DeltaAir
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Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 10:40 am

Giving `Em Away?

The incentives Airbus is using to sell its A380 now may backfire later

Beaming proudly, Airbus Industrie sales chief John J. Leahy strolls through a life-size mock-up of the A380 superjumbo jet at company headquarters in Toulouse, France. He lingers in the luxurious first-class cabin with its wood-paneled library and wine bar and lets his voice echo through the cavernous economy cabin, big enough for more than 550 passengers on two decks. Then he fixes his visitor with an intense gaze. ``Isn't this the way you want to fly?'' he asks.
It's an impressive pitch--and it's working. Since July, Leahy has logged 60 orders for the A380, which even can be configured to hold up to 800 passengers. It will be the biggest commercial aircraft ever made. Leahy has made archrival Boeing Co. look like an also-ran as he has signed up industry pacesetters such as Singapore Airlines and Federal Express and lured away Boeing stalwarts such as Qantas Airways. Indeed, Boeing hasn't won a single order for a stretch version of the venerable 747 that it's offering as an alternative to the A380.
A dazzling start, no doubt. But is it a good deal for Airbus? BusinessWeek has learned that the company is giving extraordinarily generous terms to early buyers. It's selling the cargo model of the A380 for as low as $133 million and the passenger model for just over $140 million--about 40% off list prices and less than the going rate of $140 million to $150 million for Boeing's 747. Airbus is accepting down payments as low as $500,000 per plane while giving customers the option of canceling orders 12 months before delivery without customary penalties. Airbus has offered lenient terms to buyers of established models before. But experts say it's unusual to offer them on a new plane.
True, manufacturers always sweeten the pot for first-time buyers of new aircraft, discounting them and throwing in everything from free pilot training to spare parts. And Leahy, a New Yorker who joined Airbus in 1985, is renowned for luring customers. His dealmaking skills helped the European company break into the U.S. market in the 1980s and boost its global market share from 21% to nearly 50% in the past five years. But, says an airline executive who has seen the terms Leahy is offering on the A380, ``I don't know of a deal that has ever been quite this generous.''
These concessions only steepen the already difficult path to profitability for the A380. To meet its break-even targets, Airbus says it expects to deliver 250 superjumbos by 2011. But to offset the deep discounts and raise needed working capital, it will have to demand bigger up-front payments from future customers and charge them close to list prices--$218 million to $235 million, says aerospace analyst Paul H. Nisbet of Newport (R.I.)-based JSA Research. Cost-conscious airlines won't readily agree to pay 40% more than their competitors did, say industry watchers. And Airbus has already plucked hot prospects, such as Singapore, Qantas, and Virgin Atlantic Airways, whose Asia and Pacific routes are well-suited to the mammoth jet.
Airbus isn't the only one at risk. To help finance development costs of at least $10.7 billion, it is counting on $2.5 billion in loans from European governments and $3.1 billion in credits from companies such as Saab, Fokker Aerospace, and Taiwan's AIDC, which are supplying major components of the plane. If Leahy can't keep orders rolling in, or if purchases are canceled or delayed, Airbus could be hard-pressed to meet its loan repayment schedules, analysts say.
NO GAMBLE. Airbus says such grim scenarios are nonsense. ``This is anything but a gamble,'' says CEO Noel Forgeard. Chief Financial Officer Andreas Sperl says Airbus should average a 20% pretax margin on the A380 over the next 20 years, well above the industry average. The company says it can hold down costs because the A380's design is closely related to smaller models and because its factories tend to be more efficient than Boeing's. Airbus seems to be humming along smoothly: Last year, it booked a record $41.3 billion in orders. The European Aeronautics Defence & Space Co., which owns 80% of Airbus, says the planemaker accounted for 60% of its revenues and nearly all its operating profits last year.
Airbus, while acknowledging that it expects A380 orders to fall off this year, predicts the pace will soon pick up because of the plane's efficiency. With maximum seating capacity nearly double the 420 on the biggest 747s flying today--Airbus says the A380 will cost at least 17% less per seat to operate than the 747. That could give carriers a big edge on long-haul routes. Boeing says Airbus has overestimated demand because most air-traffic growth will occur on routes between smaller cities, where huge planes aren't needed. That's why Boeing has opted for a stretch 747, designed to carry up to 520 passengers. Retorts Leahy: ``They're just flailing around looking for something to compete with us.''
By 2008, less than two years after the scheduled delivery of the first A380 to Singapore Airlines, Airbus plans to ramp up production to 50 superjumbos per year and sustain that rate for more than a decade to maintain production efficiency. That means Leahy's sales staff will have to line up dozens more orders when only a handful of planes are in service. The carriers couldn't be happier. ``I'm happy to put Boeing and Airbus into a box and let them thrash it out,'' says Peter Gardner, a vice-president at Cathay Pacific Airways Ltd., which is being wooed by Leahy.
Leahy shows no signs of letting up. To hammer out Federal Express Corp.'s order for 10 planes, he visited FedEx CEO Fred Smith's home last year while Smith was recovering from open-heart surgery. He sealed Virgin's order for five planes in a 1 a.m. phone call with Chairman Richard Branson. Leahy's biggest challenge now is Japan, where Tokyo's Narita Airport should be a prime destination for superjumbo flights.
AD: BOEING. Here Boeing has a daunting advantage. Japanese airlines give 80% of their plane orders to the U.S. company, which has cultivated strong ties by giving contracts to local manufacturers. Dimming Airbus' hopes for an A380 sale in Japan, Boeing recently struck a deal with Mitsubishi Heavy Industries Ltd. to produce the wings for the planned stretch version of the 747. Leahy has beefed up Airbus' sales operation in Tokyo and is scouting for deals with Japanese manufacturers. But he admits those efforts may not pay off quickly.
Boeing has worries of its own. Several years of production bottlenecks cost the company dearly. Boeing executives reckon that Wall Street wouldn't approve of their investing billions to develop their own superjumbo. But if the A380 catches on, Boeing would be hard-pressed to catch up. The 747 can't be stretched further than 520 seats, and designing a new plane would take years. For Boeing and Airbus, the dogfight of the century is only beginning.
 
