mush
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?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:14 am

Hey everybody. I apologize if this is being discussed or if it has been discussed recently, but...

I was wondering what effect the Airbus-caused delays to the A380 program are having on engine manufacturers. We all know that the A380 is being delay and there are numerous threads discussing the causes of those delays so we probably don't need to rehash them here.

The engine manufacturers spent a lot of $$$$ to produce the engines that are supposed to be flying in commercial service and they assumed that they would be producing many more engines then they currently are. Also, I'm sure that RR and the rest had thought that they would be making money selling spare parts and the like. Do they have legal recourse against Airbus for not producing the aircraft by a certain date?

Thanks for the replies, admittedly, I don't know very much about the contracts engine suppliers have with airframe producers.
Mush
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NYC777
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:20 am

I would think that it's going to be a huge negative for them. Not as much as it is for Airbus as they've spread their market risks around but still pretty good.
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osiris30
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:24 am

Quoting Mush (Thread starter):
The engine manufacturers spent a lot of $$$$ to produce the engines that are supposed to be flying in commercial service and they assumed that they would be producing many more engines then they currently are. Also, I'm sure that RR and the rest had thought that they would be making money selling spare parts and the like.

The impact is likely fairly painful. Additionally I doubt it will be as easier for Airbus to find engine partners (without significantly higher guarantees from Airbus) for future products or refinements to the 380. Honestly I don't think any engine manufacturers will touch the 380 again. "Hey it's Airbus we wanna change up the 380 a bit, can you help? You already have a 380 engine.. you want another for a stretch... let me check my schedule... nope sorry! "

Quoting Mush (Thread starter):
Do they have legal recourse against Airbus for not producing the aircraft by a certain date?

Doubtful. Although that may be incorporated in future agreements as a result of this.
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Shenzhen
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:25 am

The engine manufactures are huge companies, therefore this shouldn't be anything more then a pain.

The delays will really hurt, if not kill, those small manufactures. I wonder how many small machine shops will go out of business due to the high up front cost for tooling.

I reckon this will ruin hundreds of small companies..... too bad really.

Cheers
 
mush
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:29 am

Quoting Shenzhen (Reply 3):
I reckon this will ruin hundreds of small companies..... too bad really.

That's what I was thinking of...it's a real shame if some company goes under because they were given a contract to perform this work and now they are left high and dry.

Are there penalties in the contract against the engine maker if the engine is produced late?

Thanks,
Mush
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osiris30
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:31 am

Quoting Mush (Reply 4):
Are there penalties in the contract against the engine maker if the engine is produced late?

Only at the airline level to my knowledge. Airbus wouldn't be compensated by engine makers. At least that's how it's always worked in the past.
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ATCGOD
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:33 am

Quoting Mush (Reply 4):
it's a real shame if some company goes under because they were given a contract to perform this work and now they are left high and dry.

I would think the contract would guarantee payment for the work to be completed regardless. I'll be Airbus has plenty of these types of parts because they can't default on the contracts given out. Suppliers are following the prescribed scedule and Airbus probably can't penalize them for delivering a product on time even with their A380 problems.
 
futurecaptain
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:38 am

Quoting Mush (Thread starter):
Do they have legal recourse against Airbus for not producing the aircraft by a certain date?

I'd doubt it. The engines are purchased separately from the airframe by the airline. Airbus is just the middle man to attach whatever the airline wants on the wings.

I suppose if an engne maker did have legal recourse to sue they would have already.
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Shenzhen
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:40 am

Quoting ATCGOD (Reply 6):

I would think the contract would guarantee payment for the work to be completed regardless. I'll be Airbus has plenty of these types of parts because they can't default on the contracts given out. Suppliers are following the prescribed scedule and Airbus probably can't penalize them for delivering a product on time even with their A380 problems.

The problem might be, that by the time they see a dime (thru the courts) they may well have been out of business for some time. Airbus can simply place the work elsewhere and/or bring it in house.

These huge companies don't normally give a hoot about the small guy....

Cheers
 
ATCGOD
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:41 am

Quoting Shenzhen (Reply 8):
These huge companies don't normally give a hoot about the small guy....

Well, I'm sure then that small companies in the future will think twice about doing business with EADS, if this is the case.
 
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N328KF
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:45 am

Since the airframe and engine manufacturers have separate contracts with customers, would the customers have to pay for engines anyhow? I'm just envisioning a Dubai warehouse full of GP7200s in crates.  Wink
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mush
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:48 am

Quoting N328KF (Reply 10):
Since the airframe and engine manufacturers have separate contracts with customers, would the customers have to pay for engines anyhow? I'm just envisioning a Dubai warehouse full of GP7200s in crates.

I was also thinking about this...

[Edited 2006-10-03 20:49:33]
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osiris30
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 4:01 am

Quoting N328KF (Reply 10):
Since the airframe and engine manufacturers have separate contracts with customers, would the customers have to pay for engines anyhow? I'm just envisioning a Dubai warehouse full of GP7200s in crates.

Unlikely, but more because RR or whoever doesn't want to burn their customers. That would just be bad business. So you eat it because your 'partner' (Airbus) dropped the ball.
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prebennorholm
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 4:23 am

There won't be one single passenger less to transport because the 380 comes out later than anticipated.

The fact that 380 deliveries is now planned to get momentum in 2009/2010 instead of 2008/2009 means that roughly a hundred engines of two specific types will be built one year later.

While customers will want more 330's and 777's faster. That means speeding up production of very similar engine types from the same manufacturers.

A will deliver somewhat over 400 planes this year, B not much less. Which means that close to a thousand engines are built each year.

