PVG
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Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 5:33 am

 
keesje
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 5:35 am

Quoting PVG (Thread starter):
Interesting read!

thnx!
"Never mistake motion for action." Ernest Hemingway
 
XT6Wagon
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 5:37 am

I'm thinking the last one got killed for a reason... so yah
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 5:41 am

Quoting XT6Wagon (Reply 2):
I'm thinking the last one got killed for a reason... so yah

Which is why I tried to pre-empt those comments in my own post which this one just beat at FI - QR Principals Would Like More A350 Tech Info (by Stitch Jun 25 2007 in Civil Aviation).

Assuming the mods delete mine as a duplicate, I shall re-post the text here.

First, relevant quotes:

Quote:
Qatar Airways became the largest customer for Airbus's A350 XWBs at the show with an order for 80 aircraft, but has been frustrated by the airframer's tardiness in providing detailed and reliable specification and performance data for the new twinjet.

The Doha-based airline - which currently operates a large, all-Airbus fleet but is soon to add its first Boeing 777-300ER - retains its position as launch operator from mid-2013, but its chief executive Akbar Al Baker told Flight International he had been frustrated by the lack of detailed information that Airbus has been providing during negotiations: "For a launch customer we have been provided with remarkably limited information on the evolution of the A350 XWB design.

"We hope that now the purchase agreement is signed, we will be able to have a more detailed understanding of what specification choices are being considered by Airbus as the design crystalises."

Now, the commentary:

Louis Gallois has said that Airbus has issued contractual guarantees to its customers. And while it is true that the final design freeze for the A350 is planned for October 2008, this does not mean Airbus has absolutely no idea what the A350's specifications will be.

The A350 is not a "paper airplane" at this stage.

QR is not in a position of having no idea what the A350 will entail. Airbus has told them the plane will carry this amount of payload this distance with this fuel burn. They know the dimensions of the plane as planned, and while the final plane may be a meter longer or shorter, or a meter taller or shorter, Airbus is not going to suddenly make the A350-1000 85m long instead of 75m.

Now, why would QR make these statements in the first place? If you read it literally, it seems that QR just decided on a whim to order the plane because they liked how it looked, and now want to know how their new toy will perform.

To believe that is to do QR a great disservice. They may not serve 2000 cities with a fleet of 500 planes, but they are hardly some "fly-by night" operation throwing money around to try and impress the world. They have performed proper due diligence on both the 787 and the A350 and have decided that the A350 is the better choice for them.

I personally believe they said this because they want Airbus to know that they intend to play a strong role (not a commanding role and not a dictatorial role) in helping to define the plane. Airbus has held forums with potential customers to get a feel for what they want, much like Boeing started with their "Working Together" program for the development of the 777. As the largest customer for the A350 so far, as well as an original launch customer, QR is betting heavily on this plane so they want to be sure it will do what they want it to. And those goals should not be diametrically opposed to the goals of the other customers - past, present, and future. And all of those customers will themselves express input into the final design as Airbus moves forward to final design freeze in October 2008.

This is standard for every aircraft program. The 787 was not defined on Day One. Heck, only a few months ago they tweaked some of the performance specifications. And Boeing continues to try and work with customers who want more range and those who want more payload to find a "happy medium" between them.

I personally find nothing surprising nor alarming in this article or the statements quoted from QR officials in it.
 
fruitbat
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 5:51 am

I was enjoying the first thread.....  duck 

Seriously though, does anyone who reads this forum seriously think that an airline does NOT demand performance guarantees and involvement in the design process when deciding to spend billions of dollars with airframers and engine manufacturers.........

Quoting Stitch (Reply 3):
Louis Gallois has said that Airbus has issued contractual guarantees to its customers.

And I'm certain that Boeing did (and does) the same with the 787.

Quoting Stitch (Reply 3):
I personally find nothing surprising nor alarming in this article or the statements quoted from QR officials in it.

 checkmark 
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clickhappy
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:06 am

Wow, there are some amazing quotes in that FI article.

"For a launch customer we have been provided with remarkably limited information on the evolution of the A350 XWB design. "We hope that now the purchase agreement is signed, we will be able to have a more detailed understanding of what specification choices are being considered by Airbus as the design crystalises."

Seems if that is what they wanted they should have waited to sign., not the other way around.

