Part147
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Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:04 pm

Did a search, can't find it mentioned here so...

It's a shame that Air India seem to be having trouble raising funds to pay for their 787s, some of which have already been built, parked and are currently being prepared for delivery...

http://www.aviationweek.com/aw/gener...0787,%20Says%20Aviation%20Minister

http://www.foxbusiness.com/industrie...-pay-for-boeing-787-orders-report/

http://articles.economictimes.indiat...ar-ravi-boeing-aircraft-new-planes

http://www.firstpost.com/fwire/air-i...in-wake-up-poor-finance-80483.html

What would happen to those frames if the worst should happen and they aren't delivered? Would it take long to fit them out for another airline?

Edit: added extra news links

[Edited 2011-09-12 15:13:06]
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brahmin
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RE: Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:16 pm

Boeing will release them knowing that they will get paid. Boeing also has to keep them happy for future commercial and military orders.
 
Jonathanxxxx
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RE: Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:19 pm

Quoting Part147 (Thread starter):
t's a shame that Air India seem to be having trouble raising funds to pay for their 787s, some of which have already been built, parked and are currently being prepared for delivery...

I'm pretty sure some of them have already been painted too. They're really close to delivery.

Quoting Part147 (Thread starter):
What would happen to those frames if the worst should happen and they aren't delivered?

There were rumors of AA getting them. Although I doubt that..
 
kaitak
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RE: Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:20 pm

And they think of this now!

The thing is that AI definitely needs this aircraft; there is nothing between the 260 seat ULH 777LR and the 190 seat A321. Whether it actually needs 27 is another issue, but it's incredible to think it has got to within 3 months of the aircraft (finally) being delivered and they say they can't pay for it!

I believe that the aircraft is being fitted out with a normal two class layout, so provided another carrier is willing to take the AI seats (which, judging by the 777s, won't be too bad), then it shouldn't be too hard - provided another carrier is willing to take the AI colours inside (which might not be consistent with theirs).
 
kiwiandrew

RE: Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:24 pm

I am sure that the long-suffering Indian taxpayer will find themselves footing the bill for these aircraft one way or another.
 
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kanban
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RE: Air India Has 'no Money' To Pay For 787s

Mon Sep 12, 2011 10:34 pm

You will probably see a leasing company pick them up and lease those completed to Air India (if Boeing doesn't offer them a lease first) , those still in the pipe line will be deferred. Note the leasing company may just switch positions and handle these as options.
 
qf002
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 1:25 am

Quoting kanban (Reply 5):

     Seems to be the most logical solution. This could actually be very good for Boeing -- I'm sure everyone is happy to move up in the delivery list thanks to a whole pile of deferred orders by AI (assuming they take 5-10 frames initially on a lease).
 
sxf24
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 1:42 am

Quoting brahmin (Reply 1):
Boeing will release them knowing that they will get paid. Boeing also has to keep them happy for future commercial and military orders.

Absolutely not. Boeing would never hand over an aircraft without getting payment first.
 
ck8msp
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 2:26 am

Hasn't AI been making a stink and demanding compensation for the delays? Have they been given any concessions? If they cancel, do they still have any claim or recourse towards Boeing?
 
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Stitch
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 2:44 am

Quoting ck8msp (Reply 8):
Hasn't AI been making a stink and demanding compensation for the delays?

Yes. They wanted something north of USD 1 billion and as of last report (May 2011), had settled for USD 500 million, of which $264 million is notional compensation as that is the difference in price of aircraft ordered by AI and May 2011.
 
ck8msp
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 3:00 am

Quoting ck8msp (Reply 8):
Yes. They wanted something north of USD 1 billion and as of last report (May 2011), had settled for USD 500 million, of which $264 million is notional compensation as that is the difference in price of aircraft ordered by AI and May 2011.

Will this not be void if they indeed cancel their orders? Pretty shady on their part to bitch and moan and then when the time comes to pay up they are broke. OTOH, if Boeing had delivered on time they may have been in better financial shape.