watewate
Posts: 2216
Joined: Sun Nov 12, 2000 6:00 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 10:55 am

Wow, $500,000 downpayment? I'm starting to think I can afford one.

A few things...
40% discount sounds a little steep and the terms in which airlines 'supposedly' signed with Airbus would have made airlines look stupid NOT to buy. With the generous cancellation clause and deep discount, carriers have very little to lose in this game.

50 will be produced a year? That sounds quite ambitious. Not that I doubt Airbus' production capability, but like aforementioned, it will take quite an effort on their sales team's part to keep it sprinting along that rate.

It will be a field day when A380 first rolls off the assembly line. Can't wait to see it fly.
 
CliperB777
Posts: 55
Joined: Fri Jul 21, 2000 1:21 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 10:56 am

Surprise surprise!!!!...gotta sell the airplane somehow..hehe. Airbus will lose tons money and get bailed by the govertments of Germany, Spain, and France later.
 
Fly-by-pilot
Posts: 180
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 11:20 am

No big surprise. How else would they sell a plane that nobody needs.
 
magyar
Posts: 528
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 2:56 pm

Guys, but how do you know how much the plane
really costs to produce? You can put the planes
list price at 1 billion and sell for $250 million and
that is an enormous 75% discount. I heard that a 20-30%
discount is always built in the listprice (both Boeing
and Airbus). What if Airbus can actually produce
an A380 for the price of a B747. Than this 40%
discount is indeed less 5-10%.

Janos
 
cba
Posts: 4228
Joined: Sat Jul 15, 2000 2:02 pm

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 3:07 pm

Sounds like a little dirty Airbus tactic to sell their plane. Airbus sells their planes cheap, barely makes a profit to gain a larger % of the market, EU bails them out.
 
Archie Bunker
Posts: 359
Joined: Thu Jul 06, 2000 3:22 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 3:16 pm

Airbus sells their planes cheap...

It's called "dumping".


...gain a larger % of the market

Dot.com strategy.
 
gerardo
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 5:10 pm

What nobody has mentioned so far - OK, which Airbus basher wants to see the whole truth? - is, that we are talking about launch customers. And that's pretty normal to sell new aircraft at low prices. Even the good one, Boeing, plays the same game. Do you really think, Boeing will sell their B747x at list price? Do you really think, SIA paid the list price for their B777 in 1999?

