):
I think that the last thing airbus needs right now is more bad news.

Define "bad news".

(i) Is it a function of the new team to try and make the previous team's decisions work?

Obviously, in the case of the A380, being so far advanced, that must be true.

(ii) Or - is it a function of the new team to bring fresh concepts?

The A350 is not yet so far advanced, so new concepts may apply.

If it is the prevailing attitude that the present A350 doesn't cut the mustard would a cancellation - or a long-ish postponement - of the project be defined as "bad news"?

mariner
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vega
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:51 am

Quoting MSYtristar (Reply 3):
Quoting Stitch (Reply 2):
US is probably better off sticking with the A330. Their international service is not as...robust...as many and the A330 seems to be serving them well.

True. I guess unless US wanted to try to open up some Asian destinations, the 333 will work well for them.

US Airways has ten 330-200s on firm order, which have the range for PHL-NRT/KIX and PHX/PDX-Japan+ Some of Asia. This order is unrelated to the 350s.

[Edited 2006-07-07 02:53:13]
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NAV20
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 9:52 am

Quoting Pygmalion (Thread starter):
'Times' Quote - M Streiff, former deputy chief executive of the French conglomerate Saint-Gobain, may not be able to make a decision about the A350 by the company’s self- imposed deadline

Worth bearing in mind that, as far as I can see, the decision would not in fact rest with Streiff. He appears to be only one of a group of people reporting to Enders - and other people with relevant functions (like the Chief Finance Officer) report to the 'other' CEO, Gallois:-

"Furthermore the Board resolved new responsibilities and reporting lines at the top management level: Christian Streiff (CEO of Airbus), Jean-Paul Gut (COO for Marketing, Strategy and Global Development), Ralph Crosby (Chairman and CEO of EADS North America), and Francisco Fernández Sáinz (Head of Military Transport Aircraft Divison) will report to Tom Enders. Hans Peter Ring (CFO - Chief Financial Officer), François Auque (Head of Space Division), Fabrice Brégier (Head of Eurocopter Division), and Stefan Zoller (Head of Defence and Security Systems Division) will report to Louis Gallois. Jean Botti (Chief Technical Officer) and Jussi Itävuori (Head of Human Resources) will report to both CEOs."

http://www.eads.com/web/lang/en/1024...F00000040950509/8/29/41394298.html

One would expect that Streiff's input to the A350 question will be mainly on the production side and that the strategic decision will still be a matter of recommendations by Enders and/or Gallois, the two CEOs, to Lagardere and/or Bisschoff, the two Chairmen.

[Edited 2006-07-07 02:56:34]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
gigneil
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 10:28 am

Quoting Vega (Reply 23):
US Airways has ten 330-200s on firm order, which have the range for PHL-NRT/KIX and PHX/PDX-Japan+ Some of Asia. This order is unrelated to the 350s.

Based on a conversation in a thread a while back with Widebodyphotog, the 332 really doesn't have the range for PHL-NRT or KIX.

PHX, maybe. PDX obviously.

N
 
F4N
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 10:46 am

Quoting Mariner (Reply 22):
If it is the prevailing attitude that the present A350 doesn't cut the mustard would a cancellation - or a long-ish postponement - of the project be defined as "bad news"?

Mariner:

If what you suggest is perceived by investors, customers, politicians and the press as being symptomatic of continued difficulties at Airbus, than yes, it is bad news.

Bear in mind that I understand your point and I am not disputing the logic of it.
Unfortunately, rationale may not be the only factor which influences what Airbus
feels it has to do regarding A350 or anything else right now.

regards,

F4N
 
JAAlbert
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 10:58 am

$12 billion US for the A350? Isn't the Boeing investment in the 787 about 8 billion? Four billion less for a dramatically re-engineered plane. How will Airbus ever sell the A350 competively with the 787 with development costs so much higher?
 