A slight shift between the various engine types 2-3-4 years ahead is easily planned for by the engine manufacturers.

Quoting Futurecaptain (Reply 7):
I suppose if an engne maker did have legal recourse to sue they would have already.

That's the US way of doing business.

All engine manufacturers are eager to make good friends with plane manufacturers, or they are very, very stupid. Which they are not.

And BTW, did we ever hear about a court struggle between Airbus and P&W because the PW6000 being almost half a decade late put the whole A318 program into a tailspin?
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AirbusA6
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 7:14 am

Quoting Prebennorholm (Reply 13):
And BTW, did we ever hear about a court struggle between Airbus and P&W because the PW6000 being almost half a decade late put the whole A318 program into a tailspin?

Or the IAE Superfan fiasco on the original A340?

Incidentally, I presume many of the engines for the A380 must be already made and delivered to Toulouse? RR and EA can hardly be expected to keep finished engines themselves, and will expect payment too?
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PolymerPlane
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 8:03 am

Quoting Futurecaptain (Reply 7):
I'd doubt it. The engines are purchased separately from the airframe by the airline. Airbus is just the middle man to attach whatever the airline wants on the wings.

I don't think the relationship between airframer and engine maker is that disjointed. I am sure in negotiating the purchase price for an airliner, the engine price is somewhat included or being negotiated in parallel. Especially through the latest trend of single engine manufacturer on a model, i.e. 777LR and A345/6. It's not like I can buy GE engines and attach it on a A346  Silly

Cheers,
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futurecaptain
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 8:35 am

Quoting PolymerPlane (Reply 15):
I am sure in negotiating the purchase price for an airliner, the engine price is somewhat included or being negotiated in parallel.

Probably. But nevertheless it is a seperate contract the airline has with the engine manufactuer.

Quoting PolymerPlane (Reply 15):
It's not like I can buy GE engines and attach it on a A346

Actually, technically, you could.

The a/c would have to be certified and some structure changed and wiring moved, but it would be possible with enough $$$$$.
With enough money Airbus will put whatever you want on the A340. It would take billions out of your bank account, but Airbus is a business and will gladly accept this money for their services.
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osiris30
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 8:40 am

Quoting Futurecaptain (Reply 16):
The a/c would have to be certified and some structure changed and wiring moved, but it would be possible with enough $$$$$.
With enough money Airbus will put whatever you want on the A340. It would take billions out of your bank account, but Airbus is a business and will gladly accept this money for their services.
$$$$ makes the world go round.

 idea  I want a prop powered a380  Smile  highfive   duck 
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gregtx
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 9:49 am

Quoting N328KF (Reply 10):
Since the airframe and engine manufacturers have separate contracts with customers, would the customers have to pay for engines anyhow? I'm just envisioning a Dubai warehouse full of GP7200s in crates.

No. If you read the contracts, they don't take delivery of them separately, unless they are spares--the contractual obligations are very specific so exactly what you mention does not occur. Airbus will bear the brunt of the delay penalty in terms of dollars to the engine alliance. I've only seen a finance contract...not between actual builder and buyer...but I can't imagine it being any different...and likely more stringent.

I'm actually thinking, that allow I've heard little about the engines, GE/Snecma is actually breathing a collective sigh of relief since this gives them 10 more months of 'on wing' flying to assure performance guarantees.

As one poster put it...it makes little difference in the program that it is delayed a year. The aircraft will likely be in production for the next 30 or so...
 
Devilfish
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 3:15 pm

Quoting Osiris30 (Reply 17):
I want a prop powered a380

 rotfl   rotfl   rotfl 

Quoting Gregtx (Reply 18):
.it makes little difference in the program that it is delayed a year.

But it is a world of difference for those who projected their cashflows based on timely deliveries.
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AirbusA6
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 9:58 pm

Quoting Gregtx (Reply 18):
I'm actually thinking, that allow I've heard little about the engines, GE/Snecma is actually breathing a collective sigh of relief since this gives them 10 more months of 'on wing' flying to assure performance guarantees.

Wow, if the A380 is powered by CFM56s, no wonder they're having problems certifying it  Wink
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astuteman
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RE:?A380 Delays Effect On Engine Makers?

Wed Oct 04, 2006 10:06 pm

Quoting Osiris30 (Reply 2):
Additionally I doubt it will be as easier for Airbus to find engine partners (without significantly higher guarantees from Airbus) for future products or refinements to the 380

They'll piggy-back any A380 stretch engine developments on the A350 engine programme.

Quoting Prebennorholm (Reply 13):
While customers will want more 330's and 777's faster. That means speeding up production of very similar engine types from the same manufacturers.

This will certainly help in some cases. Maybe not in others.

Regards
 
OldAeroGuy
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RE:?A380 Delays Effect On Engine Makers?

Thu Oct 05, 2006 2:24 am

Quoting Futurecaptain (Reply 16):
Quoting PolymerPlane (Reply 15):
It's not like I can buy GE engines and attach it on a A346

Actually, technically, you could.

The a/c would have to be certified and some structure changed and wiring moved, but it would be possible with enough $$$$$.
With enough money Airbus will put whatever you want on the A340. It would take billions out of your bank account, but Airbus is a business and will gladly accept this money for their services.
$$$$ makes the world go round.

On the 773ER though, it's the GE90-115B or nothing because GE shared 773ER development costs with Boeing. The airframe OEM/engine OEM relationship can be very tight.
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DAYflyer
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RE:?A380 Delays Effect On Engine Makers?

Thu Oct 05, 2006 4:10 am

Quoting Osiris30 (Reply 17):
I want a prop powered a380

I think they called that the "Spruce Goose" if I remember correctly.
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