If they cancel does Boeing get to keep their deposit?
 
qf002
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 4:45 am

Quoting ck8msp (Reply 10):
Will this not be void if they indeed cancel their orders?

Have Boeing paid any compensation yet?? They could put that money towards payments for the aircraft if Boeing is yet to actually give them any cash.
 
frigatebird
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 6:29 am

Quoting jonathanxxxx (Reply 2):
I'm pretty sure some of them have already been painted too. They're really close to delivery.

IIRC, CFRP needs to be painted quickly, apparantly it's not that good if it's kept outside without the protection of paint. And a paintjob is not that much of job compared to the rework that needs to be incorporated in the early build frames. If AI really can't pay for their 787's, Boeing will just put these frames last in order for rework, store them and concentrate on customers who can pay.

Quoting jonathanxxxx (Reply 2):
There were rumors of AA getting them. Although I doubt that..

So do I, since AA hasn't ordered 787-8's. True, their order for 787-9's needs to be firmed up formally as well, but that will happen.

Quoting kaitak (Reply 3):
I believe that the aircraft is being fitted out with a normal two class layout, so provided another carrier is willing to take the AI seats (which, judging by the 777s, won't be too bad), then it shouldn't be too hard - provided another carrier is willing to take the AI colours inside (which might not be consistent with theirs).

I don't think the AI 787's have their interiors fitted yet.
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wale03
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 7:27 am

Quoting frigatebird (Reply 12):
I don't think the AI 787's have their interiors fitted yet.

Correct,in fact only one has it's engines fitted and has flown,it's presently at Lackland AFB, San Antonio, Tx where the interior is possibly being fitted
 
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InsideMan
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 7:38 am

None of us(?) know the exact details of the contract and settlement.
Normally liquidated damages due to unexcusable delay (what we had now with the 787) start x days after the scheduled delivery month and are capped at a certain value, which I assume was in this case north of 1BUSD.
Since sticking with the terms 100% in all cases would bankrupt Boeing a settlement to let everyone save face is agreed. This could be "free" 777 as compensation or interim lift, "free" 787s instead of the compensation, favorable financing conditions etc etc. anything can be put on the table.

Normally you would also negotiate new termination clauses for these AC. If not, the normal contract applies again and you would have something like 1 year before delivery you can terminate and only the deposit is sunk. What is also clear is, that once the Airline is officially notified that the AC is "ready for delivery" and don't take it, Boeing can claim compensation!

So, without detailed knowledge of the original purchase agreement and consecutive settlement agreements none of us will know for sure. But I am quite sure that Air India will receive the 787s one way or the other.
 
cricket
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:06 am

There is a 'Sovereign Guarantee' built into the contract - that is teh Government of India will have to pay for the planes if Air India can't pock them up. Air India, thanks to mismanagement due to bureaucratic interference in India's semi-privatised skies has been bleeding money and needs taxpayer dole to survive, this is just a bargaining trick by the current Aviation Minister, who is quite an open socialist and would happily shut down Indian skies for private operators if he could.
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jfk777
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:19 am

Air india's ancient fleet, not the 777's, would be very sorry if they didn't take delivery of the 787's. Without the 787 Air India should consider liquidation which would be politically impossible. There will be 787 for AI.
 
Nimish
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:32 am

Note: Rs. 1 Crore is approx USD220,000.

From: http://www.moneycontrol.com/news/cur...or-cancel-praful-patel_585566.html

The ex-Minister of Civil Aviation speaking here, says he thinks the 787 order can be cancelled entirely without (significant) loss to the govt.

Quote:
Q: The CAG says decisions were taken by Air India to buy planes worst almost Rs 35,000 crore when you were minister of civil aviation on an invalid assumption. They say ‘that increase in capacity share would automatically lead to a substantial increase in Air India's market share’. That presumption that buying planes would increase market share was wrong and therefore the purchase was based on a false presumption?

A: All projections were made by Air India from within. While we talk today Rs 18,000 crore worth of planes have neither been paid for neither have they been delivered. So how does the CAG come to the conclusion that too many planes have caused Air India's financial health to be where it is?