Come on! Wake up! That's business!

Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
mriihi
Posts: 54
Joined: Thu Aug 17, 2000 4:49 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 5:41 pm

Would there be anything to discuss if Boeing was the builder of this great plane? You US guys are about to see a great plane.

What you do not see, is that discounts and actual productioncosts have very little to nothing to do with eachother. Airlines are only interested how much money they have to have to get the plane. You do not go to shoestore and say,-"I want those shoes and I pay 40%!" Its always money you are giving away and you get something back. At this point Airlines have made the calculations that the money for that plane is OK. They can make their routes profitable and that counts for everything. This is not so complicated you make it.

M
 
N628AU
Posts: 355
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 6:17 pm

It's one thing to sell a bunch of launch customer aircraft at a big discount when there is a market to several hundred, if not thousand. Quite another when you may only sell 200, and 25+% of your market has already been sold a drastically slashed prices. If you thought it was bad with Clinton threatening the E.U., I think Bush will be a whole new ballgame when it comes to protecting U.S. industries.
 
mriihi
Posts: 54
Joined: Thu Aug 17, 2000 4:49 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 6:43 pm

When do people start to understand that Listprice and discount out of listprice does not tell you anything. Absolutely nothing. Listprice is something that someone has written. This is not a new car what we are talking about i.e if you want alloywheels it is +200$. These planes cost hunderds of millions$. The listprice is artificial piece of paper and like in any "bigger" business the buyer tells what he/she wants, and then the manufacturer tells the price it thinks will get the deal done. If these two parts see eye to eye the deal is complete. No one is interested in listprice but the one who wants to make noise about not getting the deal. The biggest fear for US manufacturers is coming true. A380 will fly and Boeing has nothing even closely similar to offer, that is the reason why this 40% discount thing is on the wall right now.

M
 
eg777er
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 8:23 pm

OK, for all the Airbus-bashers on this forum....

FOR HOW MUCH APIECE DID BOEING SELL THE 747-100 TO PAN AMERICAN WORLD AIRWAYS AND BRITISH OVERSEAS AIRLINE CORPORATION, THE LAUNCH CUSTOMERS?

I think you'll find they are quite low figures.

And for god sake, the EU countries give Airbus "refundable launch aid" for new projects. Such as the A320 loan which has been paid off and now the UK, France and Germany EARN MONEY ON EVERY A319/20/21 SOLD!!!!!

But as for Boeing and its defence contracts...
 
mriihi
Posts: 54
Joined: Thu Aug 17, 2000 4:49 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Fri Feb 23, 2001 8:38 pm

WOHOOOOOOOOU!!! What could we possibly find on that topic?

M

 
wingman
Posts: 2830
Joined: Thu May 27, 1999 4:25 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 1:18 am

It's telling what the quoted airline exec said, he's NEVER seen any offers quite so generous before. Forget what the "Americans" on the forum are saying, focus instead on what an independent industry expert is saying. Between the airline exec, the author, and Paul Nisbet all three seem to agree that Airbus is making extraordinary offers to sell the 380. Of all the carriers that signed so far, at least 6 of the 7 had already stated a strong preference for the plane, maybe all 7 (not sure about Fedex). Plus, the 380 marketing campaign, brilliant as it is and hats off that that other "ignorant American" Leahy, is at least 3 years ahead of the 747X. Any Airbus fans who think this game is over and Airbus has already "won" are very sadly mistaken. At some point, Airbus will have to jack up the prices or it will simply never turn a dime on this project. Boeing can sell the 747X at lower prices than the 380 if Airbus is not dumping. The investment price alone makes it easy for even a fool to understand. A $4B plane costs LESS than a $12B plane.
 
FrankyA340
Posts: 41
Joined: Fri Nov 10, 2000 11:34 am

White Elephant?---WHO Cares!

Sat Feb 24, 2001 2:06 am

Personally, I could care less whether Airbus is giving discounts, will be financially strapped. I would never buy the stock. As an aviation enthusiast though, all I care about is being next to the runway when that puppy takes off or lands. The Concorde sure is a white elephant, but I would bet not 1 person on this site cares when staring at its beauty. Let's get the A380 built!!!!!!!!!!!!
 
Guest

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 2:31 am

Pan Am got the 741 at $20 million apiece. That was not a big discount back then, as inflation has gone up 10-15 times by now.
 
