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N328KF
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Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:07 am

Brief fair use excerpt:

Quote:
Airline customers for the Airbus A380 super-jumbo are preparing to rally round the embattled aircraft manufacturer for fear that mass cancellations would weaken the company further and play into the hands of its rival Boeing.

[...]

Airlines are concerned that if Airbus is weakened or, at worst fails, then it will give Boeing a monopoly which it will be able to use to dictate prices. One airline executive said: "Our view is that it is probably better to help Airbus through its present predicament rather than give Boeing a clear run. In the end the airline industry needs a strong Airbus. How healthy would it be to have just one supplier?"

http://news.independent.co.uk/business/news/article1842579.ece
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Lumberton
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:14 am

Quote:
Airline customers for the Airbus A380 super-jumbo are preparing to rally round the embattled aircraft manufacturer for fear that mass cancellations would weaken the company further and play into the hands of its rival Boeing

I'm not sure their motives are as pure as this, but I have never believed the likes of SQ, EK, or QF would ever consider cancelling. The plane makes good sense for these carriers. We may see them hedge their bets, as in EK converting it's 20 777 options, but I never felt cancellation was in the cards for these guys. The delay has been an absolute blessing for MAS, and probably Thai as well. Of course, this will be expensive; even though Airbus is rumored to be at the end of it's contractual obligation for compensation with some of it's customers, it's hardly in a positon to cite legalisms. They'll pay IMO.
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Stitch
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:25 am

Quoting Lumberton (Reply 1):
I'm not sure their motives are as pure as this, but I have never believed the likes of SQ, EK, or QF would ever consider cancelling. The plane makes good sense for these carriers.

Agreed. A few carries, like MH or TG, may use these delays to get out, but I tend to think that they'd already have bailed if they wanted to, unless their contracts made it impossible. So perhaps they still truly desire the plane.
 
atmx2000
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:38 am

I have a feeling LH will act as a "Caritas" when it comes to Airbus.
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Ruscoe
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:48 am

You know this is not true because even a complete A380failure would not bring Airbus down.

They can get through this mess on cash flow from existing orders.

Also even if Airbus failed, Lockheed would get themselves back in the market.

Ruscoe
 
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mariner
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:51 am

Quoting Stitch (Reply 2):
So perhaps they still truly desire the plane.

Perhaps more than "perhaps"?

Tim Clark, the president of the Dubai-based airline, described the A380 as a "seriously good aircraft when it eventually arrives".

 Smile

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Stitch
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:56 am

Well I was referring to MH and TG (who are often quoted as "likely cancellations"), however that statement does also help provide a counter to the rumors EK will cancel half their A380 order and convert it to 748Is.  Wink
 
NAV20
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:02 am

Quoting N328KF (Thread starter):
One airline executive said: "Our view is that it is probably better to help Airbus through its present predicament rather than give Boeing a clear run."

Oddly enough, in strict business terms the airlines might better serve that objective by lowering the curtain on the A380 as soon as possible.

It's becoming clear that the lion's share of Aitbus' management time, design resources, and cash (if any) is going to be concentrated on the A380 for a number of years - probably until it goes into volume production, in 2010 or later.

From the airlines' point of view, it would probably be best if Airbus finished with the A380 straight away and concentrated its cash and resources on producing some sort of A350 and an A320 upgrade.

Otherwise it seems certain that, for the foreseeable future, Boeing will secure a monopoly across the midsize widebody sector, and will also keep the lead in the single-aisle field. Surely that is the opposite of what the airlines want?
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mariner
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:07 am

Quoting NAV20 (Reply 7):
Otherwise it seems certain that, for the foreseeable future, Boeing will secure a monopoly across the midsize widebody sector, and will also keep the lead in the single-aisle field.

I would guess - just a guess - that if Mr. Gallois is right and gets board approval to launch the A350XWB, a manager with his reputation would believe he had the necessary resources to bring it about.

???

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NAV20
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:31 am

Quoting Mariner (Reply 8):
a manager with his reputation

Not sure about that 'reputation.' Three years running SNECMA, state-owned engine-manufacturer, and four years running Aerospatiale, state-subsidised avionics company. Both companies made substantial losses while he was in charge. Then SNCF (also state-owned).

From the Airbus viewpoint the most significant thing, to my mind, is that he has been a member of the EADS Board since the company was formed. So presumably he has been a party to all decisions taken since then, including the decision to give priority to the A380 and not bother to develop competitors to the 777 and 787?
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andessmf
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:32 am

Quoting Lumberton (Reply 1):
I'm not sure their motives are as pure as this, but I have never believed the likes of SQ, EK, or QF would ever consider cancelling.

