Stickers
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Airbus Sales Assestment Question

Thu Sep 13, 2007 7:39 pm

Hi,
A while ago while reading a thread on A.net someone summed up the Boeing sales like this.

737 - Keeps the lights on
777 - Funding the development of the 787
747 767 Bonus money

I tried to search for the post, but couldn't find it - sorry.

I was wondering what would a similar assestment of Airbus sales be?

 eyebrow 
 
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Stitch
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RE: Airbus Sales Assestment Question

Thu Sep 13, 2007 9:26 pm

A320 - Keeps the lights on and funds the development of the A350
A330/A340 - Funds the development of the A350
A380 - About ready to start funding the development of the A350
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 12:15 am

 Smile

I'd say the A380 is the equivalent of the Boeing Bonus money. I expect all funding is from A320/330/340 sales.
If you cannot do the math, your opinion means squat!
 
tdscanuck
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 12:49 am

Quoting Stickers (Thread starter):
I tried to search for the post, but couldn't find it - sorry.

That was me (I?). See Reply 1 in this thread: RE: Break Even Numbers For A380, 777, & 787 (by Ferret Aug 3 2007 in Civil Aviation)

I would agree with Stitch's characterization of the Airbus breakdown, although I'd throw the A400M into the mix as well. Although a fantastic plane, that program is a huge money sink right now.

Tom.
 
Stickers
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 1:56 am

Thanks everyone,
I really enjoyed that, keep them coming.

Sorry for not giving you the credit Tom, (Tdscanuck) I just couldn't find the thread.  blush 
 
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SEPilot
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 6:04 am

From what I can see the A380 is still consuming a great deal of cash; it will not contribute positive cash flow until deliveries start in earnest, which I believe will not be until late next year.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
jdevora
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 6:27 pm

Quoting Tdscanuck (Reply 3):
I would agree with Stitch's characterization of the Airbus breakdown, although I'd throw the A400M into the mix as well. Although a fantastic plane, that program is a huge money sink right now.

My understanding was that the A400M program was FULLY paid by the initial customers (plus a fair % of benefit ) and EADS got the real benefit from the next customers
Cheers
JD
 
hawkercamm
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RE: Airbus Sales Assestment Question

Fri Sep 14, 2007 11:58 pm

I would say

A320 Turns the lights on
A330/A340 Funding development of A350
A380 Will provide additional A350 development money when A350 R&T expenditure is highest in 2010-2013 (tooling).
Power8 Bonus money in years to come.
A400M Bonus money in years to come

Bonus money = +ve EBIT
2006/2007 has no bonus money
2008 a little bonus money
2009 back to normal or airBUST!

N.B. Dont forget development of A330/A340 are pooled. The whole family shares a lot of commonality.

A300/A310 in service support and spares. ANET never accounts for in service support and spares. This is where Boeing currently has a massive advantage over airbus. Also the older the aircraft in service the better for and A and B. Don't forget all those old Maddog and classic B737s and cargo B747. It is the high cost of spares from A and B start drives the aircraft breaker industry!
 
flysherwood
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 3:20 am

Quoting CygnusChicago (Reply 2):


I'd say the A380 is the equivalent of the Boeing Bonus money. I expect all funding is from A320/330/340 sales

 laughing   laughing   laughing 
If you call a NEGATIVE return BONUS MONEY...  no   no   no 
 
deltadc9
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 3:27 am

Quoting Stitch (Reply 1):
A380 - About ready to start funding the development of the A350

Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?

Quoting HawkerCamm (Reply 7):
A380 Will provide additional A350 development money when A350 R&T expenditure is highest in 2010-2013 (tooling).

Thats a little more like it.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 4:14 am

Quoting HawkerCamm (Reply 7):
A400M Bonus money in years to come

Isn't the A400M a project of a different EADS subsidiary?

Quoting Flysherwood (Reply 8):
If you call a NEGATIVE return BONUS MONEY...

Welcome back! See you didn't do your Cash Flow 101 homework from our last discussion on this topic  bored 
If you cannot do the math, your opinion means squat!
 
Scorpio
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 4:18 am

Quoting DeltaDC9 (Reply 9):
Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?

No, he is talking about cash flow.
 
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Stitch
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 6:35 am

Quoting DeltaDC9 (Reply 9):
Stitch! WTF? That program will be in the red for years....unless they dont pay back the loans, is that what you are getting at?



Quoting Scorpio (Reply 11):
No, he is talking about cash flow.

Bingo.  Smile

Airbus has already spent the majority of the development funds necessary for the A380 program. The A300, A320, A330 and A340 programs all did their part in contributing the cash necessary to pay for those expenses.

