Blasphemystic
Topic Author
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Big A380 News From UPS In A Few Days Part 2

Fri Feb 23, 2007 11:38 pm

Hope its OK we continue here with the original thread...

UPS threat to cancel A380 order

http://news.bbc.co.uk/2/hi/business/6390269.stm

[Edited 2007-02-23 15:38:42]

[Edited 2007-02-23 15:39:48]
The true measure of a man is how he treats someone who can do him absolutely no good. -- Samuel Johnson
 
PanHAM
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RE: Big A380 News From UPS In A Few Days Part 2

Fri Feb 23, 2007 11:59 pm

Looking at this statement it really leaves all options open for both sides. Airbus mightr decide to cancel the 380F altogether for lack of customers and future potential and UPS says, fine, we can live with that. The same goes for UPS who would have made some nice deals, getting out of A300F contracts by ordering the 380F and walk away without penalties from the latter. Besides, getting a good deal on 767Fs from Boeing who needed to keep that line open for the military tanker version.

It is nice to be big and have that purchasing power.

Make your SEC mandated statement and all bases are covered.
powered by Eierlikör
 
airmailer
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:02 am

From the WSJ:

UPS Revises Order Agreement
With Airbus for A380 Freighter
By JOSEE ROSE
February 23, 2007 9:46 a.m.

United Parcel Service Inc. signed an agreement with Airbus setting out a schedule regarding UPS's order for the freighter version of the airplane manufacturer's A380 jet.

The Atlanta package-delivery company said Friday that the agreement with Airbus specifies changed delivery dates for the A380F and provides for possible cancellation of the original purchase agreement by either company later in this year.
 
JayinKitsap
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:09 am

Well this statement allows this issue to get out of the headlines. Neither party really wants regular press on this kind of issue, in particular Airbus right now. Airbus probably had some nicely wrapped presents for UPS that cleared the more pressing issues.

The press release indicated changed delivery dates but not whether they moved up or back. One consideration for UPS might be that the contract price + operating economics are good enough that they do want to keep that price but may not need the plane right away.
 
Danny
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:17 am

Quoting AirMailer (Reply 2):
United Parcel Service Inc. signed an agreement with Airbus setting out a schedule regarding UPS's order for the freighter version of the airplane manufacturer's A380 jet.



Quoting BBC:

United Parcel Service (UPS) has signed a new agreement with Airbus that changes the delivery dates for the ten A380 aircraft it has ordered.
The new agreement allows UPS to cancel its order if there are any more delays.

It basically means UPS decided NOT TO CANCEL their order. In return they received right to free cancellation if there is any additional delay. Considering that last week some were cheering cancelation already it is very good news for Airbus. A380F program continues.

[Edited 2007-02-23 16:25:56]
 
EI321
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:26 am

Quoting AirMailer (Reply 2):
From the WSJ:

UPS Revises Order Agreement
With Airbus for A380 Freighter

Well theres our big annoucemment. Airbus must be confident of more A380F orders if they are continuing with the programe. Was it the head of Fedex that predicted 200 A380F's would be flying around in two decades.
 
BoomBoom
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:29 am

Quoting Danny (Reply 4):
It basically means UPS decided NOT TO CANCEL their order.

Not yet.

Quote:
The Atlanta package-delivery company said Friday that the agreement with Airbus specifies changed delivery dates for the A380F and provides for possible cancellation of the original purchase agreement by either company later in this year.

http://online.wsj.com/article/SB1172...18215717263.html?mod=moj_companies
Our eyes are open, our eyes are open--wide, wide, wide...
 
pygmalion
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:31 am

I disagree... I think it means that Airbus convinced UPS not to announce the cancellation of the order and to defer the announcement until later. UPS no longer needs a reason to cancel.

It is clear from the news that UPS is not longer committed to buy the A380F. They may decide to buy but they are no longer on the hook to buy. UPS is now in control of the order.
 
Danny
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:33 am

Quoting BoomBoom (Reply 7):
Quoting Danny (Reply 4):
It basically means UPS decided NOT TO CANCEL their order.

Not yet.