For future purchasing power and the $$$ involved, they better make certain Airbus sticks around for a long time.

Quoting Ruscoe (Reply 4):
You know this is not true because even a complete A380failure would not bring Airbus down.

Hard to say, it wont be allowed to go down. By the same token, if you switch places, Boeing wouldnt be allowed to fail either.

Quoting NAV20 (Reply 7):
Oddly enough, in strict business terms the airlines might better serve that objective by lowering the curtain on the A380 as soon as possible.

That is a question for the number crunchers. Boeing and Airbus are so important, that I dont think they will be allowed to completely fail. After all, even MDD did not fail, but was bought.
 
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par13del
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:36 am

Ok, in general terms here's a dumb question.
One of Airbus main tenents is commonality in the cockpit across aircraft, which essentially means that if you buy only Airbus you achieve savings with lower crew training cost and "other things".

When monopoly's are discussed, should this not also be included, is this not as "bad" as Boeing getting all the business because they have "better performing aircraft", or are we saying that the way you get a monopoly makes the difference?
 
katekebo
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:44 am

What the market needs is a third significant player. The current duopoly leads to this kind of distortion in which customers and governments are willing to prop a struggling company, that would die a natural death under normal circumstances, just to avoid a monopoly. This won't help Airbus to become more efficient and competitive, and will put unfair pressure on Boeing, which in turn could lead to similar intervention by the American government, resulting in a vicious circle. In order to preserve a truly competitive environment, the industry needs at least one, preferably two significant competitors - hopefully somebody will seize the opportunity.
 
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mariner
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:47 am

Quoting NAV20 (Reply 9):
Not sure about that 'reputation.'

The general assessment of him would appear to be more than positive. This is just one:

http://news.bbc.co.uk/2/hi/business/5142590.stm

"However, it has been his ability to combine strong management skills with a popular touch which has made him valued by politicians from both sides of the spectrum."

Quoting NAV20 (Reply 9):
So presumably he has been a party to all decisions taken since then, including the decision to give priority to the A380 and not bother to develop competitors to the 777 and 787?

I don't think "not bother" is a fair assessment. Underestimate the 787? For sure.

They were not alone there.

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Ken777
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:50 am

Not canceling full orders so that Boeing will not get a clear run works both ways these days. Now that Boeing is ready to sell some 748i frames it may well be in the interests of the larger airlines to ensure that Airbus does not have a clear run. The 748i is just as important as the 380 in terms of keeping the pencils sharp for future orders. If we look at it this way then EK dropping 10 - 20 380s for an equal number of 748is would be logical - especially if Airbus stays stubborn on the 346 order.
 
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:20 am

Quoting Mariner (Reply 13):
"However, it has been his ability to combine strong management skills with a popular touch which has made him valued by politicians from both sides of the spectrum."

But that's the problem. Airbus isn't supposed to be about winning an election, but about making the best planes in the world and/or beating Boeing on price. What does making politicians happy have to do with that (in a rational world)?

I find the premise of this article to be bunk. I don't see EK, for example, buying 45 planes (at a book value of $13.5 billion) it no longer believes in or needs JUST to prop up Airbus. If EK keeps all 45 orders alive, it's because they believe in the jet and want all of them. Even at a 40% discount, EK doesn't have $8 billion dollars to screw around with.
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mariner
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:25 am

Quoting Ikramerica (Reply 15):
What does making politicians happy have to do with that (in a rational world)?

(a) quite a lot when you're running a multinational corporation.

(b) his "strong management skills" might also be a help.

(c) Nor do I underestimate his "popular touch".

During his time at the French railways, there was relative (and considerable) industrial peace, even with those notoriously aggressive unions.

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M27
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:43 am

This is a great incentive for both Airbus and Boeing isn't it? Makes them want to get their act together, run their company correctly and develope new aircraft with new materials and new construction methods that are less expensive to own and operate! Why should either bother??? Just sell what you already have developed!!
 
halls120
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:51 am

Quoting N328KF (Thread starter):
Quote:Airline customers for the Airbus A380 super-jumbo are preparing to rally round the embattled aircraft manufacturer for fear that mass cancellations would weaken the company further and play into the hands of its rival Boeing.

I would guess that these aren't the future customers who are demanding penalties be paid by Airbus for the late delivery, correct?
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PVG
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 12:00 pm

Quoting Ruscoe (Reply 4):
Also even if Airbus failed, Lockheed would get themselves back in the market

Or, Lockheed comes in as a white-knight investor, assumes responsibility for the A350 design and construction (which presumably would move to a US location and would be pushed up to a 2011/12 EIS date) and then gets half of the US Air Force tanker contract using the A350 which would be built in the US by a US manufacturer.

