NYC777
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Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 12:46 am

Now that we know that Airbus will be cash starved because of the A380 delays (compensation, lost business, cost overruns), how does that effect the A350 launch and delivery as well as A350 costs?

A few thoughts:

1) It looking more likely that the industrial launch will be pushed further out to the right, quite possibilily into next year.

2) Because of the cash flow problems that Airbus/EADS will be/is experiencing, the development money for the A350 will strecthed out further thus causing the A350 EIS to be delayed to 2013-14. This will also inevitably increase the per copy cost of the A350. If this hold then some airlines who have bought into it will balked at the increased cost of the A350 unless Airbus tells them that they will honor the pricing in the original contract.

3) Because of the delayed EIS and increase cost, some of the airlines that have firm contracts will either cancel in favor of the 787 or ask for compensation a la A380 delivery delay payments.

4) Those that have not signed on for the A350 (still evaluating vs 787) will more than likely go with the 787 and some who have LoI will not go through with it and perhaps buy the 787, like QR. Al Baker has stated that they cannot tolerate a delay of more than one year beyond the original EIS (2010). It is currently 2012 will a great possibility of mvoing further to the right. I think Al Baker is probably kicking himself for giving up those early 787 slots for the A350.

Airbus' early A350 decisions are coming home to roost as well as there choice to totally ignore the A300/767/A330 replacement market in favor for the VLA market. Both manufacturers agree that the mid-size WB market is about 3000 units and thus far Boeing has captured 420 of those and closing on 500 fairly quickly. That's 1/6 of the potential market already. The is not an official product being offered by Airbus until it's launched and the current LoIs and firm contracts are up in the air until they decide want to do about the A350 and more importantly when they decide.

Airbus is going to be paying a higher price for it's A350 follies and it could cost them mroe than the A380 fiasco did.
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BoomBoom
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:13 am

Also, it's going to take time to restructure the company, upgrade software and training , while at the same time cutting costs. I think if you try to launch the A350 in the middle of this, it's going to lead to another disaster.
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kaitak
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:17 am

I don't think Airbus can really afford to delay the A350, as this programme has been delayed enough. Bear in mind also that while the A380 might be the "prestige" product in the 380 line up, that market is relatively small; the 787/350 market is much bigger and for Airbus to upset customers in that market would be far more disastrous.

Of course, the A380 problems don't help - can anyone seriously see EK buying the 350 now? I certainly can't, but they don't want to go on delaying it or they just hand orders to Boeing.
 
NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:20 am

Quoting Kaitak (Reply 2):
I don't think Airbus can really afford to delay the A350

That maybe unavoidable at this juncture.

Quoting Kaitak (Reply 2):
Bear in mind also that while the A380 might be the "prestige" product in the 380 line up, that market is relatively small; the 787/350 market is much bigger and for Airbus to upset customers in that market would be far more disastrous.

Thus Airbus' unwise decision to focus on the VLA and ignore the mid-size WB market. They virtually gave it away to Boeing especially after their enemic attemts to counter the 787.

Quoting Kaitak (Reply 2):
EK buying the 350

Oh as of yesterday I think Airbus awarded the 787 to EK.

[Edited 2006-10-04 18:21:04]
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Stitch
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:20 am

I would not be surprised if the A350 program is delayed 12-24 months due to a mix of factors including defining, researching, and implementing the A388's fixes, the software integration issues, and short-term cashflow constraints.

If it isn't, I will also be surprised, but pleasantly so.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:32 am

Quoting Kaitak (Reply 2):
I don't think Airbus can really afford to delay the A350, as this programme has been delayed enough. Bear in mind also that while the A380 might be the "prestige" product in the 380 line up, that market is relatively small; the 787/350 market is much bigger and for Airbus to upset customers in that market would be far more disastrous.

I agree with you 100%. The only question is whether Airbus can financially afford to not delay it. These 380s are turning into VERY expensive birds, and don't forget they have a 400M on the go too. They *did* want to hire more engineers for the 350. However, there is currently a hiring freeze that is inplace till CUTS take place.
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airfrnt
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:34 am

There is a lot of wishful thinking here.

