Tangowhisky
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Is Airbus The Next Enron?

Fri Oct 13, 2006 12:57 pm

It is only appropriate that we start debating this topic - especially after jokes about Boeing as the next Enron?

So let's see:
1. Shareholders were left in the dark until last summer on A380 delays
2. One of EADS chairman sells a large amount of his share before the word gets out
3. He tells his kids to do the same
4. French president protects his pal from insider trading
5. BAE who wanted to sell its stake in Airbus also finds out too late about the A380 problems
6. BAE alleges Airbus purposely chose its timing in order to minimize the buyout of BAE
7. Airbus loses its CEOs
8. Airbus is facing massive A380 program delay penalties and facing severance costs as part of workforce reduction
9. Another Airbus CEO resignation
10. French and German politicians get involved this week to keep things at a diplomatic tone

Enron Euro Style?
Only the paranoid survive
 
watewate
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 1:04 pm

Airbus actually has healthy cash flows from selling its jets: Enron wasn't making or selling anything. I don't think it's fair to compare Airbus to Enron...
 
robsawatsky
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 1:25 pm

Enron engaged in systematic and massive fraud. Airbus's problems are mostly technical in nature with a couple of people trying to minimize the corporate and personal damage of those problems, perhaps illegaly. Anything illegal at Airbus would be a trifle and only a consequence of legitimate problems not the basis of its entire balance sheet.
 
jasond
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 1:58 pm

Quoting Tangowhisky (Thread starter):
Enron Euro Style?

The two are not the same. Airbus produces something. If they go under (which they won't, I hope ) it is simply because potential costs to deliver the products outstrip revenues over a long enough period of time. Fundamental economic principle at play here.
 
PanHAM
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 2:15 pm

I do not see any similarity in the business models - just to explain what Enron was:

Enron Venture Capitalism You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with a associated general partnership so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority share-holder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more.

Whereas Airbus gets an order for a plane, builds it, delivers it to the customer who ordered that plane and receives the cash in turn., There may be some delays however.
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N328KF
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 2:21 pm

Quoting PanHAM (Reply 4):
Whereas Airbus gets an order for a plane, builds it, delivers it to the customer who ordered that plane and receives the cash in turn., There may be some delays however.

Where that cow may deliver less milk than intended, and the beef will definitely not be 'lean.' And it eats 10% more grain than other cows.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
N174UA
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 3:57 pm

Quoting PanHAM (Reply 4):
Enron Venture Capitalism You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with a associated general partnership so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority share-holder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more.

 rotfl 
 
Skydrol
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 4:05 pm

Quoting PanHAM (Reply 4):
Whereas Airbus gets an order for a plane, builds it, delivers it to the customer who ordered that plane and receives the cash in turn., There may be some delays however.

Airbus is just waiting for the cows to come home...





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∙ ---{--« ∙ ----{--« ∙ --{-« ∙ ---{--« ∙ --{--« ∙ --{-« ∙ ----{--« ∙
 
baroque
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 5:07 pm

Quoting PanHAM (Reply 4):
The annual report says the company owns eight cows, with an option on one more.

Brilliant, I was wondering how to characterise the difference and you got it zackerly! As there is no attribution, I assume it was your own work, in which case, watch out for the job offers from "Son of Enron".

The only way that Airbus is like Enron, is if those folk who saw the Whale land at various airports were actually watching really, really good holograms. I am not sure what the (distant) rel of mine who thinks he recently had a flight in the A380 was actually doing - hypnotised by a German descendant of Freud I suppose.
 
PanHAM
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 6:09 pm

Quoting Baroque (Reply 8):

Brilliant, I was wondering how to characterise the difference and you got it zackerly! As there is no attribution, I assume it was your own work, in which case, watch out for the job offers from "Son of Enron".

no, I cannot take the credit for that. This was part of a joke circulating when Enron bit the dust and I thought it fit perfectly.

Quoting N328KF (Reply 5):
Where that cow may deliver less milk than intended, and the beef will definitely not be 'lean.' And it eats 10% more grain than other cow

....as we talk about real cows, Airbus, like Boeing and any other industry will do what farmers have done for centuries, they learn from mistakes and engineer (breed) a better product.
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Tangowhisky
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 11:39 pm

Quoting Jasond (Reply 3):
The two are not the same. Airbus produces something. If they go under (which they won't, I hope ) it is simply because potential costs to deliver the products outstrip revenues over a long enough period of time. Fundamental economic principle at play here.