Quote:
The Atlanta package-delivery company said Friday that the agreement with Airbus specifies changed delivery dates for the A380F and provides for possible cancellation of the original purchase agreement by either company later in this year.

http://online.wsj.com/article/SB1172...anies

You can spin it as much as you can.

"The new agreement allows UPS to cancel its order if there are any more delays"

http://news.bbc.co.uk/2/hi/business/6390269.stm
 
BoomBoom
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:36 am

Quoting EI321 (Reply 6):
Was it the head of Fedex that predicted 200 A380F's would be flying around in two decades.

Of course, that was before Fedex cancelled their order.  sarcastic 

Quoting EI321 (Reply 6):

Well theres our big annoucemment. Airbus must be confident of more A380F orders if they are continuing with the programe.

The WSJ story says the agreement "provides for possible cancellation of the original purchase agreement by either company later in this year".

I think Airbus is getting ready to bail on the A380F.
Our eyes are open, our eyes are open--wide, wide, wide...
 
PEET7G
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:37 am

Quoting Danny (Reply 4):
It basically means UPS decided NOT TO CANCEL their order.

Basicly Danny is right, UPS is not yet ready to cancel, but with this agreement secured themselves the right to do so without any further hassle. Good move if you ask me... Now they can play with both manufacturers and buy whatever they get a better deal on.
Peet7G
 
Sangas
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 12:41 am

Quoting EI321 (Reply 6):
Was it the head of Fedex that predicted 200 A380F's would be flying around in two decades.

No, it was David Sutton, managing director of aircraft development acquisitions and sales in FedEx�s A380 programme office, back in 2005. See this Flight International article from the time: http://www.flightglobal.com/articles...380f-fleet-expansion-strategy.html

Given FX's recent cancellation of its A380F order, and "rethink" of its business plan using 777Fs, his long-term assessment of the potential A380F fleet as well as FX's strategic thinking may well have changed?
A camel only sees the other camels' humps
 
EI321
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:10 am

Quoting BoomBoom (Reply 10):
Quoting EI321 (Reply 6):
Was it the head of Fedex that predicted 200 A380F's would be flying around in two decades.

Of course, that was before Fedex cancelled their order.

Your ignoring the reason WHY Fedex canceled the order. It was not the aircraft itself. Fedex has indicated interest in returning to the A380 later but they need capacity sooner.

Quote:

FedEx Express expects to bolster its A380 fleet with a cargo version of the planned A380-900 stretch within 10 years, and converted passenger versions of the baseline model by 2020.

Speaking at last month’s Cargo Facts 2005 conference in Seattle, David Sutton, managing director of aircraft development acquisitions and sales in FedEx’s A380 programme office, said that while the package carrier would “love to have the -900 now”, he expected a cargo version of the larger model would be available around 2014/2015 – six to seven years after it is due to receive the baseline -800F.


http://www.flightglobal.com/articles...380f-fleet-expansion-strategy.html

Personally I think Airbus should delay the A380F development until the passenger model enters service, proves itself and airline confidence is regained in the programme. It would also allow them to catch up on some of the passenger production slots. I cant see much renewed interest from package companys in the next 12-18 months. This would also allow more attention to be payed to the A350XWB.
 
UPS Pilot
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:20 am

Sorry for misunderstanding the term "next Friday" last Thursday. Yes that was the announcement.
 
PEET7G
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:37 am

Quoting EI321 (Reply 13):
Your ignoring the reason WHY Fedex canceled the order. It was not the aircraft itself. Fedex has indicated interest in returning to the A380 later but they need capacity sooner.

Almost. YES FX needed capacity sooner, but you really think they get the A380F sooner if they cancel and then reorder at a later date? You know FX could have simply ordered the 77F parallel with the A380 order and later simply operate the 2 models side by side... FX simply got fed up with all the hassle around the A380, they went back to the drawing-board and decided to order the 77F for their slightly revised business plan. And if they will need the packaged freight capacity of the A380F, and the plane will prove itself (of course with an other guinea pig that Airbus can push around). Weather any side's cheerleaders like it or not FX is as close to getting A380Fs as any other cargo airline that never put down money on these birds.