With this information unavailable, Qatar Airways has had to define in detail what its expects from the A350 XWB by way of specification and performance and then make this a contractual obligation, says Al Baker. "This part of the airline's purchase agreement is larger than the document that currently serves as Airbus's interim specification," he says

This is incredible! Inmates running the asylum.

it "has not been encouraged by Airbus to participate in the development of the A350 XWB specification - we aim to change this".

Can this really be true? An 80 frame order for a plane still being developed and they haven't been asked to participate?!?!

Surely this is a typo and/or mis-quote?
 
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N328KF
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:11 am

Quoting Clickhappy (Reply 5):
Can this really be true? An 80 frame order for a plane still being developed and they haven't been asked to participate?!?!

Well, since QR's contract gives them good prices and a performance guarantee, the only downside to them is that if the A350 Mk. VI is a bust, they will have lost time. This is time which could have otherwise been utilized acquiring the 787. If the A350 Mk. VI meets the contracted performance, then QR will be in exactly the position they wanted. However, time may be the most valuable asset in this scenario.
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atmx2000
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:12 am

Well since there are 2 threads, and one is bound to be deleted I will repost this here.

Looking at their behavior since launch of the 787 in 2004, there is a striking amount of nonserious behavior on al Baker and company's part. Ordering the original A350 only to have the rest of the airline industry force the project off the rails for being insufficiently competitive suggests that they are not doing due diligence. And in the process they gave up a large number of early 787 slots. The shenigans around the 777 order at last year's airshow demonstrated a lack of maturity. The problem with this A350XWB order is that it has been complicated by the potential Qatari investment in Airbus/EADS, which may have pushed them to make the deal now for other reasons, including to help Airbus make a big splash at the Paris airshow. So the airline may in fact not know as much as they want to.
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OA260
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:13 am

Hmm they were so frustrated that they ordered 80 of them !!! Hmm yeah figures alright  sarcastic 

Doesnt sound like the interview that I saw with the head of QR on CNN during the Paris airshow.
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:17 am

Quoting N328KF (Reply 6):
Well, since QR's contract gives them good prices and a performance guarantee, the only downside to them is that if the A350 Mk. VI is a bust, they will have lost time. This is time which could have otherwise been utilized acquiring the 787.

And QR may still have 30 of those on order as an "insurance policy".
 
khobar
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:18 am

Quoting Stitch (Reply 3):
QR is not in a position of having no idea what the A350 will entail. Airbus has told them the plane will carry this amount of payload this distance with this fuel burn. They know the dimensions of the plane as planned, and while the final plane may be a meter longer or shorter, or a meter taller or shorter, Airbus is not going to suddenly make the A350-1000 85m long instead of 75m.

But this is contrary to what SQ and ILFC said recently - the complaint was that they haven't been told about fuel burn.

Quoting N328KF (Reply 6):
Well, since QR's contract gives them good prices and a performance guarantee, the only downside to them is that if the A350 Mk. VI is a bust, they will have lost time.

Very true - and then there's the compensation, too, if there are further delays involved - as we have seen, issues of varying significance can crop up at any moment regardless of manufacturer. And didn't QR defer their A380's to grow their international routes? Doesn't sound like they are in a big hurry for their new planes.
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:21 am

Quoting Khobar (Reply 10):
But this is contrary to what SQ and ILFC said recently - the complaint was that they haven't been told about fuel burn.

I'm sorry for not being clearer. Airbus has told those airlines, via performance guarantees, that the plane will burn "x" amount of fuel for a given payload and range. So while they may not know the actual numbers (and Airbus probably does not, either), Airbus is confident enough that it won't be worse then whatever they guaranteed to the airlines. And it stands to reason that those airlines believed that the guaranteed rate is "good enough" to place orders.
 
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:29 am

Quoting Clickhappy (Reply 5):
"For a launch customer we have been provided with remarkably limited information on the evolution of the A350 XWB design.

Then why are they a launch customer. They could have so easily ordered 787s.
 
pygmalion
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:44 am

Maybe because they got a really good deal.
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:45 am

Quoting EI321 (Reply 12):
Then why are they a launch customer. They could have so easily ordered 787s.

They may very well have if the rumors of them being behind the 30 UFOs is true.

It would be interesting if QR originally chose the A350 because it wasn't a CFRP airframe and they felt more comfortable with it being Al-Li at the time they chose it instead of the 787.
 
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clickhappy
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 6:47 am

Why are you asking me? I was neither quoted in the article or the writer.

That is the problem with this place. Everyone wants to discredit by making it personal.