Worth a look if I were them if they can get enough control over the project.
 
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 12:31 pm

Quoting Ken777 (Reply 14):
The 748i is just as important as the 380 in terms of keeping the pencils sharp for future orders. If we look at it this way then EK dropping 10 - 20 380s for an equal number of 748is would be logical

I think it's fairly obvious that the 748I is not financially as important to Boeing as the A380 is to Airbus.

I found another Clark quote casting doubt on the cancellation scenario:

Quote:
Clark stressed that Emirates still supported Airbus and had not even considered cancellations. He remained confident that all would "come good in the end."

That's not to say he couldn't order a few 748I frames in addition to the A388's.

Quoting PVG (Reply 19):
Or, Lockheed comes in as a white-knight investor, assumes responsibility for the A350 design and construction (which presumably would move to a US location and would be pushed up to a 2011/12 EIS date) and then gets half of the US Air Force tanker contract using the A350 which would be built in the US by a US manufacturer.

What interest would Lockheed Martin have in keeping Airbus in the loop? I rather doubt this would happen, as the airliner business is a low-margin, cyclical business with enormous barriers to entry and a customer base without especially deep pockets. LM has lower hanging fruit to pick.
 
lehpron
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 1:33 pm

Is there any particular reason airlines are not just firing out and saying, "We want the airplane"? What is with this political/favoritism crap?
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NAV20
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 5:24 pm

This article by Steve Creedy of "The Australian" puts a rather different interpretation on similar quotes and information.

The airlines are 'dismayed' by the resignation of Streiff:-

"DISMAYED airline executives have warned plane maker Airbus to get its act together amid mounting fears that the shock resignation of chief executive Christian Streiff will slow the aerospace giant's recovery.

"The crisis facing the European manufacturer deepened overnight after Mr Streiff, the architect of a reform plan designed to restore the embattled company, resigned only 100 days into his reign."


Qantas seems to be nearing the end of its tether:-

"Mr. Streiff was instrumental in assuring airlines such as Qantas, which has 12 A380s on order, that Airbus was prepared to face up to its problems and had a plan to get its production line back on track.

"Qantas chief financial officer Peter Gregg said yesterday the airline had been assured there would be no delays beyond the postponement of up to a year announced last week. He said Qantas had been told Airbus had accepted Mr Streiff's A380 restructuring plan but not a wider plan to change Airbus.

"While the airline was not alarmed, it was tired of the situation and wanted Airbus to get its house in order.

"We just wish they would get on with it and sort it out because we're waiting for the aircraft and we don't need them to play politics -- we need them to deliver aircraft," Mr Gregg said."


Similar views were expressed by Tim Clark of Emirates:-

"The manufacturer's biggest A380 customer, Emirates, said it believed the resignation worsened the situation at Airbus and parent company EADS.

"Clearly they had no stomach for his recovery plan, which he saw as the only solution to the structural problems besetting Airbus," Emirates president Tim Clark said. "What you see here is the private sector losing out to the public sector -- which does not bode well for the company, given the magnitude of the problems. Goodness knows what will happen next."

"Mr Clark said he expected that governments would step in to ensure continuity at all costs, because failure would result in a political calamity. "This in itself may provide the impetus Airbus needs to heed the wake-up call and get going again -- but strong leadership is a must," he said."


http://www.theaustralian.news.com.au...ory/0,20867,20560626-23349,00.html
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antares
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 5:37 pm

Half of Macquarie Bank seemed to be at a luncheon addressed by Tim Clark the senior something at Emirates in Sydney this week, since it was held next door.

While I'm on the other side of the globe for the time being, my colleagues tell me Clark said he didn't even think of any cancellations when he told reporters over a week ago that he was considering all options.

He left people in no doubt that cancellations were not an option, and that the A-380 was an integral part of the 'plan' for world domination or whatever term he used, and that the order for 45 was the initial phase.

Pick up me up gently after hearing that. Apparently by the time they get the first A-380 they were due to have 18 in service.

Look, the UAE is damn impressive these days. And in a frightening part of the world too. I'm far from certain where or how far the bonananza will go.

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EDDB
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 5:46 pm

Quoting Atmx2000 (Reply 3):
I have a feeling LH will act as a "Caritas" when it comes to Airbus.