However, UPS with this new development a bit secured their order. Of course this statement can be read either way, but if Airbus plays their cards good they just might keep this order.

[Edited 2007-02-23 17:44:08]
Peet7G
 
ATCGOD
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:41 am

Quoting Pygmalion (Reply 8):
I disagree... I think it means that Airbus convinced UPS not to announce the cancellation of the order and to defer the announcement until later. UPS no longer needs a reason to cancel.

You hit the nail on the head. Instead of speculating, let's stick to the facts as they are presented.

Quoting Pygmalion (Reply 8):
UPS is now in control of the order.

I think they have been since delay number 2.
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:42 am

Quoting Sangas (Reply 12):
Given FX's recent cancellation of its A380F order, and "rethink" of its business plan using 777Fs, his long-term assessment of the potential A380F fleet as well as FX's strategic thinking may well have changed?

As I and others have said, the reason for the FX cancellation has much more to do with the fact that Airbus was unable to deliver the 380F nearly soon enough and they did not preclude reordering it (much more due to the fact that they don't have the cash to stay committed at this point to both frames). So long as Airbus continues along with the 380F or conversions become available, I fully expect FX to add 380s to the fleet at some point in the future. FX needed airlift sooner rather than later, hence the 777 order.

As for this UPS announcement, I wouldn't be so surprised if part of these negotiations might be due to the fact that possibly UPS did not have the same "out" clause that other carriers did because their deposits were shifted from the 306F order, and that part of a continued commitment would give them that "out" clause.

cheers.
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:45 am

Quoting PEET7G (Reply 15):
And you are naive to the limit. YES FX needed capacity sooner, but you really think they get the A380F sooner if they cancel and then reorder at a later date? You know FX could have simply ordered the 77F parallel with the A380 order and later simply operate the 2 models side by side... FX simply got fed up with all the hassle around the A380, they went back to the drawing-board and decided to order the 77F for their slightly revised business plan. And if they will need the packaged freight capacity of the A380F, and the plane will prove itself (of course with an other guinea pig that Airbus can push around). Weather any side's cheerleaders like it or not FX is as close to getting A380Fs as any other cargo airline that never put down money on these birds.

It isn't that they can get the 380F sooner. It's that they get capacity, itself, sooner. They did not have the financial means now to have both orders going. Hence, the cancellation. And who knows whether there are some deals in place to keep some of the pricing, etc. should they reorder? And I still think the reorganized business plan is the effect not the cause of the change.

cheers.
 
khobar
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:50 am

Quoting EI321 (Reply 6):
Was it the head of Fedex that predicted 200 A380F's would be flying around in two decades.

Most of which were expected to be -800 conversions once the -900 comes into service, not original -F builds.
 
ATCGOD
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:50 am

Quoting Dank (Reply 17):
So long as Airbus continues along with the 380F or conversions become available, I fully expect FX to add 380s to the fleet at some point in the future.

I'm inclined to agree with you, but one thing is nagging at me when I think about this. Why, if they wanted A380F's down the road, did they not just defer this order and take compensation rather than cancel and re-order down the road? Seems to me the prudent thing to do would be to defer this order and take a large compensation package rather than cancel and buy the 380 later at a higher price. Can someone explain this? I know it makes the FX fleet more flexible but they could have kept their order and in addition added the 77F.
 
baroque
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:54 am

How much work is being done on the F at this time? Presumably wiring problems are lesser on the F, unless the parcels are to watch TV. The possible delivery date might be inferred if it is known where the first F is at!
 
TeamAmerica
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:55 am

Quoting Blasphemystic (Thread starter):
Hope its OK we continue here with the original thread...

 point In future, please post an announcement in the old thread to let people know...
Failure is not an option; it's an outcome.
 
UPS Pilot
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:59 am

ATC,

From what some people at Fed Ex told me is they canceled the order itself but still have the options down the road. Fed Ex needed the lift and couldn't risk losing slots for the 777 due to the 380 delays. UPS bought 744 both new and used around the same time as the A380 announcement. This gave us additional lift along with the continued purchases of MD-11's. The first 744 will be on property June of 2007.
 