Why not email Akbar Al Baker, he is the one who the article quotes. He is also the CEO of Qatar Airways.
 
ebbuk
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 7:43 am

I know some might question QR's pedigree and shrewdness in purchasing new kit but the kings of purchase are SQ and they've signed for 20 XWBs.

So do SQ know more than QR? Or is the information sufficient at this time so far away from EIS to make an investment? Discuss
 
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 7:52 am

Reading the article, I hope Airbus takes into account this point from the Doha based CEO:

Quote:
but unlike its continued participation with Boeing in the detailed definition of the 787 and 747-8, it "has not been encouraged by Airbus to participate in the development of the A350 XWB specification - we aim to change this".

It would appear to me a valid point of concern.

Regards
MH
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 7:58 am

Quoting EbbUK (Reply 16):
So do SQ know more than QR? Or is the information sufficient at this time so far away from EIS to make an investment? Discuss

Airbus has said they will guarantee the plane's performance. If they don't, airlines get compensated the difference or they get to walk with no penalties. The A350's availability remains no worse then that of the 787's, including the 787-10 when Boeing is ready to make it available for sale.

SQ already has 787s on order with options, and rumors continue so does QR, so even if the A350 program stumbles, they're covering themselves. And with Boeing now saying the 787 is sold out through something like 2014 or 2015, it may be that other A350 customers have made private deals with Boeing to secure delivery slots around the A350's planned EIS to protect themselves, as well.
 
dutchjet
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 7:59 am

There was another thread about this article earlier today that "disappeared", dont know why, it was not any more brutal than most of the recent threads.

I find the entire situation concerning the Qatar A350 order very odd....how does an airline order 80 airframes of a new type and then go on to complain that they are ""frustrated by the lack of details"" available concerning the type? Why place an order if you are not satsified with the information being provided to you....because its fun to be in the headlines, have swanky parties, and be the star of the Paris show? While there are certain risks involved with ordering any newly launched type, and the airline must always rely on certain performance guaranties agreed to by the manufacturer, this article indicates that the current A350 situation goes beyond that standard. What is really going on?

The key questions is.......Are Qatar's orders for the A350 really firm? Or does Qatar still have the ability to walk away from the A350 without penalty if they are not satisfied with whatever details they are frustrated over concerning the airplane? Is this a firm order, or is it something else?

This story is not over yet, and its a very interesting one indeed.......Airbus' sales team is even more talented than any of us ever realized: they are have convinced airlines to place ""firm orders"" for an airplane that is not completely designed and for which key details are curiously unavailable. Pretty amazing. Now the question is what happens if the A350 cannot meet all of the targets and guaranties agreed to by the Airbus sales team in those ""firm"" purchase agreements with the airlines. Stay tuned.
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 8:06 am

Quoting Dutchjet (Reply 19):
Are Qatar's orders for the A350 really firm? Or does Qatar still have the ability to walk away from the A350 without penalty if they are not satisfied with whatever details they are frustrated over concerning the airplane? Is this a firm order, or is it something else?

Both. QR has converted their MoU to an actual order, but they ensured that the contract was written to give them maximum flexibility to adjust or cancel it as they see fit.
 
dutchjet
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 8:30 am

Quoting Stitch (Reply 20):

Both. QR has converted their MoU to an actual order, but they ensured that the contract was written to give them maximum flexibility to adjust or cancel it as they see fit.

Very well said.....so the question is:

Is a contract that contains provisions which grant the purchaser ""maximum flexibility to adjust or cancel it as they see fit"" a firm order?

The question is intended as rhetorical, we can discuss it for years getting into a variety of legal theories and case law that will support either side of the argument, this is a.net, not a court room.....the point is that Airbus has created a very interesting situation: they have firm orders for airplanes that are not really firm. And what are the implications of these arrangements? Only time will tell.

[Edited 2007-06-26 01:56:31]
 
thebry
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 8:43 am

Quoting EI321 (Reply 12):
Quoting Clickhappy (Reply 5):"For a launch customer we have been provided with remarkably limited information on the evolution of the A350 XWB design.
Then why are they a launch customer. They could have so easily ordered 787s

I think that's the question we'd ALL like answered. They were really hell-bent on buying the A350. Afterall, they've stood by their intent to purchase through all recent iterations of the A350 (culminating in what we now know as the A350XWB).

Quoting Dutchjet (Reply 19):
I find the entire situation concerning the Qatar A350 order very odd....how does an airline order 80 airframes of a new type and then go on to complain that they are ""frustrated by the lack of details"" available concerning the type? Why place an order if you are not satsified with the information being provided to you....

