aminobwana
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How Do You Think The Eads Crisis Will Be Solved?

Sun Apr 15, 2007 11:05 pm

I would like to hear opinions about how (and if) it can be solved and its consequences.

Thanks in advance

aminobwana
 
Basefly
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RE: How Do You Think The Eads Crisis Will Be Solved?

Sun Apr 15, 2007 11:10 pm

They are in the middle of Power 8, and it seems that the consequences is going to be 10,000 jobs lost.


Of course it is going to be solved, the next couple of years are going to be Airbus comeback years i am sure...

Just my  twocents 
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sphealey
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RE: How Do You Think The Eads Crisis Will Be Solved?

Sun Apr 15, 2007 11:11 pm

In order to discuss that it seems to me we would need to first define (1) what exactly the "EADS crisis" is (2) what concerns the key stakeholders actually have with the current situation/direction. Particularly on point 2, it seems to me that there may not be anywhere near as much unhappiness as is being reported in the aviation press and (of course) the aviation blogs.

sPh
 
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Stitch
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RE: How Do You Think The Eads Crisis Will Be Solved?

Sun Apr 15, 2007 11:15 pm

Yes it will be solved, because it has to be, therefore it will.

How it will be solved will probably involve a number of things we do know about:

  • Power8 or some other restructuring program
  • Partnerships with foreign countries (like Russia and Qatar)
  • Additional support and investment from the four core EU members [UK, France, Germany, Spain]

And a number of things yet to be discovered.
 
NAV20
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 12:12 am

Good question, Aminobwana!  Smile

Quoting Sphealey (Reply 2):
In order to discuss that it seems to me we would need to first define (1) what exactly the "EADS crisis" is (2) what concerns the key stakeholders actually have with the current situation/direction.

The crisis would appear to be rooted in the fact that Airbus currently has no truly competitive models to offer in competition with the 787 and 777. That problem will not be solved overnight; at least a five-year timescale will be required. Ideally, Airbus should produce two new models, not the single one - the A350XWB - that is currently proposed. Two models are probably out of the question on grounds of cost - so they HAVE to make sure that the XWB, at any rate, is highly-competitive.

A possible new problem is that Boeing are 'making noises' about developing a new single-aisle, which would give them a competitive advantage over the A320 as well. I really don't see what Airbus can possibly do about that, starting from here.

So it's clear that Airbus are facing a number of 'lean years,' whatever they do. In all probability much more severe cutbacks than those proposed in Power 8 will be required.

The underlying problem, though, remains political interference. There is more and more evidence that the French and German Governments are at complete loggerheads with each other - and that, as a result, the company is unable to take key decisions. The latest deadlocks are over whether to pay a dividend, and how to raise further capital:-

(Excerpts - link to full story below)

"PARIS (AFP) - Directors at European aerospace giant EADS said Tuesday they had failed to reach agreement on paying shareholders a 2006 dividend, underlining a crisis at the group and its aircraft manufacturing subsidiary Airbus.

"The members of the board were not able to come to an agreement on a dividend proposal," the European Aeronautic Defence and Space company said in a document submitted to shareholders ahead of its May 4 general assembly.

"The group has therefore allowed shareholders themselves to decide on the question, it said.

"In the absence of a proposal from the board the shareholders will be able to propose that the net result of the 2006 tax year, or 99 million euros (133 million dollars), should be added to the profits maintained or distributed in the form of a dividend, wholly or partially," EADS said.

"But the principal EADS shareholders, German automaker DaimlerChrysler, 15 percent, a consortium of German investors, 7.5 percent, French media and technology group Lagardere, 15 percent, and the French state, 15 percent, have been at loggerheads over whether to pay a dividend.

"Lagardere is in the process of selling 7.5 percent of its 15 percent holding.

"The French government has opposed rewarding shareholders, given the dramatic fall in profits and thousands of job losses planned at Airbus this year.

"Industrial logic should come before financial logic," Prime Minister Dominique de Villepin said in early March.

"The EADS board also has decided against proposing a capital increase to shareholders at the annual general meeting, according to the document obtained by AFP.

"The group has said it will require external finance at some point, either through a share capital increase or via a bond issue, because of production problems at Airbus and the cost of new projects.

"A capital increase would be a delicate operation at EADS, a highly politicised company with a fine balance of power between French and German shareholders.

"Any capital increase would have to be financed by all shareholders equally if the balance were to be maintained and they have been unable to agree on the operation, according to sources.

"EADS co-chief executive Louis Gallois, who is also chief executive of Airbus, said last month there was "no urgency for a capital increase" by EADS.

"EADS is to confirm at the general assembly that its operating profit will be stable in 2007 compared to the 2006 level but that Airbus will report another "substantial loss" this year as it undergoes a painful restructuring."


http://au.biz.yahoo.com/070410/33/16oss.html

Getting Airbus out of its present mess will be a difficult and lengthy business anyway. There would appear to be no possibility of even STARTING the job if the two key governments go on disagreeing at every turn.

The picture may become clearer after the French elections (which finish on 6th. May). But only MAY......
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
sphealey
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RE: How Do You Think The Eads Crisis Will Be Solve

Mon Apr 16, 2007 2:41 am

NAV20,
I don't disagree with your analysis, but I think you are leaving out two factors. First, the major airplane buyers are not going to allow a situation to develop where there is only one viable manufacturer. Lockheed and McDonnell-Douglas are gone, and it doesn't currently appear that Embraer will move into the 150-550 market. Russia and the PRC are long-term wildcards for now, so that leaves the definition of "one viable" somewhere around 40% market share for Airbus (or whoever is down in the current cycle). Clearly there are limits to this; airlines won't buy planes that are utterly uncompetitive just to prop up a manufacturer. But Airbus' offerings are nowhere near uncompetitive at this point even against the 787.

Second, what I was hinting at in my OP was that I suspect the true Airbus stateholders are not really dissatisfied with the jobs and technology "juice" that Airbus provides to the EU economy. They might be perfectly happy to slap around a few scapegoats in public and do a bit of reorganizing, then just continue as before.

sPh
 
ikramerica
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 2:50 am

Quoting Sphealey (Reply 5):
First, the major airplane buyers are not going to allow a situation to develop where there is only one viable manufacturer.

the airlines do not collude. they will not ask their friends before buying.

yes, SOME carriers, like EK and SQ will try to split orders. But that doesn't mean that the whole industry will split orders, as they want to be profitable, and the Boeing or Airbus give the best plane, they will go with it.

So you get a situation where some carriers buy a "token" number of the "wrong" model in an effort to keep the other man. afloat, but that alone can't actually keep the other manufacturer afloat.

Further, if Airbus or Boeing falters, why would a third party come to the table? For example, Airbus is leaving a big hole in the 788 class, and you might see China fill it before Airbus gets around to it.

Ditto the 752 replacement. If Boeing or Airbus don't get off their asses and create a real replacement, that EXCEEDS the abilities of the 752, you might see Brazil or the Chinese jump on that, too...
Of all the things to worry about... the Wookie has no pants.
 
sphealey
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 2:53 am

> But that doesn't mean that the whole industry will split orders, as
> they want to be profitable, and the Boeing or Airbus give the best
> plane, they will go with it.

That wasn't my experience in another capital-intensive industry where there was a duopoly on the supply side. No one ever wrote it down, but every executive in the industry knew where the viability point for the weaker supplier was and nudged the purchasing decisions as needed.

sPh
 
ConcordeBoy
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RE: How Do You Think The Eads Crisis Will Be Solve

Mon Apr 16, 2007 2:56 am

Quoting Aminobwana (Thread starter):
How Do You Think The Eads Crisis Will Be Solved?

If you want the short answer:
when Airbus starts being run solely as a market-driven corporate entity rather than any vestiges of social employment program.

Simple, but not easy (for them) at all.

Quoting NAV20 (Reply 4):
The underlying problem, though, remains political interference.