Quoting NYC777 (Thread starter):

2) Because of the cash flow problems that Airbus/EADS will be/is experiencing, the development money for the A350 will strecthed out further thus causing the A350 EIS to be delayed to 2013-14. This will also inevitably increase the per copy cost of the A350. If this hold then some airlines who have bought into it will balked at the increased cost of the A350 unless Airbus tells them that they will honor the pricing in the original contract.

I don't think there is any real financial reason for this. Airbus simply can't self fund a new plane at this juncture. That means the A350 is completly at the mercy of two different factors. One is if Airbus can actually get the funding (Airbus is basically a company with a maxed out credit card right now - they have 19 billion dollars in credit to pay back to governments, banks and their investors). The second is if they have the engineers to actually pull it off.

Airbus is openly talking about outsourcing work to Russia and China (Japan being American territory). Germany politicans are openly rebelling. French unions will strike before it ever happens. The chance of Airbus getting launch aid if the do go forward with job cuts and outsourcing is not strong.

Quoting NYC777 (Thread starter):
4) Those that have not signed on for the A350 (still evaluating vs 787) will more than likely go with the 787 and some who have LoI will not go through with it and perhaps buy the 787, like QR. Al Baker has stated that they cannot tolerate a delay of more than one year beyond the original EIS (2010). It is currently 2012 will a great possibility of mvoing further to the right. I think Al Baker is probably kicking himself for giving up those early 787 slots for the A350.

I really don't think that will matter. QR probably is unhappy with the general state of things, but QR might have burned too many bridges at Boeing (and vice versus).

If Airbus makes a competitive plane, people will buy it. Period.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:36 am

Quoting Osiris30 (Reply 5):



Quoting Osiris30 (Reply 5):
The only question is whether Airbus can financially afford to not delay it.

The die may have already been cast. In order to avoid a huge loss on the A380 project, Airbus may have to put off the A350 until the A380 has been stabilized and production issues are behind them. They cannot afford to put resources on both the A380 and the A350. They are now asking themselves, "Well which program has high priority?" We all know that it is the A380.
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NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:40 am

Quoting AirFrnt (Reply 6):
If Airbus makes a competitive plane, people will buy it. Period.

The problem is no one at Airbus know when they can sell it and how much it's going to cost or even they can start to sell it. All this uncertainty (caused by the A380) will delay the A350 and make it more expensive vs the 787 and probably the 777. At that point airlines would have to evaluate if it is worth it.

Mind you this does not factor in Boeing reaction to the A350 to keep the 777/787/Y3 competitive to what ever Airbus puts out.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:41 am

Quoting NYC777 (Thread starter):
3) Because of the delayed EIS and increase cost, some of the airlines that have firm contracts will either cancel in favor of the 787 or ask for compensation a la A380 delivery delay payments.

I wasn't aware that Airbus had any firm contracts for the A350XWB?

cheers
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:48 am

Quoting Shenzhen (Reply 9):
I wasn't aware that Airbus had any firm contracts for the A350XWB?

Not for the XWB but for the previous incarnations of the A350. Those firm orders are still uncertain if they will be converted to the new version of they will be canceled by the airlines who ordered them.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:51 am

Quoting NYC777 (Reply 10):
Not for the XWB but for the previous incarnations of the A350. Those firm orders are still uncertain if they will be converted to the new version of they will be canceled by the airlines who ordered them.

I would think that new contracts would need to be drawn, considering the A350 was basically cancelled, and the XWB hasn't yet been launched.

Cheers

[Edited 2006-10-04 18:57:36]
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:52 am

Quoting Kaitak (Reply 2):
Bear in mind also that while the A380 might be the "prestige" product in the 380 line up, that market is relatively small; the 787/350 market is much bigger and for Airbus to upset customers in that market would be far more disastrous.

Good point

Quoting AirFrnt (Reply 6):
Quoting NYC777 (Thread starter):
4) Those that have not signed on for the A350 (still evaluating vs 787) will more than likely go with the 787 and some who have LoI will not go through with it and perhaps buy the 787, like QR. Al Baker has stated that they cannot tolerate a delay of more than one year beyond the original EIS (2010). It is currently 2012 will a great possibility of mvoing further to the right. I think Al Baker is probably kicking himself for giving up those early 787 slots for the A350.