It's just odd. Maybe they decided early on that they'd buy the competing Airbus product (against the 787) regardless of what final form it took. I've never written anything like this in a forum post before, but I'm inclined to wonder if they got an amazing deal ($$) they just couldn't pass up for firming their original A350 order, and adding more to it at the airshow. Dollars will go a long way toward smoothing over silly things like detailed specifications, etc.
 
PVG
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 9:44 am

Quoting Dutchjet (Reply 21):
Is a contract that contains provisions which grant the purchaser ""maximum flexibility to adjust or cancel it as they see fit"" a firm order?

I wonder if any of these firm customers have actually paid-up any cash against these orders? That would be the real test I guess.
 
jacobin777
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 9:52 am

Quoting Thebry (Reply 22):
Quoting EI321 (Reply 12):
Quoting Clickhappy (Reply 5):"For a launch customer we have been provided with remarkably limited information on the evolution of the A350 XWB design.
Then why are they a launch customer. They could have so easily ordered 787s

I think that's the question we'd ALL like answered. They were really hell-bent on buying the A350. Afterall, they've stood by their intent to purchase through all recent iterations of the A350 (culminating in what we now know as the A350XWB).

It think you might be correct.....what I also find interesting from the article is...

"adding that the airline was heavily involved in the previous definitions of the A350"....

.....does QR really know what they want? Ostensibly, It seems as if they believed the previous incarnations of the A350 were fine too.....which was obviously a gaffe.....
"Up the Irons!"
 
atmx2000
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 10:24 am

Quoting EbbUK (Reply 16):
I know some might question QR's pedigree and shrewdness in purchasing new kit but the kings of purchase are SQ and they've signed for 20 XWBs.

So do SQ know more than QR? Or is the information sufficient at this time so far away from EIS to make an investment? Discuss

Well SQ bought 20 789s, while QR bought 20 A358s. So maybe they do know something different. Perhaps SQ was determined to divide orders between Boeing and Airbus, in which case both orders mean somewhat less. Or maybe Leahy pulled a fast one on SQ: the slots are going fast, can't wait for engine choices!

Quoting Jacobin777 (Reply 24):
.....does QR really know what they want? Ostensibly, It seems as if they believed the previous incarnations of the A350 were fine too.....which was obviously a gaffe.....

I've made that point often.
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 10:27 am

Quoting Byrdluvs747 (Reply 25):
So am I correct in saying that Airbus has tissue-thin orders for a paper airplane that exists nowhere?

IMO, no.
 
Ruscoe
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 11:01 am

As has been stated here, and as I stated in another thread and had many a European breathing down my neck, if Airbus give performance guarantees then airlines can safely buy the 350 in the knowledge that if it does not meet guarantees they will get compensation, to make up the short fall.

However, because of the delay between order and delivery, the airlines had better place an order for the alternative at the same time, if they think they may have to withdraw from the contract.

Also for a guarantee to be meaningful, it will need to compare it's performance to the aircraft the opposition will be flying, In this case Airbus is very exposed to any improved performance of the 787.

All thinks considered I don't think Airbus had a choice. If the 350 had floundered at Paris, it was the end of the road for that program.

Ruscoe
 
aminobwana
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 11:06 am

Quoting Dutchjet (Reply 21):
Is a contract contains provisions that grant the purchaser ""maximum flexibility to adjust or cancel it as they see fit"" a firm order?

You are completely right. This is not a courtroom

But a FIRM order, to be such, has to have specifications of its globality and main component, including the also main
technical Characteristics. And even if it is admissible that certain data can be left to posterior agreement, the dominant
majority must be defined.

If specs are not met by a reasonable margin, Airbus would pay penalties
If specs are not met by a larger margin: Airbus would pay penalties or the customer walk away, as Al Bakr stated, at
the latter selection

In the case of the Qatar complaint, they specifically state that the interim info is very scarce. This means that when the final specs become available, there will not be a adequate reference.. This works in favor of the customer, as this
would allow him to state that he had no data to refer too and what he is offered now is not what he expected, and therefore walk away if he so wishes

And if this is the situation, this is by no means a firm contract as factually the customer can cut anytime

Quoting Stitch (Reply 3):
personally believe they said this because they want Airbus to know that they intend to play a strong role (not a commanding role and not a dictatorial role) in helping to define the plane