Cause we all know that playing "Caritas" is what LH shareholders would highly appreciate instead of a nice ROI...

 no 
 
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mariner
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 6:38 pm

Quoting NAV20 (Reply 22):
The airlines are 'dismayed' by the resignation of Streiff:

I would think many people were surprised - concerned, dismayed, whatever - by it.

I was surprised - and I don't have a horse in this race, I'm not buying any aircraft.

But since Mr. Streiff chose to resign - probably more than once according to the NYT - that resignation has to be dealt with.

And nothing in those articles is at variance with the subject of this thread.

???

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Poitin
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 6:45 pm

Quoting EDDB (Reply 24):
Cause we all know that playing "Caritas" is what LH shareholders would highly appreciate instead of a nice ROI...

This is a good point. There is a limit before the stockholders rebel.

A good friend of mine is a senior airline executive and he basically says that if there were at third airline airframe manufacturer everyone would dump Airbus in a minute as a hopeless situation. However, given that dumping Airbus now would then make Boeing the ONLY supplier, they are going to try hard as they can to get EADS to sort itself out. He expects some A380 cancellations with very harsh words from some airlines, but certainly not all or even most of the 16.

And as a second "however", he added that should there be another screw up at Airbus, which is possible, then all bets are off as the CEOs riding on Airbus getting itself sorted out would be fired. There is only so far they can go.

Lastly, he says there are feelers out to get a third airframe manufacturer going in Asia, but little has come of it yet. But people are hopeful that the turmoil at Airbus will encourage the Chinese to do something in the 200-250 seat market. Already the Chinese are building a DC-9/MD-80 clone with a new Russian designed wing. While no great competitor for the A320 and B738, it is a start.
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EDDB
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 7:31 pm

Quoting Poitin (Reply 26):
Lastly, he says there are feelers out to get a third airframe manufacturer going in Asia, but little has come of it yet. But people are hopeful that the turmoil at Airbus will encourage the Chinese to do something in the 200-250 seat market. Already the Chinese are building a DC-9/MD-80 clone with a new Russian designed wing. While no great competitor for the A320 and B738, it is a start.

I have my doubts...
Have a look at how long it took to establish Airbus as a competitor for Boeing, and I think the chinese still have to catch up technologywise (copying is one thing, pushing technology further ahead another)!
Russia is way ahead of china, but still, no one buys russian jets...
 
wingman
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:14 pm

Not to dismiss Mr. Gallois, his credentials look fairly decent, but running SNECMA is about as far from running Airbus as you can get. One operates French trains carrying Frenchmen on French railway ties to the next French town (handfuls to to Brussels and London notwithstanding). Airbus is a company about to fire 5-10K employees and try to explian to them why the Chinese are deserving of those jobs instead. It looks to me like Mr. Gallois has zero experience in this regard and his "popular touch" sounds like Latin for Union and Politico bootlicker, exactly what Airbus does NOT need any more of (see comments by EK and QF).

I also agree about 380 cancellations, I just don't se this happening. The aircraft was never ordered to prop up Airbus, they were ordered due to need. The real problem IMO is how badly this 380 mess damages the 350 and pending sales campaigns over the next 2-3 years. The way I see it is that Airbus has a shot at possibly 40% of this mid-range market if they execute falwlessly from this point forward. This is essential because it is where Airbus will have to earn its high margins over the next decade. This is the plane that will feed the 320 replacement costs. The 380,I would wager, will never turn a single Euro of profit. If it breaks even at this point it will be a smashing success. It's all about the 350 now, the 380 may be great for airlines and passengers when it comes, but for Airbus it will be nothing but a horrible experience to learn from.
 
keesje
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:46 pm

Quoting NAV20 (Reply 7):
From the airlines' point of view, it would probably be best if Airbus finished with the A380 straight away

- 800 747s have to be replaced in the next 20 years
- air traffic will tripple in that period
- fuel costs are expected to rise above $100 / barrel in the not so far future.
- 80% of worldwide traffic is between hubs

Now NAV20, please enlighten me, how would the international carriers be helped by stopping the A380s (which seems to have met performance)?

By 2015 probably hundreds of A380s will sail over the oceans and poles, whether one likes or denies it.
"Never mistake motion for action." Ernest Hemingway
 
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Stitch
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:50 pm

Quoting Poitin (Reply 26):
A good friend of mine is a senior airline executive and he basically says that if there were at third airline airframe manufacturer everyone would dump Airbus in a minute as a hopeless situation.

I'd be flabbergasted, frankly, if this executive's view was shared by many in the industry, even if they personally belong to an airline that does not, nor has any intention to, fly an Airbus product.