I really don't think that will matter. QR probably is unhappy with the general state of things, but QR might have burned too many bridges at Boeing (and vice versus).

And how about US, the launch customer for the A350. Like I said before on another thread, they seem rather content, as I don't think they're in any real hurry to take delivery of the A350 just yet. They are focused on the A330 in the short term for continued PHL-Europe build up. I believe they will take the A350 when they choose to do PHL-NRT/PVG. Still, not happening anytime soon, and it's not because of the A350 delays...

As far as Airbus giving any orders over for the 787, I don't see them doing this, especially regarding US and Boeing. They turned away from Boeing in the mid 90s, I believe... They wanted a better product for their 120-160-seat market, and teh 737NGs would not be available at the time US would need them. Then I heard from someone else that the scandal revolving around the 737 after the crash of US 427 while on final approach to PIT also turned them away from Boeing and the 737... Sooo... the A320 family became the viable option for US...
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osiris30
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:54 am

Quoting NYC777 (Reply 7):
The die may have already been cast. In order to avoid a huge loss on the A380 project, Airbus may have to put off the A350 until the A380 has been stabilized and production issues are behind them. They cannot afford to put resources on both the A380 and the A350. They are now asking themselves, "Well which program has high priority?" We all know that it is the A380.

 checkmark  That's *exactly* what I meant by that statement  Smile
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:57 am

Quoting AirFrnt (Reply 6):
I really don't think that will matter. QR probably is unhappy with the general state of things, but QR might have burned too many bridges at Boeing (and vice versus).

The fact that they finally concluded the 777 deal indicates the bridges are still intact.

Boeing would love to have an order for the 787 from QR.
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NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 1:57 am

Quoting Steeler83 (Reply 12):
And how about US, the launch customer for the A350. Like I said before on another thread, they seem rather content, as I don't think they're in any real hurry to take delivery of the A350 just yet. They are focused on the A330 in the short term for continued PHL-Europe build up. I believe they will take the A350 when they choose to do PHL-NRT/PVG. Still, not happening anytime soon, and it's not because of the A350 delays...

As far as Airbus giving any orders over for the 787, I don't see them doing this, especially regarding US and Boeing. They turned away from Boeing in the mid 90s, I believe... They wanted a better product for their 120-160-seat market, and teh 737NGs would not be available at the time US would need them. Then I heard from someone else that the scandal revolving around the 737 after the crash of US 427 while on final approach to PIT also turned them away from Boeing and the 737... Sooo... the A320 family became the viable option for US...

Not all would drop the contracts but ILFC for example has 16 firm and they may drop them if the delivery dates are pushed further out to the right. Airbus has only 100 firm A350s so only a few of those would be dropped but it the LOIs and the current sales compeititions vs the 787 (like at EK and LH) where the 787, I think, would win out.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:17 am

Financing the A350 is not an issue. Launch aid will be readily available. There is really nothing the US can do about this. Even with a WTO ruling, what would they propose doing, banning or heavily taxing Airbus imports in retaliation? I don't think that's feasible. There is no way the US will spark an all out trade war over this.

The best route for Airbus/EADS is for the Euro governments to restructure the existing launch aid in order to improve the balance sheet. If they wipe the slate clean on the A380 aid, etc., with an agreement not to provide future launch aid, that should both solve Airbus' problems with giving the US a fig leaf to declare victory.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:25 am

Quoting Shenzhen (Reply 9):
I wasn't aware that Airbus had any firm contracts for the A350XWB?

As NYC777 noted, as the plane has not been formally offered for sale (pending it's industrial launch which was scheduled for this month but may now slip), nobody can sign a firm contract.

And as you correctly noted, when the plane is offered for sale, new contracts will need to be drafted for the A350XWB. A few customers have noted they find the A350XWB acceptable, but they also noted they expect to receive the same pricing they did for the original model (which I don't see possible).