Lets assume this is so. In this case, I would call Mr. GALLOIS and tell him: "Dear friend, do not take us for granted.
change your ways, supply the missing info, if not, Boeing is waiting !!"
But I would certainly not make such public declarations (including naming Boeing as a shining example of collaboration) which possibly could destroy single-handed all the public relation effect Airbus obtained in Le Bourget

So, what is the real reason ?? Possibly, they are getting nervous realizing they have bought the cat in the sack and also risked their future by basing their fleet on this unborn cat's performance, with the hope of inducing the other ordering airlines to second them and so force Airbus to comply (assuming hat AB is able to do so)?? Could be that the SUV actions had some influence ?
My personal opinion is that QR is a small airline in a small country with too much money and limited knowledge,
eager to play the role of a large player, neglecting repeatedly to perform due diligence in due time.

regards

aminobwana
 
Shenzhen
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 11:20 am

Quoting Dutchjet (Reply 21):
Very well said.....so the question is:

Is a contract that contains provisions which grant the purchaser ""maximum flexibility to adjust or cancel it as they see fit"" a firm order?

This is interesting, and I did bring it up some time ago. I would appear that these days airlines place very large orders with Airbus, which seem to missing the options and purchase rights. Boeing seem to get smaller orders with larger numbers of options and purchase rights.

Are we seeing a change in the way orders are made with some of the manufactures?

Cheers
 
MIT787
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 11:31 am

Hey Fellow Aviation Fanatics...This is my first post...Rah! Rah! Rah! Please be nice to me. Even though I am a die hard Boeing fan, I am objective. Here is how I believe the QR deal went down. First and foremost, this is not the first time
QR complained about not having detailed info about the A350. Back in January, Akbar went on record as saying that he would order the 787 if Airbus did not provide detailed info by the start of the Paris Air Show. By this time, I think Airbus had their eyes on BA or LH. BA and LH are the premier brand in civil aviation. There is no question about that. However, these two airlines weren't ready to commit yet. So, Airbus has to go back to QR. By this time John Leahy sees the writing on the wall...the A350 is on the verge of being dead before the first frame is even put together and he needs to generate some excitement as soon as possible especially when you consider the 787 was rolling out in less than a month, the larger US legacy carriers (AA, UA, DL) will be placing orders in less than a year. Orders that Airbus probably will not get if history is a good teacher. I bet John Leahy had nightmares about Tom Brokaw announcing at the 787 roll out ceremony that Boeing just passed 1000 firm orders. So, he definitely could not let that happen, and JL definitely could not allow QR, to defect to the Boeing camp. So, John called a meeting w/ Akbar and offered him a "one shot deal". John might have offered QR up to 65% off. I know this is alot, but considering the A350 program already received a snub from GE and SUH, it would be logical. Also, if I was a betting man, I would bet that there is no performance guarantees. I am pretty sure that QR was more than willing to waive them. Here is how I think John Leahy could have possibly explained it:

John Leahy: Akbar, I know you gave Airbus a benchmark to provide detailed info on the A350 program. Unfortunately because we are restructuring our manpower, and still tweaking the final design we are unable to provide you with specific figures at this time. However, we do not want to lose QR as a customer, so I will guarantee you this. This new plane will be able to fly nonstop to any destination in the world, the plane will be 30% cheaper to operate than the B777, and it will be delivered ontime. However, you must waive your right to seek compensation if we fall a little off, or if we are slightly delayed. Do we have a deal? Alright guys... I will be back on the board after 787 roll out.
 
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Stitch
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 11:50 am

Quoting MIT787 (Reply 31):
So, John called a meeting w/ Akbar and offered him a "one shot deal". John might have offered QR up to 65% off. I know this is alot, but considering the A350 program already received a snub from GE and SUH, it would be logical. Also, if I was a betting man, I would bet that there is no performance guarantees. I am pretty sure that QR was more than willing to waive them.

First up, the head of Airbus has said there are performance guarantees. And the head of QR has said they have written their contract in such a way that Airbus needs to meet many performance guarantees or QR can walk-away.

Frankly, I just can't see Airbus that desperate for an order that they would sell QR A350s for price that would lose Airbus money on every frame and allow them to walk away at will. That kind of deal can't stay a secret and airlines would smell blood in the water. If Airbus agreed to that kind of deal, the whole A350 program is a house of cards waiting for a stiff breeze to come along and knock it over.
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:21 pm

Quoting Stitch (Reply 3):
Now, why would QR make these statements in the first place? If you read it literally, it seems that QR just decided on a whim to order the plane because they liked how it looked, and now want to know how their new toy will perform.