Underlying?
The case could easily be made that it's the root problem.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
aminobwana
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 3:01 am

Quoting Aminobwana (Thread starter):
QUOTE SELECTED TEXT_

NAV20 From Australia, joined Nov 2003, 4357 posts, RR: 10
Reply 4, posted Sun Apr 15 2007 09:12:35 your local time (52 minutes 12 secs ago) and read 53 times:

Quoting Sphealey (Reply 2):
In order to discuss that it seems to me we would need to first define (1) what exactly the "EADS crisis" is (2) what concerns the key stakeholders actually have with the current situation/direction.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Pls. see below the comments Iinserted in your text.
After you have read my posting I indicate above, i would be happy to hear your further comments
Good question, Aminobwana!
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The crisis would appear to be rooted in the fact that Airbus currently has no truly competitive models to offer in competition with the 787 and 777. That problem will not be solved overnight; at least a five-year timescale will be required. Ideally, Airbus should produce two new models, not the single one - the A350XWB - that is currently proposed. Two models are probably out of the question on grounds of cost - so they HAVE to make sure that the XWB, at any rate, is highly-competitive.
---------------------
--------------------
Comment No.1
-------------------
The interesting points you raise refer to the technical induced problems of AIRBUS

To compare your further points with my assessment, which are very compatible, pls refer to:
"EK A350 Audit A350 Closes Gap On B787
Aminobwana Reply 244, posted Fri Apr 13 2007 23:21:23 your local time (1 day 10 hours 55 minutes ago)
and read 1134 times"

To ask "which Crisis" as SPHEALEY does seems ironic, as the world press is full of it, being one of the principal issues of the French elections, all candidates, the prime-minister and several other are using the word CRISIS continuously!
-------------------
End comment No.1
-------------------
A possible new problem is that Boeing are 'making noises about developing a new single-aisle, which would
give them a competitive advantage over the A320 as well. I really don't see what Airbus can possibly do
about that, starting from here.
-------------------
Comment No.2
------------------
Fully agreed; Factually, the present models of the Cash-cow A320 are based on a 20 year concept and it is
clearly visible that the B737NG is beginning to cut away their market-share, as well CANADAIR and
EMBRAER on the lower end. It seems obvious that they have not developed the A320NG because all the
resources were swallowed by the A380 !
------------------
End comment No.2
------------------

So it's clear that Airbus are facing a number of 'lean years,' whatever they do. In all probability much more
severe cutbacks than those proposed in Power 8 will be required.
FACT IS THAT POWER 8 NOT ONLY FAILS TO ADDRESS THE MAIN PROBLEMS, BUT TO SHOW
THAT THEY ARE WILLING TO BE ENERGETIC, CUT JOBS, WHEN THE PROBLEMS DO NOT LAY
WITH THE WORKFORCE. THIS WILL ONLY WORSEN THE PROBLEM, AS AND Irtysh-Avia (Kazakhstan)">IT WILL DELAY THE SHIPPING
OF THE HUGE BACKLOG AND CREATE MORE CASH FLOW AND FINANCING PROBLEMS.

The underlying problem, though, remains political interference. There is more and more evidence that the French and German Governments are at complete loggerheads with each other - and that, as a result, the company is unable to take key decisions. The latest deadlocks are over whether to pay a dividend, and how to raise further capital:-

Getting Airbus out of its present mess will be a difficult and lengthy business anyway. There would appear to be no possibility of even STARTING the job if the two key governments go on disagreeing at every turn.

The picture may become clearer after the French elections (which finish on 6th. May). But only MAY......

-----------------------
*********************************************************
COMMENTS No.1 and 2 are inserted in your text !!
*********************************************************
COMMENT No. 3
-----------------------
The deadlock problems you refer and the issues as addressed in the excerpt you quote further bellow are not
even the most grave problem, which is that no state dominated enterprise will be able to solve these problems,
as theyprecisely originated in the fact that such enterprises always put the political and here also the
chauvinistic interests in front of the needs of the company Obviously, if the company is multi-state and subject
to conflicting interest, this increase quadratically!.
A separate even if related issue is that AIRBUS through all its history has been living on Life Support by gigantic
subsidies, and what is really outrageous, the French politician as well the German, even with less enthusiasm,
have openly indicated that they will continue this path, WTO and US be screwed.
And, as I know be long personal experience dealing with state or state supported enterprises, the fact that
Papa State will always be there to cover their fracas, let the political appointed or supported managers and
Boards act irresponsibly, the now very public ex-CEO FORGEARD is a typical example.
And when a real manager as M. CHRISTIAN STREIFF states the true, telling that the company is limping
10 years behind BOEING, he is "ceremoniously" fired (pardon: he resigned !!)

If AIRBUS were a private company, it would have declared bankruptcy a long time ago, restructured and c
ontinued business with its strong parts. Instead, they are trying to cope with most serious problems with the widebodies, as the A340, A350 and A380, as well as the A400 (as they have admitted publicly), the only
bright point beeing the A330, which will probably become obsolete after the B787 becomes more available

As for the typical misleading comment from GALLOIS that EADS n o w doesnt need money: This in true
if refrred to 2007, but totally untrue and critical from 2008 on, and so there is a very short time to raise it!!

I have only one point I do not agree with you: the problems will not alleviate after the French elections, the
policy of their governments always followed the path of state intervention and subsidies, as well as bullying
the partners. This got somewhat better in the last years of MITTERAND, but as it is "presque" sure that
Sarkozi, Chirac's candidate, will win, all will continue as it is.

AMINOBWANA

(Excerpts - link to full story below)

"PARIS (AFP) - Directors at European aerospace giant EADS said Tuesday they had failed to reach agreement on paying shareholders a 2006 dividend, underlining a crisis at the group and its aircraft manufacturing subsidiary Airbus.

"The members of the board were not able to come to an agreement on a dividend proposal," the European Aeronautic Defence and Space company said in a document submitted to shareholders ahead of its May 4 general assembly.

"The group has therefore allowed shareholders themselves to decide on the question, it said.

"In the absence of a proposal from the board the shareholders will be able to propose that the net result of the 2006 tax year, or 99 million euros (133 million dollars), should be added to the profits maintained or distributed in the form of a dividend, wholly or partially," EADS said.

"But the principal EADS shareholders, German automaker DaimlerChrysler, 15 percent, a consortium of German investors, 7.5 percent, French media and technology group Lagardere, 15 percent, and the French state, 15 percent, have been at loggerheads over whether to pay a dividend.

"Lagardere is in the process of selling 7.5 percent of its 15 percent holding.

"The French government has opposed rewarding shareholders, given the dramatic fall in profits and thousands of job losses planned at Airbus this year.

"Industrial logic should come before financial logic," Prime Minister Dominique de Villepin said in early March.

"The EADS board also has decided against proposing a capital increase to shareholders at the annual general meeting, according to the document obtained by AFP.

"The group has said it will require external finance at some point, either through a share capital increase or via a bond issue, because of production problems at Airbus and the cost of new projects.

"A capital increase would be a delicate operation at EADS, a highly politicised company with a fine balance of power between French and German shareholders.

"Any capital increase would have to be financed by all shareholders equally if the balance were to be maintained and they have been unable to agree on the operation, according to sources.

"EADS co-chief executive Louis Gallois, who is also chief executive of Airbus, said last month there was "no urgency for a capital increase" by EADS.

"EADS is to confirm at the general assembly that its operating profit will be stable in 2007 compared to the 2006 level but that Airbus will report another "substantial loss" this year as it undergoes a painful restructuring."

http://au.biz.yahoo.com/070410/33/16oss.html
 
aminobwana
Posts: 923
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 3:26 am

Quoting Aminobwana (Thread starter):
ConcordeBoy From United States, joined Feb 2001, 15352 posts, RR: 70
Reply 8, posted Sun Apr 15 2007 11:56:28 your local time (21 minutes 42 secs ago) and read 38 times:


Quoting Aminobwana (Thread starter):
How Do You Think The Eads Crisis Will Be Solved?

If you want the short answer:
when Airbus starts being run solely as a market-driven corporate entity rather than any vestiges of social employment program.

Simple, but not easy (for them) at all.

Quoting NAV20 (Reply 4):
The underlying problem, though, remains political interference.

Underlying?
The case could easily be made that it's the root problem

Very well said !

Could I ask you how far you agree with my posting:
"EK A350 Audit A350 Closes Gap On B787
Aminobwana Reply 244, posted Fri Apr 13 2007 23:21:23 your local time (1 day 10 hours 55 minutes ago)
and read 1134 times"

A stupid question ! As I saw that you underlined the ROOT word in your posting (I am a new member)
How I can make underlinings and boldings ??