Quoting CHIFLYGUY (Reply 16):
Financing the A350 is not an issue. Launch aid will be readily available. There is really nothing the US can do about this. Even with a WTO ruling, what would they propose doing, banning or heavily taxing Airbus imports in retaliation? I don't think that's feasible. There is no way the US will spark an all out trade war over this.

Perhaps it is the EU who do not wish to spark the "all-out trade war"? The US has already withdrawn from the treaty, I believe, which some believe frees Airbus' hand to ask for all the RLA (or just plain cash handouts) they want/need. Yet the host governments have not done that, nor have they indicated (to my knowledge) they are willing to do that.

While it is true the US filing a petition before the WTO on the issue will probably take years to resolve, if the WTO rules against RLA and/or "offsetting" (what Boeing does), Airbus may be required to repay any RLA/cash handouts in a very short period, returning the cash-flow issues such payments would have been meant to cover and now after Airbus has already committed the capital to projects and cannot recover them without going to the capital markets.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:31 am

Quoting CHIFLYGUY (Reply 16):
Launch aid will be readily available.

With the bad aste of the A380 experience in their mouths as well as uncertainty as to where the A350 will be built, the EU is going to be very careful about giving out launch aid unless there is a binding agreement that there are certain production facilitieis located in country X and others locateed in country Y. Remember RLA is essentially to ensure that Airbus remains a Public Works Project funded by the EU taxpayers. They will have a say as to where the A350 will be built. This really flies counter to what EADS and Arbus are trying to do to reduce their overhead.

Quoting Stitch (Reply 17):
they expect to receive the same pricing they did for the original model (which I don't see possible).

The other issue is when will it be delivered which I argue is farther out to 2014.
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DAYflyer
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:38 am

Airbus is now really in a tough spot right now.

If Boeing went all out for the jugular and announced it was seeking input on the anticipated 737 replacement, the entire product line of Airbus would be exposed.
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Stitch
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:43 am

Quoting DAYflyer (Reply 19):
If Boeing went all out for the jugular and announced it was seeking input on the anticipated 737 replacement, the entire product line of Airbus would be exposed.

Unfortunately (for Boeing) / fortunately (for Airbus), that decision seems to be driven more by the engine manufacturers then the airframe ones. So even if Boeing had the Y1/737RS airframe ready to go, they probably would not launch it until the new engines were ready.
 
NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:44 am

Quoting DAYflyer (Reply 19):
If Boeing went all out for the jugular and announced it was seeking input on the anticipated 737 replacement, the entire product line of Airbus would be exposed.

IMO it already is because of the A380.

Poor cashflow due to A380, A350, A400M, A320E and the BAe buyout. Not to mention they have a huge debt load to contend with including RLA. Now try to do the A320 replacement is going to be next to impossible. And remember, Boeing is planning to launch the 737RS in 2006. That's only two years away!!!!
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 3:57 am

Quoting NYC777 (Reply 3):

Thus Airbus' unwise decision to focus on the VLA and ignore the mid-size WB market. They virtually gave it away to Boeing especially after their enemic attemts to counter the 787.

At the time the A330 was competing quite well against the 767. When they launched the A380 the 787 was still 4-5 years away.

Quoting Kaitak (Reply 2):
Bear in mind also that while the A380 might be the "prestige" product in the 380 line up, that market is relatively small; the 787/350 market is much bigger and for Airbus to upset customers in that market would be far more disastrous.

Upset customers in that market? You make it sound like there are VLA customers and mid-size WB customers. In most cases they are the same customers and they are already upset.

Quoting BoomBoom (Reply 1):
Also, it's going to take time to restructure the company, upgrade software and training , while at the same time cutting costs. I think if you try to launch the A350 in the middle of this, it's going to lead to another disaster.

I don't see why it would lead to another disaster. Upgrading software, training, and restructuring the company. . . BCA did a lot of the same around the launch of the 787. Airbus should be able to do all this as well as cut costs while building the A350.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:00 am

Let me play devil's advocate and say maybe this is a good thing for Airbus. It will force them to slow down a little and offer a good product that can compete with the B787. This is versus the initial A350 that was widely criticized by most in the aviation industry, including those who do the buying.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:02 am

Quoting 787engineer (Reply 22):
Airbus should be able to do all this as well as cut costs while building the A350.