This only goes to confirm my own belief, as stated in posts this week that what we had at this airshow was the mother of all fire sales.

Thanks for the posted article. Very insightful to say the least.

Sheesh...HOBO
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:36 pm

Quoting Dutchjet (Reply 19):
The key questions is.......Are Qatar's orders for the A350 really firm? Or does Qatar still have the ability to walk away from the A350 without penalty if they are not satisfied with whatever details they are frustrated over concerning the airplane? Is this a firm order, or is it something else?

Yes most likely firm in that they placed deposits. But I am sure the fine print is such that if Airbus sneezes they can walk away from this. And you can probably say that about the other 150 orders....sheesh.

These kind of tactics were necessary by aibus at this time I will admit. Just kind of hurst as a Boeing fan. Hope it does not bite em both in the end.

HOBO
 
aminobwana
Posts: 923
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:36 pm

Quoting MIT787 (Reply 31):
However, you must waive your right to seek compensation if we fall a little off, or if we are slightly delayed



Quoting Stitch (Reply 32):
First up, the head of Airbus has said there are performance guarantees. And the head of QR has said they have written their contract in such a way that Airbus needs to meet many performance guarantees or QR can walk-away.

Frankly, I just can't see Airbus that desperate for an order that they would sell QR A350s for price that would lose Airbus money on every frame and allow them to walk away at will. That kind of deal can't stay a secret and airlines would smell blood in the water. If Airbus agreed to that kind of deal, the whole A350 program is a house of cards waiting for a stiff breeze to come along and knock it over.

Welcome, MIT787
I agree mostly with your analysis, but as for the waiving of the performance guarantees, STITCH has already commented

Stitch: I notice that you and several other cannot immagine that anybody sells below cost. As this is a fairly normal practice for the initial period of sales, obviously only if not avoidable, I amagine that this is a problem of definition:

factory cost: Is the cost of direct labor and components
Direct cost: Is the factory cost, plus the assigned development costs, plus the aliquote of the balance of all the other ------------------costs occured in the factories and
Total cost: Direct costs, plus the aliquote of all the other costs of the company

As an example: List Price:------------$ 257 M
As an example: TC = Calculatory cost:---- $ 180 M (- 30,0%)
TD = Direct cost:------------- $ 140 M (- 45.5%)
TF = Factory cost: -----------$ 100 M (- 61.0%)

If one sale is made at 45.5% discount, it amortizes the Direct, but does not contribute to alliviate the total costs
Generally, it can be said that financially it is better to make such a sale than not make it, as long as the factories are not full.
If a sale is made below - 45,5%, the company looses money with each unit sold.

But of course: if the company sells all aircraft with an average discount larger than 30%, the company will have a global loss

aminobwana
 
azhobo
Posts: 281
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:36 pm

Quoting Dutchjet (Reply 19):
The key questions is.......Are Qatar's orders for the A350 really firm? Or does Qatar still have the ability to walk away from the A350 without penalty if they are not satisfied with whatever details they are frustrated over concerning the airplane? Is this a firm order, or is it something else?

Yes most likely firm in that they placed deposits. But I am sure the fine print is such that if Airbus sneezes they can walk away from this. And you can probably say that about the other 150 orders....sheesh.

These kind of tactics were necessary by aibus at this time I will admit. Just kind of hurst as a Boeing fan. Hope it does not bite em both in the end.

HOBO
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:46 pm

Quoting Aminobwana (Reply 29):
If specs are not met by a reasonable margin, Airbus would pay penalties
If specs are not met by a larger margin: Airbus would pay penalties or the customer walk away, as Al Bakr stated, at
the latter selection

I will have to disagree with you on this one. Reason they cant walk away in 2012-13, is that they will not have the needed aircraft. FOr an aircraft order this large, they are just not going to be able to switch to Boeing and grab some off the line. Maybe lease them? If this is truly a house of cards in Toulousse, then maybe some of the leasing companies may want to up their orders now for the 2013-2015 deliveries. They may be able to get premium rates from Qatar (and others) in that time frame!

HOBO
 
PVG
Topic Author
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 12:55 pm

Quoting Stitch (Reply 32):
Frankly, I just can't see Airbus that desperate for an order that they would sell QR A350s for price that would lose Airbus money on every frame and allow them to walk away at will. That kind of deal can't stay a secret and airlines would smell blood in the water. If Airbus agreed to that kind of deal, the whole A350 program is a house of cards waiting for a stiff breeze to come along and knock it over.