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:10 am

Quoting F4N (Reply 26):
If what you suggest is perceived by investors, customers, politicians and the press as being symptomatic of continued difficulties at Airbus, than yes, it is bad news.

As I see it, Airbus management are on a hiding to nothing with the A3-whatever. If they rush out an aeroplane proposal consisting of 'brochures and promises' the market will pan them for coming up with yet another hurried half-measure. If they announce either that the decision has been deferred, or that the project is still 'under consideration,' the market will conclude that they STILL have no credible answer to the 787/777 combination.

In my view the controlling interests (the French and German governments, acting through Lagardere and Daimler-Chrysler) had their opportunity to terminate the dreadful politicised 'dual-control' management setup that brought Airbus to its present situation, and introduce a proper commercial setup which could take effective decisions and speak with one voice.

Because neither side was willing to settle for one chairman and one CEO, consisting of the best people for the jobs regardless of nationality, they 'dropped the ball' yet again.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
gigneil
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:27 am

Quoting JAAlbert (Reply 27):
$12 billion US for the A350? Isn't the Boeing investment in the 787 about 8 billion? Four billion less for a dramatically re-engineered plane. How will Airbus ever sell the A350 competively with the 787 with development costs so much higher?

You never know what they might launch with that $12b.... if its a comprehensive program to compete with the 787-9, 777-200ER, and 777-300ER then that might be money well spent for them.

N
 
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ER757
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:31 am

Quoting Mariner (Reply 22):
If it is the prevailing attitude that the present A350 doesn't cut the mustard would a cancellation - or a long-ish postponement - of the project be defined as "bad news"?

I would have to say no, but with some reservations. The market for aircraft of this class is huge, 2000+ frames by most estimates. Many of the majors haven't yet bought the 787, so there's lots of opportunity to sell an A350 that DOES cut the mustard if it is offered for sale in the reasonably near future. You are right that to come out with a half-baked proposal now and sink many billions of Euros into it only to have it be slaughtered by the 787 would be senseless. That being said, Airbus really does need to hit a home run with whatever the do eventually offer and they can't wait too terribly much longer.
 
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mariner
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:34 am

Quoting F4N (Reply 26):
If what you suggest is perceived by investors, customers, politicians and the press as being symptomatic of continued difficulties at Airbus, than yes, it is bad news.

Absolutely, but that is a perception, and that could be true of any action they take.

On the other hand, it could be seen as a dazzlingly bold move by a strong, fearless, new CEO.

Which would be another perception.

Airbus has very little control as to how any action they take will be perceived.

All the new team can do is what they believe to be right, what they are comfortable with, and to weather whatever tempests their actions may provoke and have the courage of their own convictions.

mariner
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dl021
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:39 am

Quoting Mariner (Reply 7):
New Blow To Airbus As A350 Faces Delay"

I'm not clear why it is "a blow"?

Because they face further delays and further loss of consumer confidence in their ability to manage themselves or their own projects. No one believes them right now when they make promises. It's going to continue to hurt them until they get it right and come through on several promises in a row.

Quoting CF188A (Reply 20):
wow... another con airbus thread

Not really. It's a point about the A350, a program that just got more bad news. Why turn it into more than that? Why ignore the problem? It's real and worth discussing.

Quoting Mariner (Reply 22):
Define "bad news".

When your failing program is being rejected by the market by more than a 2/3 margin and you promise to get it back on track and lead the market to believe you'll have a new program by a certain time (and it's a high profile venue) and you then fail to post with the goods on time reinforcing the perception of many in the market that your organization has no real rudder, no real leadership, and is floundering. When you build hundred million dollar jets that's bad news.

That's bad news any way you slice it and unless you're determined to blind yourself you can't really ignore it.

Quoting Mariner (Reply 22):
If it is the prevailing attitude that the present A350 doesn't cut the mustard would a cancellation - or a long-ish postponement - of the project be defined as "bad news"?

Sure it would, if you promised to fix it by a certain time and can't come through with the material promised. You seem to be able to rationalize anything on Airbuses behalf.