Q: Are you saying that out of the order of Rs 35,000 crore, Rs 18,000 crore worth hasn’t been paid for. Can that Rs 18 000 crore now because the demand picture has changed dramatically be cancelled and can that money be saved?

A: I am not the minister now but as I know from my own background there in the ministry that the delay is on part of Boeing because their 787 Dreamliner got delayed and that’s the reason 27 of the 50 planes have not yet been manufactured for Air India.

Q: Can you get out?

A: I think so because the delay is on their part and it’s not just normal delay. In fact Air India can either cancel or claim a huge compensation. I don’t know what the decision will eventually be.

Q: So you believe that something like Rs 18,000 crore of orders can be got out of because Boeing has delayed the delivery. Was this known to the CAG when that report was written?

A: As I had been told during the exit conference, the Ministry of civil aviation made this representation that out of the 50 big planes we are talking about only 20 have joined the fled, 30 planes have neither been paid for nor have they joined and the ministry can review this decision.
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Kaiarahi
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 11:36 am

Quoting sxf24 (Reply 7):
Absolutely not. Boeing would never hand over an aircraft without getting payment first.

And your authority for this statement is?
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Burkhard
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 11:48 am

Besides the minor problem what to do with the aircraft that are almost ready for delivery, Boeing will be very happy to get out of having to deliver these aircraft at a huge loss, can forward others a bit and sell aircraft then for a price that creates a profit.
 
Flyglobal
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 11:59 am

how stupid could AI be, not to take the aircrafts for the discounted price?
Better sell something else to fund it and even somebody may want to lease it from AI.

I can't believe

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HAWK21M
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 12:13 pm

I feel AI will take the Aircraft & funds will be arranged......Its Taxpayers money afterall.
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qf002
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 12:19 pm

Quoting Kaiarahi (Reply 18):
Quoting sxf24 (Reply 7):
Absolutely not. Boeing would never hand over an aircraft without getting payment first.

And your authority for this statement is?

I'm willing to bet it's basic business acumen and sense. No business is going to give away product without some guarantee of being paid for it -- Boeing isn't going to deliver aircraft to a company that has publicly said that they're unable to pay for them, the same as any business.

Quoting Nimish (Reply 17):
A: I think so because the delay is on their part and it’s not just normal delay. In fact Air India can either cancel or claim a huge compensation. I don’t know what the decision will eventually be.

Haven't they already claimed their compensation though?? If there's been no compensation agree as yet then I have no doubt that they can cancel -- whether they get their deposit back in another matter, which will be covered under the sales contract.
 
Kaiarahi
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 12:42 pm

Quoting qf002 (Reply 22):
No business is going to give away product without some guarantee of being paid for it

Agreed - but that's not the same as:

Quoting sxf24 (Reply 7):
Boeing would never hand over an aircraft without getting payment first.

I was just wondering how the poster was informed of the terms and conditions of the Boeing-AI contract.
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3rdGen
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 1:16 pm

What about AI taking them and immediately selling or leasing them out, if they're getting them for a discount they could sell them for less than list but still reap a profit. I'm sure there are tons of airlines that would love to get their hands on their 787s early. Maybe AI could swap their orders with another airline with a future delivery date.
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enilria
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 1:24 pm

Quoting brahmin (Reply 1):
Boeing will release them knowing that they will get paid.

With all the delays I wouldn't doubt Boeing could easily find other homes.
 
Gr8Circle
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 1:36 pm

Quoting jfk777 (Reply 16):
Air india's ancient fleet,

What are you talking about? The bulk of AI's fleet now comprises of relatively new A320 family planes, 777's and a few older 744s.....the "ancient" A310s have been retired.....
 
sxf24
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 2:58 pm

Quoting Kaiarahi (Reply 18):
And your authority for this statement is?

Accounting rules.

Boeing can't book revenue from delivery of the aircraft unless it receives payment. Booking the revenue is critical to meeting the guidance Boeing has provided to its investors.
 