Not desperate? See A380 for reference. Loads of money coming in from that program 7 years down the line and counting.
 
cygnuschicago
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:04 pm

Quoting Azhobo (Reply 36):

Yes most likely firm in that they placed deposits. But I am sure the fine print is such that if Airbus sneezes they can walk away from this. And you can probably say that about the other 150 orders....sheesh.

Yes, they are firm orders.
Yes, deposits have been placed.
No, they cannot walk away if Airbus sneezes
Yes, some specifications are open-ended, including in the contract, and subject to negotiation between QR and Airbus
Yes, they can walk away if the plane does not meet performance guarantees, which are pretty comprehensive in terms of range, MTOW, fuel burn, etc
Yes, this contract is largely like any other contract signed by either Airbus or Boeing, except that the compensation clauses and penalties are more severe, and the "cancellation" window for late delivery is earlier

Quoting Azhobo (Reply 36):
hese kind of tactics were necessary by aibus at this time I will admit. Just kind of hurst as a Boeing fan.

What kind of tactics are you talking about?

Quoting Aminobwana (Reply 35):
As this is a fairly normal practice for the initial period of sales, obviously only if not avoidable, I amagine that this is a problem of definition:

No this is not unavoidable, nor is it a normal practice for the initial period of sales. In fact selling below marginal cost is an illegal tactic known as dumping. If there was any indication that this was happening, you can bet that the US order would have a tarriff slapped on it that would make the A350 pricier than a B2.
If you cannot do the math, your opinion means squat!
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:11 pm

Quoting CygnusChicago (Reply 39):
What kind of tactics are you talking about?

 flamed 

F
I
R
E
S
A
L
E
 flamed 

as stated in my previous post.

CHEERS. HOBO
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:13 pm

Quoting Azhobo (Reply 40):
No this is not unavoidable, nor is it a normal practice for the initial period of sales. In fact selling below marginal cost is an illegal tactic known as dumping. If there was any indication that this was happening, you can bet that the US order would have a tarriff slapped on it that would make the A350 pricier than a B2.

Yeah a tarrif. Thats it. On all 22 coming this way.

HOBO
 
rj777
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:29 pm

I think the airlines aren't the only ones. Some of us aviation enthusiasts could also be frustrated by this as well.
 
ikramerica
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:44 pm

Quoting MotorHussy (Reply 17):
It would appear to me a valid point of concern.

This is one of the failures I have cited re: Leahy and his job performance. He plays a very large part in the A350 program fiasco for this reason. He's really dropped the ball as communicator on this aircraft.

Contrast with the job that was done with the 787, lessons Boeing learned from the 777. Customers involved all the way, defining it, prioritizing what was important. And you can bet customers are still heavily involved in defining the 787-10. Boeing isn't just going to say: "here's what we came up with, you wanna buy it?"

Quoting Atmx2000 (Reply 26):
Well SQ bought 20 789s, while QR bought 20 A358s. So maybe they do know something different.

Well, I'm not entirely sold on Chew. He hasn't been the head of SQ for that long, and he isn't the one who got SQ to where it is today. He doesn't have enough of a track record as head for me to think he knows more or less than QR.

Quoting Shenzhen (Reply 30):
I would appear that these days airlines place very large orders with Airbus, which seem to missing the options and purchase rights. Boeing seem to get smaller orders with larger numbers of options and purchase rights.

This is quite interesting. I see the middle east airlines doing this especially. Why on earth with QR, for example, order 80 A350s when logic would dictate they order 30+30+20? Why would EK order 100 at once rather than 40+40+20 or some mix of that? The QF structure for the 787 is the way aircraft deals traditionally work, but somehow Airbus is booking huge numbers of firm orders instead. Is it a sleight of hand we are seeing? Who knows.

Quoting Aminobwana (Reply 35):
If a sale is made below - 45,5%, the company looses money with each unit sold.

Not entirely true. The company doesn't lose money. They just don't get any closer to paying off the fixed costs involved in the program. Assuming that you can sell a plane for the cost of incrementally producing that plane, you don't really lose a dime, but you push break even back. This of course doesn't sit well with real investors, but governments are different. The amount of government funding at AIrbus via both ownership, investment by government banks, and via launch aid, means Airbus can float along for a while breaking even on each jet if it looks like it might help the program pay back in the long term. A real private company can't do such a thing without a bonafide breakout product or infusion of capital from outside sources with a separate interest in the company existing outside of the profit motive.
Of all the things to worry about... the Wookie has no pants.
 
azhobo
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:46 pm

Quoting Clickhappy (Reply 5):
Seems if that is what they wanted they should have waited to sign., not the other way around.