On the other hand you do seem to have taken a really cool flight as a child on a Shorts Sunderland. Was an Empire flying boat, or another line?
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F4N
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 11:59 am

Quoting Mariner (Reply 31):
Absolutely, but that is a perception, and that could be true of any action they take.

Mariner:

Again sir, you are correct. Unfortunately, Airbus is under a level of scrutiny(and by default, pressure)which probably precludes the luxury of a lengthy decision however much conventional wisdom would so dictate. They have got to get it right and they have got to get it right very, very soon. Anything less will lead to continued share-price decline and resultant investor unrest, more orders for 787/marketshare decline as well as the enhanced prospect of more political interference. In short, they face the unenviable prospect of perception becoming their reality unless they hit this spot-on this time.

They had also better hope that Boeing does not go for the throat and do the 2nd production line. That would complicate things even more.

Good night & best regards,

F4N
 
NAV20
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 12:05 pm

Quoting Gigneil (Reply 29):
You never know what they might launch with that $12b.... if its a comprehensive program to compete with the 787-9, 777-200ER, and 777-300ER then that might be money well spent for them.

It's maybe more realistic to look at it in terms of annual expenditure. In round terms both major firms currently spend about $2B. p.a. on R & D.

That is probably sufficient for Boeing to finish off the (nearly-complete) 787, develop the (relatively low-cost) 748, and make progress on both Y1 and Y3 over the next six years.

However, it's difficult to see how it would be sufficient for Airbus to develop TWO new aeroplanes from scratch (787 and 777 competitors), AND make progress on an A320 up-grade/replacement, and maybe work on further variants of the A380, all within the same period.

On the face of it Airbus is going to have to find $3-4B. p.a. for R & D until 2010 or beyond for all those projects. That doesn't look possible.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
airfrnt
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 12:58 pm

Quoting Pygmalion (Thread starter):
New article in the times about the A350 and possible new delays due to the management shakeup... Fair use excerpt:

"AIRBUS may be forced to delay the launch of its £7 billion A350 project because Christian Streiff, the group’s new chief executive who has still not formally started work, needs time to approve the venture, The Times has learnt.
Details have also emerged for the first time of how NM Rothschild & Sons came to its valuation of BAE Systems’ 20 per cent stake in Airbus, casting doubt on the effectiveness of work done by other City institutions.

This is pretty obviously a trial baloon. Between this and the sales outlook Airbus is still working on getting a handle on the operations issue. It really sounds like Airbus lost all direction when Forgeard got kicked upstairs.

Quote:

A City source familiar with Rothschild’s work said: “You have to say the quality of analysis by other banks has been poor. I think the Airbus business has not been that well understood and the liabilities are also not well understood.”

This quote should scare the living daylights out of people. It basically is saying that Airbus is significantly over valued because their liability exposure is not understood.

This is exactly the situation that Enron found itself in when it's market collapsed after they took a 1 billion dollar write off for some of their oil assets.

I don't mean that Airbus could be facing a collapse the way Enron did, Enron's situation was far more complex then just a misunderstood liability structure (it turned out to be a set of illegal liability structures cascaded with a couple of horrible terms on some loans that had absolute repayment terms once the credit rating fell) But Rothschild seems to be saying that the liabilities that Airbus has require at least a 25% write down _of the whole company_. Thats a $8 Billion Dollar Correction.

Quoting Mariner (Reply 7):
I'm not clear why it is "a blow"?

I think the blow referenced both the details of the Rothschild evaluation as well as the A350 delay. The danger is that Airbus is looking at a 2000 frame replacement market. At the current rate and momentum Boeing will probably hit 500 frames, that is 25% of the total market before the plane flies for the first time. That means Airbus must act now to start winning frames, or it will be locked out of the replacement market.

The situation gets even more dire when you look at what is left. Very few US carriers who have around half of the total world wide lift have ordered, so a large chunk of the remaining orders are in that Market. Airbus is at a institution disadvantage in this market going into it.