Should and could, I think are two different things here. There are a miriad of political and economic considerations that could prevent EADS from making a successful transition to an efficient corporate entity. We already see German politicos lining up their ducks ready to shot at EADS if the A380 work is taken away. It's not going to be easy for EADS. The other problem is corporate culture that is ingrained in EADS/Airbus. It's like the NASA culture prior to the Columbia disaster.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:06 am

Quoting Echster (Reply 23):
It will force them to slow down a little and offer a good product that can compete with the B787.

That could be a problem. If they slow down the A350 then that plane won't start service till 2014. That give the 787 a 6 year headstart. Assuming Boeing delivers 10/month that means in 6 years Boeing would have delivered 720 787s. They would be almost half way to their goal of having 50% of the mid-size WB market (3000/2 = 1500). That's not a good position to be in if you're 2nd in a two way race.

[Edited 2006-10-04 21:16:55]
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:08 am

Quoting 787engineer (Reply 22):
BCA did a lot of the same around the launch of the 787

So are you saying BCA pre 787 launch was as screwed up as EADS is today?

Did they have the same convoluted management structure?

Did they have the same degree of political meddling?
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:12 am

Quoting BoomBoom (Reply 26):
So are you saying BCA pre 787 launch was as screwed up as EADS is today?

I think that BCA's problem at that time was with the sales organization, as well as perhaps Condit.

Prior to that, they had production issues, but even Condit was sorting that out.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:18 am

I thought it was that BCA embarked on a cost cutting program that included new assembly methods. But they tried to ramp up production too fast.
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787engineer
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:23 am

Quoting NYC777 (Reply 24):
Should and could, I think are two different things here.

Couldn't agree more  yes 

Quoting BoomBoom (Reply 26):

So are you saying BCA pre 787 launch was as screwed up as EADS is today?

No that's not what I'm saying. What I'm saying is that as far as upgrading/training engineers from CATIA v4 to CATIA v5, restructuring the company (i.e. outsourcing with risk-sharing partners for 787), cutting costs (layoffs, etc), and launching a new airplane program (7E7/787) at the same time. . . well Boeing did all that around the time of the 787 launch. We got through it and Airbus should be able to as well.

Quoting BoomBoom (Reply 26):

Did they have the same convoluted management structure?

Hard to say; I've seen Boeing's management structure, but I haven't seen Airbus's so I can't say for sure. Have you seen either comapny's management structure? If you haven't who are you to judge who's is more convoluted.

Quoting BoomBoom (Reply 26):

Did they have the same degree of political meddling?

I doubt it  Yeah sure
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:24 am

While it gives me shivers down my spine, this thread might just have a bit more truth to it than some of might have hoped: tomorrow's Financial Times Deutschland will feature an article in which Tom Enders comments that he is not certain whether Airbus should proceed with the A350 - his reasoning being that if that program had similar problems, the complete company would be endangered.

This was just reported on n-tv, I'll see if I can find a link...

... bad, bad news...  Sad
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:24 am

Quoting NYC777 (Reply 7):
In order to avoid a huge loss on the A380 project, Airbus may have to put off the A350 until the A380 has been stabilized and production issues are behind them. They cannot afford to put resources on both the A380 and the A350. They are now asking themselves, "Well which program has high priority?" We all know that it is the A380.

Way off on all accounts. The first statement is illogic: How do you avoid losses on program A by doing or not doing program B? The second statement is nothing but a bold claim. Do you really expect the majority of Airbus resources being devoted to the A380? Actually, the #1 priority program right now is sustaining the A320.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:32 am

Quoting Rheinbote (Reply 31):
Way off on all accounts. The first statement is illogic: How do you avoid losses on program A by doing or not doing program B? The second statement is nothing but a bold claim. Do you really expect the majority of Airbus resources being devoted to the A380? Actually, the #1 priority program right now is sustaining the A320.

The A320 is fine on it's own. It's generating positive cashflow on it own, has no production problems (in fact they're increasing production), and has a very healthy order book.

