leelaw
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Rolls-Royce Helps Finance Northwest 787 Deal

Fri Oct 20, 2006 7:39 pm

Rolls-Royce (R-R) has agreed to finance advance payments for Northwest Airlines’ purchase of 18 Trent 1000-powered Boeing 787 aircraft while the US major continues restructuring under Chapter 11 bankruptcy protection.

The deal is among a number of arrangements disclosed in Northwest’s bankruptcy court documents that reveal Boeing - together with Boeing Capital - and R-R are facilitating the airline’s order for 787s, the first of which will be delivered to the SkyTeam member in August 2008...


http://www.flightglobal.com/Articles...Northwest+Airlines+Boeing+787.html
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trex8
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Fri Oct 20, 2006 8:53 pm

so lets see, a company which receives significant launch aid investment from its government is helping an airline from a company in a country which thinks launch aid is illegal to buy products from a company which also thinks its illegal and has been even harmed by such. How very quaint!
 
jfk777
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Fri Oct 20, 2006 9:39 pm

I hope this doesn't cause a political stink in the UK as Rolls Royce did when they financed Pan Am's purchase of 12 L-1011-500 in 1979.
 
PM
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Fri Oct 20, 2006 9:46 pm

Quoting Trex8 (Reply 1):
so lets see, a company which receives significant launch aid investment from its government ...

Sounds like a perfect description of Japanese involvement in the 787!
 
AirbusA6
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Fri Oct 20, 2006 9:56 pm

By the sound of the article EVERYONE is helping Northwest out at the moment - Boeing, Airbus, RR, Bombardier, Embraer etc. It looks like NW will soon be on the straight and narrow.
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baroque
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 12:31 am

Quoting Trex8 (Reply 1):
so lets see, a company which receives significant launch aid investment from its government is helping an airline from a company in a country which thinks launch aid is illegal to buy products from a company which also thinks its illegal and has been even harmed by such. How very quaint!

Excellent summary, I must get you to write my abstracts! goodvibes 

Quoting Jfk777 (Reply 2):
I hope this doesn't cause a political stink in the UK as Rolls Royce did when they financed Pan Am's purchase of 12 L-1011-500 in 1979.


With RLI it should not, Treasury should press the buttons on their till to go Kerlang as I remarked on a different thread. If RR helping NW sells more engines, the pollies should be delighted. 1979 were different times with a different RR!
 
beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 2:14 am

Quoting Trex8 (Reply 1):
so lets see, a company which receives significant launch aid investment from its government is helping an airline from a company in a country which thinks launch aid is illegal to buy products from a company which also thinks its illegal and has been even harmed by such. How very quaint!

Here we go...

Quoting PM (Reply 3):
Sounds like a perfect description of Japanese involvement in the 787!

And everyone should make note... it is the Japanese companies receiving this launch aid (just like RR does) for their own factories and build up. Not Boeing.

Quoting AirbusA6 (Reply 4):
It looks like NW will soon be on the straight and narrow.

Excellent news. As much as people on here seem to dislike NW. They are still one of my favorites. Dozens on flights(both pre and post 911) on them and i have never even been looked at the wrong way. Let alone had bad service. Most of the time our flights were early or "at worst" on time. I can only remember one flight we were more than 5 minutes "late" to the gate.
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sk736
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 2:45 am

Quoting Beech19 (Reply 6):
And everyone should make note... it is the Japanese companies receiving this launch aid (just like RR does) for their own factories and build up. Not Boeing.

Well that makes all the difference, doesn't it! Couldn't be described as a subsidy to Boeing at all. Clever!
 
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Stitch
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 2:51 am

So I guess if NW pays back this financing prior to taking delivery, they'll be free to hang GEnx-1B64 engines off the wing? And if they do so, that will be dishonest because they "owe" RR?  Wink
 
PresRDC
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 3:02 am

It's all about getting your engines on wing. Once that happens, you've got a captive customer.
 
beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 3:24 am

Quoting SK736 (Reply 7):
Couldn't be described as a subsidy to Boeing at all. Clever!

They use Rolls Royce motors. Which has already been let out of the bag that they get government subsidies.
They used RR motors on the 747 which was built completly within the US (which as we know, government subsidies are illegal here).
Are you saying that because RR gets government aid, that Boeing then by "connecting the dots" received government aid from the UK?