This and other reasons given have nothing to do with saying it is not like Enron. What is not the same with Enron is that no-one form Airbus stole company money like Andrew Fastow did when he was CFO at Enron. And no one cooked the books or falsified financial data.

But there are similarities between CEOs of Enron and EADS. Jeffrey Skilling was found guilty in falsifying financial statements and hiding information from shareholders. He and Ken Lay were charged for insider trading when they sold their stock before all hell broke loose. Ken Lay was also a friend of the president of the country he lived in (Ken Lay died unexpectedly this past summer waiting for sentencing).

Now here is the part that is similar with EADS. EADS co-chairman Noel Forgeard suspiciously sells hist stock and tells his kids to do the same. It is suspicious as keeping it a secret about the news of A380 delays is no small matter. Especially when it has such a strong impact on the financial health and forecast earnings of Airbus and its co-owner EADS. Both have shareholders and these shareholders have the right to know news such as these as early as possible. Noel was forced to resign not because the A380 was late (that is more of Airbus leadership mismanagement rather than EADS), but his dubious behaviour to benefit his personal finances that are linked to the A380 delays. President Chirac then gets involved (and we will never know to what extent) to save his protege Noel. Why can't the investigators do their job without the president of France getting involved? The whole thing about Noel has since gone quiet.

Hiding or massively delaying news that are considered important can be considered breach of securities laws. Any corporate communications VP will tell you that. Insider trading goes without arguments. Perhaps there were many more people who knew and benefited from these news at EADS, and it is being covered up. What brought down Enron was the collapse of its stock due to wide scale corruption. If EADS stock plunges as a result of confidenece in the equities markets due to corruption alligations , it will not be a pretty picture. Skilling and Lay purposely kept information from the scrutiny of hard questions by suspicious equities analysts. Perhaps there is more to why the German government yesterday said they would buy a large stake in the company (other than saving German Airbus jobs).
Only the paranoid survive
 
Alessandro
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RE: Is Airbus The Next Enron?

Fri Oct 13, 2006 11:57 pm

I don´t think either US nor EU would allow either B nor A to go bankrupt.
From New Yorqatar to Califarbia...
 
airfrnt
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:04 am

Quoting Watewate (Reply 1):
Airbus actually has healthy cash flows from selling its jets: Enron wasn't making or selling anything. I don't think it's fair to compare Airbus to Enron...

Airbus isn't Enron. Period. But a lot of the governance problems that existed at Enron exist (in some cases much worse) at Airbus. If Fastow worked for Airbus he could do everything he did at Enron.

Quoting Robsawatsky (Reply 2):
Enron engaged in systematic and massive fraud. Airbus's problems are mostly technical in nature with a couple of people trying to minimize the corporate and personal damage of those problems, perhaps illegaly. Anything illegal at Airbus would be a trifle and only a consequence of legitimate problems not the basis of its entire balance sheet.

Part of the problem is that Airbus doesn't publish the detailed balance sheet information (EADS does for the parent company) that would be demanded in the US, to say nothing of the hugely complex SOX requirements that were a response to the Enron failure.

Airbus's books are sigificatly difficult to work out. Just look at the hard time people are having just figuring out how much the A380 is over budget by.

One of the reasons I want to see this artificial EADS structure go away, is because it might mean that we finally get good fiscal analysis and people doing their homework on EADS/Airbus and their programs.
 
baroque
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:36 am

Quoting Tangowhisky (Reply 10):
Now here is the part that is similar with EADS. EADS co-chairman Noel Forgeard suspiciously sells hist stock and tells his kids to do the same. It is suspicious as keeping it a secret about the news of A380 delays is no small matter. Especially when it has such a strong impact on the financial health and forecast earnings of Airbus and its co-owner EADS.

It does not look good and I am sure the police will tell us eventually whether it was illegal or not. Some time ago, when the Forgeard transactions were first discussed, someone wiser than I pointed out that not only were the times that Forgeard could sell strictly prescribed, but the family sales were all part of the same deal, that is it was a single sale decision, which may or may not make it all more or less suspicious. But it is different from saying he tipped off his family. One day we may find out.
 
Danny
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:39 am

Quoting AirFrnt (Reply 12):
to say nothing of the hugely complex SOX requirements that were a response to the Enron failure.

Rest assured that concept of internal control are not unknown in Europe even if we do not have SOX. Nothing of this gets published anyway other than auditor opinion on controls.
 
