Eureka
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Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 6:33 pm

Most everyone here is well aware that the A350 has gone through some design iterations. The latest of these iterations is the A350XWB, which has family members sized between the 787-9 with 290 seats and the 777-300ER with 365 seats. Presumably, some of the airlines that bought the original 100 A350's wanted the 210 to 250 seat aircraft they contracted to receive.

If Boeing can find the odd product slot here and there before or around 2013 can any of the early A350 customers be pulled away? Which airlines might these be?
 
AirSpare
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 8:25 pm

I have wondered about TAM. As they have ordered the 777, why would they need therir 350XWB orders?

It would seem a 787 would be a better fit for them now. But if they get the XWB for the price of A350 iteration 1, it may be to good of a deal to pass up.

That will probably be the subject of future threads, A will fill the firm orders booked in years gone by for a loss.
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NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 8:28 pm

My guess is that Airbus's incompetent management has left their sales negotiators on 'a hiding to nothing', Eureka.

Applying ordinary business principles, if anyone came to me and said that the product I'd ordered in good faith was going to be late, larger, and thirstier, my starting position would be, "Yes, I'll still consider taking delivery. But only if - A. the price remains as agreed; B. I get compensation for loss of profits due to the delay; and C. you agree to compensate me for the extra fuel I'll have to buy and waste if I can't fill the thing."

Airbus's chopping and changing begins to look more and more like business 'suicide' to me.

[Edited 2006-12-17 12:31:20]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
PADSpot
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:02 pm

Quoting Eureka (Thread starter):
Presumably, some of the airlines that bought the original 100 A350's wanted the 210 to 250 seat aircraft they contracted to receive.

If someone felt that way they had the chance to withdraw their order. After such a significant redesign (from the original A350 to the A350XWB) customers are not further bound to their commitments. They could even sue Airbus for delivering the originally promised aircraft. Well ... that woudln't materialize, but Airbus had to pay compensations for not abiding a contract.
 
NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:11 pm

Quoting PADSpot (Reply 3):
After such a significant redesign (from the original A350 to the A350XWB) customers are not further bound to their commitments. They could even sue Airbus for delivering the originally promised aircraft. Well ... that woudln't materialize

Worse than that, PADSpot - by ordering the 'old new' A350 they passed up their chances of getting early delivery of 787s. And that means losing real money over a period of years - they simply won't have, and can't get, the aeroplanes on which their future business plans were based.

IMO, If Airbus doesn't pay up handsomely and soon, they'll have every right to sue.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
PADSpot
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:22 pm

Quoting NAV20 (Reply 4):
Worse than that, PADSpot - by ordering the 'old new' A350 they passed up their chances of getting early delivery of 787s. And that means losing real money over a period of years - they simply won't have, and can't get, the aeroplanes on which their future business plans were based.

IMO, If Airbus doesn't pay up handsomely and soon, they'll have every right to sue.

Well, while it would additionally justify compensations, I don't know if it would finally had an effect, because even the "old new" A350 would had entered into service 2 years after the 787. Thus chances are not all too bad to get some 787 slots at a comparable point in time.
 
NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:37 pm

Quoting PADSpot (Reply 5):
even the "old new" A350 would had entered into service 2 years after the 787. Thus chances are not all too bad to get some 787 slots at a comparable point in time.

That's a point that could be argued out in court, PADSpot. But I expect that we both agree that this sort of problem will never see the inside of a courtroom, Airbus will just pay whatever it takes to avoid the bad PR. After all, chances are that they'll mainly be using taxpayers' money in one form or another.  Smile

"MADRID, Dec 15 (Reuters) - Spain approved an increase in payments to Airbus's (EAD.PA: Quote, Profile , Research) A380 aircraft on Friday in a bid to protect Spanish suppliers to the aerospace industry, massively dependent on the beleaguered new plane.

"The planemaker, the core business of European aerospace group EADS, accounts for half of the Spanish aerospace sector's income.

"It is hoped the increase of aid will help alleviate the difficulties the Spanish firms linked to the aeronautical industry are going through due to Airbus's delicate situation," the Ministry of Industry, Tourism and Commerce said in a statement.

"Successive delays and profit warnings at Airbus plunged EADS into management turmoil in the summer and mean deliveries of the ultra-large aircraft are on average two years behind schedule."


http://today.reuters.com/news/articl..._AIRBUS-SPAIN.XML&rpc=66&type=qcna
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Rj111
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:43 pm

The A350XWB-800 got wider but actually got shorter than the A350-800. So it probably had around the same capacity. I don't know what the new specs are or if the size has changed.