The A380 is a mess, to be sure, but it's not like Airbus can't ship A320, A330, or A340 family members. And while the A380 has a lot of Airbus capital tied up into it, and the RoI is getting pushed back every day they're not delivering a bird, it's not like this is the only product they offer.

I imagine Boeing's inability to get 737NGs out the door last decade hurt them more then Airbus' inability to get A380s out the door this decade, because a lot more airlines order narrowbodies then VLAs and those orders Boeing could not meet were orders Airbus possibly snapped up which improved their position to order more Airbus planes down the road and make them, at best, a dual-operator and, at worst, an ex-Boeing operator. In the case of the A380, even if every airline was ready to just walk-away, they can't get 747-400s now, much less 747-8s.

If this A380 and reorg snafu hurts Airbus anywhere, it will be in the A350XWB program. QF's Greggs comments about EADS accepting the A380 restructuring plan but not the overall restructuring plan, if true, could quell the fears of current A380 customers, but could trigger the fears of current and potential A350XWB customers if production and design of that programs looks to be assigned more along political lines and not technical and execution excellence ones...
 
NAV20
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 9:55 pm

Quoting Keesje (Reply 29):
Now NAV20, please enlighten me, how would the international carriers be helped by stopping the A380s

I thought it was clearly explained in my post, Keesje?

Quoting NAV20 (Reply 7):
From the airlines' point of view, it would probably be best if Airbus finished with the A380 straight away and concentrated its cash and resources on producing some sort of A350 and an A320 upgrade.

If Airbus continues to put all its spare cash and resources into the A380, and therefore has nothing to spare to develop an A350 and an A320 replacement, the airlines will have to buy over 90% of their aeroplanes (i.e. all midsizes and most single-aisles) from Boeing, with no-one else offering modern/efficient alternatives.

Clear now?  Smile
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keesje
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:06 pm

Quoting NAV20 (Reply 31):
Quoting NAV20 (Reply 7):
From the airlines' point of view, it would probably be best if Airbus finished with the A380 straight away and concentrated its cash and resources on producing some sort of A350 and an A320 upgrade.

If Airbus continues to put all its spare cash and resources into the A380, and therefore has nothing to spare to develop an A350 and an A320 replacement,

NAV20, I doubt many airlines will feel the need to replace their 747's with A350 / A320 replacements, but I'll think it over.
"Never mistake motion for action." Ernest Hemingway
 
jasond
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:18 pm

The thread title is misleading to me. I wasn't aware that Airbus were in danger of being insolvent, unless there is something the 'airlines' know that we (or the shareholders) don't know.  Smile
 
Dougloid
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:21 pm

Quoting Katekebo (Reply 12):
What the market needs is a third significant player. The current duopoly leads to this kind of distortion in which customers and governments are willing to prop a struggling company, that would die a natural death under normal circumstances, just to avoid a monopoly. This won't help Airbus to become more efficient and competitive, and will put unfair pressure on Boeing, which in turn could lead to similar intervention by the American government, resulting in a vicious circle. In order to preserve a truly competitive environment, the industry needs at least one, preferably two significant competitors - hopefully somebody will seize the opportunity.

Well, actually there were quite a few of them in the not too distant past. Douglas, Lockheed, and Fokker come to mind. With Douglas, the cry from up north was always and forever "Douglas delenda est" and they got it, courtesy of 'tough federal regulators'. The result? The whole place is gone. The C17 is government owned right down to the tooling, so Boeing's a mere contract operator. They're busy sowing salt in the furrows of Long Beach.

I've always had a bone to pick with that phrase as the news jocks apply it to any megamerger/acquisition. "Well, the deal for ABC to buy DEF has to pass scrutiny of tough federal antitrust regulators, Jim!" Bullshit. There's no heat in that stove.

I can safely say that after the hammering that Lockheed took with the L1011-which was a fine aircraft-they'll not be back in the civilian market anytime soon, much less to bail anyone out. Remains to be seen whether there's any fire in the ashes at Fokker.

If the Chinese ever get it together they have the money and the brains. I could see them buying the type certificate and tooling for something like the DC9-80 or the F100 and building it-particularly as the A320 line in China is now very much in doubt because of the A380 decomposition.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
Lumberton
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:34 pm

Quoting Dougloid (Reply 34):
as the A320 line in China is now very much in doubt because of the A380 decomposition.

Not according to the Chinese press. There are a couple of articles today regarding the Tianjin assembly line....
"When all is said and done, more will be said than done".
 
TeamAmerica
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:35 pm

Keesje, your line of argument for the A380 is very weak!