Confuscius
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 1:59 am

From the first thread: A direct quote from a HIGHLY placed source at UPS. "The A-380 is DEAD".

Not quite, but in life-support (no DNR order). Probably has the same chance as the PR 747s yet to be delivered.
Ain't I a stinker?
 
Sangas
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:07 am

Quoting Dank (Reply 18):
They did not have the financial means now to have both orders going.

How much money do you estimate FX had on deposit with Airbus at the time they cancelled their order? Was FX so desperate to recover these deposits to risk jeopardizing the future of a program which they once considered of strategic importance? Why not defer their order like VS and ILFC if FX seriously wants to promote the long-term viability of the A380F program?
A camel only sees the other camels' humps
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:08 am

Quoting ATCGOD (Reply 20):
Seems to me the prudent thing to do would be to defer this order and take a large compensation package rather than cancel and buy the 380 later at a higher price. Can someone explain this? I know it makes the FX fleet more flexible but they could have kept their order and in addition added the 77F.

I doubt that Airbus was ever going to just give out the compensation as straight cash (i.e. if it ends up being money and not discounts for other products or services, it would come in as less money due when payments were due), and two things would have hurt FX here, they wouldn't have the cash from the deposits to use for the new order and they would have debt on the books.

Quoting UPS Pilot (Reply 23):
From what some people at Fed Ex told me is they canceled the order itself but still have the options down the road. Fed Ex needed the lift and couldn't risk losing slots for the 777 due to the 380 delays. UPS bought 744 both new and used around the same time as the A380 announcement. This gave us additional lift along with the continued purchases of MD-11's. The first 744 will be on property June of 2007.

Thanks for that info. That's inline with what I was thinking, that FX must still have some way of cashing in on slots and pricing.

cheers.
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:12 am

Quoting Sangas (Reply 25):
How much money do you estimate FX had on deposit with Airbus at the time they cancelled their order? Was FX so desperate to recover these deposits to risk jeopardizing the future of a program which they once considered of strategic importance? Why not defer their order like VS and ILFC if FX seriously wants to promote the long-term viability of the A380F program?

Sorry, you posted while i was writing, so I missed yours. From what I gathered from info at the time that the press release was made, FX wasn't in a cash rich position at the time. Add in the fact (as I mentioned in my previous post) that FX probably didn't want to carry the commitment as it may hurt their credit. I think that FX's cash and lift positions are more important to them than the viability of the 380F program. More importantly, I don't know how much a package freight company would lose going with a converted pax 380 than a new build 380F.

cheers.
 
BoomBoom
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:29 am

Quoting PEET7G (Reply 15):
However, UPS with this new development a bit secured their order. Of course this statement can be read either way, but if Airbus plays their cards good they just might keep this order.

I don't think Airbus wants the expense of developing the A380F for just one customer. This announcement today is a way to save face for all concerned.
Our eyes are open, our eyes are open--wide, wide, wide...
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:40 am

Quoting BoomBoom (Reply 28):
I don't think Airbus wants the expense of developing the A380F for just one customer. This announcement today is a way to save face for all concerned.

One would assume that most of the money has already been spent, and IIRC sections for the 380F have already been produced. That said, it may be beneficial to Airbus to delay the 380F in order to get more of the pax versions out earlier.

cheers.

[Edited 2007-02-23 18:42:04]
 
Blasphemystic
Topic Author
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:46 am

"A withdrawal by UPS could be the last straw for the freight version of the Superjumbo after the only other customer, FedEx, pulled out last year."

Quoting BoomBoom (Reply 28):
I don't think Airbus wants the expense of developing the A380F for just one customer. This announcement today is a way to save face for all concerned.

With set backs like these, how could Airbus have not seen this coming? How can Airbus fall years behind promised delivery dates? I am not an aviation expert but from everything I have read and seen with the A380 this could be the flagship mistake that never was and put Airbus in a spot where they may never recover. This is just one persons opinion.