At the end of the day (if the plane hasn't shrunk) it's about operating costs and not size.
 
manni
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 9:55 pm

Quoting NAV20 (Reply 2):
"Yes, I'll still consider taking delivery. But only if - A. the price remains as agreed; B. I get compensation for loss of profits due to the delay; and C. you agree to compensate me for the extra fuel I'll have to buy and waste if I can't fill the thing."

 rotfl 

Mr. Leahy has already said that he expect some airlines to cancel. Reading between the lines, he probably said 'dont expect us to sell our planes at a loss, we'd rather loose your business this time'.

The airlines are 'warned' as Mr. Leahy has clearly indicated that the deal can only go trough when both parties are satisfied.

And let's face it, if TAM, just an example, decides to cancel her order and goes to Boeing for the 787... How much room do you expect TAM to have to get a reasonable discount?
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NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:10 pm

Quoting Manni (Reply 8):
Reading between the lines, he probably said 'dont expect us to sell our planes at a loss, we'd rather loose your business this time'.

Manni, an order is a contract. If either party breaches that contract they are liable to pay damages to the aggrieved party.

So, if the orders were genuine, the only thing Leahy can say to the customers is, "Sorry, our fault, what sort of compensation would you consider reasonable?"

Of course, if the 'orders' weren't in fact genuine orders, but only 'letters of intent,' Airbus is in the clear with the customers. But it's in deep trouble with the shareholders and regulators, for publishing misleading information.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
Lumberton
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:15 pm

Quoting Manni (Reply 8):
Mr. Leahy has already said that he expect some airlines to cancel. Reading between the lines, he probably said 'dont expect us to sell our planes at a loss, we'd rather loose your business this time'.

Going forward, that may very well be the case. However, with existing customers, who have signed contracts, there will most likely be compensation or cancellation. IMO, the dollar vs euro imbalance has taken away much of John Leahy's much touted (allegedly) ability to discount.
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ebbuk
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:33 pm

Quoting NAV20 (Reply 9):
But it's in deep trouble with the shareholders and regulators, for publishing misleading information.

Nav you have a well documented beef with the management at Airbus but to say that is simply not cricket. There has never been any misleading information.
 
dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:35 pm

A simple question that provokes very complicated answers - the A350XWB is a different airplane than the A350 Mark 2 that gathered the orders which you are referreing to. My guess is that Airbus will meet with each airline that ordered the A350 Mark 2 and at those meetings the particular airline will either (1) reconfirm their order for the A350, (2) be given the option to cancel their order for the A350 as Airbus cannot (legally) and will not (practically) force airlines to take airplanes that they do no want and did not specify, or (3) do something else, such as being offered A330s at special terms.

Eseentially, contracts must be renegatiated from being to end......the airplane has changed, the delivery schedules have changed, and the prices have likely changed.

I have said this before and some of the Airbus gang got a bit annoyed with me.....but at this point in time, Airbus really does not have any real committments (never mind confirmed orders) for the A350XWB except from possibly SQ and I dont think that deal is confirmed yet either. This is not intended as a negative remark or a jab at Airbus......its simply the reality of the situation: The A350XWB is a different airliner than originally proposed by Airbus, thus they are starting over with the order book.....the fact that many airlines had selected the A350 Mark 2 will help get the A350XWB launched and Airbus will work very hard to re-confirm those deals, but as said by Airbus itself:

Quoting Manni (Reply 8):
Mr. Leahy has already said that he expect some airlines to cancel.
 
SKA380
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:37 pm

Quoting NAV20 (Reply 9):
Manni, an order is a contract. If either party breaches that contract they are liable to pay damages to the aggrieved party.

Ohhh, have you read these contracts? I guess not..
Don't you think Airbus has covered their asses and put a small note that the design and configuration of the aircraft is subject to changes in these contracts?

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trex8
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:46 pm

Quoting Dutchjet (Reply 12):
Airbus really does not have any real committments (never mind confirmed orders) for the A350XWB except from possibly SQ and I dont think that deal is confirmed yet either.

what about the Chinese LOI?
 
dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:50 pm

Quoting EbbUK (Reply 11):
There has never been any misleading information.

Thats a remark that I have a problem with.......whether you are an Airbus guy or a Boeing guy, it does not matter, the simple truth is that there has been a good amount of misinformation or lack of information (with the same result) coming out of Toulouse in recent times.

Quoting SKA380 (Reply 13):
Don't you think Airbus has covered their asses and
ut a small note that the design and configuration of the aircraft is subject to changes in these contracts?

Modifications to a design are one thing, a complete redesign of an airliner is another..........Airbus can cover its asses all they want, but they will not force airlines to accept delivery of an airplane that they did not order over a time period that was not originally anticipated. It would be a huge legal mess and cost Airbus a huge amount of good will with the airlines. Airbus and the airlines must renegotiate whatever agreements exist concerning the A350.....and this will happen behind the scenes in the coming months and, as stated above, there COULD be some cancellations for a variety of reasons which is something that Airbus is fully prepared for.
 
dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:51 pm

Quoting Trex8 (Reply 14):
what about the Chinese LOI?

