|Quoting WingedMigrator (Reply 44):|
Does it have to? So what if it can't?
Two important points bear repeating. (1) the program will generate positive cash flow starting in 2010, regardless of break-even or ROI considerations. Those considerations are important before a decision to launch a program is made, but that time is long past. They are now purely academic considerations analyzed with 20/20 hindsight, hence my rhetorical questions. The milk has been spilled, and one must accept it (along with the usual a.net Schadenfreude). Finally, (2) the launch decision was based on a 270-frame break-even. The intervening cock-up could not have been foreseen at that time, and does not in any way invalidate the original launch decision.
It absolutely does...even if it will generate positive cash flow...in its simplistic form, Airbus was touting that $1 dollar in would eventually be $1.20 out (with the A380 program specifically-not EADS/Airbus as a whole)...at $19 billion dollars now, it doesn't even seem remotely close...especially with the B748 nipping at its heels..
As an EADS investor, I would be furious..
Obviously with so much sunken costs into the program, there isn't too much in terms of flexibility-in other words, they basically have to go with the program.......also, I don't know what kind of math Airbus has done with 270 break even frames (I would like to see the breakdown in numbers-as I'm highly skepitcal of their numbers).. In fact, many analysts have questioned Airbus 270 break even numbers..many had figured around 300-350 frames...
Also, their $billions of dollars in tax payer
money was at stake when the program was launched..as a possible EADS investor as well as possible tax-payer, I would like to know if my $1 investment would indeed be an ROI of $1.20 (or whatever positive amount-again, I'm only talking about the A380 ROI, not EADS/Airbus in total) after "x" amount of years.
Not only has the A380 become a financial sink hole....1)Airbus must keep selling A380 frames
, otherwise the expenses (as well as losses) on the program will keep on mounting (their 2010 cash flow positive is predicated on the fact they will have lots of sales and keep the assembly line moving) 2)lost opportunities
..how much financial and engineering talent has EADS/Airbus lost trying to fix this problem? It completely distracted them from other market situations (witness the B787/A350 situation), especially given that twins started to become more dominant..they had to look no further to see that their A330's were selling like hot cakes (as well as B777's)...3)Airbus themselves have said that losses for the A380 are not completed yet....
...and if I'm off on my comment, then here is something to ponder about..
""Airbus' 2006 nightmare with PLM can actually be traced back to the giant company's difficult birthing process in 2001. "This issue dates back to the historical structure of Airbus," recalls former Airbus financial executive Massey. A loose consortium of French, German, British and Spanish companies formally spun out Airbus in 2001 at the same time the A380 program was being launched.
Massey well remembers the infighting among the partners over jobs, and over which country would get the bulk of the mammoth aircraft's production work. Some executives, in fact, expressed the feeling that, as Massey puts it, "We shouldn't be launching this aircraft put together by four different nations."
Such disputes can have a downside, resulting in a level of distrust or, at best, erratic coordination. "Because there was an awful lot of debate about the way to create this single-company structure, the A380 was held hostage to that," he says. "*
*baseline Feb, 2007
Will it be a successful plane? Maybe, no one really knows, but history (and time) is not on its side (IMHO)...