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N328KF
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:52 am

Quoting Baroque (Reply 13):
It does not look good and I am sure the police will tell us eventually whether it was illegal or not. Some time ago, when the Forgeard transactions were first discussed, someone wiser than I pointed out that not only were the times that Forgeard could sell strictly prescribed, but the family sales were all part of the same deal, that is it was a single sale decision, which may or may not make it all more or less suspicious. But it is different from saying he tipped off his family. One day we may find out.

Does France have a group with authority similar to that of the SEC?
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
bmacleod
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 3:38 am

How did a few A380 delays turn into rumors that Airbus was a corrupt company on the verge of total collapse. They did outsell Boeing last year or the year before, right?

5 years from now when the A380 delays are ancient history and Airbus WILL STILL BE IN BUSINESS, we'll all remember late 2006 when rumors of Airbus' collapse were rampant.... tombstone 
The engine is the heart of an airplane, but the pilot is its soul.
 
thebry
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 4:13 am

Quoting Bmacleod (Reply 16):
How did a few A380 delays turn into rumors that Airbus was a corrupt company on the verge of total collapse. They did outsell Boeing last year or the year before, right?

5 years from now when the A380 delays are ancient history and Airbus WILL STILL BE IN BUSINESS, we'll all remember late 2006 when rumors of Airbus' collapse were rampant....  

I don't think anyone with two brain cells to rub together truly believes Airbus is going bust. As I've said in previous threads, the pendulum swings both ways. This year (and last year, if you take order counting practices into question) the pendulum swung toward Boeing. For all we know, it could swing back in Airbus' favor next year.

One things' for certain. For the "rumors" to stop, Airbus has got to become a more transparent company. Perhaps that'll be the outcome of all this A380 and A350 (MK I, MK II, MK III, MK IV, MK V & XWB) hoopla.
 
airfrnt
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 4:39 am

Quoting Danny (Reply 14):

Rest assured that concept of internal control are not unknown in Europe even if we do not have SOX. Nothing of this gets published anyway other than auditor opinion on controls.

Then how do you know they are being enforced? The amount of transparency (or rather the lack) is a critical question for the long term survival of Airbus, not just during the current crisis. Lack of visibility into the accounting and orders practices leaves the door wide open for abuses.

What is wigging some people out is that a bit of the langauge (investors complaining about incomplete or incomprehensible statements, lack of break down of profit levels beyond just a "Airbus is a devision of EADS and generated 1.5 billlion, etc) all immediate recall the accounting scandals that were triggered by a market downturn.

Again, I am not saying that Airbus is enron. I am saying that no one can say with authority what Airbus's true fiscal picture is right now.
 
Halibut
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 5:22 am

Quoting Watewate (Reply 1):
Airbus actually has healthy cash flows from selling its jets: Enron wasn't making or selling anything.

Well ,
Airbus gets some direct help from time to time from European taxpayers via the politicians . Take that enabling away & what do you get ?


Hhmm scratchchin 

 eyebrow 

Halibut
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Tangowhisky
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 5:53 am

Quoting AirFrnt (Reply 18):
The amount of transparency (or rather the lack) is a critical question for the long term survival of Airbus, not just during the current crisis. Lack of visibility into the accounting and orders practices leaves the door wide open for abuses.

EADS stock is listed in three European exchanges and perhaps the level of disclosure and transparency is adequate to meet their criteria. Does someone know if EADS reporting system would meet US type General Accounting Principles? If it does not, than perhaps that may be one reason it is not listed in NYSE. But the whole issue of transparency is even more important for the investment community. CEO's come and go as loosing faith in the management is one thing and usually less damaging than losing faith in the numbers the company says it has is another. As long as EADS is publicly traded and needs money from the capital markets, it's numbers better and should be transparent.
Only the paranoid survive
 
jcavinato
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 6:11 am

I interviewed many people inside Enron in the late 1990s as part of my academic research in business, business models, and strategies. I met very sharp, bright people who took great pains to explain many of their ventures and business models. Very few of them ever made real sense to me. They were all a big house of cards. I came away from those days never wanting to own their stock, and I made sure that any mutual fund I owned has very small positions in them. In fact, in many interviews, some of the people would start the discussion with, "Now, this might require you to listen with a bit of a leap of faith...." then they would explain their gas futures modeling system, or some other creation.

Airbus is a going concern, with product lines, technologies, and a focus. Even though there are shenannagins coming out at the edges, it is a real company with a future. My visits there leave me with the fealing of being hindered with a very complex organization, processes and procedures, and more, but the people are diligent are building real things with value.
 