Thanks in advance

Aminobwana
 
MEA-707
Posts: 3660
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 3:44 am

They are on their way. 2007 HAS to generate more positive news then 2006, like a successful entry of service of the A-380 and a major order for the A-350 (think of Emirates or Qatar confirming 60-ish, or a surprise new top client like United, BA or Lufthansa). Combined with a continued strong orderbook for the A-320 and A-330 that will mean the worst is over and they will remain the manufacturer close to Boeings market share for years to come.
nobody has ever died from hard work, but why take the risk?
 
ConcordeBoy
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 3:59 am

Quoting MEA-707 (Reply 11):
2007 HAS to generate more positive news then 2006, like a successful entry of service of the A-380

Which hasn't happened yet....

Quoting MEA-707 (Reply 11):
and a major order for the A-350 (think of Emirates or Qatar confirming 60-ish, or a surprise new top client like United, BA or Lufthansa).

...nor has this.


Something about counting-your-eggs cher?
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
Rheinbote
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 4:13 am

Quoting Basefly (Reply 1):
They are in the middle of Power 8, and it seems that the consequences is going to be 10,000 jobs lost.

- Expect no more details on Power8 execution until after the French election.  Wink
- Airbus XFW will hire an additional 1.000 blue collars this year. How's that?  scratchchin 
- Upper ranks are being mopped up in the right places without much fanfare.  thumbsup 
 
Basefly
Posts: 189
Joined: Thu Apr 12, 2007 4:35 am

RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 4:14 am

Quoting ConcordeBoy (Reply 12):
Quoting MEA-707 (Reply 11):
2007 HAS to generate more positive news then 2006, like a successful entry of service of the A-380

Which hasn't happened yet....

That like saying that you doubt that the 787 will enter service, just because it havent done so yet.

The A380 WILL enter service this year, even if it mean that Airbus will install the seat from their cafeteria, they will get that whale flying this year, rest assure....!
 silvermedal 
757/777-A340/A380, Love them.
 
Basefly
Posts: 189
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 4:21 am

Quoting Rheinbote (Reply 13):
Expect no more details on Power8 execution until after the French election.
- Airbus XFW will hire an additional 1.000 blue collars this year. How's that?
- Upper ranks are being mopped up in the right places without much fanfare.

I did not know about them hiring 1000 more.....

I must admit that i fear the French no matter how the election turns out, will go national on EADS, and demand no layoffs.


The biggest problem Airbus have (at the moment) , i think we can all agree, is French politics, and to a much lesser extent German politics.....
 ashamed 
757/777-A340/A380, Love them.
 
ConcordeBoy
Posts: 16852
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 4:55 am

Quoting Basefly (Reply 14):

That like saying that you doubt that the 787 will enter service, just because it havent done so yet.

Your comparison is utterly ridiculous.

Quoting Basefly (Reply 14):
The A380 WILL enter service this year, even if it mean that Airbus will install the seat from their cafeteria, they will get that whale flying this year, rest assure....!

....the same may have been surmised in 2006, after the first year's delay. As you don't see the future, nor the internal workings of Airbus production for that matter; you cannot with any such assuredness guarantee an EIS until it's actually occurred. End of story.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
MEA-707
Posts: 3660
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 5:04 am

Quoting Basefly (Reply 14):
That like saying that you doubt that the 787 will enter service, just because it havent done so yet.

Come on, you are reading too much in it. It's like 95% sure the A-380 will enter service this year, and otherwise early in 2008, same as that the 787 will enter pax service next year. But this small chance of major snags or further delays would be a nightmare. Or that the aircraft IS entering service but all kind of reliability and efficiency issues will dominate the news. But actually I am pretty sure Airbus will have a nice 2nd half of 2007 with some good news on the A-380. Enthousiast first passengers, a few small orders here and there.
nobody has ever died from hard work, but why take the risk?
 
aminobwana
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 5:05 am

Quoting Aminobwana (Thread starter):
SEND INSTANT MSGADD TO RESP MEMBERSSUGGEST DELETIONQUOTE SELECTED TEXT_

Sphealey From United States, joined May 2005, 140 posts, RR: 0
Reply 5, posted Sun Apr 15 2007 11:41:26 your local time (1 hour 13 minutes 16 secs ago) and read 109 times:


NAV20,
I don't disagree with your analysis, but I think you are leaving out two factors. First, the major airplane buyers are not going to allow a situation to develop where there is only one viable manufacturer. Lockheed and McDonnell-Douglas are gone, and it doesn't currently appear that Embraer will move into the 150-550 market. Russia and the PRC are long-term wildcards for now, so that leaves the definition of "one viable" somewhere around 40% market share for Airbus (or whoever is down in the current cycle). Clearly there are limits to this; airlines won't buy planes that are utterly uncompetitive just to prop up a manufacturer. But Airbus' offerings are nowhere near uncompetitive at this point even against the 787.

Second, what I was hinting at in my OP was that I suspect the true Airbus stateholders are not really dissatisfied with the jobs and technology "juice" that Airbus provides to the EU economy. They might be perfectly happy to slap around a few scapegoats in public and do a bit of reorganizing, then just continue as before.

1) As for
"the major airplane buyers are not going to allow a situation to develop where there is only one viable
manufacturer. Lockheed and McDonnell-Douglas are gone"
Pls. refer to a posting I already made under another title, which I attach on the end of this message. I would be
happy to hear your opinion regarding the content.
As you see, I had addressed the monopoly issue on the end of said message.
I agree with you that it cannot be said that AIRBUS is not competitive, but have extreme serious deficiencies
mainly in planning (market adaptation A340 and original A350, market assessment and airport adaptation
A380, irrational manufacturing and assembling chain)) and compliance with specs (A340 and A 380 weight
problems). But of course: this per se are not reasons to liquidate them. Basicly, if the top management would
do its job instead to try to please the politicians of their country, and the managers cease to be named by a
quota system instead of merits,many of these problems would disappear. This is typical of state enterprises,
I have 40 years experience to deal
with such. Of course, multi-state is even worse !
And as you mention Lockheed (and I add Northrop): As far I hear, they are looking carefully at the situation.
They
have not lost their VLA and LA building capacity and would come back immediately if AIRBUS is out from
the wide-body business. Obviously AIRBUS, or successor will and should not leave the single aisle one!
So a joint venture Lockheed-Northrop and eventually BAE could provide the needed competition, possibly
not even much later than AIRBUS would be able to clear its act, which possibly will be never as long they do
not get rid of the politicians and only if they are able to attract private investors

2) as for
",what I was hinting at in my OP was that I suspect the true Airbus stockholder's are not really dissatisfied
with thejobs and technology "juice" that Airbus provides to the EU economy. They might be perfectly happy
to slap around a few scapegoats in public and do a bit of reorganizing, then just continue as before.[/quote]

Here I most definitively disagree.
* Daimler and LAGARDERE are on they way out taking huge losses. especially Daimler, having lost already
a lot of money by getting arrogant and overvalue their capacities by going international (Chrysler, Mitsubishi,
the joint venture of the mini-hybrid).
* there is anybody private remotely interested to invest money as long the French state is in, and such
candidates as Russia, Qatar and China lurk in the background, each one having special interests not
convenient for the company.
* the smaller investors on the Stock exchange, with the stock going south continuously, obviously are most
unhappy, also because of the negative impression of the bickering within EADS, the public customer
corruption accusations and the official investigation of insider trading of MM. Lagardere and Foregeard, in
the last days enhanced by the Golden Parachute of the latter, something not so usual in Europe as
in the US.
* The French state obviously considers the contribution of EADS/AIRBUS to the economy, but cannot be
happy given the situation and the perspective to inject additional 8-figure billions Euros in subsidies and
capital increase.when they have already a too high budget deficit.

What you possibly mean that there are a lot of AIRBUS admirers (many of them by a reverse anti-US
attitude), but obviously this can go only so far...

And, as you say, after spending billions, all will revert to the present handling, then AIRBUS will limp
along and progressively be a token competitor for BOEING, which would make the latter very happy (


As said, see below my posting No. 244 Apr.13

best regards

aminobwana


"EK A350 Audit A350 Closes Gap On B787 Aminobwana Reply 244, posted Fri Apr 13 2007

I am German-Venezelan, from a pure European family, over 70, a former Director from the largest German
E-Konzern and therefore surly not anti-European. I find it bizarre that anythink somebody says in favor or against Boeing or Airbus immediately gets many emotional and inobjective comments !