Give it a rest... they don't get launch aid. IF the 787 had been produced 100% in house they would have built it without launch aid. Just as Boeing is not receiving any sort of launch aid. The suppliers who build some of the parts and ship them to Boeing are.

Does Ford Motor Company receive subsidy aid from Canada and Mexico because some of the components that go into Ford cars in the US have components from there? NO... thats just stupid.

Boeing has no control over government subsidies in other countries. The US Government doesn't ever have control over that (although they might want too...).

Quoting Stitch (Reply 8):
So I guess if NW pays back this financing prior to taking delivery, they'll be free to hang GEnx-1B64 engines off the wing?

One can only dream...
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Lemurs
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 3:31 am

Quoting Trex8 (Reply 1):
so lets see, a company which receives significant launch aid investment from its government is helping an airline from a company in a country which thinks launch aid is illegal to buy products from a company which also thinks its illegal and has been even harmed by such. How very quaint!

What exactly are you trying to prove with that? You've now involved so many layers of abstraction that it would be perfectly fine to say that any company in the US that takes money from any number of other companies in other parts of the world that recieves subsidies are guilty of...what exactly? I'm really lost at what you're trying to imply, honestly.
There are 10 kinds of people in the world; those who understand binary, and those that don't.
 
vv701
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 3:54 am

Quoting Trex8 (Reply 1):
company which receives significant launch aid investment from its government



Quoting Beech19 (Reply 6):
it is the Japanese companies receiving this launch aid (just like RR does)



Quoting Beech19 (Reply 10):
They use Rolls Royce motors. Which has already been let out of the bag that they get government subsidies.



Quoting Beech19 (Reply 10):
Are you saying that because RR gets government aid,

As a stock holder in RR I regret that the above comments are not strictly true. I would love the value of my stock to be subsidised by someone and with UK tax levels running at over 42 per cent of GDP, the British government should be able to afford to give me some back. However I regret it is well over a quarter of a century since RR last received a direct subsidy from the UK government. So it would be correct to replace 'receives' by 'received', 'does' by 'did', 'get' by 'got' and 'gets' by 'got' in the four replies referenced above.

Whether or not RR has since received any indirect subsidies through over priced military or research contracts I do not know. Although it has been suggested that Boeing receive such indirect subsidies I have never seen a similar suggestion about RR. But who knows?
 
Bongodog1964
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 3:57 am

Have Rolls Royce received any launch aid for civil programmes in the recent past; its just that I can't remember hearing of any ?
 
beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 4:20 am

Quoting VV701 (Reply 12):
As a stock holder in RR I regret that the above comments are not strictly true. I would love the value of my stock to be subsidised by someone and with UK tax levels running at over 42 per cent of GDP, the British government should be able to afford to give me some back. However I regret it is well over a quarter of a century since RR last received a direct subsidy from the UK government. So it would be correct to replace 'receives' by 'received', 'does' by 'did', 'get' by 'got' and 'gets' by 'got' in the four replies referenced above.

I was only repeating what was obviously mis information. I did not know for sure. It was an example.
Good to hear as it just throws one more wrench into the "boeing receives indirect subsidies" argument. Which they do NOT.
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ImperialEagle
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 5:27 am

This is not a "first" for RR.

They got pretty "sporty" with PA and sold them engines for their L15's------and for better or worse landed a new customer.

Now they are doing it with NW. Good for them both.
"If everything seems under control, you're just not going fast enough!"
 
AirbusA6
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 5:39 am

Well seeing that GE bought BA's engine maintenance plant (at a generous price) in order to get the 777 contract, being sporty is hardly new!

Oh and wasn't the CF6 derived from the engines on the Galaxy?
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beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 5:55 am

Quoting AirbusA6 (Reply 16):
Oh and wasn't the CF6 derived from the engines on the Galaxy?

Yes... it was "based" off the GE TF39 - The first high bypass fan.
http://geae.com/engines/commercial/cf6/history.html
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trex8
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sat Oct 21, 2006 10:02 am

Quoting Bongodog1964 (Reply 13):
Have Rolls Royce received any launch aid for civil programmes in the recent past; its just that I can't remember hearing of any ?

from Hansard, this is just for recent RLI too

TRADE AND INDUSTRY
A380 Airbus
Mr. Hayes: To ask the Secretary of State for Trade and Industry what the UK's share is of the costs of the A380 Airbus initiative; and what estimate he has made of the number of jobs for UK citizens this initiative has (a) created and (b) safeguarded (i) in the UK and (ii) overseas. [53230]

Alun Michael: The Government committed support of £530 million in repayable launch investment for the design and development of the wings for the A3 80 by Airbus UK. In addition, the Government committed support of £250 million in repayable launch investment for the design and development of the Trent 600 and 900 engines by Rolls-Royce—the Trent 900 engine powers the A380.