Quoting Mariner (Reply 9):
I have no idea what the market will do. Some will buy 787's, I would guess.

But perhaps it is better to get the A350 right than get it out, so I still don't know why it is "a blow".

Delivery cycles and replacement timing. Plus the fact that you have a very large workforce that put in a lot of effort already on the A350 and will be sitting around, or working on the wrong project.

Quoting Lumberton (Reply 13):
Not according to Rothschild, if the Times has it's numbers right. The symbols from the portion of the article I quoted didn't copy and paste correctly, but Rothschild is saying the costs are now at Pounds Sterling 7 billion, or $12.8 billion U.S. Dollars. This is very significant cost escalation,if true.

That's a huge cost escalation. I think that Rothschild may be a bit extreme here. My suspicion is that Airbus might have sunk a few billion already into the A350, but at least some of that work will have value for the 370 _if_ that is the direction Airbus chooses to go. Add on top of that another 8 billion for a 370 to go up head to head against the 777 and 787.

The real problem for Airbus is that Boeing is not eating the full $8B cost for the 787, but has done a great job with the risk and revenue partners. Airbus tried that with the A380 but ended up eating most of the costs for that project as well.

Quoting AerospaceFan (Reply 14):
Well put, BoeingBus. Airbus has good reason to be careful these days, because another false move, and the "corporate vultures" of the world (meaning, by this reference, not anyone in particular, but simply the many hypothetical financial interests who may be looking for divestiture for salvage reasons, etc.) will want to swoop in for the kill. EADS is already facing the music concerning its stock value. And all of this is on top of rather unpredictionable nationalistic impulses pertaining to Airbus of which I, personally, have become bored.

You may be bored of them, but even in a worst case scenario, they will keep Airbus afloat. Airbus has plenty of back orders to let them sail for a while. The A380 is a large liability for them, but I still believe that program will eventually get back to break even.

Quoting Mariner (Reply 22):
Define "bad news".

(i) Is it a function of the new team to try and make the previous team's decisions work?

Obviously, in the case of the A380, being so far advanced, that must be true.

(ii) Or - is it a function of the new team to bring fresh concepts?

The A350 is not yet so far advanced, so new concepts may apply.

If it is the prevailing attitude that the present A350 doesn't cut the mustard would a cancellation - or a long-ish postponement - of the project be defined as "bad news"?

I think you nailed it on the head here. Airbus has to make the A380 decision work. They have no choice in the matter, they have a phenominal amount of money invested in the project, and closing the project would bankrupt them. The strategy to place the 350/370 between the 787 and 787 is debateable.

Quoting Gigneil (Reply 29):
You never know what they might launch with that $12b.... if its a comprehensive program to compete with the 787-9, 777-200ER, and 777-300ER then that might be money well spent for them.

Quick. What's the top selling 787 model?

That's the market Airbus gives up by going with a larger 370 and 350.

Quoting ER757 (Reply 30):
I would have to say no, but with some reservations. The market for aircraft of this class is huge, 2000+ frames by most estimates. Many of the majors haven't yet bought the 787, so there's lots of opportunity to sell an A350 that DOES cut the mustard if it is offered for sale in the reasonably near future. You are right that to come out with a half-baked proposal now and sink many billions of Euros into it only to have it be slaughtered by the 787 would be senseless. That being said, Airbus really does need to hit a home run with whatever the do eventually offer and they can't wait too terribly much longer.

The US Majors have not. Most of the Asian ones have. Some of the European majors will be deciding shortly.

Quoting Mariner (Reply 31):
Airbus has very little control as to how any action they take will be perceived.

Airbus needs to have control of at least their own message. Airbus is horrible at Message Descipline, and until they get that down, they will be at the whims of reportors writing about "another blow"
 
Aviator27
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 1:02 pm

US Airways will not cancel their A350 order. It was part of a deal when Airbus loaned $250 million to the bankrupt carrier to aid with its merger with America West Airlines and emergence from bankruptcy. The order was placed in exchange for this loan. Of course if the airplane isn't offered, then of course there won't be an order.