This said, I cannot understand how anybody can put the fortune of his airline on stake ordering (at least)
anythingfrom Airbus other then A320/330. The A380 has still a lot of problems and the A350XWB exists only
on paper and again I find it preposterous that anybody (including the overrated Mr. Tim Clark, if he is not only
posing) can say it is better or worse than the almost already flying B787. What you draw on a paper is one
thing, the reality is an other !!
I notice that our Forum, where I am a newcomer, is highly qualified technically, but does not consider much
the economical and financial problems (outside the directly to the Aircraft related) of the enterprises, which
unfortunately from our point of view of us engineers are more weighty then the purely technical . Therefore I
can understand that it can be thought that above technical problemens, and other (as the misplanned A340)
can be solved, but the main reason not to place orders is the state of the company, which is structurally 10 years+ behind Boeing (quoting the former CEO of Airbus the very prestigeous and succesful (as CEO of
St. Gobain, between other, now he is CEO of Peugot) former CEO of AIRBUS M. CHRISTIAN STREIF. Dual
top management, other managers appointed by quotas instead merits, the same for manufactring sites and subcontractors, subject to political pressures by the French government, with the private EADS shareholders DAIMLER and LAGARDERE on they way out (BAE laredy gone) and none other private investors interested ,
the only way out (meaning the schievement of the capital for EADS to be able to susbsist) is a takeover by
the French state and such other state interests as Russian, Qatari and possibly Chinese, which have each
one its own nationalistic agenda much in front of the interest of the company. And such not only state, but
multistate bureaucratic company will never be able to solve the existing organizational problems, probably
they would get worse, and the company would only be able to function with increased level of the already
high subsidies.
In the meantime, due to the fight on the top and labor unrest, the comapny is nearly paralyzed.

And of course, order annoucements as the Qatari und Russian for the A350, inspite thatt both countries
declared these were merely LOIs (and -as not declared but generally known- conditioned to that their
investment is accepted and the obtention of board seats,) as well as the increasingly loud public accusations
of customer corruption and insider trading on the highest level, do not contribute to the confidence of present
and future shareholders.

Obviously, many airlines are reticent and try to delay to act basing on these facts, by a logical fear of a
BOEING quasi monopoly on the wide-body sector, some of them also due to their exceedently cordial past
relations with EADS and possibly a few because of their anti-US political position, but there is no way to go
around the facts. Obviously, there exist solutions, bur as these are very hard and painful, they are not even
seriously considered, as the POWER 8 restructuring plan shows, which as one of its main "ideas" is to fire a
part of the workforce (ignoring that the crisis was originated by the same Board and EADS co-CEOs (one of
them being the CEO of AIRBUS) which invented the plan, at a moment where one of the most grave
financial problems is the lack of cash flow due to the slowness to get rid of the enormous order backlog, which
only would produce more slowdown composed by labor unrest,

AN UNORTHODOX AND PROBABLY UNREALISTIC IDEA: IF THIS FORUM COULD PRODUCE AN ASSESS-
MENT OF THE SITUATION AND PROPOSE SOLUTIONS, THIS WOULD BE A GREAT THING !!

aminobwana
 
ConcordeBoy
Posts: 16852
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 5:13 am

Quoting MEA-707 (Reply 17):
It's like 95% sure the A-380 will enter service this year, and otherwise early in 2008

You just contradicted your own previous arguement.... rendering your assessment more worthless now, if such a thing is indeed possible, than it was to begin with.  Yeah sure
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
aminobwana
Posts: 923
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 5:30 am

Quoting Aminobwana (Thread starter):
SUGGEST DELETIONQUOTE SELECTED TEXT_

MEA-707 From Netherlands, joined Nov 1999, 2407 posts, RR: 14
Reply 11, posted Sun Apr 15 2007 12:44:28 your local time (1 hour 21 minutes 17 secs ago) and read 105 times:


They are on their way. 2007 HAS to generate more positive news then 2006, like a successful
entry of service of the A-380 and a major order for the A-350 (think of Emirates or Qatar confirming
60-ish, or a surprise new top client like United, BA or Lufthansa). Combined with a continued
strong orderbook for the A-320 and A-330 that will mean the worst is over and they will remain
the manufacturer close to Boeings market share for years to come

I agree with you under condition that these confirmation were not conditionesd. A order from
Qatar Air means very little, as nobody knows if they are able to convert their struggling
organization in a large airline (money alone doesn't makes it, th competion is also very hard).
As the A350XWB is a paper aircraft, as not even carefully studied because of the time lost with
the first A350, obviously the final specs will differ a lot from the offered and they would be able
to cancel the order anytime. But to place such a token order would ensure them an extremely
low price, delivery slots and a improved chance to be admitted as a institutional investor at EADS.
If they are not, adieu order!!

The Russian position is the same, only Aeroflot is already a big airline.

A real probable for Airbus are their misleading announcements. In above cases, first they
announced ORDERS. later both Russian and Qataris had to clarify that this were LOI's
So unfortunately their statements are to be taken very cautionably!

aminobwana
 
aminobwana
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 5:45 am

Quoting Aminobwana (Thread starter):
MEMBERSSUGGEST DELETIONQUOTE SELECTED TEXT_

Rheinbote From Germany, joined May 2006, 630 posts, RR: 5
Reply 13, posted Sun Apr 15 2007 13:13:46 your local time (1 hour 17 minutes ago) and read 102 times:


Quoting Basefly (Reply 1):
They are in the middle of Power 8, and it seems that the consequences is going to be 10,000 jobs lost.

- Expect no more details on Power8 execution until after the French election.
- Airbus XFW will hire an additional 1.000 blue collars this year. How's that?
- Upper ranks are being mopped up in the right places without much fanfare

1)" Expect no more details on Power8 execution until after the French election"
I agree !! Then it will be probably scrapped, which would be a good thinj, as the
Plan does not address any real issue. The personnel reduction makes no sense.
the problem is not labor originated, but mismanagement. With less personnel
the cash flow problem will become wors, nor better
2) "Airbus XFW will hire an additional 1.000 blue collars this year. How's that? :
If this is true, it seems not compatible with Power 8. But this is unimportant.
Fact is that AIRBUS has only a purely theoretical design, where they promised any-
thing custmers as TIM CLARK asked. To hire personnel strictly assigned to this
project seems more or less similar to play AIRBUS assets at Montecarlo !!
3) "Upper ranks are being mopped up in the right places without much fanfare[/quote"
Again, if this is true, this would be a positive announcement, as showing that
they get rid of failing managers without caring which politician protects him!
So why this is anot announced ??

aminobwana
-
 
aminobwana
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 6:08 am

Quoting Aminobwana (Thread starter):
ConcordeBoy From United States, joined Feb 2001, 15367 posts, RR: 70
Reply 16, posted Sun Apr 15 2007 13:55:45 your local time (49 minutes 34 secs ago) and read 63 times:


Quoting Basefly (Reply 14):

That like saying that you doubt that the 787 will enter service, just because it havent done so yet.


Your comparison is utterly ridiculous.

Quoting Basefly (Reply 14):
The A380 WILL enter service this year, even if it mean that Airbus will install the seat from their cafeteria, they will get that whale flying this year, rest assure....!

....the same may have been surmised in 2006, after the first year's delay. As you don't see the future, nor the internal workings of Airbus production for that matter; you cannot with any such assuredness guarantee an EIS until it's actually occurred. End of story

I agree that the B787 comparison from Basefly is not objective. If he would have written this
3 years ago, then it would apply, but not knowm when the aircraft is nearly flying.

But even what you say is normal if referred to a normally working enterprise, as AIRBUS is
desperate. I agree here with Basefly !! I have already said the similar a few days ago when
posting a response regarding that they are already painting (!!!) this unit.

Fact is that Airbus has already admitted that wiring will not be the definitive.

In this posting I had already stated that I heard that SQ has accepted such strange
proceedings as a part of the negotiation where they got enormous direct and indirect
discounts for the already ordered A380 andfor the additional ones.
It was agreed that this unit SQNo.1 will be later returned to Germany or France to be
upgraded to specs.

Of course, this becomes handy for SQ too, as if the unit is not delivered in October,
their shareholder will begin to ask questions regarding their relation with AIRBUS !!