AirbusDriver
Posts: 228
Joined: Mon Feb 05, 2001 8:01 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 3:56 am

Boeing sold the 777 to El Al for 100 million a piece!!!

Bush can mind his owne probleme if you US guy's think that we are scare of him you got it all wrong, what do you think that he can tell us in europe at what price to sell our planes???
 
JETPILOT
Posts: 3094
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 4:04 am

40% discount? I'll take one. I was just waiting for the price to drop.

JET
 
travelin man
Posts: 3198
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 4:12 am

You are ignoring the facts stated in the article: At some point, the deep discounts must stop. And when they do, who will be there to buy this huge plane??? Many of the target customers have bought it ALREADY.

The question is: When does Airbus start charging full price (the price needed to recoup development costs as calculated by the article -- in the $200 million range)????

And WHO will be willing or able to purchase these planes, knowing that many of the most financially viable airlines that CAN, (Singapore, Virgin, Qantas) have already done so?

I am not an Airbus basher. They make good planes. I do have an Economics/Finance background, though, and it seems like the A380 will barely break even, if it breaks even at all. Of course, this should not matter to aviation enthusiasts. But to business people, it might. (and to European taxpayers who may have to eat the development costs a la the Concorde).
 
sccutler
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 5:01 am

We'll never settle this thing here; only time and market conditions will do so.

The fundamental variable here is this: will the market absorb as many of the super-jumbo jets as Airbus projects?

If yes, advantage: Airbus. If no, EU taxpayers get to subsidize the company.

As for me, I remain skeptical about the number of these behemoths needed, but as pouplation densities continue to increase around the world, they may yet be what's needed.
...three miles from BRONS, clear for the ILS one five approach...
 
MAH4546
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 5:30 am

This is pathetic. Can somebody say "jealous Boeing fans"?
a.
 
SegmentKing
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Joined: Sun Aug 27, 2000 7:16 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 5:33 am

hrm.. seems like Airbus is just another employment agency.


Must be nice to have the European governments control the industry sector.

I appreciate the capitalistic democracy here in the U.S.  Smile/happy/getting dizzy
~ ~ ~ ~ pRoFeSsIoNaL hUrRiCaNe DoDgEr ~ ~ ~ ~
 
Guest

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 5:33 am

I am so tired of the constant European argument that Boeing's defense contracts amount to governmental subsidies. The people espousing this view are either ignorant or intellectually dishonest. Either way, it is just plain wrong.

Boeing, in order to get a defense contract, must compete on the open market against Lockheed Martin, Ratheon, Bell Helicopter, and others. This is what it is presently doing in the "fly-off" for the Joint Strike Fighter with Lockheed. The Department of Defense purchases whichever is the best plane for the best price. (If they didn't, can you imagine the congressional hearings.) This costs Boeing an enormous sum in research and development, an amount that it is not assurred of recouping as the DoD could opt for the Lockheed model or scrap the program altogether. Even if the government does purchase the JSF from Boeing, Boeing's prices do not accord that much profit because of the bidding process against Lockheed during the test phase. In essence, when it signs a defense contract with Boeing, the government gets something for a good price.

By way of contrast, when it provides its "loans" to Airbus, European governments do not receive anything. Moreover, they are not assurred of repayment. It is these "loans," which if defaulted upon are nothing more than governmental subsidies, that permit Airbus to develop this ridiculous aircraft for which there is no demand just so that the EU can stand up and say, "see, we make the biggest airplane." (And, yes, we all know that is what this is really about)

For the record, Airbus is free to enter the defense aircraft industry. I am certain that there would be less bitching on this side of the pond if Airbus received government money in exchange for military aircraft rather than in exchange for nothing as is presently the case. Indeed, if the military contracts business is half as lucrative as Airbus alleges, one would certainly expect that they would have long ago followed Boeing's lead and developed fighters, transports, and bombers for European air forces. The fact that Airbus does not take this action, opting instead merely to collect its "loans," speaks volumes about the validity of their "government contract as subsidy" argument.
 