Depends upon whether you are counting an LOI as a firm order.
 
PADSpot
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:53 pm

Quoting NAV20 (Reply 6):
After all, chances are that they'll mainly be using taxpayers' money in one form or another. Smile

Nope, that is a common misconception. All what has been talked about were stakeholder-secured loans. That means that the stakeholder of a company (here the French and German governments) only safeguard a standard bank credit, which is subject to normal interest and amortization payments. If and only if Airbus is not able anymore to pay for the credit the stakeholder steps in and takes over responsibility. That has never been the case up to now, thus tax payer's money wasn't ever wasted. The opposite is the case: Airbus has made more profits than losses and as the French and German governments are actual stakeholders of EADS/Airbus the tax payer profited from those profits

The only direct payment that were made, were start-up payments at the beginning of the A300/310 development in the 70s. But that's a little long ago to argue about ... and then the situation was that two government open up a business. I think it's not unusual that stakeholders bring in the money in that case.

However Airbus' critics argue that already a government-secured loan poses a subsidy because it is a financial advantage that a competitor outside the reign of that "generous" government does not have (-->Boeing). But that is a matter of definition, because one could say exactly that about piles of legislation on both sides of the pond. Just think of laws that protect defense companies from foreign take-over, individual tax agreements and so forth. The entire discussion is also quite industry-specific. The same happens in many other industries and nobody complains about it ... airlines business, automotive industry etc ...

I think the problem is not the government-secured loans of Airbus, but the fact the US have a "free economy", where it is not part of the philosophy that the state supports business to promote social welfare. It is up to the market to decide, who wins and who fails. Many European countries (mainly France and Germany, but also the Nordic countries) practice something called "social economy" in which more money is spent to secure social welfare. Part of that is supporting promising technologies in order to secure high-skilled labor. And that is why Airbus was founded 35 years ago. Thus finally it is not a legal issue, but a cultural one.
 
NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:53 pm

Steady, EbbUK - I merely said that if the A350 'orders' turned out to be only LOIs, THAT would be considered 'misleading.'

As it happens, though, there are already lawsuits pending which mey in fact turn out to allege misinformation as well as 'insider trading.'

"PARIS -(Dow Jones)- A French shareholder lobby group said Wednesday it is planning to file a lawsuit in connection with recent allegations of insider trading that have surrounded the Franco-German aerospace giant European Aeronautic Defence & Space Co. (5730.FR).

"The move comes just days after investigators raided the Paris headquarters of EADS and one of its major shareholders, the French defense and media group Lagardere SCA (13021.FR).

"Colette Neuville, chairman of ADAM -one of France's best-known shareholder groups representing small investors -told Dow Jones Newswires the lawsuit would allege either insider trading or the publication of "misleading information"."


http://news.morningstar.com/news/Vie...INE000519_univ.xml&Cat=Industrials

I reckon that the only certain thing about all this is that the courts will be busy for years arguing out the manifold details of the Airbus debacle.
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11Bravo
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 10:59 pm

Quoting Manni (Reply 8):
How much room do you expect TAM to have to get a reasonable discount?

While the B787 is doing extraordinarily well and Boeing is in a position to maximize their margins on this product, I suspect any of the existing A350 customers would likely receive a nice discount to switch.

The benefit of having a customer switch may well outweigh the cost of a discount. It would further strengthen the already very robust market position of the B787. I'll bet Boeing is working this with some of the larger A350 customers; US , JJ, TP, and SQ (loI).
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NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 11:21 pm

Quoting 11Bravo (Reply 19):
The benefit of having a customer switch may well outweigh the cost of a discount.

Really don't see why - Boeing have 787 orders running out of their ears.........

The more likely 'business reality' is that the aggrieved airlines will screw appropriate compensation out of Airbus and then use Airbus money to pay Boeing or 'A.N. Other' - (i.e. existing 787 customers) extra to secure 'early delivery' 787 slots.
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ebbuk
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RE: Is The A350 Too Big For Some Who've Ordered It

Sun Dec 17, 2006 11:22 pm

Quoting Dutchjet (Reply 15):
the simple truth is that there has been a good amount of misinformation or lack of information (with the same result) coming out of Toulouse in recent times.

so a lack of information is misleading? The two are very different.


It is incredible that whatever Airbus does is bad PR for the company. See below

Quoting NAV20 (Reply 18):
Steady, EbbUK - I merely said that if the A350 'orders' turned out to be only LOIs, THAT would be considered 'misleading.'