Grid
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 3:06 pm

Quoting sxf24 (Reply 27):
Quoting Kaiarahi (Reply 18):
And your authority for this statement is?

Accounting rules.

Boeing can't book revenue from delivery of the aircraft unless it receives payment. Booking the revenue is critical to meeting the guidance Boeing has provided to its investors.

You can't have a contract that says Company Y will pay Company Z $XXX for Product C, and then Company Z delivers without having received funds? I was under the impression that this happened frequently.
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Bravo1Six
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 4:05 pm

Quoting Grid (Reply 28):
You can't have a contract that says Company Y will pay Company Z $XXX for Product C, and then Company Z delivers without having received funds? I was under the impression that this happened frequently.

You can, so long as the agreement carries on to say that Company Y will pay the purchase price at a later date.

No business should just be handing over assets without some type of promise to pay. Given that a customer is saying it doesn't have money to pay for its aircraft at delivery, how comfortable do you think any OEM would be extending credit to that customer and taking the risk that they might pay at a later date?

OEMs aren't in the business of lending money to their customers. More often the better solution is to punt the customer and sell the white tail to another customer.
 
blueflyer
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 5:20 pm

I find it interesting that it's not just Air India that's a bit short of funds, but the Indian Civil Aviation ministry as well, with the minister quoted as saying he doesn't want to go "beg" (his word) the finance minister for cash to pay Boeing.

So that means there is a limit as to how much cash the government of India is willing to sink into that black hole of an airline. The limit is whatever the pride of the aviation minister can take...
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Grid
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 6:14 pm

Quoting bravo1six (Reply 29):
Given that a customer is saying it doesn't have money to pay for its aircraft at delivery, how comfortable do you think any OEM would be extending credit to that customer and taking the risk that they might pay at a later date?

I was asking generally, not specifically about Air India and Boeing's current situation. Thanks.
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yeelep
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 6:27 pm

Quoting bravo1six (Reply 29):
OEMs aren't in the business of lending money to their customers.

Sure they are. Ever heard of Boeing Capitol Corp..
 
Gr8Circle
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 6:52 pm

Quoting blueflyer (Reply 30):
So that means there is a limit as to how much cash the government of India is willing to sink into that black hole of an airline. The limit is whatever the pride of the aviation minister can take...

Isn't it the banks that would have to advance the payments to Boeing on behalf of AI? No airline actually pays cash out of their coffers to take delivery of planes....aren't they almost always bank financed? So, the GOI would essentially have to provide the guarantees to the banks, that AI will honor the loans.....
 
Bravo1Six
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 7:07 pm

Quoting yeelep (Reply 32):
Sure they are. Ever heard of Boeing Capitol Corp..

Boeing Capital Corp. wouldn't exist if all of Boeing Commercial Aircraft's customers had the ways and means to pay for their aircraft.

All the OEMs have financing arms to their business. If they had the choice, they'd shutter the doors on those financing arms tomorrow.
 
blueflyer
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 7:51 pm

Quoting gr8circle (Reply 33):
Isn't it the banks that would have to advance the payments to Boeing on behalf of AI?

In a perfect, capitalist, good-credit-record world, that is indeed how it goes. The aviation minister is on the record saying he needs to get the money from the finance minister to make this deal happen, however.

Obviously, Air India's financial situation is bad enough that it cannot get loans (with acceptable terms) on its own, otherwise there would be no reason for the government to step in. Perhaps, the situation is dire enough that even with government guarantees, the terms are still not acceptable to Air India.

Another option is Air India secured partial financing only but they don't have enough cash on hand to pay their share.
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MHTripple7
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 8:11 pm

These planes will get delivered to AI. I personally think that AI is saying this to persuade the Indian government to inject more cash into the carrier. There was similar controversy about the 777 deliveries if I recall correctly.
 
babybus
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 8:21 pm

Quoting MHTripple7 (Reply 36):
I personally think that AI is saying this to persuade the Indian government to inject more cash into the carrier.

Nice idea but I can't imagine any government falling to blackmail like this. I wouldn't, would you? It's your problem you get yourself out of it. Let it go this once and you'll have every company doing it.