Quoting Keesje (Reply 29):
800 747s have to be replaced in the next 20 years

No requirement that they be replaced by aircraft of equal or greater size. The only real requirement is comparable range.

Quoting Keesje (Reply 29):
air traffic will tripple in that period

No sir, it will not. Exactly because of what you said next:

Quoting Keesje (Reply 29):
fuel costs are expected to rise above $100 / barrel in the not so far future.

Exactly so, which will simultaneously increase the cost of air travel while reducing people's ability to afford it. Air traffic will not "triple" in the near term at all. The future lies with smaller aircraft with CASM as good or better than A380. B787 is already a huge seller, and Airbus's own A350 will seal the fate of the A380.

I do not believe that even a complete cancellation of the A380 will bankrupt Airbus, so any goodwill on the part of the customers is mostly misplaced. At this point, nearly all A380 purchasers will be getting a very capable aircraft at an extremely favorable price. No reason to cancel.

This is not necessary to the benefit of Airbus. Carriers who might otherwise have cancelled due to lack of need (MH, TG and possibly VS) will go forward with their purchases, and may well release them for sale. Consider the effect on the A380 order book if cheap A380's are on the market 5 years from now.  scratchchin 
Failure is not an option; it's an outcome.
 
deltadc9
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:41 pm

Quoting Ruscoe (Reply 4):
You know this is not true because even a complete A380failure would not bring Airbus down.

They can get through this mess on cash flow from existing orders.

Also even if Airbus failed, Lockheed would get themselves back in the market.

Or Northrup, or somebody else.

When a vacuum is created, somebody gets sucked in.

Quoting AndesSMF (Reply 10):
Boeing wouldnt be allowed to fail either.

Not true at all. The main reason Lockheed was not allowed to acquire Northrup was that if Boeing or Lockheed failed, we would still have two majors.

Northrup, Lockheed and others would simply buy up Boeings assets and the viable production would remain in tact. Just the logo on the paychecks would change.

This has been proven over and over in the US. No company, no matter how big, is safe. If Chrysler failed after their bailout, they would not have had a chance in hell of receiving another one.

Quoting Katekebo (Reply 12):
What the market needs is a third significant player

IMO the market has proved several times that a third player cannot garner a big enough share of the pie to make it worthwhile, especially in the down cycles.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
EDDB
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:49 pm

Quoting TeamAmerica (Reply 36):
Air traffic will not "triple" in the near term at all.

Keesje never talked of "near term" if I recall correctly...

20 years was the time frame mentioned and that's exactly what Airbus and Boeing use for their market forecast....
Which btw says air traffic will more than double (which is not exactly tripple but it would be childish to argue about that...)!

So either you're wrong with your forecast or A and B are...
 
katekebo
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 10:58 pm

I think the biggest misconception in this whole discussion is that "the world needs Airbus". The truth is that the world does NOT need Airbus, what the market needs is healthy competition. Putting Airbus on life support distorts the competitive environment. If Airbus screwed up, let it die a natural death.

The only ones that truelly need Airbus are French and German politicians, and few die-hard Airbus fans on a.net - to satisfy their penis envy.

The biggest strength of the American economy is its flexibility and capability to re-invent itself. 50 years ago GM and Ford were the shining stars of American industry. Now Toyota is the global leader and the American government is not jumping in to prop the two moribund giants. Why? Because American economy does not need it. New industries take over the leadership position. Now it is computer and software. Microsoft, Dell, HP, Google are the shining stars today. 20 years from now it will somebody else.

The market should let Airbus die or survive on its own merits. If they can make it - great, good for them. If Airbus dies, let somebody else, from China, Japan, India, Russia or, why not, USA take its place.
 
Joni
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:01 pm

Quoting Poitin (Reply 26):
A good friend of mine is a senior airline executive and he basically says that if there were at third airline airframe manufacturer everyone would dump Airbus in a minute as a hopeless situation.

Ok, I'm not saying your friend didn't say that or that he's not working for an airline. However, exactly how would airlines "dump Airbus"? Would they cancel their A380 orders, which are orders for planes they need, a plane that meets or exceeds the guaranteed performance and for which they're getting a huge discount (taking the late-delivery penalties into account)? The latest news from the order front is SQ converting options to orders, and buying even more options.

Did your friend take into account the fact that if an airline cancels orders, they aren't going to get the planes?
 
EDDB
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:06 pm

Quoting Katekebo (Reply 39):
Putting Airbus on life support distorts the competitive environment.

Didn't notice something about financial support of any kind... Source?