Of course it is a possibility that no one has purchased a single Airbus plane, such is the "misleading" information coming from Toulouse.

Quoting NAV20 (Reply 18):
As it happens, though, there are already lawsuits pending which mey in fact turn out to allege misinformation as well as 'insider trading.'

This lawsuit has nothing to do with the 350, and nor will it address the issues that trouble Airbus at present.
 
dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 11:35 pm

Quoting EbbUK (Reply 21):
so a lack of information is misleading? The two are very different.

In many cases, the lack of information is midleading.......think A380. The two are not different, in neither case is the truth being set forth.
 
NAV20
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 11:38 pm

Quoting EbbUK (Reply 21):
so a lack of information is misleading?

Absolutely, if it consists of keeping shareholders in ignorance of expected production delays (while selling off your own shares).

So, in my opinion, is leaving 100-plus 'orders' for an aeroplane that has not been designed, will not be built, and will never be delivered on your company website.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
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Stitch
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 11:45 pm

Quoting Eureka (Thread starter):
If Boeing can find the odd product slot here and there before or around 2013 can any of the early A350 customers be pulled away? Which airlines might these be?

Depends on how many they need, when they need them, and how their current fleet is organized, I imagine.

Quoting RJ111 (Reply 7):
The A350XWB-800 got wider but actually got shorter than the A350-800. So it probably had around the same capacity. I don't know what the new specs are or if the size has changed.

It's heavier and therefore needs more powerful engines. So while it's not really an A332 replacement anymore, it better covers the A333 and A343 markets.

Quoting Manni (Reply 8):
Mr. Leahy has already said that he expect some airlines to cancel. Reading between the lines, he probably said 'dont expect us to sell our planes at a loss, we'd rather loose your business this time'.

In all honesty, Leahy has to say that...

I don't expect Airbus to exactly roll-over, especially since they still have the option of canceling the A350 program if the orders don't justify the costs of going forward, but, obviously, Airbus isn't going to be in the strongest position with customers who ordered predominately or substantially the original A358 model.
 
11Bravo
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RE: Is The A350 Too Big For Some Who've Ordered It?

Sun Dec 17, 2006 11:57 pm

Quoting EbbUK (Reply 21):
Of course it is a possibility that no one has purchased a single Airbus plane, such is the "misleading" information coming from Toulouse.

Why must you always take such a sarcastic and confrontational tone on this forum?

NAV20's point remains; Airbus is in noncompliance with the terms and conditions set forth in the existing A350 firm order contracts. They can either renegotiate or pay compensation for a cancellation.
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ORD2pm
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:07 am

I'm not trying to insult anyone, but cant you guys just admit that you know nothing about Airbus or Boeing.

And your posts is just alot of rubbish? I mean, it would be fair of you to admit that.
 
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scbriml
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:11 am

Quoting 11Bravo (Reply 25):
Airbus is in noncompliance with the terms and conditions set forth in the existing A350 firm order contracts.

This is known how exactly?

Unless I'm mistaken (and I'm sure I'll be quickly corrected if I am), the original A350 never achieved design freeze, so it would be very surprising if there weren't clauses in the contracts to cover changes to the specifications.
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dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:12 am

Quoting ORD2pm (Reply 26):
I'm not trying to insult anyone, but cant you guys just admit that you know nothing about Airbus or Boeing.

And your posts is just alot of rubbish? I mean, it would be fair of you to admit that.

Why would anyone be insulted by your remarks?  Confused
 
leelaw
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:19 am

Quoting Trex8 (Reply 14):
what about the Chinese LOI?

Who knows which design iteration of the A350 was the subject of the "Chinese LOI" announced on October 26th. After all, Mr. Leahy, et al, didn't officially switch from playing "three-card composite monte" (Al-Li fuselage) to the "composite shell game" (Composite fuselage) until December 4th.  Smile
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scbriml
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:35 am

Quoting Leelaw (Reply 29):
Who knows which design iteration of the A350 was the subject of the "Chinese LOI" announced on October 26th.

They signed for A350XWBs. I don't think the move from Al-Li to composite fuselage has changed the basic sizes of the models, and I would have expected that the LOI would be sufficiently "loose" to allow room for manoeuvre either way.

I also expect Airbus knew about the composite fuselage a while before it was announced to the World on Dec 4th. But I'm sure you knew that already. wink 
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11Bravo
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 12:40 am

Quoting Scbriml (Reply 27):
Unless I'm mistaken (and I'm sure I'll be quickly corrected if I am), the original A350 never achieved design freeze, so it would be very surprising if there weren't clauses in the contracts to cover changes to the specifications.

