art
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A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 4:19 am

A380 development costs were expected to be about $12 billion.

Extra costs were incurred trying to trim its weight. Development cost rose to a reported $14 billion IIRC.

Then the wiring problem came up.

Any guesses as to how much will be spent on development in total including penalty payments to customers/giving special prices on other Airbus products by way of compensation and the extra cost of financing debt with no positive cashflow? $18 billion would represent about a 50% increase. Could it rise beyond this to $20 billion or more?
 
osiris30
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 4:24 am

Quoting Art (Thread starter):
A380 development costs were expected to be about $12 billion.

Acutally the number I've seen widely quoted was $13.5B

EADS seems to be indicating a further 4.8B eu (@1.27:1 that's $6.1B) so it's pretty damned close to 50%.
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airfrnt
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 4:29 am

Quoting Art (Thread starter):
A380 development costs were expected to be about $12 billion.

12B Euro, not $$$ ($15 billion US).

Quoting Art (Thread starter):

Any guesses as to how much will be spent on development in total including penalty payments to customers/giving special prices on other Airbus products by way of compensation and the extra cost of financing debt with no positive cashflow? $18 billion would represent about a 50% increase. Could it rise beyond this to $20 billion or more?

Hopefully Airbus will clarify the charges. I havn't seen any solid numbers, but I think it's a fair bet to assume that it will end up costing between $17B-$20B.

Airbus is in the worst possible position right now. Not only do they have to have engineers still on the project, they have a idle factory line, and 15 A380s that all need significant work to make them ready for delivery.
 
redflyer
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 4:34 am

Quoting AirFrnt (Reply 2):
12B Euro, not $$$ ($15 billion US).

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Quoting AirFrnt (Reply 2):
I havn't seen any solid numbers, but I think it's a fair bet to assume that it will end up costing between $17B-$20B.

I remember reading back around c.2000, when Airbus was claiming it would cost $10 billion (USD) to develop the aircraft someone wrote the cost could be as high as $20 billion. Of course, everyone scoffed at that high figure -- rightfully so given the circumstances at the time. But who would have ever thought...?
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airfrnt
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 5:01 am

Quoting RedFlyer (Reply 3):

I remember reading back around c.2000, when Airbus was claiming it would cost $10 billion (USD) to develop the aircraft someone wrote the cost could be as high as $20 billion. Of course, everyone scoffed at that high figure -- rightfully so given the circumstances at the time. But who would have ever thought...?

It's a combination of two factors. One is that the dollar is more competitive now. This can not be overemphasized. Boeing is competitive again if for no other reason then the fact that their planes are "cheaper" in dollars. The really bad news for Airbus is that they get paid in dollars (cheap) but have huge components that they have to pay for in Euros (expensive) which is a nasty little trap. They apparently hedged everything to high heaven and kept this cost from killing them, but those hedges are getting ready to expire.

The second factor is simply the cost overruns. Empty assembly lines are incredibly expensive.
 
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chrisnh
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 5:40 am

With all that has happened recently, is it possible to guess how many A380s they'll need to sell in order for the program to break even? Could it possibly be that they'll have to now sell twice as many of these than they originally expected, in order to break even? Or is it a whole lot less? Obviously the original break-even quantity is out the window.

Chris in NH
 
BoomBoom
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 5:46 am

Quoting RedFlyer (Reply 3):
I remember reading back around c.2000, when Airbus was claiming it would cost $10 billion (USD) to develop the aircraft someone wrote the cost could be as high as $20 billion.

Only 100% over budget--close enough for government work.
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airfrnt
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RE: A380 Dev Costs Including Cost Of Problems?

Wed Oct 04, 2006 6:53 am

Bloomberg's putting the delay cost at 3.6 billion. After factoring in the original development cost (~15 billion), the planned for costs (another 1.6 billion), the peanlty costs (???) that puts the total within spitting distance of 19-20 billion.

Now, how much of these costs are due to lost opportunity (revenue) versus charges for the idle factory line (costs) I don't know.