Quoting Katekebo (Reply 39):
The only ones that truelly need Airbus are French and German politicians, and few die-hard Airbus fans on a.net - to satisfy their penis envy.

 thumbsdown 

No need for a comment....
 
Poitin
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:34 pm

Quoting EDDB (Reply 27):
I have my doubts...
Have a look at how long it took to establish Airbus as a competitor for Boeing, and I think the chinese still have to catch up technologywise (copying is one thing, pushing technology further ahead another)!
Russia is way ahead of china, but still, no one buys russian jets...

I agree, but whoever thought the Europeans could compete against the likes of Boeing, Lockheed, Douglas in the 1970's. The Russians design good airplanes, but they are not supported the way large airlines need.

Quoting Stitch (Reply 30):
I'd be flabbergasted, frankly, if this executive's view was shared by many in the industry, even if they personally belong to an airline that does not, nor has any intention to, fly an Airbus product.

Since I don't know "many" airline execs, I can't say.

Quoting Joni (Reply 40):
Ok, I'm not saying your friend didn't say that or that he's not working for an airline. However, exactly how would airlines "dump Airbus"? Would they cancel their A380 orders, which are orders for planes they need, a plane that meets or exceeds the guaranteed performance and for which they're getting a huge discount (taking the late-delivery penalties into account)?

The issue in not that the A320 and A330 aren't good airplanes and they are being built in numbers. It's that the company of Airbus hasn't made many if any good decisons since taken over by EADS. There is a severe erosion in confidence in Airbus and that must be rebuilt. So far, they have only been making the loss in confidence greater with escapades such as the hiring and firing of Streiff.

As for those "huge discounts" remember that they have their money tied up on something that is not making money for them. They need ROI not discounts.

[Edited 2006-10-12 16:42:22]
Now so, have ye time fer a pint?
 
TSV
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:37 pm

Quoting PVG (Reply 19):
Or, Lockheed comes in as a white-knight investor, assumes responsibility for the A350 design and construction (which presumably would move to a US location and would be pushed up to a 2011/12 EIS date) and then gets half of the US Air Force tanker contract using the A350 which would be built in the US by a US manufacturer.

I was going to suggest something like this (without any foundation of course) but not to the same extent :

Lockheed takes up a shareholding similar to what BAe is selling;

Lockheed assumes responsibility for the fuselage* construction (as obviously XWB is somewhat different from the "conventional" A300/330/340 cross section and not to mention Lockheed has previous experience with similar size of fuselage cross section) in the US;

and

Lockheed would then be well placed to seriously bid for the Tanker contract.

However not having

Quoting PVG (Reply 19):
Worth a look if I were them if they can get enough control over the project.

and

Quoting WingedMigrator (Reply 20):
as the airliner business is a low-margin, cyclical business with enormous barriers to entry and a customer base without especially deep pockets. LM has lower hanging fruit to pick.

and

Quoting Dougloid (Reply 34):
I can safely say that after the hammering that Lockheed took with the L1011-which was a fine aircraft-they'll not be back in the civilian market anytime soon

would pretty much rule out all of the aforementioned.



* = P.S. Makes one think of an interesting "what if" - A Tristar based stretched fuselage (minus the third engine of course) with an Airbus wing. Sort of like a stretched modernised "Bistar" concept. Funny that this sort of thing was discussed with MDD (DC-10 Fuselage with Airbus wing) before the A340 was originally launched. With all the talk about a strong third party makes you wonder if MDD would still have been around if this had happened.
"I told you I was ill ..." Spike Milligan
 
burnsie28
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:41 pm

Quoting Lumberton (Reply 1):
The plane makes good sense for these carriers.

Not EK, they can't even fill the planes they have now, how do they plan to fill 45 A380's....
 
TeamAmerica
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:42 pm

Quoting EDDB (Reply 38):
So either you're wrong with your forecast or A and B are...

I consider 20 years to be "near term", so we only differ on words. As for the forecast, I think society in general is in denial. This is in no way limited to A and B.

Consider it: doubling air traffic implies doubling fuel consumption. It assumes advancing wealth (in Asia or wherever) will create the demand for the doubling, and those newly affluent people will have cars and housing roughly equivalent to what we have in the West. So we are not talking of doubling consumption of jet fuel alone, we are implying a doubling of all fuel consumption. We all know that worldwide oil consumption is immense - on the order of 85 million barrels a day. I see two simultaneous outcomes: mankind will find it impossible to produce 170 million barrels per day of affordable oil, and the effects of global climate change will become so undeniable that we would be insane to burn it even if we could get it.