Will Airbus abandon the A380F if UPS cancels?
The true measure of a man is how he treats someone who can do him absolutely no good. -- Samuel Johnson
 
Sangas
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:46 am

Quoting Dank (Reply 27):
From what I gathered from info at the time that the press release was made, FX wasn't in a cash rich position at the time. Add in the fact (as I mentioned in my previous post) that FX probably didn't want to carry the commitment as it may hurt their credit.

I've seen this theory/speculation repeated in a couple of discussion forums, however, I don't remember these circumstances reported as being the case by any news organisations at the time. Perhaps someone can provide a link to a news story reporting such facts as I haven't been able to find one?
A camel only sees the other camels' humps
 
SEPilot
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:51 am

Quoting AirMailer (Reply 2):
The Atlanta package-delivery company said Friday that the agreement with Airbus specifies changed delivery dates for the A380F and provides for possible cancellation of the original purchase agreement by either company later in this year.

As I see it UPS is not very enthusiastic about the A380 but doesn't want to lose the money they put down on the A306F's. Airbus still wants to build the A380F but hasn't been able to convince anyone else to buy it. They've been twisting UPS's arm to keep them on board, but have started to see that they may be shooting themselves in the foot. The result is an agreement to kick the can down the road, with UPS having the upper hand. Be assured that if there is one more delay however slight UPS will jump on it faster than a cat on a mouse and bail.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
JayinKitsap
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 2:54 am

Quoting Pygmalion (Reply 8):
I disagree... I think it means that Airbus convinced UPS not to announce the cancellation of the order and to defer the announcement until later. UPS no longer needs a reason to cancel.

It is clear from the news that UPS is not longer committed to buy the A380F. They may decide to buy but they are no longer on the hook to buy. UPS is now in control of the order.

That is it in a nutshell. By being in control I would suspect that they can: a) defer or cancel with no penalty, b) Either get their deposits back in $, parts, service support, or deposit on some future model - at UPS's choice, c) not show on their books the debt (basically the order becomes options as the delivery date is probably undefined), and d) Be able to keep their current pricing if and when the 380F becomes a reality and the 380 performance begins to be proven.

Airbus saves face and any financial hits currently as the order stays on the books.

For both, it gets this out of the news, which I am sure both want.
 
art
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 3:32 am

Quoting EI321 (Reply 13):
Personally I think Airbus should delay the A380F development until the passenger model enters service, proves itself and airline confidence is regained in the programme. It would also allow them to catch up on some of the passenger production slots. I cant see much renewed interest from package companys in the next 12-18 months. This would also allow more attention to be payed to the A350XWB.

 checkmark 

From the BBC article:
"Airbus has now given UPS new estimates of when the aircraft will be ready, but the two have agreed not to make them public.

They are expected to decide later this year whether to go ahead with the order, which is valued at $2.8bn (£1.4bn)."
Who is "they" in the above sentence? Airbus and UPS? If so, is Airbus freezing work on the A380F in the hope of trying to land another customer in the extra (undisclosed) time allowed by UPS? Or does Airbus perhaps need more time to ascertain if they can make the revised (undisclosed) delivery dates?
 
laddb
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 3:50 am

I don't get it. Why does UPS care about saving face for Airbus? I would think that if they wanted to cancel, they would have. If UPS was serious about cancelling the A380F, then don't you think they would ASAP so that they can start looking at other options, like buying from Boeing as Fed Ex did.

I don't think they are kicking the can down the road (postponing cancellation). I think UPS really would like this plane. Airbus needs to sell as many airframes as possible.
 
airtran717
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 3:52 am

Quoting Pygmalion (Reply 8):
UPS is now in control of the order.

How do you qualify that remark? I thought the consumer was ALWAYS in control of whatever they buy. How would Airbus have ever had the upper hand? While I do understand how a contract works, I don't follow you here.

717
 
airtran717
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 3:56 am

Quoting TeamAmerica (Reply 22):
In future, please post an announcement in the old thread to let people know...


The old thread was archived. You can't post anything more to it.