I am happy that colleage BASEFLY has the same opinion as I regarding the
negotiation methods of Mr. John Leahy !!

AMINOBWANA
 
NAV20
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 12:07 pm

It's all too easy in business (particularly the 'slow-burning' aviation field) to confuse 'future prospects' with the day-to-day business

Quoting MEA-707 (Reply 11):
2007 HAS to generate more positive news then 2006, like a successful entry of service of the A-380

In cash flow terms the A380 will have a negative effect for several years to come. The first 90 or so that Airbus delivers will COST it money, not make it money. The scale of the adverse cash flow is worsening daily as the $US depreciates against all other currencies. In strict business terms, leaving 'prestige considerations' out of it, Airbus would be better off cancelling, or at least deferring, A380 deliveries.

Quoting MEA-707 (Reply 11):
and a major order for the A-350 (think of Emirates or Qatar confirming 60-ish,

A350 orders are irrelevant to Airbus' medium-term prospects as there can be no deliveries until 2014. The cash flow implications of the A350 programme are downright 'dire' as Airbus will have to find of the order of $E10B. (rather more than half of what the whole of EADS is worth) to develop the design. More mere orders will not improve that situation. However, it's interesting to note that Airbus only have a total of 11 firm orders for the A350XWB (and those from Finnair, a government-controlled airline); that doesn't look to me like a firm basis on which to commit E10B. in development costs.

Quoting MEA-707 (Reply 11):
Combined with a continued strong orderbook for the A-320 and A-330 that will mean the worst is over

Agreed on the A320 (117 orders so far this year); but, of course, the profit margin on single-aisles is very low (for Boeing as well). As regards widebodies, there is currently an order backlog of about 2.5 years for the A330/A340. But the A330 order situation cannot currently be described as 'strong'; Airbus have only sold six of them so far this year, and that was back in January.

Looking at all that (particularly the certainty of heavily-adverse cash flows for years to come) 'Power 8' looks a ridiculously-feeble response. Particularly since none of the governments concerned, and none of the unions, have yet agreed to any part of it.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
baroque
Posts: 12302
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 9:22 pm

Quoting NAV20 (Reply 4):
Good question, Aminobwana!

Which crisis would that be?  Smile  Wow!
Is it the one of having delivered more planes in 2006 than ever before? The low dollar and the high Euro? Orders running at a higher rate than they can deliver for another year? Or perhaps, bearing in mind the current situation of Qantas, is it the problem of EADS having an ownership structure that effectively rules out a takeover by private equity while presumably its US rival remains vulnerable to such a takeover.
It is a worrying situation, I must agree.  Big grin
 
astuteman
Posts: 6340
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 10:34 pm

Quoting Aminobwana (Reply 18):
I find it bizarre that anythink somebody says in favor or against Boeing or Airbus immediately gets many emotional and inobjective comments !

Emotional and Inobjective comments?.........

Quoting Aminobwana (Reply 9):
A separate even if related issue is that AIRBUS through all its history has been living on Life Support by gigantic subsidies



Quoting Aminobwana (Reply 9):
and what is really outrageous, the French politician as well the German, even with less enthusiasm, have openly indicated that they will continue this path, WTO and US be screwed



Quoting Aminobwana (Reply 9):
And when a real manager as M. CHRISTIAN STREIFF states the true, telling that the company is limping 10 years behind BOEING, he is "ceremoniously" fired (pardon: he resigned !!)



Quoting Aminobwana (Reply 9):
If AIRBUS were a private company, it would have declared bankruptcy a long time ago,



Quoting Aminobwana (Reply 9):
As for the typical misleading comment from GALLOIS that EADS n o w doesnt need money:



Quoting Aminobwana (Reply 18):
irrational manufacturing and assembling chain)) and compliance with specs (A340 and A 380 weight problems).



Quoting Aminobwana (Reply 21):
Then it (power8) will be probably scrapped, which would be a good thing, as the
Plan does not address any real issue.



Quoting Aminobwana (Reply 21):
Fact is that AIRBUS has only a purely theoretical design, where they promised any-
thing custmers as TIM CLARK asked

Yup. That pretty much puts the emotion and inobjectivity to bed.............  Smile

(PS, do you mind if I suggest not repeatedly quoting quite such large swathes of previous posts - I personally found it made the thread difficult to follow for a mere 20-odd posts. No offence intended)

Quoting NAV20 (Reply 4):
The crisis would appear to be rooted in the fact that Airbus currently has no truly competitive models to offer in competition with the 787 and 777

I don't think that this is the crisis at all. If you are indeed correct in your assertion (and FWIW I don't think the picture is a simple as that), these would be symptoms of an underlying problem, not a root problem.

Quoting NAV20 (Reply 4):
Good question, Aminobwana!

The "question" would appear to have been framed in the way it was by a poster who clearly has a "particular" point of view to share with us, with an assumption that his "views" of what "the crisis" is, are actually accepted as a "given" by all of the wider A-net audience.

As such, it was not a good question, and would appear to have resulted in a not particularly high quality thread.
A more "open" framing of the subject may well have produced a much higher quality re-run of ......the endless discussions we have already had on the topic of EADS current situation............ Wink

Quoting ConcordeBoy (Reply 8):
If you want the short answer:
when Airbus starts being run solely as a market-driven corporate entity

I'm inclined to agree with what I perceive as the intent of your statement.
The word "solely" jars with me though.
No aerospace organisation the size of either Airbus or Boeing operates in an environment free from political influence.
A "black-and-white" picture of Boeing as the "pure" market driven organisation and Airbus as a "Pure" state controlled, non-market driven organisation is an almost embarrasing simplification of the "grey" realities of both of these businesses.

Quoting ConcordeBoy (Reply 12):
Quoting MEA-707 (Reply 11):
2007 HAS to generate more positive news then 2006, like a successful entry of service of the A-380

Which hasn't happened yet....



Quoting ConcordeBoy (Reply 16):
Quoting Basefly (Reply 14):

That like saying that you doubt that the 787 will enter service, just because it havent done so yet.

Your comparison is utterly ridiculous.

Wonderful stuff!  Smile

Quoting Stitch (Reply 3):
How it will be solved will probably involve a number of things we do know about:

Power8 or some other restructuring program

Partnerships with foreign countries (like Russia and Qatar)

Additional support and investment from the four core EU members [UK, France, Germany, Spain]

Power8 obviously addresses some "cost" issues, particularly by attacking the "overhead" cost element as opposed to the producers. It should really have been "normal" business anyway, if it was "doable". Maybe a symptom of Airbus becoming complacent?....
(FWIW Rheinbote, unlike some, I see nothing incongruous with hiring 1000 production staff to cope with a ramp-up, whilst overhead staff are being reduced to improve costs. I can see serious political hurdles that might be created though...)

I share the concern of others that partnerships with more foreign governments has the capability to create more problems than it solves........as does additional investment from the fou core EU members. Their investment will almost inevitably be linked to political considerations.
If said governments were capable of investing on a "financial" basis (i.e. as a good way to make money), it may work, but that's unlikey to be the thrust of their investment.

Whilst the floor is open for emotive and irrational commentary, from my seat, Airbus was very well conceived and executed for the particular method of doing business that it has undertaken so far (i.e aluminium airliners, with wings made in the UK.......and so on).
I'd venture an opinion that it's success has actually been market driven, even if it's existence, of necessity, was a thing of government intervention.
Sadly, the same government intervention that created Airbus, has become a hindrance, now that the way of doing business is (and has to) change. I believe it was Streiff himself that effectively said the organisation had effectively been designed to be almost impossible to change.

For me, THAT is the root of the "crisis", and whilst it may be a great emotional relief to throw out free-market slogans as the solution, the reality of how to migrate from todays position to one of free (or as free as it gets) market influence is one that I can't easily visualise.
I suspect it would take a decade or more, and require great care during the transition.

Quoting Baroque (Reply 24):

A perfect riposte, as always..  bigthumbsup 

Regards
 
Basefly
Posts: 189
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 11:00 pm

Quoting ConcordeBoy (Reply 16):
Your comparison is utterly ridiculous.

You know what i mean....

Quoting ConcordeBoy (Reply 16):
....the same may have been surmised in 2006, after the first year's delay. As you don't see the future, nor the internal workings of Airbus production for that matter; you cannot with any such assuredness guarantee an EIS until it's actually occurred. End of story.