My arguement is that Airbus (by their own admission) will have cashflow problems which will make it difficult to launch the A350XWB and they have to put more focus on fixing the A380 problems as well as paying out compensation to affected airlines. That's a lot of bucks right there. Add in the BAe payout and the A400M which by some accounts is also in trouble and you have to decide as a manager where to prioritize you resources.

If Airbus were to put resources into the A350 program at the expense of the A380 program then you are dooming the A380 to further delays and customer cancellations. Not good after you've spent over Eu20 billion.
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NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:34 am

Quoting Leskova (Reply 30):
Tom Enders comments that he is not certain whether Airbus should proceed with the A350

That is a very scary prostect if you're Airbus. In essence you're ceding almost an entire market to Boeing. More scarier...want does that say about Airbus when the co-head of its parent is making that kind statement. Doesn't come across as a vote of confidence in Airbus.
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Leskova
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:38 am

Quoting NYC777 (Reply 33):
That is a very scary prostect if you're Airbus.

That's a very mild way of putting it!

Might be that he's trying to scare politicians away from trying to influence the expected restructuring - but publicly questioning the project that will, by all estimates, be the future backbone of Airbus' (widebody-)product range?

[Edited 2006-10-04 21:38:48]
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BoomBoom
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:39 am

Quoting 787engineer (Reply 29):
Have you seen either comapny's management structure? If you haven't who are you to judge who's is more convoluted.

No need to get snippy about it.

Airbus' management structure has been discussed at length on these forums. This is what Christian Streiff said yesterday:

Quote:
But Airbus is not yet an integrated company. Airbus doesn't yet have a simple and clear organisation. There are shadow hierarchies -- leftovers from the never finished integration...

http://atwonline.com/news/story.html?storyID=6652

[Edited 2006-10-04 21:40:54]
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USAF336TFS
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:48 am

Quoting BoomBoom (Reply 26):
So are you saying BCA pre 787 launch was as screwed up as EADS is today?

No, but not that far away.

Quote:
Did they have the same convoluted management structure?

Nope, just one, the CEO, Phil Condit.

Quote:
Did they have the same degree of political meddling?

They were doing the political meddling not the other way around, which, as a shareholder, I'd rather have.  Smile
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TeamAmerica
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 4:52 am

Quoting NYC777 (Reply 25):
That could be a problem. If they slow down the A350 then that plane won't start service till 2014. That give the 787 a 6 year headstart. Assuming Boeing delivers 10/month that means in 6 years Boeing would have delivered 720 787s. They would be almost half way to their goal of having 50% of the mid-size WB market (3000/2 = 1500). That's not a good position to be in if you're 2nd in a two way race.

A350 doesn't compete against B788, it targets B789 (and falls short IMHO), B772 (which it beats pretty handily, but B78A likely will spoil that party) and B773 (where A350-1000 should shine). B787 is going to grab >50% of the mid-size market regardless of the A350.

The later A350 EIS appears to be, the less sensible the decision to go with the XWB. A350 development is starting to impinge upon the time frame for replacing the A320, and that is of the utmost importance. For less cash and less effort, Airbus could still build the A350 that they have 100 orders for. Their market share in the mid-size range couldn't be much worse than going with the XWB, and XWB is going to be vulnerable to an enlarged B787, a deeply discounted B77W, or an eventual Y3.

Dropping the XWB would avoid the can of worms they opened, with all the questions of customers cancelling orders vs. renewing contracts for a bigger plane to be delivered much later...and will they agree to pay the higher price? I'd like to know if Airbus will owe compensation to original A350 customers who expected delivery in 2010 or don't want the XWB at all.

I don't think this is a likely decision, but I'd be surprised if the Airbus board is not at least talking about it.
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Stitch
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 5:17 am

Quoting Leskova (Reply 30):
While it gives me shivers down my spine, this thread might just have a bit more truth to it than some of might have hoped: tomorrow's Financial Times Deutschland will feature an article in which Tom Enders comments that he is not certain whether Airbus should proceed with the A350 - his reasoning being that if that program had similar problems, the complete company would be endangered.