717
 
RichardPrice
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 4:00 am

Quoting AirTran717 (Reply 37):


The old thread was archived. You can't post anything more to it.

It was archived when this thread was 20 or so posts old, people were still posting to the old thread while this one was active.

On topic - for me this justifies the 767 order, in that UPS now has almost immediate uplift with the near future delivery of the 767, and they can push their A380 order out a little further to better facilitate a steady capacity increase.
 
Ken777
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 4:22 am

It's possible that UPS was ready to cancel the order, but Airbus asked them to hold off while both companies re-evaluated the situation. Airbus looking at their investment in the F and how they are going with other prospects - and needing more time to work things out. UPS would re-evaluate, based on new delivery schedules and "compensation" for the delays. UPS would probably go for that IF the 306F deposits were not lost from a delayed deposit.

I wouldn't be surprised if both companies are genuinely working on internal re-evaluations, with a decision by either leading to a cancellation, or a decision by both to continue with the order.
 
andessmf
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 4:28 am

 
ATCGOD
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:06 am

Quoting Dank (Reply 26):
I doubt that Airbus was ever going to just give out the compensation as straight cash (i.e. if it ends up being money and not discounts for other products or services, it would come in as less money due when payments were due), and

Why not? Apparantly Thai is getting discounted planes AND a cash settlement.
 
bbobbo
Posts: 172
Joined: Tue Dec 05, 2006 7:33 am

RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:12 am

Quoting Laddb (Reply 35):
I don't get it. Why does UPS care about saving face for Airbus? I would think that if they wanted to cancel, they would have. If UPS was serious about cancelling the A380F, then don't you think they would ASAP so that they can start looking at other options, like buying from Boeing as Fed Ex did.



Quoting AirTran717 (Reply 36):
How do you qualify that remark? I thought the consumer was ALWAYS in control of whatever they buy. How would Airbus have ever had the upper hand? While I do understand how a contract works, I don't follow you here.

The issue is that UPS had non-refundable deposits for the A380F because of the conversion of an earlier A300F order. Airbus had some leverage because UPS would lose those deposits if they cancelled their A380F order. I don't know if I would go so far as to say they had the upper hand, though.

This new announcement seems (note the emphasis on "seems") to imply that UPS can now cancel without penalty if the A380F is delayed one more time.

Basically, it seems that Airbus agreed to remove the non-refundable status of UPS's deposits in exchange for a commitment to take delivery if there are no more A380F delays. Although the following statement from the article:

Quote:
They are expected to decide later this year whether to go ahead with the order, which is valued at $2.8bn (£1.4bn).

may imply that UPS may cancel anyway, unless it's meant in the context of evaluating whether Airbus is still on schedule with their promised delivery date.

Quoting Art (Reply 34):
Who is "they" in the above sentence? Airbus and UPS? If so, is Airbus freezing work on the A380F in the hope of trying to land another customer in the extra (undisclosed) time allowed by UPS? Or does Airbus perhaps need more time to ascertain if they can make the revised (undisclosed) delivery dates?

I think "they" probably does refer to UPS, because if it referred to Airbus, it would have made more sense to write, "They are expected to decide later this year whether to go ahead with the A380F program." In other words, why would Airbus not go ahead with the UPS order, but still go ahead with the A380F program?
 
SEPilot
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:13 am

Quoting Laddb (Reply 35):
I don't get it. Why does UPS care about saving face for Airbus? I would think that if they wanted to cancel, they would have. If UPS was serious about cancelling the A380F, then don't you think they would ASAP so that they can start looking at other options, like buying from Boeing as Fed Ex did.

Perhaps the terms of the contract did not allow UPS to get their money back; recall that the contract was converted from the A306F's that UPS didn't want. I don't think they care about saving face for Airbus; they care about their money.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
WINGS
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:16 am

Quoting ATCGOD (Reply 41):
Why not? Apparantly Thai is getting discounted planes AND a cash settlement.

Can you provide a source for such a statement? It's the first time that I have come across a someone stating that the settlement between Airbus and Thai involved both discounted planes + cash.