If they haven't got the cash then the jets could possibly go to a leasing company. I don't know how it works but if I was a aircraft manufacturer I'd want my cash up front before I build.

On a side note, I still don't like Air India's new livery. They should go back to the old one.  
and with that..cabin crew, seats for landing please.
 
Gr8Circle
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 8:42 pm

Quoting Babybus (Reply 37):
Nice idea but I can't imagine any government falling to blackmail like this. I wouldn't, would you? It's your problem you get yourself out of it. Let it go this once and you'll have every company doing it.

It's not blackmail.....considering that AI is a public sector co and owned by the GOI, there's not much of a choice to say "It's your problem you get yourself out of it".....that's the whole problem with AI....if the GOI had left them on their own a long time back, they would have either flourished or floundered and folded up long ago.....
 
FAEDC3
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 9:46 pm

Quoting blueflyer (Reply 35):
Boeing Capital Corp. wouldn't exist if all of Boeing Commercial Aircraft's customers had the ways and means to pay for their aircraft.

All the OEMs have financing arms to their business. If they had the choice, they'd shutter the doors on those financing arms tomorrow.

Financing is a very lucrative part of the business, there is no pro-bono in it. If financing purchases made by its own customers wasn't a great business none of the carmakers would have financing arms as well... Different levels of credit of course, but the principle of financing the goods one manufactures is the same.
 
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kanban
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:18 pm

Question: Would a major manufacturer underwrite a customers purchase of a competitor's product to ensure a sale?
Example: airline 'x' wanted 10 narrow bodies and 10 wide bodies, but to get the wide body sale they needed to underwrite the narrow body purchase.
 
Bravo1Six
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:41 pm

Quoting FAEDC3 (Reply 39):
Financing is a very lucrative part of the business, there is no pro-bono in it. If financing purchases made by its own customers wasn't a great business none of the carmakers would have financing arms as well... Different levels of credit of course, but the principle of financing the goods one manufactures is the same.

But not as lucrative as selling aircraft (or cars for that matter) for cash...

Assume the selling price is $100 with a 10% margin. At delivery, the OEM has already sunk $90 into the aircraft. OEM Financeco comes along and gives the OEM $100. That's great, except OEM and OEM Financeco are the same corporate group, so the OEM has paid itself, and now needs to wait 12 to 15 years to recover not only its cost, but the margin as well, and needs to assume the risk that it never gets paid at all. You don't get sale treatment, and you need to wait to get your cash.

The OEMs are the financing sources of last resort. They'd much prefer that someone else finances their customers and get the $100 at delivery. The financing arms exist out of necessity, not out of desire.
 
Bravo1Six
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:45 pm

Quoting kanban (Reply 40):
Question: Would a major manufacturer underwrite a customers purchase of a competitor's product to ensure a sale?
Example: airline 'x' wanted 10 narrow bodies and 10 wide bodies, but to get the wide body sale they needed to underwrite the narrow body purchase.

I think the sales team would have a hard time convincing management that it was a good idea to willingly put money in the pockets of a competitor.
 
sxf24
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 10:48 pm

Quoting kanban (Reply 40):
Question: Would a major manufacturer underwrite a customers purchase of a competitor's product to ensure a sale?
Example: airline 'x' wanted 10 narrow bodies and 10 wide bodies, but to get the wide body sale they needed to underwrite the narrow body purchase.

One OEM has historically declined to provide a customary level of support to its aircraft owned or financed by the other OEM.

The other OEM could really care less who owns or finances its aircraft, as long as it gets paid.

[Edited 2011-09-13 15:48:40]
 
qf002
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RE: Air India Has 'no Money' To Pay For 787s

Tue Sep 13, 2011 11:28 pm

Quoting Grid (Reply 28):
You can't have a contract that says Company Y will pay Company Z $XXX for Product C, and then Company Z delivers without having received funds? I was under the impression that this happened frequently.

Sure it does, when Company Z is guaranteed payment eventually. This is a different situation -- Company Y cannot necessarily guarantee payment.