Relatively minor adjustments to the specifications perhaps, but no customer in their right mind would sign a legally binding contract that would allow the manufacturer to drastically change the aircraft as Airbus has done.

The EIS delay alone, to say nothing of the specification changes, makes it impossible for Airbus to comply. I guarantee you no airline signed a contract that had a delivery date window of plus or minus 2 years.
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ATCGOD
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:11 am

Quoting Manni (Reply 8):
And let's face it, if TAM, just an example, decides to cancel her order and goes to Boeing for the 787... How much room do you expect TAM to have to get a reasonable discount?

Probably a quite reasonable discount seeing that they are a 100% Airbus operator (until the 777's come along). Boeing might see this as an opportunity to get their second foot in the door with this customer and therefore offer a nice little discount for a large bulk order.

Quoting 11Bravo (Reply 19):
While the B787 is doing extraordinarily well and Boeing is in a position to maximize their margins on this product, I suspect any of the existing A350 customers would likely receive a nice discount to switch.

Couldn't agree more.

Quoting 11Bravo (Reply 19):
The benefit of having a customer switch may well outweigh the cost of a discount.

Again, couldn't agree more. It'd be like Airbus getting an order from JAL or another all Boeing operator.

Quoting NAV20 (Reply 20):
Really don't see why - Boeing have 787 orders running out of their ears.........

True, but it's about securing a customer that for the longest time has gone with your competitor. It's a business move that might be scrutinized but in my opinion makes complete sense in the long term.
 
leelaw
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RE: Is The A350 Too Big For Some Who've Ordered It

Mon Dec 18, 2006 1:20 am

Quoting Scbriml (Reply 30):
But I'm sure you knew that already.

What I do know is that before Farnborough there were rumors that Airbus would change the design to a composite fuselage. At the Farnborough press conference where the A350XWB was unveiled, Mr. Streiff, Mr. Williams, and Mr. Leahy under close questioning from the assembled press corps were adamant that despite the "100-day program review period" the reconsideration of the Al-Li fuselage was not on the table. IMO, given the recent turmoil within Airbus, it's not at all clear whether the rather stunning conversion from the "Church of Al-Li" to the "Church of CFRP" was complete in time to be considered in the negotiations leading to the "Chinese LOI."

Whether this fundamental change in design philosophy would be of any real concern to the Chinese customers seems to be another question altogether.
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ebbuk
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RE: Is The A350 Too Big For Some Who've Ordered It

Mon Dec 18, 2006 1:20 am

Quoting Dutchjet (Reply 22):
In many cases, the lack of information is midleading.......think A380.

Well of course the reality of the 380 is as we know it now.

Quoting NAV20 (Reply 23):
Absolutely, if it consists of keeping shareholders in ignorance of expected production delays (while selling off your own shares).

Well I guess this is what the court case will try to prove. That at every step of the 380 development the Airbus management team inteded to "mislead" its customers, shareholders and suppliers as to the full extent of the delays. An ununecessary distraction for all parties me thinks, but hey people have to make a living I suppose.

Quoting 11Bravo (Reply 25):

Why must you always take such a sarcastic and confrontational tone on this forum?

Because of statements like this one.

Quoting 11Bravo (Reply 25):

NAV20's point remains; Airbus is in noncompliance with the terms and conditions set forth in the existing A350 firm order contracts. They can either renegotiate or pay compensation for a cancellation.

Legal paperwork lodged at the time of the deals still stand, so there is nothing non-compliant about that. If after talks with customers any of the orders are cancelled wholly without obligation from both parties then they must be removed from the order book. I am not a lawyer but I suspect I have most of that right. I cite orders on both A and B books which will never see a single rivet yet have not been removed.

Equally, I have a hunch that within the contract small print, there might be a clause with wording to the effect "we reserve the right to make changes to the design without notice and where these changes affect the design materially we will notify you at the earliest possible time. At such a time you may well change your mind". Having never seen an Airbus plane order contract, it is only a hunch
 
trex8
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:27 am

Quoting Leelaw (Reply 29):
Who knows which design iteration of the A350 was the subject of the "Chinese LOI" announced on October 26th. After all, Mr. Leahy, et al, didn't officially switch from playing "three-card composite monte" (Al-Li fuselage) to the "composite shell game" (Composite fuselage) until December 4th.  

and that would also be true about the SQ LOI which predates the Chinese one.

but does it really matter? I find it hard to believe that SQ or anyone in their right minds in the last year signed up for an A350 of whatever version with specific concrete specifications, construction methods beyond a general this plane will fly x passengers y miles for z cost and will have 2 bleed air engines and it will do so at lower cost than the competition and have CCQ to other A products. I mean B just finalized the 747-8F design in the last week, if they had made some changes to say the wings and that changed the span or even decided a totally new design was necessary or if they had decided to make some major structural portion out of new composite material XYZ or have a rivetless design or GE dropped out and new engines had to be found etc etc would the customers who signed up already walk out on B as they felt B was in breach of contract? Not likely, as long as the plane still does what B said it would do initially, and if it does it even at lower operating cost than originally told by B they would be delighted as long as they don't have to pay any more than what they signed up for.
 
kaneporta1
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:36 am

Quoting Stitch (Reply 24):
It's heavier and therefore needs more powerful engines. So while it's not really an A332 replacement anymore, it better covers the A333 and A343 markets.