RIX
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Joined: Thu Aug 03, 2000 4:46 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:11 am

I absolutely don't care whether Airbus sells something with discount or not, gets subsidies or not. I'm happy to see SST landing here at JFK (hope it comes back) and, being an American taxpayer, I'll be happy if Boeing gets a subsidy to develop something REALLY new (not another five-decker 5,000 seater). BUT: stop this "Boeing military contracts" stupidity. Boeing gets money for a product, not a gift! As I once said here, my software company sometimes gets government (both state and federal) orders. Of course, they pay for our work. Of course, we then use technologies and experience obtained in government projects for our work for private customers. Does it mean we get government subsidies? WN_boy is right: the people espousing this view are either ignorant or intellectually dishonest.
 
HeavyCapt
Posts: 61
Joined: Mon Jan 15, 2001 5:00 pm

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:22 am

In order to avoid being "branded" and pulled into a war of words about one versus the other....I have no opinion about either except to say that I love to fly.

That being said. There are some interesting parallels here. I would suggest to all to burn up their modems and dig on the web to find out about the L1011. I think you will find some interesting info vis a vis what happened to their price after lowering it initially to overcome engine fears that the launch customers had. Bear in mind that at the time those launch customers were some of the finest carriers (read most well managed) of their pre deregulation/privitization era. Also look at the overall selling price over the life of the production run after the initial discounts. Finally look at what the L1011 did to Lockheed in terms of commercial transport production.

I am not implying that this would happen to Airbus (Not at all so please don't infer so) All that I am saying is that this set of circumstances has occurred before in this industry with less than hoped for results. Please take a look at the story before weighing in with an opinion as to whether or not Airbus will be successful. All of that being said, I believe that if there is a chance to avoid those pitfalls then Airbus and it's aggressive Marketing are most likely the ones to pull such a feat off

I hope that I have not disturbed anyone too greatly. It's just that this has evoked such emotional responses and I thought it would be interesting to point out a remarkably similar set of circumstances so that the posts may perhaps return to a more business like approach to the subject
 
akelley728
Posts: 1965
Joined: Tue Dec 07, 1999 12:35 pm

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:24 am

Well said WN boy.

Let me add something else to this 'defense contract subsidy to Boeing' argument that Boeing bashers here on the forum love to throw around...

If you want to call the defense contracts that Boeings gets 'subsidies's, then Airbus indirectly gets defense 'subsidies' also!

Airbus is 80% owned by EADS (the other 20% by BAe), right?

Let me quote from FROM EADS website:

The 1999 revenues show EADS to be the largest manufacturer of tactical missiles in Europe and the second largest in the world. EADS is the third largest supplier of defence electronics in Europe and, with its partner Nortel Networks, plays a significant role amongst multinational telecommunications companies active in the military and civil markets.

Some of their products:
soon to be launched A400M
Tornado fighter
yphoon fighter
Meteor Air to Air missle
I could go on and on...

The other 20% of Airbus is owned by BAe. The military products that BAe puts out is too numerous to mention here.
 
Archie Bunker
Posts: 359
Joined: Thu Jul 06, 2000 3:22 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:26 am

Defense/Military Sales 1999 ($m)

Boeing 12,220
Total: 12,220

BAe 9,445
EADS 3,732
Total: 13,177

source: Flight International

 
SInGAPORE_AIR
Posts: 11619
Joined: Mon Nov 13, 2000 4:06 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:33 am

I don't think any airline really buys at list price whatever that is,

I hardly think that SIA would have bought is 77 whatever 777s for the list price

However ,40% is a lot and that says a lot about the tactics of both maufacturers (and how DESPERATE they are possibly????) brb

I'm back with a cup of tee

Yes I think i've said all I can say.
Anyone can fly, only the best Soar.
 
EGGD
Posts: 11880
Joined: Sat Feb 24, 2001 12:01 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:41 am

OK i think this constant Boeing.v.Airbus war is really sad. They both make great, reliable aircraft so why do you need to argue who is best? The A380 will brake even and go into profit some day, even though it may take a number of years. Boeings 747X will also be a success.

All major projects had their ups and downs. remember Boeing not selling any 737's for 2 years at the start of the 70's? well they sold the model at a discount price before it went into production and when they started to sell them at the retail price no-one bought them. But now look!

No more Boeing or Airbus Bashing!

Regards EGGD
 
SInGAPORE_AIR
Posts: 11619
Joined: Mon Nov 13, 2000 4:06 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 7:02 am

Hi EGGD!