US Airways Indifferent to Airbus A350 dilemma
 
707lvr
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 1:30 pm

Quoting Pygmalion (Thread starter):
may not be able to make a decision .. by Farnborough Air Show, which starts on July 17.

Sorry, that's just piling on and looking for anything. Do they really expect the guy to have Airbus' corporate future for the next generation mapped out to the tune of twelve billions dollars before he even has a parking space?
 
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mariner
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 1:48 pm

Quoting AirFrnt (Reply 35):
At the current rate and momentum Boeing will probably hit 500 frames, that is 25% of the total market before the plane flies for the first time. That means Airbus must act now to start winning frames, or it will be locked out of the replacement market.

I understand that completely, and I would guess that Airbus does. I don't think the people that run the organization are stupid.

The critical "wrong" decision was to underestimate the 787 and come up with the A330 derivative that became the A350.

No matter what they do, they will now always be playing catch up to the 787, and it is difficult to imagine any derivative that can be half as successful as a successful original.

So they have put themselves between a rock and a hard place, and the way out is not necessarily to try and play catch up.

If they cede the major part of this market to Boeing (which, in effect, they may have already done) it wouldn't be the end of the world and it wouldn't be the end of Airbus.

At the risk of repeating myself, it may - stress "may" - be more desirable to take themselves out of the race.

Or is the efficient running of the corporate conglomerate more important than the function the conglomerate was designed to achieve?

mariner
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atmx2000
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 1:56 pm

Quoting Mariner (Reply 39):
If they cede the major part of this market to Boeing (which, in effect, they may have already done) it wouldn't be the end of the world and it wouldn't be the end of Airbus.

At the risk of repeating myself, it may - stress "may" - be more desirable to take themselves out of the race

I thought your position was that they should have gone with the original A350 despite the views of Udvar-Hazy and other airline industry executives. Or are you now in agreement with the assessment of those executives of leasing companies and airlines?
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jacobin777
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:02 pm

Quoting Mariner (Reply 39):

I understand that completely, and I would guess that Airbus does. I don't think the people that run the organization are stupid.

Seeing what's been happening with Airbus the past few months, I think "stupid" is an apt word to describe management....isn't their stupidity part of the reason (amongst other things) as to why they are in this conundrum?
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:04 pm

Quoting Atmx2000 (Reply 40):
I thought your position was that they should have gone with the original A350 despite the views of Udvar-Hazy and other airline industry executives.

That is still my position - isn't that what I have been saying? I don't think they should tell America West they can't have an aircraft.

But it may be a waste of money to try and "improve" the derivative any further.

It may be desirable to cede the larger part of that particular market to Boeing - to accept the reality of what has probably already happened.

That it may be desirable to buy time, to think and re-group.

I have to assume that what the leasing companies and some airlines want is in their own best interests.

That doesn't mean it is necessarily in the best interests of Airbus.

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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:17 pm

Quoting Jacobin777 (Reply 41):
.isn't their stupidity part of the reason (amongst other things) as to why they are in this conundrum?

If you really believe the people running Airbus are "stupid" then there seems little point in having a conversation about it.

I suggest - only suggest, anyone can disagree - that to make a wrong decision is not - in itself - indicative of stupidity.

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atmx2000
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:21 pm

Quoting Mariner (Reply 42):

That is still my position - isn't that what I have been saying? I don't think they should tell America West they can't have an aircraft.