The A350-800XWB has the same MTOW as the old A350-800. That's 245t.
I'd rather die peacefully in my sleep, like my grandfather, not terrified and screaming, like his passengers
 
dutchjet
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:41 am

Airbus: Hello Ms Airline Exec, this is Airbus calling.

Airline Exec: Yes, how can I help you?

Airbus: I am sure that you remember that your airline signed documents to purchase twenty 250 passenger widebody airliners from us?

Airline Exec: Of course, that would be our A350 order.

Airbus: Well, we just wanted to let you know that we will be delivering 300 passenger airplanes to you.

Airline Exec: Oh, really?

Airbus: And instead of delivering them in 2011 and 2012, we will deliver them inn 2014 and 2015.

Airline Exec: Huh?

Airbus: And, by the way, each airplane will now cost $20 million more, since we will be delivering a very different product to you.

Airline Exec: Excuse me, but this was not the deal, you have just changed all of the terms and conditions of our preliminary agreement.

Airbus: Too bad, a deal is a deal.....and if you dont take these more expensive, larger and redesigned airplanes two to three years later than planned, we will see you in court.

Airline Exec: On the floor laughing.....OK, have it your way, and we will be cancelling all of our further commitments for Airbus aircraft. Good bye.

----

Ms Airline Exec then proceeds to call Boeing.


-----

Does anyone really think that this will happen? Due to the material changes in the A350 program, Airbus will go back to each and every customer that signed up for the A350 (order, LOI, memo, handshake, whatever) and re-work their deals. Those are the facts. And some cancellations are a real possibility.

[Edited 2006-12-17 17:43:12]
 
Ken777
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:42 am

I'm far from an expert, but I believe that there are two major issues Airbus faces with the existing orders.

The first, as noted in the thread starter, is the difference in size between the ordered planes and the XWB. Using Boeing planes as an example, it seems like this is like airlines ordering a 757 and Boeing deciding to build the 767 instead. The airlines would need to decide if the increase in size to the 767 fits their needs size wise and is acceptable. The second issue when looking at the change is the increase in purchase price and operating costs. There would have been a lot of issues to address and Boeing would basically have had to negotiate a new contract for each of the 757 orders.

I think Airbus is in this type of situation where they are going to need to sell each 350 v2 customer on the new XWB and, if the customer likes the new plane then Airbus will have to negotiate a new contract - or a rather extensive addendum to the original contract.
 
PanAmOldDC8
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:43 am

Quoting NAV20 (Reply 6):
MADRID, Dec 15 (Reuters) - Spain approved an increase in payments to Airbus's (EAD.PA: Quote, Profile , Research) A380 aircraft on Friday in a bid to protect Spanish suppliers to the aerospace industry, massively dependent on the beleaguered new plane.

Don't understand? I don't believe in Governments getting involved in business, they only ruin them. Seen many cases of Government run businesses never making money and then being taken over by private company and made money. I don't agree with Governments protecting"so called jobs" eventually they will fold any way. Governments should keep their noses out of business and do the thing that they are elected to do run the country
Barbados, CWC soon, can't wait
 
PanAmOldDC8
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:45 am

Quoting PADSpot (Reply 17):
Nope, that is a common misconception. All what has been talked about were stakeholder-secured loans. That means that the stakeholder of a company (here the French and German governments) only safeguard a standard bank credit, which is subject to normal interest and amortization payments. If and only if Airbus is not able anymore to pay for the credit the stakeholder steps in and takes over responsibility. That has never been the case up to now, thus tax payer's money wasn't ever wasted. The opposite is the case: Airbus has made more profits than losses and as the French and German governments are actual stakeholders of EADS/Airbus the tax payer profited from those profits

And if the company goes belly up then who is left holding the bag THE TAXPAYERS
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ATCGOD
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:47 am

Quoting Dutchjet (Reply 37):
Due to the material changes in the A350 program, Airbus will go back to each and every customer that signed up for the A350 (order, LOI, memo, handshake, whatever) and re-work their deals. Those are the facts.