Do you see the future?? If so next week´s lotto numbers please.
 pray 

Listen, they are painting it they are done fitting it..... It will fly.... Unless the french first demand a giant french flag being dragged behind it, when it flies....... in 2007 of course......  hissyfit 
757/777-A340/A380, Love them.
 
NAV20
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RE: How Do You Think The Eads Crisis Will Be Solved?

Mon Apr 16, 2007 11:07 pm

Quoting Baroque (Reply 24):
Which crisis would that be?

Well - to put it as shortly as I can, Baroque, Boeing's widebodies are outselling Airbus's widebodies at a rate of ten to one so far this year (177 to 17), and Airbus is forecasting another loss in 2007. All the signs are that Airbus is on the wrong side of a classical 'duopolistic' situation. And, to cap it all, Boeing show every sign of 'going in for the kill' by bringing out a new composite-based single-aisle which will knock Airbus' only remaining steady seller, the A320, out of contention.

And every time Airbus proposes to do ANYTHING - withhold a dividend to aid cash flow, or raise capital by a cash call or share issue, or even (just today) sell off plants to get more working capital - one or other of the various governments puts a spoke in their wheel:-

"FRANKFURT (Thomson Financial) - The government wants to make sure that the three Airbus plants in Germany which EADS NV plans to sell will be bought by German companies, weekly Focus magazine reported, citing sources.

"Experts from the Economy Ministry and the state-owned Kreditanstalt fuer Wiederaufbau (KfW) have already held talks with potential buyers of the plants in Laupheim, Varel and Nordenham, it added.

"It said the government prefers to sell the plants to German companies that have been the suppliers to the Airbus plants."


http://www.forbes.com/business/feeds/afx/2007/04/15/afx3613545.html

The behaviour of the German Government, in particular, reminds me of a sign an old boss of mine used to have on his wall, which read (with apologies to Kipling):-

"If you can keep your head when all about you
'Are losing theirs and blaming it on you.......

"YOU PROBABLY DON'T UNDERSTAND THE SITUATION."


One thing was clear back last July when they hired Streiff - fixing Airbus is a task that will take many years. Which makes it all the more worrying that they haven't even started the job yet.......

[Edited 2007-04-16 16:11:16]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
baroque
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 12:14 am

Quoting NAV20 (Reply 27):
Well - to put it as shortly as I can, Baroque, Boeing's widebodies are outselling Airbus's widebodies at a rate of ten to one so far this year (177 to 17),

How much would you care to invest that Airbus widebody orders at 31 Dec 2007 will be 4*17 or less? Also what is the underlying loss/profit? The 2007 data are strongly influenced by the A380 woes, but do you think that the operations are actually running at a loss excluding that special factor - I will not call it a one off because it has had a remarkable life? Yes it is a less than happy outcome, but it really does not indicate a total picture of doom and gloom.

And one might observe that Airbus are so despairing of the 330/340 sales that they are increasing production first to 8 a month (early 2008) and then to 9 a month (mid 2009). Either Airbus are hopelessly out of touch with the demand for their planes, or it is rather healthy. You might try citing the French for Gallic over-exuberance, but hardly the Germans??

Quoting NAV20 (Reply 27):
And every time Airbus proposes to do ANYTHING - withhold a dividend to aid cash flow, or raise capital by a cash call or share issue, or even (just today) sell off plants to get more working capital - one or other of the various governments puts a spoke in their wheel:-

Sorry to hit below the belt, but this performance is as nothing compared with that of the Qantas board selling us all out for a mess of potage while they retreat with a part of the spoils. Compared with that effort, EADS seems like very sound management to me.

Apart from anything else, I suspect the engineers in Airbus will pull it through regardless of the management. It might be really really nice to have management helping, but you might find the technical folk will "manage" just fine in the absence of that factor. We keep hearing the "truism" that the true capital of a company is its staff, perhaps this might even be true!
 
manni
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RE: How Do You Think The Eads Crisis Will Be Solve

Tue Apr 17, 2007 12:18 am

Quoting Aminobwana (Reply 20):
A order from
Qatar Air means very little, as nobody knows if they are able to convert their struggling
organization in a large airline (money alone doesn't makes it, th competion is also very hard).

I suppose you mean Qatar Airways? A firm order for 80 A350XWB's would mean the biggest widebody order ever placed. BTW. How is their organisation struggling?

Quoting Aminobwana (Reply 20):
A real probable for Airbus are their misleading announcements. In above cases, first they
announced ORDERS. later both Russian and Qataris had to clarify that this were LOI's

I'd like to see those announcements made by Airbus. Could you provide a link? I haven't come across them. Could you also show me the the articles were SU and QR had to correct Airbus?

Here's what Airbus wrote on their website.

http://www.airbus.com/en/presscentre...ems/07_03_22_Aeroflot_A350XWB.html

"The Russian flag carrier Aeroflot signed today the Memorandum of Understanding for 22 Airbus A350XWB aircraft."

Do you know the difference between a MuO and an order?

Quoting NAV20 (Reply 23):
Airbus have only sold six of them so far this year, and that was back in January.

I remember you were in a similar fashion 'optimistic' last year, all be it a bit later in the year. Time has proved not to draw conclusion to early. I thought you'd have learned that by now...

Quoting Aminobwana (Reply 18):
AN UNORTHODOX AND PROBABLY UNREALISTIC IDEA: IF THIS FORUM COULD PRODUCE AN ASSESS-
MENT OF THE SITUATION AND PROPOSE SOLUTIONS, THIS WOULD BE A GREAT THING !!

Just curious here... And to who would you propose that solution?.  rotfl   rotfl   rotfl 
SUPPORT THE LEBANESE CIVILIANS
 
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autothrust
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RE: How Do You Think The Eads Crisis Will Be Solve

Tue Apr 17, 2007 1:49 am

Quoting Rheinbote (Reply 13):
- Airbus XFW will hire an additional 1.000 blue collars this year. How's that?
- Upper ranks are being mopped up in the right places without much fanfare

Yes, i readed that to, on a german newspage.They are really searching more qualified people.

Behind the scenes ranks are indeed changing quite fast.

Quote:
EADS

Gerald Weber appointed Head of Operations and Member of the Airbus Executive Committeet
Patrick Gavin Appointed Executive Vice President Engineering
Charles Champion Becomes Executive VP Customer Services
Tom Williams appointed acting Head of Procurement
Stéphane Israël appointed business advisor to EADS CEO Louis Gallois
Ulrike Steinhorst appointed chief of staff of EADS CEO Louis Gallois



Quoting Baroque (Reply 24):
Is it the one of having delivered more planes in 2006 than ever before? The low dollar and the high Euro? Orders running at a higher rate than they can deliver for another year? Or perhaps, bearing in mind the current situation of Qantas, is it the problem of EADS having an ownership structure that effectively rules out a takeover by private equity while presumably its US rival remains vulnerable to such a takeover.



Quoting Astuteman (Reply 25):
No aerospace organisation the size of either Airbus or Boeing operates in an environment free from political influence.
A "black-and-white" picture of Boeing as the "pure" market driven organisation and Airbus as a "Pure" state controlled, non-market driven organisation is an almost embarrasing simplification of the "grey" realities of both of these businesses.

 thumbsup  Excellent posts Baroque and Astuteman, can only agree with them.

EADS will sure try sell over the next years more smaller plants of Airbus to get the costs lower.(apart from P8)
Their preference will be presumably Dollar Zone, to even to some degree the problem of the Euro strength.
IMO Airbus must become smaller to be competitive in the next decade and outsource more, similar what Boeing do.