Airbus, in my opinion, cannot afford to not launch the A350XWB, but I do not believe they have to launch it right now - especially if they are concerned about execution on that launch.

The A332 is considered a better plane then the 767, but the 767 didn't exactly stop selling once the A332 entered service. And while the 777 family is considered superior to the A333 and A340 family, the Airbus products also didn't stop selling when the 777 entered service.

If GE and RR can be convinced to proceed with their GEnx-1A72 and Trent 1700 engine programs, those engines can be fitted on new-build A330s and retrofitted to existing A330s. Heck, I wonder if they can hang under an A343, for that matter.

The 777 and 787 will enjoy "sales superiority" for the next decade, but Airbus can still sell A332s, A333s and A346s for the next decade while they fix the A380 and develop the A320E and A320RS programs. Then, in the late 2010's/early 2020's, come to the market with a CFRP widebody with even more moden engines and systems to truly "one-up" the 777 and 787 programs as well as capture the majority of first-wave of 773ER/A346/787 replacements as Boeing is capturing the majority of first wave of A332/A333/A343 replacements.
 
n1786b
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 5:35 am

Quoting Leskova (Reply 30):
tomorrow's Financial Times Deutschland will feature an article in which Tom Enders comments that he is not certain whether Airbus should proceed with the A350 - his reasoning being that if that program had similar problems, the complete company would be endangered.

This was just reported on n-tv, I'll see if I can find a link...

... bad, bad news...

In German:

http://www.ftd.de/unternehmen/industrie/119044.html

- n1786b
 
Leskova
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 5:54 am

N1786b... thanks for the link!

Quote:
Airbus-Chef Christian Streiff sagte der Financial Times am Mittwoch, das Unternehmen könne mehr als ein Jahrzehnt brauchen, um in der Produktentwicklung wieder zu Boeing aufzuschließen.

Ouch... translated: Head of Airbus Christian Streff told Financial Times on Wednesday that the company might need more than a decade to catch up to Boeing's product development again.

Quote:
Die Krise biete auch Chancen. EADS und Airbus könnten jetzt Tabuthemen angehen. Hierzu gehörten die politisch gewachsene Standortstruktur und Doppelkapazitäten.

This comment by Tom Enders somewhat goes in the direction that I had mentioned in my previous reply. Again roughly translated: The crisis offers chances. EADS and Airbus could now address taboo-subjects, such as the politically developed structure of sites as well as double-capacities.
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Lumberton
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 6:07 am

Quoting Leskova (Reply 40):
The crisis offers chances. EADS and Airbus could now address taboo-subjects, such as the politically developed structure of sites as well as double-capacities.

I agree it offers a rare opportunity to restructure, but as I noted on another thread, I don't think the political will is there to accomplish this. Already we are hearing pronouncements by union officials and officials from France and Germany. See this Reuters article for more. I've provided some highlights:
Looming Europe battle puts Airbus shake-up at risk

Quote:
LONDON (Reuters) - A new rescue plan from Airbus to cut costs already appears to be at risk as France and Germany warn that the planemaker's expected job cuts and plant closures must be spread evenly.

Spreading its operations evenly across France and Germany is exactly what the company now says it must stop doing, but the politics of undoing the process are daunting. ..
German Economy Minister Michael Glos called EADS's rescue plans "unavoidable steps" but urged the company to spread the pain evenly -- meaning German jobs should not be chopped any more heavily than French ones.
"I assume that the unavoidable steps to raise efficiency and lower costs ensue equally for all production sites and any burdens are fairly distributed," Glos told reporters a day after Airbus and EADS warned on earnings and said cost cuts were urgently needed.
German Finance Minister Peer Steinbrueck also urged EADS to avoid cutting its approximately 42,000 jobs in Germany...
France was were quick to respond, too, with Prime Minister Dominique de Villepin declaring he would be "vigilant" in ensuring French jobs were protected.
Villepin did just that in May, hobbling EADS's efforts to cut jobs at loss-making maintenance unit Sogerma in a sampling of what EADS faces as it mounts a far broader shake-up of its operations.
EADS needs good relations with these states, as they supply loans to help it develop planes and they buy EADS's defense equipment.
The governments, in turn, see EADS as a European champion that can wean them off of their reliance on U.S.-built arms while creating high-technology jobs and lucrative exports.