With this information unavailable, Qatar Airways has had to define in detail what its expects from the A350 XWB by way of specification and performance and then make this a contractual obligation, says Al Baker. "This part of the airline's purchase agreement is larger than the document that currently serves as Airbus's interim specification," he says

This is incredible! Inmates running the asylum.

Yes this is the line that says it all. Just goes to airbus execs lack of credibility. When Boeing made a few astute comments about the A350 this past week, Airbus execs were all over them. I could not believe the fire storm, bruhaha, tantrum, or what ever you want to call it.

Seems Boeing execs know more about the a350 than airbus execs know (at least what they are willing to say out loud).

HOBO
 
bhmbaglock
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 1:51 pm

Quoting MIT787 (Reply 31):
so I will guarantee you this



Quoting MIT787 (Reply 31):
However, you must waive your right to seek compensation if we fall a little off, or if we are slightly delayed.

These don't quite make sense together. If you waive your right to compensation there is no guarantee.

Quoting Azhobo (Reply 41):
Yeah a tarrif. Thats it. On all 22 coming this way

A tariff isn't always placed on the particular offending item. A does sell a lot more of the A320 series here. However, I don't think this will happen as A is well aware of what is allowable and will certainly have things covered.
Where are all of my respected members going?
 
aminobwana
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 2:07 pm

[quote=CygnusChicago,reply=39]

Pls provide the supports of all your statements

aminobwana
 
aminobwana
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 2:38 pm

Quoting Ikramerica (Reply 43):
This is quite interesting. I see the middle east airlines doing this especially. Why on earth with QR, for example, order 80 A350s when logic would dictate they order 30 30 20? Why would EK order 100 at once rather than 40 40 20 or some mix of that? The QF structure for the 787 is the way aircraft deals traditionally work, but somehow Airbus is booking huge numbers of firm orders instead. Is it a sleight of hand we are seeing? Who knows

I do not understand the term "sleight of hand" Sorry for my bad English

Wny these not so firm orders have no options ? There are no way to count options as firm orders !!

Quoting Byrdluvs747 (Reply 25):
If a sale is made below - 45,5%, the company looses money with each unit sold.



Quoting Ikramerica (Reply 43):
Not entirely true. The company doesn't lose money. They just don't get any closer to paying off the fixed costs involved in the program

Pls. note that in my example I have assumed that the direct costs are List-45,5%. and in the quote I am assuming that the sale is made with a discount larger than 45.5%. So there is a loss. I think you have not noted the "larger"
If the discount is 50%, the loss is 4.5%

regards

aminobwana
 
707lvr
Posts: 457
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 2:41 pm

Quoting CygnusChicago (Reply 39):
Yes, they are firm orders.
Yes, deposits have been placed.
No, they cannot walk away if Airbus sneezes
Yes, some specifications are open-ended

etc, etc. We don't know any of this, and that is the point of the entire thread. The rules have changed, the conventions have changed to the extent that Udvar-Hazy had to declare that his money was on the way to Seattle, as in - I bought planes, I really did buy some planes.

As for QR, many times one member or another has pointed out in here, rightly, that the people at the airlines are intelligent, savvy .. even brilliant, and they know more than we do by a long shot, but I wonder. Maybe QR just isn't all that smart.
 
mham001
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 2:47 pm

Quoting CygnusChicago (Reply 39):
Yes, they are firm orders.
Yes, deposits have been placed.
No, they cannot walk away if Airbus sneezes
Yes, some specifications are open-ended, including in the contract, and subject to negotiation between QR and Airbus
Yes, they can walk away if the plane does not meet performance guarantees, which are pretty comprehensive in terms of range, MTOW, fuel burn, etc
Yes, this contract is largely like any other contract signed by either Airbus or Boeing, except that the compensation clauses and penalties are more severe, and the "cancellation" window for late delivery is earlier

Exactly how did you come across this private information? Or should we assume it is nothing more than speculation on your part(and should have been phrased as such)?
 
Motorhussy
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RE: Qatar Airways Frustrated By Lack Of Airbus A350 XW

Tue Jun 26, 2007 3:27 pm

Quoting Byrdluvs747 (Reply 25):
So am I correct in saying that Airbus has tissue-thin orders for a paper airplane that exists nowhere?

Yes, in a very cynical and biased kind of a way.
come visit the south pacific