The original estimate of the number of jobs created both directly and indirectly by the A380 project was 22,000. It was also estimated that it would help to safeguard the 62,000 Airbus-related jobs in the UK. A further 7,000 jobs were to be safeguarded by the investment in the Trent 900.

Today, Airbus employs a total of 55,000 people with 13,000 of those jobs at Airbus UK. Rolls-Royce employs a total of 36,000 people with 21,000 of those jobs in the UK.

27 Feb 2006 : Column 124W

Quoting Lemurs (Reply 11):
What exactly are you trying to prove with that? You've now involved so many layers of abstraction that it would be perfectly fine to say that any company in the US that takes money from any number of other companies in other parts of the world that recieves subsidies are guilty of...what exactly? I'm really lost at what you're trying to imply, honestly.

that certain companies who cry foul and call launch investment the devils work should also ethically extend that description to all launch investment including situations where their own suppliers benefit. Is that clear enough???
 
baroque
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sun Oct 22, 2006 12:29 am

Quoting Bongodog1964 (Reply 13):
Have Rolls Royce received any launch aid for civil programmes in the recent past; its just that I can't remember hearing of any ?

Well, as I was about to say:

Quoting Trex8 (Reply 18):
from Hansard, this is just for recent RLI too

when Trex8 beat me me to it. Glad Hansard is not only read down here! I guess the UK is too exciting a place for it to be widely read there although I know RP is a devotee.

The disconnect (cognitive dissonance, whatever!!) is whether RLI is a subsidy or not. The EU and GoUK clearly think it is not, and Bobby Z says it is.

As this thread makes clear, the effects of RLI can spread far and wide, so if it is a subsidy, then the sales of any airplanes carrying Rollers also carry a subsidy. You will probably find in the finer detail that many other parts of aircraft are similarly affected.

The normal definition of a subsidy would not include RLI, it does indeed offer a slightly lower interest rate compared with the market (but surprisingly little increase) but the major disconnect is the ongoing Royalty. So once RR has repaid its loans on the T1000 - which should be a snip - then each sale produces an override straight back to Treasury.

If I were an RR shareholder, I would worry more about the Royalty being paid, than the advantage I got earlier in the deal.

Just the overall repayment so far to the UK Treasury of over 80% of initial investments so far, suggests it is not your usual form of subsidy!

I do look forward to seeing the results of the WTO effort. I find it hard to believe the US case will stick. But then normal legal matters leave me amazed, so WTO should be even "better".

My biggest recent surprise was when our brilliant mandarins in Canberra, made a definition of oil so that it included (accidentally) coal and oil shale. The definition stated any material containing hydrocarbons. Well coal does contain methane. So EXXON (Esso Aus) claimed oil rates for coal exploration. The judge listened to it all, agreed that coal fell in the definition for oil, but then found against EXXON because to agree with them would have defied commonsense (or a similar phrase). Good grief, judges applying commonsense, what next. So don't assume you know the answer to the WTO case, not unless you are the one who decides it!!!
 
leelaw
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sun Oct 22, 2006 12:40 am

Quoting Baroque (Reply 19):
Good grief, judges applying commonsense, what next.

Jurists are supposed to apply the law, not commonsense.
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Jonathan L
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sun Oct 22, 2006 1:15 am

Quoting Beech19 (Reply 10):
(which as we know, government subsidies are illegal here).

Actually in this country they take the form of "defense contracts."
 
baroque
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Sun Oct 22, 2006 2:00 am

Quoting Leelaw (Reply 20):
Jurists are supposed to apply the law, not commonsense.

I know, but you just cannot trust the buggers!  Big grin

I would have been willing to bet EXXON would have won, but lo and behold the Tax Office did. The really amazing thing was the whole argument was on extra deductions over a relatively small amount (in Exxon terms) something less than $200 million, so the different rates would have been about 5% of that, which must have been close to the cost of the case, especially when they had to pay the Tax depts costs (IIRC).
 
beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 12:38 am

Quoting Jonathan L (Reply 21):
Actually in this country they take the form of "defense contracts."