I don't want this to sound horrible here but:

What's wrong with an Airbus v. Boeing war?
I can't get it.

It must be youthfiul mentatlity!
Anyone can fly, only the best Soar.
 
EGGD
Posts: 11880
Joined: Sat Feb 24, 2001 12:01 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 7:10 am

I hate wars thats why  Smile
 
magyar
Posts: 528
Joined: Mon Feb 14, 2000 4:11 pm

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 9:13 am


>>
Boeing, in order to get a defense contract, must compete on the open market against Lockheed Martin, Ratheon, Bell
Helicopter, and others. This is what it is presently doing in the
<<

All of the mentioned companies are US company!
Nobody, outsider, can have a real shot at it.
That is because of national security of the US. Yet, it
is a huge market (AFAIK Lockheed Martin besically lives off it),
a US company can make a huge money on it with an average performance. Airbus and EADS can do their best yet they have
no chance to win anything alone (only if they subcontract with
an american company, a la BAE, but than they only get peanuts).

>>
process against Lockheed during the test phase. In essence, when it signs a defense contract with Boeing, the
government gets something for a good price.
<<

yes, yes, just like the toilet seats in the Pentagon for couple
of hundred dollars each. I remember, there was a big scandal
because of such ``wise`` spending in the Pentagon.

>>
For the record, Airbus is free to enter the defense aircraft industry. I am certain that there would be less bitching on
this side of the pond if Airbus received government money in exchange for military aircraft rather than in exchange for
nothing as is presently the case. Indeed, if the military contracts business is half as lucrative as Airbus alleges, one
would certainly expect that they would have long ago followed Boeing's lead and developed fighters, transports, and
bombers for European air forces.
<<

This shows how utmostly ignorant and biased you are.
One of the thing I always hear in the US is the
babbling about ``the mightiest, biggest, finest `` US military.
And yes the US has the biggest, most sophisticated and
best supplied military in the world. The needs of such
military probably dwarfs anything in comparison. Also,
people in the US are whining that the Europians are not
capable to defend themselves, they lack the basic means
to be an effective force, etc. And now when we compare
the military contract EADS and the american companies
can get all of the sudden everything is equal.
No, the US military is probably the fattest market for
military supplies, and EADS and Airbus is excluded from
it, or is confined to be a minor player, by default. Boeing
on the other hand can have a full shot at it. And this DOES
have a consequence on the commercial airplane industry
as well.
It is like me and you go to college, you are eligible to
apply for a loan I am not. Granted, you may not get the loan,
but don't blame if I go to my daddy for money!

Janos
 
Archie Bunker
Posts: 359
Joined: Thu Jul 06, 2000 3:22 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 11:02 am

...or one can look at it this way; with a strong U.S. military (including presence in Europe) the U.S. government is indirectly subsidizing Airbus.

European governments, with less money allocated for its defense budgets, can now easily afford to subsidize its industries and corporations...Talk about a double whammy for Boeing.  Big grin

I think Airbus should repay the U.S. treasury from some of its profits. Big grin
 
WiLdmanVzla
Posts: 590
Joined: Wed Sep 20, 2000 12:17 pm

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 11:20 am

There's a lot of screaming in Seattle... and by the way, who cares about the big subsidies?, I do care about the plane Airbus is building... and be sure, the A380 is gonna be the world best airplane in all terms.

So Boeing fans: SHUT UP & WAIT!!!!, there's a big market for both manufacturers

 
Guest

Magyar

Sat Feb 24, 2001 1:13 pm

Magyar said:<<<"This shows how utmostly ignorant and biased you are.
One of the thing I always hear in the US is the
babbling about ``the mightiest, biggest, finest `` US military.
And yes the US has the biggest, most sophisticated and
best supplied military in the world.">>>

Magyar, just about everytime someone is trying to talk the truth, if it means even saying something which is against anything European, you always jump in and make rude and stupid comments like the above. Would you just stop your "babbling" everytime someone trys to defend something which they agree with. WNboy, I have to say I was very impressed with your post, and you certainly straightened out some things in this topic.
-Tom
 
N628AU
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Joined: Wed Oct 18, 2000 4:20 am

RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 4:33 pm

(1) There is not a big market for VLA aircraft. There is a market, but not a big one.