When you say take themselves out of the race, I took it to mean not compete at all in that segment for now. I think that is likely the wisest decision. That or put out a less intensive A330 update than the A350 launched last year, and then focus on a new aircraft for the 300 to 400 pax space. My feeling is that the A350 uses too many financial and engineering resources for not getting at least 40% of the market over a decade. I fully expect whatever orders they get will be front loaded, as Airbus's customers will likely be only those who got launch discounts, if Boeing meets its contractual promises to airlines or is even somewhat off target on certain aspects.
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jacobin777
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:35 pm

Quoting Mariner (Reply 43):
If you really believe the people running Airbus are "stupid" then there seems little point in having a conversation about it.

as I metioned, "stupidity" was part of the reason....maybe 10-15%......

1)hubris
2)denial
3)market circumstances
4)ignorance
5)bad luck
6)lack of vision
7)good competition

all of these contributed to Airbus latest gaffe....
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:38 pm

Quoting Atmx2000 (Reply 44):
I think that is likely the wisest decision.

That may be right.

If Ikramerica is correct (#18) and America West would be happy with the A330 - souped up, perhaps - hey, why not?

As I said, the critical mistake - in my mind - was underestimating the 787, but a lot of people did that.

The second mistake, in my mind, was to give credence to Mr. Udvar-Hazy.

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B707Stu
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:43 pm

Quoting 87dreamin (Reply 6):
"Sources close to EADS," in PR/journalist source speak, mean, "intentional leak by EADS."

Ninety-five percent chance this is a prepare-the-market leak.

That is exactly how I read this press release, lower the expectations and then over deliver to help restore some sense of progress. I'm sure behind the scenes phone calls have already gone out to the major buyers of the A350 and potential buyers with the details and promises of what it will have. This is all for show and will likely work to tame the Press, which is Airbus's biggest problem right now, public image. The reality of their situation isn't as bad as atheir p ublic image, I'm sure that's the first problem they're going to fix.
 
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 2:50 pm

The biggest problem with Airbus is that they have been in the mode of growing their family of airliners. They haven't given enough thought to the long term game plane in which models have to be replaced from time to time. Boeing had to make the switch in the late 70's - when the 7N7/7X7 concepts were being developed into the 757/767.

Airbus probably went one model too far in their family (at a huge cost in terms of money and time) and now are left scrambling, with no apparent strategy. Consequently, rather than coinciding a new model with an upswing in a particular market, they are caught responding late to Boeing's moves, missing market windows every time. They have done it with the A350, they will do it with the A370 if the rumours are true, and the combined effort of those two will mean they do it again with the A320 replacement.

Probably the best thing for them now to do is stop, think, and lay out some sort of game plan where they respond to the market rather than to Boeing. If they can do that, they will recover.
 
vega
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 3:03 pm

Quoting Gigneil (Reply 25):
Quoting Vega (Reply 23):
US Airways has ten 330-200s on firm order, which have the range for PHL-NRT/KIX and PHX/PDX-Japan+ Some of Asia. This order is unrelated to the 350s.

Based on a conversation in a thread a while back with Widebodyphotog, the 332 really doesn't have the range for PHL-NRT or KIX.

PHX, maybe. PDX obviously.

The 330/200 has a specified range of 6,750 nmiles - see here:
http://www.airbus.com/en/aircraftfam...0a340/a330-200/specifications.html
The Great Circle Distance from PHL-NRT is 5870 nmiles. What is your logic that say's the 330-200 cannot make that flight? And PHX-NRT at 5010 is not questionable at all.

[Edited 2006-07-07 08:12:02]
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Beaucaire
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 3:03 pm

The article is just repeating basically old news- as one can check on the attached (french ) article from "Investir"..
I just would wait until the 17th instead of adding another useless thread .
If they have to wait to formalise the specs,budgets and engines-choice- well so be it. Rather wait and do it right than jump to hasty announcements and find oneself in the unconfortable situation to revise again.
I cant' understand why some have this unhealthy drive to trumpet doomsday- messages instead of observing quietly what's gonna happen....

http://www.investir.fr/conseils/soci...mbole=1rPEAD&id=11310&nom_table=av
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astuteman
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 3:31 pm

Quoting Mariner (Reply 7):
I'm not clear why it is "a blow"?