However we will see at latest on the A350 EIS how integrated EADS/Airbus has become.
“Faliure is not an option.”
 
flysherwood
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 3:13 am

Quoting Sphealey (Reply 7):
That wasn't my experience in another capital-intensive industry where there was a duopoly on the supply side. No one ever wrote it down, but every executive in the industry knew where the viability point for the weaker supplier was and nudged the purchasing decisions as needed

Really? WN has never bought an Airbus aircraft. When was the last time CO bought one? When was the last time BA bought an Airbus widebody? etc... It is not up to the airlines to ensure that there are two viable manufacturers. It is up to the manufacturers themselves! If Airbus or Boeing cannot cut the mustard, they will lose orders, end of story. If you don't believe that then ask Lockheed or MDD. Yes, it is absoulutely in the interest of the airlines that at least two are viable, but they will not order aircraft just to ensure this happens. Mr. Clark bought 43 A380, because he wanted to buy them, not because he had to offset his 777 orders.
 
flysherwood
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 3:46 am

Quoting Baroque (Reply 28):
The 2007 data are strongly influenced by the A380 woes, but do you think that the operations are actually running at a loss excluding that special factor

How exactly do you exclude a $6 billion drain on the company's cash flow? You cannot take only the winning parts of Airbus and exclude the losses. The A380 is in PRODUCTION, therefore it is part of the operating losses or profit for Airbus for the length of time it is in production. It is no longer in the development stage!!!  Yeah sure
 
astuteman
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 4:01 am

Quoting Flysherwood (Reply 32):
How exactly do you exclude a $6 billion drain on the company's cash flow?

$6Bn cash drain is not necessarily the same as lost profit BTW, but in answer to your question, the way that Airbus are doing (and most other companies would in the same circumstances also..).

The A380 losses are an exceptional, caused by a specific event, and accounted for accordingly.

In normal circumstances, you would expect a businesses profitability to return to the underlying trend, once the exceptional has been dealt with (which Airbus are doing in 2006 and 2007 FY's).

Airbus's operating profit on A320/A330/A340 was E2.8Bn in 2006 (or c.$3.5Bn). In theory, once the exceptionals are written off, Airbus's figures would return to something similar.
In practice, they have warned of the adverse effect of worse hedging rates, and lower margins on sales, on future profits. These are NOT exceptionals, and can't be avoided.

Regards
 
MaverickM11
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 4:25 am

As long as the politicians are involved, it will never be "solved" but rather window dressed in the hopes that outside stimuli will make it better, in much the same way that the two leading offenders' economies are run Silly.
E pur si muove -Galileo
 
flysherwood
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 5:04 am

Quoting Astuteman (Reply 33):
The A380 losses are an exceptional, caused by a specific event, and accounted for accordingly.

A $6 billion loss is still a loss no matter how you report it. And it is my understanding that Airbus plans to take the losses on the first few deliveries, therefore it is still part of the operating income, exceptional or not.

Quoting Astuteman (Reply 33):
In practice, they have warned of the adverse effect of worse hedging rates, and lower margins on sales, on future profits.

You have just made my point. They lowered margins on the A330 as part of the compensation to the buyers of the A380 for delay penalties. Once again affecting operating margins. You cannot take one without the other.
 
bigjku
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 5:13 am

Quoting Flysherwood (Reply 35):
A $6 billion loss is still a loss no matter how you report it. And it is my understanding that Airbus plans to take the losses on the first few deliveries, therefore it is still part of the operating income, exceptional or not.

There are different concerns at work here though. For example if one were considering lending to this company they are going to list the A380 loss as an exceptional loss because they are expecting it not to happen again. The loss is still there but it can be explained out of the trends.

What matters then is the judgement of the lender of investor looking at the company. Were those losses really one time deals? If that is the case then you base your future projections on their numbers as they would have been without those losses.

The one concern that people can have with Airbus that is legitimate is how the pain from the A380 will hurt when combined with the development cost of the A350XWB in terms of cash flow for the company.

If I am assessing this company my main concern is that, assuming there is already debt there for the A380 development, will they be able to meet the cost of that debt, plus new debt on the A350, plus the cost of goods sold, plus the cost of manufacture and still turn a positive cash flow. If they can do this and I have faith in them to make a profit and give me back my money plus a return I invest or lend. If they are cash flow negative then I have concerns.

The problem when looking at Airbus is figuring out just what exactly they owe to whom and under what terms.
 
prebennorholm
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 5:20 am

Quoting Aminobwana (Thread starter):
How Do You Think The Eads Crisis Will Be Solved?

First of all the shareholders will during the next 2-3 years get a lower profit from their investment than they hoped for when they invested their money.

Then during the same period EADS will deliver a thousand 320 and 330 family aircrafts and put the money on their bank account.

To the end of this period, when a couple of dozen A380s are in service, then RR will adapt the Trent 1700 to the A380, thereby boost its fuel efficiency beyond any competition, and EADS will book 100-200 new orders to fill the order book until 2015.

It is of course true that the A380 program cash flow has been postponed according to previous plans, and that the free fall of the dollar value has hit EADS hard. But the "crisis" has often been exaggerated way out of proportion. For instance Ford Motor Company and a lot of other large companies around the world are in much greater trouble.
Always keep your number of landings equal to your number of take-offs
 
astuteman
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 5:35 am

Quoting Flysherwood (Reply 35):
A $6 billion loss is still a loss no matter how you report it.

Sorry, its not the same.
The $6Bn change in cashflow results from cash coming into the business much later than planned, but much of that cash WILL come in eventually, and therefore won't be a loss of profit.
It's a matter of the timing of when the cash flows.
FWIW, the loss of profit as a result of the A380 delays is reported as E2.8Bn ($3.5Bn?).

Quoting Flysherwood (Reply 35):
it is my understanding that Airbus plans to take the losses on the first few deliveries,

Your understanding is not correct. Airbus plans to (and already has started to) take the losses as exceptional items out of the 2006 and 2007 accounts, irrespective of deliveries.
E1Bn of A380 specific exceptional loss was reported in Airbus 2006 year-end accounts. There were no deliveries in the year (I'm led to believe......).

Quoting Flysherwood (Reply 35):
You have just made my point. They lowered margins on the A330 as part of the compensation to the buyers of the A380 for delay penalties

Airbus's warnings were applied across the board, to the A320 and A340, as well as the A330, and are therefore most certainly NOT specific to any deals relating to the A380 delay.
They were also explicitly related in the year-end statement to a) the worsening exchange rate, and b) increased pricing pressure from Boeing across the board.
FWIW I'm not particularly keen on having the meaning of my own words twisted to suit another's myopic view of proceedings.
Your restraint would be appreciated  Smile.

Regards
 
flysherwood
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 7:24 am

Quoting Prebennorholm (Reply 37):
It is of course true that the A380 program cash flow has been postponed according to previous plans, and that the free fall of the dollar value has hit EADS hard. But the "crisis" has often been exaggerated way out of proportion. For instance Ford Motor Company and a lot of other large companies around the world are in much greater trouble.

The fact that they are looking to cut 10000 jobs during one of the biggest booms in the aircraft industries history would counter your assertions. One can only hope that a sense of urgency prevails among the management of Airbus.
 
NAV20
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 12:26 pm

Quoting Baroque (Reply 28):
Also what is the underlying loss/profit? The 2007 data are strongly influenced by the A380 woes, but do you think that the operations are actually running at a loss excluding that special factor - I will not call it a one off because it has had a remarkable life?

Baroque, we pretty well know the 'underlying' profit situation - that there isn't going to be one for the foreseeable future, Airbus will make a loss in 2007 as it did in 2006, and EADS will just scrape a nominal profit of about E100M. (please read the story I quoted in Post 4):-

"EADS is to confirm at the general assembly that its operating profit will be stable in 2007 compared to the 2006 level but that Airbus will report another "substantial loss" this year as it undergoes a painful restructuring.

The A380 is not a one-off 'special factor' but a continuing financial drain. Not only do large compensation payments have to be made to all customers for delays; EADS admitted last year that actual production of the A380 will lose them money (i.e. sales receipts will be less than production costs, 'negative cash flow') at least till 2010.

It remains to be seen whether, within the expected 'zero profit' outlook for 2007 and probably beyond, Airbus can find the money to carry out urgent development of the A350 - leave alone an urgent answer to a new Boeing single-aisle, if one turns out to be necessary.

We may know more in a few days - EADS are due to publish their first-quarter results for 2007, and outlook figures for 2007 and beyond, prior to the AGM on 4th. May.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
Ken777
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 12:56 pm

Airbus clearly has challenges, but I believe that they will work through them over the next few years.

If cash becomes a major crisis then I have no doubts that bonds will be issued that will mature after the 350 enters service (with a spare year thrown in to be safe) and these bonds will be purchased indirectly by one or two countries.

The 380 problems can basically be blamed on a dumb decision over software versions AND the lack of even one engineer noticing just how much wiring would be going through the spaces available. That problem is being worked on and I believe that the 380 will do well after 2010. I don't believe it will wipe out the 748i, but it will be OK.