The monies each A380 sale generates over and above the cost of producing the plane will go back into Airbus' "general" fund, which will be used to both make payments on the RLA amount as well as to fund existing operations and future programs like the A350 and A320RS.
 
flysherwood
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 7:31 am

Quoting Stitch (Reply 12):
The monies each A380 sale generates over and above the cost of producing the plane will go back into Airbus' "general" fund, which will be used to both make payments on the RLA amount as well as to fund existing operations and future programs like the A350 and A320RS.

I think you have materials, labor and general overhead for each frame to worry about too, don't you?...  Wink
 
flysherwood
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 7:32 am

Quoting CygnusChicago (Reply 10):

Welcome back! See you didn't do your Cash Flow 101 homework from our last discussion on this topic

Cygnus, when you actually finally run a for profit business instead of consult for them, come talk to me about cash flow!  Wink
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 9:44 am

Quoting Flysherwood (Reply 14):
Cygnus, when you actually finally run a for profit business instead of consult for them, come talk to me about cash flow!

What makes you think a consulting business is not for profit?

One day, when you understand cashflow, I'll take you up on the offer. Right now, my consulting fees will be like taking candy from a baby with you  Wink
If you cannot do the math, your opinion means squat!
 
tdscanuck
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 9:49 am

Quoting CygnusChicago (Reply 10):

Isn't the A400M a project of a different EADS subsidiary?

It's from Airbus Military...I'm a little fuzzy on how that's financially worked into Airbus itself.

Tom.
 
racercoup
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 10:28 am

Let me understand this the A380 in the year of its first delivery is as of the end of August at -1 net sales for the year is going to help fund a plane of the future?
 
NAV20
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RE: Airbus Sales Assestment Question

Sat Sep 15, 2007 2:08 pm

Quoting Scorpio (Reply 11):
No, he is talking about cash flow.

Get tired of mentioning this over and over again - but EADS/Airbus themselves are forecasting a negative cash flow on the A380 (i.e. having to spend more on production than they receive in sales revenue, leaving alone any question of recouping any of the development costs) until late in 2010.

By which time they expect to have built and delivered around half the A380s currently on order.

"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
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
flysherwood
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 12:32 am

Quoting CygnusChicago (Reply 15):
Right now, my consulting fees will be like taking candy from a baby with you

You know why I don't pay for consultants? Why the heck would I pay for advice from someone who couldn't make it in the real world? And take a look at the last post from NAV20 for your lesson on Airbus' interpretation of cash flow!  Wink
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:00 am

Quoting Flysherwood (Reply 19):
And take a look at the last post from NAV20 for your lesson on Airbus' interpretation of cash flow

NAV20 quotes the Oct 2006 press release. The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

Anyway, word of advice - be careful of NAV20 interpretations of cash and cash flow. NAV20 believes that 6bn euro in free cash at EADS is a "cash crisis".

Quoting Flysherwood (Reply 19):
Why the heck would I pay for advice from someone who couldn't make it in the real world?

Hehe. Whenever I get my profit-sharing from my partnership share, it certainly seems like "real world" money to me  Smile
If you cannot do the math, your opinion means squat!
 
mrcomet
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:09 am

Here is my guess:

A320 Funds development of A350/operating costs/executive bonuses for Leahy
A330/A340 Funds development of A350 and pays for French and German unions
A380 Funds its own bloated development costs.
French and European no repay loans keep the lights on and fund development
The dude abides
 
NAV20
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:11 am

Quoting CygnusChicago (Reply 20):
The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

That's more than debatable, CygnusChcago. Since when did cancelling orders and paying substantial compensation ot the orderers tend to IMPROVE cash flow? In any case, if the cash flow situation has indeed improved, why haven't EADS/Airbus amended their advice to shareholders, as they are legally bound to do?

Quoting CygnusChicago (Reply 20):
NAV20 believes that 6bn euro in free cash at EADS is a "cash crisis".

Inclined to agree with Flysherwood that you don't understand business. Having cash in hand amounting to E6B. is one thing. But if you spend it (given that EADS did not make a material profit last financial year, and is forecasting that they won't make one this year either) all you'd achieve is a E6B. loss?
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
flysherwood
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:14 am

Quoting CygnusChicago (Reply 20):
NAV20 quotes the Oct 2006 press release. The A380 cash flow figures at that time included the freighter model, which has since been suspended, improving the cashflow perspective.

How does that improve the perspective when you have cancelled orders and returned deposits? Besides, weren't you the one saying that the development money had already been used and so everything coming in is a bonus?