We can debate the time frame, but there is an inevitable limit to how much flying we will do in the future. Smaller, more efficient aircraft will be the rule. The Airbus "bigger is better" strategy is doomed to failure.  sorry 
Failure is not an option; it's an outcome.
 
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zeke
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:54 pm

Quoting DeltaDC9 (Reply 37):
This has been proven over and over in the US. No company, no matter how big, is safe. If Chrysler failed after their bailout, they would not have had a chance in hell of receiving another one.

If it were not for Chapter 11, how many airlines would there be in the USA today ?

If a Chapter 11 style arrangement was entered into with Airbus, would the people in the USA cry unfair, or would they say fair game ?

Quoting TSV (Reply 43):
With all the talk about a strong third party makes you wonder if MDD would still have been around if this had happened.

Yeah, I loved the MD-12 design, looked a lot better than the Boeing NLA.

Quoting Burnsie28 (Reply 44):
Not EK, they can't even fill the planes they have now, how do they plan to fill 45 A380's....

Funny, my friends that work for EK cannot get around their network and take other carriers as their seats are full.

I know they cancel a number of flights a day, that is for a lack of crew, not passengers.
We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
 
fd728
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RE: Customers Back A380 To Keep Airbus Solvent

Thu Oct 12, 2006 11:54 pm

Kill the A380? Don't even think about it. Remember when Boeing created the 747 back in the late 60s and almost went bankrupt. Good thing they didn't because it has sold 1300+ frames and has helped Boeing to become as strong and prosperous as it is today. The A380 is the only brand new design Airbus is offering, so stick with it. If they were to shrink their family, they will go down the drain just like MDD did.
About the A350: it indeed would be wise to postpone it until the A380-issues are sorted out. They need to bundle their engineering power. Besides, the A330 is still selling.
 
baroque
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RE: Customers Back A380 To Keep Airbus Solvent

Fri Oct 13, 2006 12:29 am

Quoting Par13del (Reply 11):
When monopoly's are discussed, should this not also be included, is this not as "bad" as Boeing getting all the business because they have "better performing aircraft", or are we saying that the way you get a monopoly makes the difference?

I had just absorbed from Nav20 that B>>>A in widebodies (fair enough) and that the A32x is dominated by the B737 (???), when now I learn that Airbus has a monopoly. Golly gosh that split personality will be tricky to manage.

Quoting Katekebo (Reply 39):
I think the biggest misconception in this whole discussion is that "the world needs Airbus". The truth is that the world does NOT need Airbus, what the market needs is healthy competition.

Well that is true, the world does not need Airbus, but I think the need for it is a bit wider than France and Germany, not perhaps as wide as Europe, but a goodly part of Europe.

It would be a mistake to underestimate the extent to which important parts of Europe are indeed united. This includes the aircraft industries.

Rejection of treaties is not what it is about. Groups that barely knew each other thirty years ago are working on common projects now. From this distance at least it is quite impressive. The nationality clashes in Europe have their counterparts in Aus at least, and the US probably in state rivalries. Just because there was a war in Europe 60+ years ago does not mean there is one now.
 
EDDB
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RE: Customers Back A380 To Keep Airbus Solvent

Fri Oct 13, 2006 12:44 am

Quoting Zeke (Reply 46):
If it were not for Chapter 11, how many airlines would there be in the USA today ?

If a Chapter 11 style arrangement was entered into with Airbus, would the people in the USA cry unfair, or would they say fair game ?

 checkmark 

Good point!

Quoting TeamAmerica (Reply 45):
I consider 20 years to be "near term"

Wow... 20 years is roughly 1/4 of my life... I suppose I should stop making long term commitments then...
(just kidding)

Quoting TeamAmerica (Reply 45):
Smaller, more efficient aircraft will be the rule. The Airbus "bigger is better" strategy is doomed to failure.

Correct me if I'm wrong, but efficiency is mostly down to weight saving and engine technology, both can be used for small or big planes, airplane size is not a limiting factor for the implementation of new technologies, right?
Most people here on a.net support the theory that (same technology used!) bigger planes offer better CASM, which sounds logical to me! Right?
Whatever the passenger number will be in 20 years, and even if smaller jets could reach the efficiency of bigger planes (again: both of course using the same technology), where's the difference then in putting 1000 pax in five 200-seater or in two 500-seater?

I can't follow you...

Quoting TeamAmerica (Reply 45):
doubling air traffic implies doubling fuel consumption

Nope! Only if GE, RR, P&W or SNECMA fail to achieve a single percent improvement on fuel consumption...

And overall... Flying DC9s and driving big pickup trucks and SUVs offers plenty of ways to reduce fuel consumption...  duck