(2) On defense spending in the U.S.:

You do not pay $100 for a toilet seat. Black operations are necessary, but you don't show where the money is coming from or going to. You buy $100 seats and $500 hammers to write the money off the books that you need to show going somewhere.
 
User avatar
ERJ135
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 5:32 pm

The war is over now.
Everyone sit back and look at this silly squabbling.
For a war to exist two parties or more would be fighting for the same piece of the market.
Airbus has it's A380 and Boeing has the..........Nothing!
That's not a hit at Boeing, but in reality Boeing has no competing aircraft. The 747X is smaller and no matter how hard we wish, it will never be streched to match the passenger capacity of the A380, it simply can't.
So if they are not competeing they must compliment one another so airlines can and will buy both according to their needs, wants or checkbook.
Airlines like Qantas and Virgin have orders from both stables. Singapore too with more 777's.

Get over it!
I remember when the DC-3 was new!
 
DatamanA340
Posts: 535
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:26 pm

Korean Air got 27 737s for $1.3bil. According to Boeing's site, If anyone wants to buy 11 -800s and 16 -900s, must pay $14.8bil at least. This price can go up to 16.8bil. I don't know whether these are 'list' prices, but you can notice that there was 'slight' discount.

380 is fully new model, and its 'real' price is even not estimated, 'cause when Airbus sells one more 380, it must pays cost for development. That's why manufacturers give launch discount. For Airbus, to sell more 380 is to cut the loss. Even when Airbus gives 50% or more discount, only this payment will be efficient for manufacturing cost. You are wrong to blame this discount as EU citizens tax.

When Boeing really offers 747Xs, just wait and see how much discount this Seattle giant sets.
 
L-188
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Sat Feb 24, 2001 6:55 pm

According to your numbers DatamanA340, Boeing lists a 737 at 548 Million and change....For some reason that seems just a little high....14.8B divided by 27.

Likewise According to your numbers 1.3B divided by 27 works out to be 48 mil plus change.....Much more realistic

And even that seems a little high to my memory...So I assume there are some spares support/training into that price.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
 
akelley728
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Wed Feb 28, 2001 2:15 pm

I think he meant to say 1.48b and and 1.68b, but anyways...

I wonder how much of a discount Qatar is getting for it's new order of A380s
 
Kangar
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Wed Feb 28, 2001 8:33 pm

Folks,
It is sad to see the same junk getting talked over yet again, this topic has been discussed to death. Me personally, I think AI paid the customers to take the A380 for free, there's no way the aircraft's technology have anything to do it. If Boeing would quit whining and get up off their asses and build the aircraft everyone knows they can, they'd be better off.
 
cfalk
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Wed Feb 28, 2001 9:19 pm

Price-cutting is a vicious tool. By drastically cutting prices, you force your competitors to do the same. By offering the A380 at a lower price than the 777, 747X, and not so far from the 767 even, Boeing will have to reduce its prices as well. This will prove to be bad news for Airbus's A340/A330 line, whose prices will also have to be cut.

In the end, profit margins are shot to hell, shareholders are screaming, and management responds by drastic cost-cutting, which may include making designs cheaper to build rather than safer.

Safety costs money. There is always a balance between safety and cost-effectiveness which has to be struck. For instance when Airbus requests bids for brakes from its suppliers, it will be faced with maybe 2 choices - The Rolls Royce Model, with all the bells and wistles and very good performance or the Subaru Model, and half the price and just barely passing the required tests. If there is plenty of margin on the overall plane, Airbus is more likely to say "let's go for the safer, more expensive option." But if they are scratching for pennies, the Subaru option looks a lot more attractive.

Just my 2 cents.

Charles
The only thing you should feel when shooting a terrorist: Recoil.
 
Joni
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RE: Airbus Selling A380 With 40% Discount: Biz. Week

Wed Feb 28, 2001 10:54 pm


The discounts offered depend on how much the suppliers "want" the deal. When Airbus and Boeing were luring SIA, you might have seen steep discounts offered for A380 and 747X.

However, Virgin was reportedly not given as sweet a deal anymore, since Airbus told them they could launch the plane even if Virgin didn't buy. The Qatar deal was small and the program already launched, so the Qatari most likely paid substantially more than, say, Air France or Qantas.