The 350 is probably going to be as demanding an engineering challenge as the 380 simply because it has to compete with the 787's performance as they stand today, and as it improves over the years. Basically, the 350 has to be the best plane that Airbus has ever built.

While the 350 is going to require a lot of engineering resources Airbus is still going to need to put money and talented engineers into a plane that will be able to take on Y1, and take it on almost as soon as Boeing announces Y1 and starts working with airlines for orders.

As for the 330's, I think they will be effective in providing short term solutions to airlines ordering the 350. It is unfortunate that Airbus was not able to move some of the advances from the work done on previous 350 versions to the 330, making it a 330E. That might have helped in later years when the 350s are delivered and the 330s come back to Airbus. Hopefully by then Airbus will have a very good freighter conversion program ready!

While I believe that Airbus faces internal challenges that they can work through I believe that Boeing's potential releases will be more important for them to address, or be ready to address.

- How good will the 787 be? How much will it exceed expectations?
- What tricks will Boeing have up it's sleeve for the 777 to release after all the 350 specs are out?
- How far along is Boeing with Y1 and how soon will they announce it?
- Just how good is the 748i going to be when it starts flying?

Boeing isn't going to just sit back and watch Airbus suffer. They might not "go for the kill", but they are going to maximize their competitive positions in all lines. That, for me, is the largest problem that Airbus faces.
 
Byrdluvs747
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 1:21 pm

Quoting Ken777 (Reply 41):
They might not "go for the kill", but they are going to maximize their competitive positions in all lines. That, for me, is the largest problem that Airbus faces.

I believe if Boeing can introduce products in time to take advantage of Airbus' mesteps, they will. As I've said before, in business you're lucky if you knock your competitor down. You're blessed from above if you can keep kicking him when he's down.
The 747: The hands who designed it were guided by god.
 
MCIGuy
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 1:27 pm

If the A350 turns out to be close to what they say it will be, that'll go a long way to pulling them out. I don't expect full recovery until the 2020's though, if they play their cards right. With Y1 coming sooner than later and Y3 soon to follow, I think A will be playing catch up until then.
Airliners.net Moderator Team
 
baroque
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 4:29 pm

Quoting NAV20 (Reply 40):
The A380 is not a one-off 'special factor' but a continuing financial drain. Not only do large compensation payments have to be made to all customers for delays; EADS admitted last year that actual production of the A380 will lose them money (i.e. sales receipts will be less than production costs, 'negative cash flow') at least till 2010.

I don't understand financial matters as well as you, but I suspect the A380 is both, that is it is a one off, but the other part about negative cash flow continuing is also true. However, that negative cash flow for 2009 (if it does occur) will be to produce income in 2010. One problem is what "at least" 2010 means, Jan 1 or Dec 31!!!
However, even with negative cash flow it seems unlikely that the whale problems will totally swamp the income from the 400 plus planes delivered each of the years 2007, 2008 and 2009. If I was feeling difficult, I would argue that perhaps the negative cash flow for 2009 might not be as red as it sounds.  angel 
 
Bongodog1964
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 6:08 pm

IMO the Airbus problems are as follows:

Complacency through operating for a number of years in a "comfort zone"; whilst orders are flowing in and everything is flowing out in an orderly fashion, there is little control on overheads' every executives PA needs their own PA, plus all those trimmings of office and on and upwards goes the headcount and expenditure. This happens in all departments, design, sales manufacturing etc. When the crunch comes, Airbus have Power 8; Boeing had a similar exercise I believe a few years back.

Exchange rate

The exchange rate at present is unfavourable to Airbus; this makes those at the time of signing lucrative orders, only break even, or even worse loss making. They have two solutions to this one; live with it, or increase sourcing from $ economies.

Design problems; I'm sure we can all accept that the A380 wiring problems have been a PR disaster (and financial as well) in addition the A350 was stillborn due to the likely dominance of the 787.

Management leadership

Some of the last years decisions and PR disasters are beyond belief; It was clear that the A350 was never going to be good enough; we then had the vision of the A350XWB; but for months dilly dallying about on whether it was launched or not, and still the question of the original A350 orders hasn't been cleared up.
We then had a customer wanting A330 freighters with an order floating about at Farnborough, but eventually Airbus saying they couldn't provide the planes.
The A380 delays would have been far better handled by some earlier honesty; to announce only a few months before the expected entry into service that the latest delay would be an additional year beggars belief.

Political interference

Yes this does play a part, and I'm sure Airbus doesn't always get to make things where they would ideally like to; but I don't think this has been the root cause of the problems.

So in summary, yes the problems are solvable; but it will require strong leadership.
 
NAV20
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 8:47 pm

Quoting Baroque (Reply 44):
However, that negative cash flow for 2009 (if it does occur) will be to produce income in 2010. One problem is what "at least" 2010 means, Jan 1 or Dec 31!!!

All 'spelled out' (in EADS-speak anyway) back last October, Baroque. Doesn't say so in so many words, but it suggests that A380 cash flow won't turn positive until close to December 2010, rather than January.  Smile In any case, those figures will be based on estimates of the compensation payable to customers, very possibly the likely losses are even greater now.

"From an Income Statement perspective, the management estimates that the A380 series production will generate a cumulative programme EBIT* loss of around € 2.8 billion for the years 2006 to 2010, of which approximately € 1.1 billion is anticipated in 2006 and approximately € 0.7 billion in 2007. The A380 programme shall deliver a first positive EBIT* contribution in 2010. The management estimates that the A380 programme contributions will be substantial beyond 2010."

http://www.eads.com/1024/en/investor...06/20061003_eads_airbus_adhoc.html

Quoting Baroque (Reply 44):
However, even with negative cash flow it seems unlikely that the whale problems will totally swamp the income from the 400 plus planes delivered each of the years 2007, 2008 and 2009.

Given an estimated loss of E2.8B. over the period, which may well be higher now - plus the fact that they'll be getting paid in 'good ole' devalued US greenbacks - it certainly looks as if losses on A380 production/delivery are likely to rule out any worthwhile profits being made before 2011.

As I said, it remains to be seen how they can find enough cash to develop the A350, leave alone a new-version A320. Sure, in normal circumstances, they could borrow - but any lending institutions are going to want to see solidly-based cash flows that turn well and truly green within a reasonable period.

And 'reasonable' will almost certainly mean long before 2011 or so. How much of your OWN 'hard-earned' would you lend to a company that is actually PLANNING to make a loss until then?  Smile
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
keesje
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 9:20 pm

Quoting Sphealey (Reply 2):
it seems to me that there may not be anywhere near as much unhappiness as is being reported in the aviation press and (of course) the aviation blogs.

 checkmark 

With a backlog of over 2500, two record sales yrs behind and issues like how to ramp production faster the word crises is perhaps more an opinion then an objective qualification.

New types like the A400, A320E, 330F, 380 versions and 350 XWB seem to ensure healthy future for the next few yrs.

Problems like management changes, political issues haven't shown to stop the factories bursting out ever more airframes. y.

The Boeing euphoria is good & deserved knowing where they are coming from ( http://apres-le-non.forum-carolus.or...ll_731469_airbusboeing_sales.6.gif ) however reality is A is still pushing out more aircraft & prospects are all but depressing.

"Never mistake motion for action." Ernest Hemingway
 
ConcordeBoy
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RE: How Do You Think The Eads Crisis Will Be Solve

Tue Apr 17, 2007 11:42 pm

Quoting Basefly (Reply 26):

Do you see the future??

...nope, I just have enough life experience to know better than to proclaim with any manner of assuredness a set and narrowed timeframe for a production crisis already mired by delays and clouded by secrecy.

Sad that you, elder than I, do not.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
astuteman
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RE: How Do You Think The Eads Crisis Will Be Solved?

Tue Apr 17, 2007 11:57 pm

Quoting ConcordeBoy (Reply 48):
...nope, I just have enough life experience to know better than to proclaim with any manner of assuredness a set and narrowed timeframe for a production crisis already mired by delays and clouded by secrecy.

Calling the rest of 2007 for a successful EIS of the A380 is a pretty broad definition of narrow........  Smile

Would a 2008 EIS for the 787 qualify as equally "narrow"?

Regards

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