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N328KF
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 10:29 am

Quoting Tangowhisky (Reply 20):
EADS stock is listed in three European exchanges and perhaps the level of disclosure and transparency is adequate to meet their criteria. Does someone know if EADS reporting system would meet US type General Accounting Principles? If it does not, than perhaps that may be one reason it is not listed in NYSE.

One exchange (Euronext), three cities. Think of it as three stores in a chain.

EADS would definitely not meet GAAP. The 2005 order stunt would have instantly failed them.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
laxatljfkcvg
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 10:53 am

you did the same thing with boeing.


from flightaware-delta flight 644 CVG-PDX they have lost the position it was 1066ft and going about 150 anyone have anymore info.
 
laxatljfkcvg
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 10:54 am

Wait nevermind!!!!!
 
scalebuilder
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 11:22 am

Quoting Tangowhisky (Reply 20):
Does someone know if EADS reporting system would meet US type General Accounting Principles?

I am not by any means an expert on European financial reporting requirements, but I do believe that those in Europe are just as stringent as those in the US.

Scalebuilder
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N328KF
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 11:27 am

Quoting Scalebuilder (Reply 25):
am not by any means an expert on European financial reporting requirements, but I do believe that those in Europe are just as stringent as those in the US.

Only the U.K. The difference between U.S. and Continental European rules was one of the concerns when Euronext was negotiating to be bought by NYSE.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
airfrnt
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 11:52 am

Quoting Tangowhisky (Reply 20):
EADS stock is listed in three European exchanges and perhaps the level of disclosure and transparency is adequate to meet their criteria.

To their critera is the point, and I think you awknowledge later that it is investor access, not general principle that is at stake here.

Quoting Tangowhisky (Reply 20):
Does someone know if EADS reporting system would meet US type General Accounting Principles?

(GAAP - Generally Accepted Accounting Principles) No. Certainly not now that SOX is in effect.

Quoting Scalebuilder (Reply 25):
I am not by any means an expert on European financial reporting requirements, but I do believe that those in Europe are just as stringent as those in the US.

They are not.
 
jasond
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:41 pm

Quoting Tangowhisky (Reply 10):
Now here is the part that is similar with EADS. EADS co-chairman Noel Forgeard suspiciously sells hist stock and tells his kids to do the same. It is suspicious as keeping it a secret about the news of A380 delays is no small matter. Especially when it has such a strong impact on the financial health and forecast earnings of Airbus and its co-owner EADS. Both have shareholders and these shareholders have the right to know news such as these as early as possible.

Unless I am missing something here (sorry I work in IT and consequently am not very bright) I can't see the similarity. The Enron people were governed entirely by greed in my view, indirect greed you could argue but insidious all the same. The people now departed from Airbus simply could see the gathering storm and they were bailing out. Sure I concede that a more cynical person may see their actions as being a tad dubious but their motives were very different from their Enron counterparts.
 
N908AW
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:43 pm

Of course, the real reason Airbus will never go bust...

...Europe probably will never run out of money.
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Desh
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 12:55 pm

Dont think its fair to compare both - I think Airbus might be more like GM or Ford ..... than Enron.

Boeing is fortunate that it has all the defence orders it has been getting - from the 2005 financials Comercial planes got them 22,651M$ whereas defense got them 30,791M$ - Compare that to Airbus devlieries (I am not considering orders since they have to be fulfilled to realize the cash flows) of EURO 22 Billion ~ $28 Billion ..... NOTE I am not looking at EADS balance sheets for these numbers since they do not break up the revenue by line of business ...

Would it be fair to compare Boeing to Enron if I strip off the defense business of its balance sheet ?

Agreed there are problems with Airbus ... no denying that but I dont think you can call it large scale fraud and duping of its employees ...
"History is merely a list of surprises. It can only prepare us to be surprised yet again." - Kurt Vonnegut
 
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N328KF
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 2:39 pm

Quoting Jasond (Reply 28):
The people now departed from Airbus simply could see the gathering storm and they were bailing out.

I disagree. Forgeard was an asshole of the highest calibre. He made improper decisions, many based upon ego, and he sold out using insider information.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
baron95
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RE: Is Airbus The Next Enron?

Sat Oct 14, 2006 3:07 pm

Airbus and Boeing will never be like Enron.

The problem with Enron is that NO ONE understood what they were about or what they were doing. All the analysts were too embarrassed to admit they didn't understand, so they started hailing Enron as the future of all knowledge companies trading on information, not goods.