No... a defense contract must be won. My father is a defense contractor, USAF. They are NOT subsidized. They have to compete and win the contract. Don't go down that road.
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trex8
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 3:37 am

Quoting Beech19 (Reply 23):
No... a defense contract must be won. My father is a defense contractor, USAF. They are NOT subsidized. They have to compete and win the contract. Don't go down that road.

usually that is the case, sometimes there are sole source non competitive contracts (if you want another F15, why would you get Lockheed to bid on it?), sometimes your friendly congressman writes into appropriations bills certain clauses which essentially end up giving a contract out to a specific contractor and needless to say they only do this with the nations best interests in mind with no selfish intent whatsoever  Smile, and then sometimes some manufacturers try to wangle a big one in like the KC767 lease without any competition.
so not all, though certainly most, DoD contracts are competitively bid.
as to subsidies, well, that would be good for another 100 posts!! one mans taxbreak is another mans subsidy
 
beech19
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 4:20 am

Quoting Trex8 (Reply 24):
sometimes there are sole source non competitive contracts (if you want another F15, why would you get Lockheed to bid on it?),

Yes but that is a little different of a situation...

Quoting Trex8 (Reply 24):
some manufacturers try to wangle a big one in like the KC767 lease without any competition.

Yeah... that was a mistake. Though they will still end up getting the deal in the long run. IMHO.

Quoting Trex8 (Reply 24):
one mans taxbreak is another mans subsidy

And i didn't agree with that either. Well played by Boeing though...
I honestly think Boeing played the state of washington on that one. lol
I don't think they truely had intentions on building the 787 anywhere else. It just didn't make sense. Could you imagine Boeing building aircraft (717 not included for obvious reasons) outside of the Jet City? (they already admitted the mistake of moving headquarters to Chicago... can't find the link. Sorry).
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par13del
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 4:45 am

So if I understand Trex8 point, if you only have a single supplier and you obtain goods from them that means that you give them a subsidy?

If a defense contract is given it is a subsidy?

I always thought that defense contracts were for the provision of either a service - maintain/refurbish equipment - or a product - tank, aircraft, etc. If they are not delivered, penalties apply.

A good question for the military contracts being subisidies crowd is what happened to the Commanche and Crusader, who paid the bill, and how are the "losses" being recouped. If it is similar to launch aid, does that mean that Lockheed etc will be repaying the US govt. in 15-18 years?
 
trex8
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 5:18 am

Quoting Par13del (Reply 26):
So if I understand Trex8 point, if you only have a single supplier and you obtain goods from them that means that you give them a subsidy?

not at all, my point in my last post was that not all DoD contracts are competitively bid out.
a non competitive bid may well be a subsidy though thats hardly the case most of the time, going back to the KC767 lease, in the eyes of some that was certainly nothing more than a subsidy as it was non competitive yet they were arguably other solutions which could have done the job and the price was outrageously overpriced.
I would call cost plus contracts more likely to be abused as a subsidy than non compete contracts.
 
acidradio
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 9:27 am

Yeah, this whole thing of NW buying an RR engine for a new plane seemed all too weird. At least in my mind, all signs pointed at GE, especially given the absence of a PW engine choice for the 787. But now I see it. We all know NW to go where they get the best deal, and they found it with RR. It is interesting that NW didn't try and force Boeing to add a PW engine option to the 787, but then again, NW isn't exactly in the right position to bargain for such a thing.
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trex8
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 9:58 am

Quoting Acidradio (Reply 28):
It is interesting that NW didn't try and force Boeing to add a PW engine option to the 787, but then again, NW isn't exactly in the right position to bargain for such a thing.

NW had no choice, Boeing had booted PW out of the 787 game early on and chose RR and GE as the only 2 engine suppliers, their proposal was too high risk for Boeing, though probably the most technically advanced
 
acidradio
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 10:53 am

Could this be NW's first new widebody jet order where PW was NOT an option? Out of curiosity, what exactly was PW's proposal? Are there any links that you know of? Thanks.
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PM
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RE: Rolls-Royce Helps Finance Northwest 787 Deal

Mon Oct 23, 2006 11:33 am

Quoting Acidradio (Reply 30):
Could this be NW's first new widebody jet order where PW was NOT an option?

It is the first Boeing or Douglas jet (excluding sub-versions) where there is no PW option. That's quite historic.