Quoting CygnusChicago (Reply 20):
Hehe. Whenever I get my profit-sharing from my partnership share, it certainly seems like "real world" money to me

There isn't a consultant in the world that knows what real world money is!!!  Wink
 
sstsomeday
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:30 am

Quoting Stitch (Reply 1):
A320 - Keeps the lights on and funds the development of the A350
A330/A340 - Funds the development of the A350
A380 - About ready to start funding the development of the A350

The 330 is a great asset and will be for some time.
The 320 shows no signs of stopping. Airbus' cash cow, to be sure.
The 340 I believe is a liability and not a source of serious profit, unless it added profitability to the line it shares with the 330 by keeping things humming. But I doubt it gave a return on it's own development costs.

As to the 380, because of the monumental development costs for this A/C which serves what has been called a niche market, and including the billions of dollars in additional costs related to the delay, I think positive cash flow on this A/C will go to paying for it's R+D plus interest for many years to come. I don't know much about financing, but I don't see how an A/C that has to pay for itself to the tune of 15 billion or more dollars, and is under-ordered, can also be funding the A350 project.
I come in peace
 
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Stitch
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:45 am

Quoting SSTsomeday (Reply 24):
The 340 I believe is a liability and not a source of serious profit, unless it added profitability to the line it shares with the 330 by keeping things humming. But I doubt it gave a return on it's own development costs.

I expect that, at worse, the A343 is "raw cash" since the costs to produce it would be leveraged a good deal by the costs needed to produce the A332 and A333 and, as such, each frame should produce a profit.

The A342 obviously didn't contribute much of anything due to low sales, but then the same is with the 764ER. However, both program's costs were more then covered by sales of the other members of the families. So while neither generated a positive RoI, neither did they materially drag down the total revenue of their respective families.

The A345 and A346 leverage less of their costs with their A330 and A340 sisters because of their different wing, but even so, it is likely they too contribute "raw cash" if nothing else, especially the A346 since it has close to three times the sales as the A345.

So on a model by model basis, it is likely only the A332, A333, and A343 are truly "RoI positive", but when you add in the incremental sales the A342, A345 and A346 add, the entire program as a whole is almost assuredly an asset, and not a liability.
 
sstsomeday
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 1:53 am

Quoting Stitch (Reply 25):
So on a model by model basis, it is likely only the A332, A333, and A343 are truly "RoI positive", but when you add in the incremental sales the A342, A345 and A346 add, the entire program as a whole is almost assuredly an asset, and not a liability.

You have shown yourself to be very knowledgeable, of course.

Are you saying the 340 is as cash positive asset to the 330/340 program? Or that the 330/340 program is a cash positive asset to Airbus?

I would agree to the latter, but what I am trying to understand is whether the 340 arm of the 330/340 program has reduced the overall profit of that program.

(That's why I have difficulty with threads/statistics which only assess the 330/340 program as a whole.)
I come in peace
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 2:12 am

Quoting NAV20 (Reply 22):
Having cash in hand amounting to E6B. is one thing. But if you spend it (given that EADS did not make a material profit last financial year, and is forecasting that they won't make one this year either) all you'd achieve is a E6B. loss?

That is definitely one of the most illogical statements I have ever read.
If you cannot do the math, your opinion means squat!
 
cygnuschicago
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 2:25 am

Quoting Flysherwood (Reply 23):
Besides, weren't you the one saying that the development money had already been used and so everything coming in is a bonus

1) Development of the freighter was not complete = near-term cash savings (longer term pain, if they ever reintroduce it)
2) No late delivery penalties on the ~20 freighters (which is a reason early frames aren't making money) = cash savings

Anyway, I think we've hijacked this thread, so I apologize to the thread starter. This will be my last response on cash-flow/A380 in this thread.
If you cannot do the math, your opinion means squat!
 
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Stitch
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 3:49 am

Quoting SSTsomeday (Reply 26):
Are you saying the 340 is as cash positive asset to the 330/340 program? Or that the 330/340 program is a cash positive asset to Airbus?

The A340 family has sold ~400 frames to the ~800 of the A330, so I see it as an asset to both, to be honest.
 
deltadc9
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RE: Airbus Sales Assestment Question

Tue Sep 18, 2007 4:47 am

Quoting Scorpio (Reply 11):
No, he is talking about cash flow.

OK, but I dont look at these things in terms of "monopoly money".

If I pay 1000 bucks for a car, and sell it for 500, thats 500 in cash flow and 500 loss at the same time.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny

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