People intrinsically understand that Boeing and Airbus, design, sell, build, enhance, sell more, retire, a very visible and complex industrial product. The nuances of how the planes are financed, and risk sharing and currency hedges, etc are a bit fuzzy to all, and that is the area that gets debated.

Everyone though, understand that the one that has the better performance plane for the best price in a given segment gets rewarded more than the other guy and that Boeing and Airbus are constantly leapfrogging each other. Be it 737classic-A320-737NG-A320E or 767-A330-787 or 747-300-A340-777, everyone understands the game.

Futher, their products is valuable, they face little competition except from each other, and the market easily enables each to make money. Based on the product cycles and strategic decision, one will make a bit more than the other, but neither is likely to screw up so royally that they fail. Nor can they stray too far with pyramid schemes or Enron type schemes. Their market is too well understood for that.
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scalebuilder
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RE: Is Airbus The Next Enron?

Sun Oct 15, 2006 12:50 am

Quoting AirFrnt (Reply 27):
Quoting Tangowhisky (Reply 20):
Does someone know if EADS reporting system would meet US type General Accounting Principles?

(GAAP - Generally Accepted Accounting Principles) No. Certainly not now that SOX is in effect.

How would you know if EADS is SOX compliant or not? It does not have to be knowing that its shares are not traded in the US and the holding company itself is not of US domicile. But with that being said, we should not conclude that EADS is not up to SOX standards. I don't think we know that.

And just so everyone in the forum knows and understands, SOX compliance has really nothing to do with US GAAP. It is a compliance standard (internal controls, separation of duty etc.) that is layered on top of the reporting of GAAP results of publicly traded companies in the US. Most private and mutual companies follow US GAAP too, and have voluntarily adopted internal control standards mandated by the passing of the Sarbanes Oxley Act.

Let's not forget that Airbus Industries really has two holding companies - EADS (80%) and BAE (20%). BAE is traded, on a limited basis, here in the US. BAE is only required to meet with limited US reporting requirements as a result.

I do not believe that EADS will end up like another Enron. I think European reporting and disclosure standards are solid enough to prevent that. Recent accounting scandals and fraudulent practices involving Enron, MCI etc. occurred here in the US and not in Europe.

I think EADS has been very upfront about disclosing the financial impact of the recurring problems and delays of the A380. The company may very well face a cash flow crisis as a result knowing that the A350 is also being redeveloped and requires a lot of capital.

The problem facing EADS is not an issue about financial mismanagement and fradulent practices, but poor operational planning.
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baroque
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RE: Is Airbus The Next Enron?

Sun Oct 15, 2006 1:17 am

Quoting N328KF (Reply 15):
Does France have a group with authority similar to that of the SEC?

Basically the answer is yes.

"The French financial regulator is at the head office of Airbus in Toulouse, as trouble at its parent company EADS shows no sign of easing.

Among those under scrutiny are former Airbus head and co-chief executive of parent company EADS, Noel Forgeard. "

http://news.bbc.co.uk/2/hi/business/5097834.stm

AND

"The French financial services regulator AMF has revealed it is running an investigation into EADS's share price activity.

The AMF says that, in line with its powers, it has been investigating the share trading activity of the company over "the past few weeks". The watchdog says it will include this week's "most recent events" in its investigation.

The German central bank and financial supervisory authority, BaFin has also acknowledged that it is also looking into the unusual share price activity in recent days "as a routine procedure"."

FROM
http://62.189.48.33/Articles/2006/06...+share+price+investigation+is.html

These things never seem to be easy so a lack of information does not mean that the bloodhounds are not busy.

Quoting Halibut (Reply 19):
Airbus gets some direct help from time to time from European taxpayers via the politicians . Take that enabling away & what do you get ?



Quoting N328KF (Reply 31):
I disagree. Forgeard was an asshole of the highest calibre. He made improper decisions, many based upon ego, and he sold out using insider information.

I do not know enough to comment on Forgeard. However, it may be that the timing of the sale was partly beyond his control. You would have to look at it in a longer context - the information is, or was, available on the EADS website. All you have to do is go through and you will find that his transactions were not all that unusual.

It also seems to be untrue that he told his children and wife to sell. As I understand the explanation, they were essentially shares in trust and it was his decision to sell or hold.

So the conspiracy is only about half or 30% as suspicious as it being presented here. Which is not so say the sales may NOT have been improper. But how about we wait to find out. Or if we don't like a guys specs can we just declare him guilty?