Quoting AirMailer (Reply 15):
and I'm sure that one of our French or German flagged posting-mates will be around shortly to explain to us how this is actually an advantage

mmm, let's see..

Quoting AerospaceFan (Reply 11):
It might be that July 17 as a self-imposed deadline is basically too early, anyway. I see no reason why a company should be so bound to the start date of an airshow, no matter how prestigious.

American

Quoting BoeingBus (Reply 12):
. I think right now Airbus wants to do what is right for its future...

American

Quoting ER757 (Reply 30):
You are right that to come out with a half-baked proposal now and sink many billions of Euros into it only to have it be slaughtered by the 787 would be senseless

American

Quoting NAV20 (Reply 28):
If they rush out an aeroplane proposal consisting of 'brochures and promises' the market will pan them for coming up with yet another hurried half-measure

Australian.
Just a selection - not a European in sight. Perhaps a critique of the situation might have been more appropriate than airing your own personal predjudice in this particular circimstance....

Quoting Lumberton (Reply 8):
This is thought to have caused a significant increase in development costs, with estimates now up to �7 billion.

3 things come to mind here.......
1. Is £7Bn (or $12.5Bn) another part of the great BAE stake devaluation?
2. Does £7Bn (or $12.5Bn) cover both staying with the A358 AND a new A370?
3. In truth, the number is pure conjecture anyway. We'll certainly find out what the truth is in due course.

Quoting NAV20 (Reply 24):
One would expect that Streiff's input to the A350 question will be mainly on the production side and that the strategic decision will still be a matter of recommendations by Enders and/or Gallois, the two CEOs, to Lagardere and/or Bisschoff, the two Chairmen.

Why don't you quote a bit more of this article?
Enders is the man who has responsibility for Airbus strategy - Streiff's boss. It in his TOR's
I've also asked you before if you can work out what significant role there is for a strong production man in determining strategy, research + development, and marketing.
It's there.. (and boy-oh-boy, how)
Worked it out yet?

As far as the article itself is concerned, nobody else seems to have picked up on the fact that this is actually a delay to an "announcement".
I strongly suspect that the existing workstreams are currently proceeding exactly as planned last month.

Regards
 
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 3:51 pm

Quoting Lumberton (Reply 13):
This is very significant cost escalation,if true.

This may not be such bad news, as you seem to imply, if the cost escalation is associated with an increase in scope.... cost increases are certainly a problem if the scope doesn't change. It is impossible to judge the situation without knowing both.

A dual launch, much like the A330 / A340 or previously the B757 / B767, would be one example of an increase in scope. People here have often pointed out that the sheer size of the hole in Airbus's future product lineup can't be plugged with a single aircraft family. For all the hay made of the EADS stock price drop, Airbus is not a company starved for cash, and will not be for several years yet. I think the notion of a dual launch is reasonable, both from a technical and financial point of view, and is a plausible explanation for this new cost figure.

Quoting B707Stu (Reply 47):
That is exactly how I read this press release

This is not an Airbus press release we're talking about. It is a single article in the Times of London quoting anonymous sources, as of this writing not picked up by any other media outlet. Not that this would discredit the story, but do keep that somewhere in the back of your mind.
 
atmx2000
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 3:58 pm

Quoting Astuteman (Reply 46):

Just a selection - not a European in sight. Perhaps a critique of the situation might have been more appropriate than airing your own personal predjudice in this particular circimstance....

Well, it was nighttime in Europe based on the time stamps.

By the way good morning.  Smile
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
astuteman
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RE: New Blow To Airbus As A350 Faces Delay

Fri Jul 07, 2006 4:20 pm

Quoting Atmx2000 (Reply 48):
Well, it was nighttime in Europe based on the time stamps.

Damn - I'd hoped to get away with that one, too  Wink
Mind you, some A-netters don't seem to sleep at any time...... Smile

I'd like to think the point stood anyway.......
Regards