Quoting yeelep (Reply 32):
Sure they are. Ever heard of Boeing Capitol Corp..

Nobody is going to lend anyone money without some security/proven means by which to repay the money. I'm not sure that AI exactly has a strong credit rating.
 
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InsideMan
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RE: Air India Has 'no Money' To Pay For 787s

Wed Sep 14, 2011 11:55 am

Quoting Kaiarahi (Reply 18):
And your authority for this statement is?

that's how it works for A and B. No money in the bank, no Aircraft delivery.

Quoting Grid (Reply 28):
You can't have a contract that says Company Y will pay Company Z $XXX for Product C, and then Company Z delivers without having received funds? I was under the impression that this happened frequently.

This would then be a third party. A bank, lessor, maybe even Boeing Capital or Airbus Financial Services, but the standard remains. No money in the manufacturers account (every single dollar of the invoice price!), no delivery.
 
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scbriml
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Joined: Wed Jul 02, 2003 10:37 pm

RE: Air India Has 'no Money' To Pay For 787s

Wed Sep 14, 2011 12:23 pm

Quoting sxf24 (Reply 43):
One OEM has historically declined to provide a customary level of support to its aircraft owned or financed by the other OEM.

I think you'll find one OEM threatened to withdraw support for its aircraft sold on by the other OEM. Threatening and doing are, and were, two very different things.

Back on topic, I'm pretty sure some sale and lease-back deal will be brokered which will allow AI to take delivery of their 787s very soon. Whether they end up taking all of their order will be interesting to see.
Time flies like an arrow. Fruit flies like a banana!
 
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lightsaber
Crew
Posts: 11740
Joined: Wed Jan 19, 2005 10:55 pm

RE: Air India Has 'no Money' To Pay For 787s

Wed Sep 14, 2011 12:48 pm

AI is broke. Who would lend them money? I suspect the answer will be a government loaned down payment.

Quoting bravo1six (Reply 41):
But not as lucrative as selling aircraft (or cars for that matter) for cash...

Tell that to Udvar-Hazy or GECAS. Aircraft leases typically have a higher ROI than aircraft sales!    The lease rates are pretty high.

Quoting scbriml (Reply 46):
I'm pretty sure some sale and lease-back deal will be brokered which will allow AI to take delivery of their 787s very soon. Whether they end up taking all of their order will be interesting to see.

This I agree with. AI will be giving back compensation.  



Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
qf002
Posts: 3064
Joined: Tue Jul 05, 2011 11:14 am

RE: Air India Has 'no Money' To Pay For 787s

Wed Sep 14, 2011 2:18 pm

Quoting lightsaber (Reply 47):
government loaned

LOL loan... More like a government payout.
 
FAEDC3
Posts: 111
Joined: Thu Jun 21, 2007 10:11 am

RE: Air India Has 'no Money' To Pay For 787s

Wed Sep 14, 2011 4:29 pm

Quoting bravo1six (Reply 42):

But not as lucrative as selling aircraft (or cars for that matter) for cash...



Evidently not.... but if you take a quick look at their FS for ´10 (source: BCC Form 10-K) Link: http://tiny.cc/55h2i

Revenue $ 639 Mil
Dividends to Boeing $108 Mil
Total Assets $ 5.986 Mil
Debt $ 3.446 Mil / debt with Boeing $ 66 Mil, debt issued (open market) $ 3.314 Mil

From those numbers I draw the following conclusions:
1. $639 Million revenue is pretty respectable as income
2. A business that is not the core, but contributes with $ 108 Million net profit to the main company's FS is a good business to any company.
3. Moreover, if that business only draws $66 Million in resources from the mother company, and that reflects on a little over 1% of their total assets; the rest is financed either by own funds or investors buying its debt.

That looks as a swell business any company wants to have as a subsidiary or affiliate. At the end of the day, the amount of receivables that BCC holds pending with Boeing is minimal, meaning that Boeing collects the money at delivery of the planes, either from the customer, its bank or BCC as a financing entity.

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