I'd say in most cases you will be correct, however, there will most certainly be a few airlines that will say, "this is not the product we ordered and the capacity of this jet does not fit within our growth strategy, therefore, we must cancel." I think this will happen with a couple of airlines just because they can't make an XWB fit into their plans. We'll see, maybe time will prove me wrong.
 
Poitin
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 1:58 am

Quoting Ken777 (Reply 38):
The second issue when looking at the change is the increase in purchase price and operating costs.

A third issue is the several airlines who signed up for the A350 Mk 1 or 2 and signed contracts at well under the present price of the XWB version, and said, "Hey, we have a contract for 'X' dollars, and we expect Airbus to keep to that price."

While none of them are American carrier airlines, I have no idea about the "bait and switch" laws of other countries, but in America, they would have to deliver something the airlines are happy with at the specified price.

Sounds like Airbus shot themselves repeatedly in their feet with shotguns.
Now so, have ye time fer a pint?
 
PADSpot
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 2:48 am

Quoting PanAmOldDC8 (Reply 40):
And if the company goes belly up then who is left holding the bag THE TAXPAYERS

In that unlikely case it is the price one has to pay for years of safe employment of tens of thousands of people, profit for millions of shareholder, enormous progress in the related research fields and so on and so on ...

Btw ... you statement is common for US-Americans, but I never heard it from a European. Have you read the last paragraph of my above post? Finally it all comes down to extent of involvement the tax payers expect from their government. And at that point there is a big difference between the US and large parts of Europe.

Quoting Dutchjet (Reply 37):

Airbus: Too bad, a deal is a deal.....and if you dont take these more expensive, larger and redesigned airplanes two to three years later than planned, we will see you in court.

Airline Exec: On the floor laughing.....OK, have it your way, and we will be cancelling all of our further commitments for Airbus aircraft. Good bye.

----

Ms Airline Exec then proceeds to call Boeing

That is where it becomes false ...
 
sstsomeday
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 3:00 am

All things considered, I suggest that it is a good idea for the 350 to be larger in most of it's variations than the 787. Even if Airbus loses some current orders because the specs have changed since those orders were placed, I suggest their intention is to gain other orders in markets that the 787 may be too small for in the future.

My reasoning is this: Because the 787 is quite advanced in terms of the larger degree to which composites are used, as well as bleedless engines, I don't think it's a good idea for Airbus' 350 to compete with it head-to-head, especially since 350's EIS is so much later.

Yet, because it's reasonable to expect air travel to grow in demand, perhaps some routes now requiring 250-seat long range A/C will require more like 350 seats in the foreseeable future. So, in that scenario, we could see larger 350's rather than 787s replacing 767s and 777s on some routes in the future.

I'm going to assume that the 350, as a clean sheet A/C, will have technological but especially economic (fuel consumption) advances ahead of the 777, even as Boeing modernizes and tweeks it moving forward. (Of course that is a lot of assuming - so far we have engineers saying they don't see technology being available that would support Airbus' performance/economic claims for the 350, if I am not mistaken.)

But I wonder if Airbus' strategy is specifically designed to side-step direct competition with the 787, and instead tap into higher capacity markets that currently offered variants of the 787 will not cover?
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atmx2000
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 3:14 am

Quoting SSTsomeday (Reply 44):
But I wonder if Airbus' strategy is specifically designed to side-step direct competition with the 787, and instead tap into higher capacity markets that currently offered variants of the 787 will not cover?

Airbus's problem is that they have to address a market ranging from 200 pax to 400 pax in 3 class layouts. They thought they had the high 300 market covered with the A346, but it turns out they don't. So how can they address a market that Boeing has captured while addressing the market the 787 addresses at the lower end of the range. The best answer Airbus is to attack the middle, the 300 pax space, and stretch down and up a little bit. Now this isn't a bad idea because the replacement market for the 300 pax space will be taking off as A333s/A343s/772As/77ERs get to be around 15-20 yrs old in the middle of the next decade. I don't think their attack on the 773ER will be terribly successful though as Boeing will have addressed a significant portion of this market already by the 2015/2016 EIS date for the largest A350. And the shrink model probably will have a weight penalty compared to the 787-9.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
Eureka
Topic Author
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 3:28 am

Quoting Manni (Reply 8):
And let's face it, if TAM, just an example, decides to cancel her order and goes to Boeing for the 787... How much room do you expect TAM to have to get a reasonable discount?

TAM or any of the other airlines that, for whatever reason, ordered the A350 early on have plenty of room to negotiate a "reasonable" discount. Boeing will take every opportunity to capitalize on the current strength of both the 787 and 777 offerings. This is despite some feelings that many of these airlines deserve what they get for going cheap in the first place.