Regards,
Wings
Aviation Is A Passion.
 
pygmalion
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:19 am

Quoting AirTran717 (Reply 36):
How do you qualify that remark? I thought the consumer was ALWAYS in control of whatever they buy. How would Airbus have ever had the upper hand? While I do understand how a contract works, I don't follow you here.

717

Once UPS put down deposits and signed a contract... they (and Airbus) were were bound by the terms. Airbus was in default as they were not meeting the delivery date commitments. So the contract was up for renegotiation, cancellation, compensation, etc. etc. with Airbus still holding the deposit "card" hostage.

Airbus and UPS have now stated that either party can terminate the contract at will... So UPS, IMHO, can cancel without penalty and regain their deposits or major protion thereof. UPS is more in control of the order than they were before, when they could not cancel without penalty.

Airbus can still say the order is not cancelled... YET. UPS can decide later if they want to get some A380F. This is win for Airbus but IMHO, only a PR win.
 
BoomBoom
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:19 am

Quoting Bbobbo (Reply 42):
may imply that UPS may cancel anyway, unless it's meant in the context of evaluating whether Airbus is still on schedule with their promised delivery date.



Quote:
UPS needs to finish its internal evaluation of its future needs on the trans-Pacific route and then determine if the A380 would be available when the Atlanta company needs it, UPS spokesman Norman Black said. The package delivery company's final decision is contingent on the results of that review, he added.

"This gives both sides a clear timetable for going ahead or not with this, and it says that either side at the proper time can cancel the order."

If UPS had canceled the order, it may have allowed Airbus to bring forward some passenger versions of the plane in its production schedule. Media reports had suggested Airbus would have saved around one billion euros (US$1.23 billion) in development costs for the freighter version of the plane if UPS had canceled because that version would have been left with no customers.

http://online.wsj.com/article/SB1172...717263.html?mod=home_whats_news_us

So Airbus will save $1.23 billion if they cancel? That's not chicken feed...
Our eyes are open, our eyes are open--wide, wide, wide...
 
andessmf
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:24 am

Quoting BoomBoom (Reply 46):

So Airbus will save $1.23 billion if they cancel? That's not chicken feed...

That is interesting, but at least for now the speculation about the order can shift to later on the year.
 
dank
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:34 am

Quoting ATCGOD (Reply 41):
Why not? Apparantly Thai is getting discounted planes AND a cash settlement.

I have yet to see that this is true. The airlines say that they got a great deal on 330s, because if they weren't due compensation, this would be true. It becomes a win-win for airbus and the airlines in that airbus gets a better option than paying the cash, itself, and the airlines are able to get more lift. More importantly, I doubt that anyone is going to get straight cash (I would guess that almost every penalty will end up in the form of discounts on other aircraft, maitenance, parts, etc.), particularly if they choose to defer the order as was suggested that FX have done. UPS is likely in a situation that is different from almost any other carrier that ordered the 380. They had non-refundable deposits on A300s that they converted to 380s. It is likely that the contract was different on the refundability of the deposits on a 380 because of this.

cheers.
 
coa747
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 5:51 am

Why would Airbus continue to develop an aircraft that nobody wants. The 747-8F has destroyed the A380F in sales and I just don't see how Airbus can justify continuing the program given their current financial situation. Airbus needs to focus on making money not throwing more money at the A380 which is dragging the company down like the Titanic.
 
EI321
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RE: Big A380 News From UPS In A Few Days Part 2

Sat Feb 24, 2007 6:13 am

Quoting PEET7G (Reply 15):
YES FX needed capacity sooner, but you really think they get the A380F sooner if they cancel and then reorder at a later date? You know FX could have simply ordered the 77F parallel with the A380 order and later simply operate the 2 models side by side.

Canceling the A380 order may have had more to do with writing off liabilities or loans from their Balance sheet. Fedex could either 1) leave a two billion dollar A380 order sitting there after delays while going and borrowing an equal amount to order 777s, or 2) transfer the funding for the A380s to aircraft which will be delivered sooner and plug the hole, and look at a reorder for A380s when the time comes. Apparently Fedex have retained their A380 options, make of that what you will.