For all those who expect Forgeard to be on Devil's Island and Airbus to be in receivership by tomorrow, well Tuesday at the latest, it just ain't gonna happen.
 
airfrnt
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RE: Is Airbus The Next Enron?

Sun Oct 15, 2006 1:24 am

Quoting Desh (Reply 30):

Would it be fair to compare Boeing to Enron if I strip off the defense business of its balance sheet ?

No, because it's not a question of scale.

Quoting Scalebuilder (Reply 33):
How would you know if EADS is SOX compliant or not?

Because I have looked at their financial, and because of the relatively sparse Airbus documentation. SOX standards also include a huge number of financial reporting requirements as well as the internal controls you mention.

Quoting Scalebuilder (Reply 33):
Let's not forget that Airbus Industries really has two holding companies - EADS (80%) and BAE (20%).

Not anymore they are not. BAe is out of the picture.

Quoting Scalebuilder (Reply 33):
I do not believe that EADS will end up like another Enron. I think European reporting and disclosure standards are solid enough to prevent that. Recent accounting scandals and fraudulent practices involving Enron, MCI etc. occurred here in the US and not in Europe.

Europe has had their own share of financial implosions as well. Anyplace where there is a lack of oversight, a lack of good controls, a lack of visibility into a company, there is the potential for really catastrophic abuse of financial systems. Airbus has all those in spades. They have lots of money, strange financing structures, unclear organizational structures, and the lack of published sheets make me worry very much.

This should be step 1 (collapse the EADS and Airbus structure into a single structure) and step 2 (give investors the usual investing benchmarks) in a revitalized airbus.

Quoting Scalebuilder (Reply 33):
I think EADS has been very upfront about disclosing the financial impact of the recurring problems and delays of the A380. The company may very well face a cash flow crisis as a result knowing that the A350 is also being redeveloped and requires a lot of capital.

They will face a cash drain without the A350 as well.

Quoting Scalebuilder (Reply 33):

The problem facing EADS is not an issue about financial mismanagement and fradulent practices, but poor operational planning.

We don't know enough to say that there are no problems with fiscal mismanagement (that's my point, not that Airbus is enron waiting to happen). There is no doubt that there are significant problems with Airbus's production and R&D teams (no matter how often Airbus says "it's only a production problem" the fact remains that the R&D teams kicked it off in the first place by not getting the wiring done to spec).
 
scalebuilder
Posts: 605
Joined: Thu Nov 24, 2005 10:32 pm

RE: Is Airbus The Next Enron?

Sun Oct 15, 2006 2:58 am

Quoting AirFrnt (Reply 35):
Because I have looked at their financial, and because of the relatively sparse Airbus documentation. SOX standards also include a huge number of financial reporting requirements as well as the internal controls you mention

Please understand that "getting the clean opinion" from an audit firm, and ultimately being SOX certified, is a pretty exhaustive effort. It will involve far more effort than "glancing" at EADS's financial statements. EADS is not required to pursue this compliance. With that said, it is not in either your or my place to say that EADS is in or out of compliance. The company may very well meet or exceed SOX compliance standards for all that we know. Please prove me wrong.

Quoting AirFrnt (Reply 35):
Not anymore they are not. BAe is out of the picture.

It is hard to confirm out there whether BAE found eligible buyers for their interest. EADS may have bought some and Russian interests may have bought the rest. Should the facts that I have gathered be true, accurate and correct, BAE realized a hefty loss on this transaction (I am not surprised). Can you confirm, using a reliable source, that the BAE interest is finally sold to third parties?

Quoting AirFrnt (Reply 35):
They have lots of money, strange financing structures, unclear organizational structures, and the lack of published sheets make me worry very much.

Airbus does not have lots of money! They may run cash flow negative even in the short run.

Strange financing structures? Please explain.

What do you put in the term "published sheets"?

Quoting AirFrnt (Reply 35):
They will face a cash drain without the A350 as well.

This could happen, but you seem to be positive. Why?
Go the extra mile......and avoid the traffic!!!
 
GSM763
Posts: 573
Joined: Sat Jan 07, 2006 3:35 am

RE: Is Airbus The Next Enron?

Sun Oct 15, 2006 3:22 am

Airbus has had a really bad 6 months, with CEO resignations, aircraft delays etc. but I can't quite see this all as a reason to deczlare impending doom and start declaring it enron II/III/IV... whatever. Let'snot forget the Boeing situation 10 years ago and it has bounced back. There is no sign that Airbus has tried the huge fradulent accounting thing and this is harder to do when you're using Aircraft anyway.

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