When I say going cheap I don't only mean the purchase price since the 787 list price is actually lower than the A350. One of the aspects that really separates the way Boeing and Airbus generally do business is Airbus's greater willingness to pre-negotiate remedial payments for sub-par performance in flight and maintenance/reliability. Boeing generally prefers to say that remedies can be negotiated for missed guarantees at delivery because there probably won't be a miss, if there is a miss we'll first attempt to fix it in a reasonable time, and the airline will have more leverage at delivery anyway because technically the manufacturer is in breach of contract.

Some airlines really like the sound of a pre-negotiated revenue stream in case of missed guarantees. All to often these remedies can be insufficient and the airline finds that the manufacturer no longer cares about fixing the problem because the pre-negotiated remedy leaves the manufacturer clear of any further responsibility.

Let's circle back to the A350 having seemed cheaper to acquire than the 787 to some of the early A350 buyers. This is largely due to these airlines counting on some guaranteed revenue from the guarantees and attached remedies. Early base discounts from Airbus trying to get in the game also played a significant role in many current A350 order holding airlines' decisions.
 
797charter
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 4:59 am

Quoting Eureka (Thread starter):
Is The A350 Too Big For Some Who've Ordered It?



Absolutely!
And maybe to small, for orders who've not ordered it.

And who knows, maybe even "suitable" for a minor minority of others.
 flamed   flamed   flamed 

Regards
Steen.
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flydreamliner
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 5:19 am

Airbus has a number of issues relating to the buyers of the earlier version A350s. First off, they are missing their promised delivery dates by 2-3 years easy now, which will require most likely, per the agreements, compensation. Moreover, they will not be delivering the product promised. I'm sure the A350XWB is a nicer aircraft, but all the same, not the same thing. Its operating costs likely will be close enough to inline. Airbus wants to get more money for this now larger, more expensive aircraft. Per the current agreements, they'd actually have to give compensation to the airlines on top of the earlier prices. Selling over 100 of their new jets at a loss while the company is already hurting for money from its large A380 losses just doesn't sound attractive. My guess is that they'll try to renegotiate from scratch, will some kind of discount for the airlines inconvenience to cancel their old A350 order and write a new A350XWB order.

Either way, airbus loses on this one. What it amounts to is someone ordering a 767-400ER, and having Boeing say "sorry, we're delivering a 777-200A to you, but it's going to be 3 years late, ps, we want another $25 million/frame."

Airbus either loses or orders, or loses money to keep now largely delayed orders for a different product.

They are having a really hard time with staying on time over there in Toulouse. Everything seems to be getting YEARS of delays.... i'm thinking some people in charge either need to get on their game or get out. A350 is the 4th program with severe issues. A345/A346 appears will not be a profitable program, neither will A380, which is years delayed, A400M is facing very real delays, and A350 likewise delayed by years, with more than 100 orders over its head for a less expensive aircraft which will no longer exist, moreover XWB is going to be doing up against 787, which will fly sooner, using more sophisticated composite technology.

Good thing A320 is so incredible and sells like hot cakes, right now I think it's the only thing keeping them going.
"Let the world change you, and you can change the world"
 
osiris30
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RE: Is The A350 Too Big For Some Who've Ordered It?

Mon Dec 18, 2006 5:24 am

Quoting EbbUK (Reply 21):
so a lack of information is misleading? The two are very different.

Minor point here, but legally not disclosing something corporately like that and lieing about it are equivalent.. so in the legal sense (at least every time I've seen) they are equivalent (ever hear of errors and omissions insurance? same principal at play).

That is ofcourse assuming in this case that the lack of information was intentional. My understanding of French law (admittedly EXTREMELY limited) is that the burden is on the defendants in such instances though.

Quoting Scbriml (Reply 30):
I don't think the move from Al-Li to composite fuselage has changed the basic sizes of the models,

 checkmark 

Quoting EbbUK (Reply 34):
Well I guess this is what the court case will try to prove. That at every step of the 380 development the Airbus management team inteded to "mislead" its customers, shareholders and suppliers as to the full extent of the delays.

EbbUK: See above. Under French law the onus is on Airbus to prove they DIDN'T intentionally mislead/misinform/disinform. Not the other way around.

Quoting EbbUK (Reply 34):
Legal paperwork lodged at the time of the deals still stand, so there is nothing non-compliant about that. If after talks with customers any of the orders are cancelled wholly without obligation from both parties then they must be removed from the order book.

Legally the orders are still 'ok' on the books. Not much you can say about that. However, those orders when/if cancelled will likely incurr penalties on Airbus to cancel them (or alternatively Airbus could chose to deliver the planes the customer contracted for... not bloody likely). The reason the customer's aren't cancelling is because then they would be on the hook for the cancellation clause money. So they wait. Sooner or later Airbus will address them case by case or will find themselves in court.
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