Isn't there a French election coming up in April?
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NYC777
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 6:11 am

Wow, this is something Boeing never has to deal with. Thank god for the fee market economy!!
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airfrnt
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 6:21 am

Quoting NYC777 (Reply 42):
Wow, this is something Boeing never has to deal with. Thank god for the fee market economy!!

They have had to deal with it (there was a lot of pressure to build the 747 in california for political reasons). However, since the US government doesn't own Boeing, Joe Sutter was able to beat back that decision.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 6:24 am

Quoting AirFrnt (Reply 43):
However, since the US government doesn't own Boeing, Joe Sutter was able to beat back that decision

That's exactly why...Boeing and other companies can, for the most part, resist political interference in their business.
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osiris30
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 10:37 am

Quoting Leskova (Reply 34):
Might be that he's trying to scare politicians away from trying to influence the expected restructuring - but publicly questioning the project that will, by all estimates, be the future backbone of Airbus' (widebody-)product range?

If he was he failed.. see my other thread  Sad

Quoting Stitch (Reply 38):
Then, in the late 2010's/early 2020's, come to the market with a CFRP widebody with even more moden engines and systems to truly "one-up" the 777 and 787 programs as well as capture the majority of first-wave of 773ER/A346/787 replacements as Boeing is capturing the majority of first wave of A332/A333/A343 replacements.

They'd be going head to head with Y3 then, not the 777. If Y3 is anything like 767->787 look out.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 10:46 am

Quoting Leskova (Reply 30):
his reasoning being that if that program had similar problems, the complete company would be endangered.

I think the A350XWB is less of a risk because unlike the Boeing 787, the A350XWB isn't trying to push the limit of aircraft structural technology like what Boeing is doing with the 787. Also, the A350XWB will use engines that are derived from those already under advanced development for the 787. Indeed, I think if Airbus can get their act together the A350XWB could end up being one of Airbus' more successful programs.
 
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 10:47 am

The 350 will be delayed, I'm sure. The A380 has caused Airbus's future developments to suffer dramatically (hence the first, failed A350). Based on how the A380 production has consitantly been inconsistant (delayed), I think that there will be a 380 related problem every day at Airbus, until the plane is no longer manufactured. Because of this, the A350 will suffer. The 350s business model, a response to the 787, but "better" is flawed and uncreative. There is way too much ego driven political and economic turmoil at Airbus right now for them to sucessfully produce a brand new revolutionary airliner.
 
osiris30
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 10:54 am

Quoting RayChuang (Reply 46):
I think the A350XWB is less of a risk because unlike the Boeing 787, the A350XWB isn't trying to push the limit of aircraft structural technology like what Boeing is doing with the 787.

With due respect Ray, it's unlikely to be competive in terms of operating margins either then. Boeing's composite push is a gamble. But when Boeing gambles (so far) they've been spot on (707 could have broken Boeing, 747 same thing, 777 going all CAD was a big risk and now we've got the 787 with sales good enough that if they deliver on time is already at or past break even by most (if not all) reasonable estimates).

There's only two ways to compete against someone pushing the envelope. You either stick with the tried and true approach and hope it bites your competitor in the arse *or* you push even harder, further and faster and beat them at their own game.

Incidentally Airbus started the whole composite thing in earnest (but to a smaller extent) on commercial jets with their line IIRC.
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RE: Is The A350 A Casualty Of The A380 Delays?

Thu Oct 05, 2006 10:56 am

Quoting NYC777 (Thread starter):
I think Al Baker is probably kicking himself for giving up those early 787 slots for the A350

Yep - I would agree with that statement!  yes 
I wonder if Beoing is talking to their suppliers and deciding whether a 2nd 787 line is feasible and sustainable. I'd think if they could offer early delivery slots to the likes of QR and some other A350/787 fence-sitters, they might just be able to corner the early market on the mid-sized widebody replacement cycle before the A350 ever gets off the drawing boards

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