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SC430
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 12:35 am

lightsaber wrote:
JustSomeDood wrote:
IndianicWorld wrote:
It’s all part of the cycle really, IMHO.

Boeing had its struggles a few years ago where so much seemed to be heading off course for them, and Airbus is currently experiencing some pain.

The product range is strong and orders are still significant, so once it has ironed out its issues (mainly with engine manufacturers), it should be ready to gain momentum again for the future.


The ideal time for the 330neo to have gained order momentum was 2-3 years ago. When purchase price and slot availability were actually legitimate advantages instead of A.net "wisdom". Airbus will have a tough time getting per-unit production costs low enough when production rates are less than half projected..

To build on Justsimedood's comment:. Cutting the production will add about 10% to the cost of building the aircraft w/nacelles. The engine economy of scale isn't as impacted due to T1000 production.

The costs would have gone up 15% or so if it wasn't for part commonality and demand for parts from the in service fleet.

Not crippling, but not good. About a 6% increase from the 110 build rate over-all. Maybe only a 2.5% increase from this year. But certainly not helping with the 787 at 3x the rate or 10% to 15% lower overall cost just from economy of scale.

For the record, I cannot understand why the 747 and A380 remain in production. Everything I know about economy of scale falls apart below 25 per year. :(

Lightsaber


Seems I read somewhere awhile back that freighters were not discounted to the degree passenger planes are. I doubt Boeing would continue the 747/767 line unless it was profitable. The A380 is in a class of it's own.
 
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flee
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 2:19 am

Momo1435 wrote:
We know right now that Airbus is reducing the production rate. They would not have done if they would expect enough orders in the near future to maintain the current rate or even increase it. So we can wait until Farnborough to discuss this, but it's most likely will be giving more reasons why Airbus decided this right now.

It's an interesting business case to investigate. Why did the A330 orders suddenly just dry up afters years of tremendous successes.

I think Airbus is just being realistic and don't want to be building white tails. Also, cutting A330 production will free up capacity for an increase in A350 production as the original plan was for the A350 to replace the A330. If the A330 does not get more orders in the next two or three years, Airbus may have to consider shutting down the A330 line. However, with military and freighter orders at stake, they might not want to give up so easily.

A330 orders dried up following a general downturn in widebody orders. Everyone who wanted a widebody has ordered something or other. We may see a recovery in widebody orders beginning this year - so far, only the B787 seems to be winning these orders.
 
2175301
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 3:45 am

lightsaber wrote:
For the record, I cannot understand why the 747 and A380 remain in production. Everything I know about economy of scale falls apart below 25 per year. :(
Lightsaber


The 747 line is profitable at 6 per year; and the planes are priced accordingly. For many years it ran at 12 or less per year. My understanding is that it is not "massively" profitable. That the 737 lines and 767 line makes more $ per square ft (or square meter).

Boeing sees a long term future for the 748F... and as long as the program is profitable... there really is no reason to end it.

I personally believe the only reason that Airbus has not ended the A380 program (or announced its end) is for EGO and Marketing "value." They can claim they build the largest airliner in the world... and feel that the intangible value from that is worth building them at a loss...

I see no other reason. Yes, the line would be expensive to shut down... but, that expense will have to occur at some point (which is projectable to current euro values); and there is no real evidence that there actually will be a larger market for the A380 in the future. The same argument keep getting repeated that were used as part of the initial justification of the program (increased air traffic in the world in the future). The last 15+ years have shown that the answer is not the A380; but more smaller aircraft and upgrading to smaller widebodies in certain cases. Take away the slot restricted major airports and the usefulness of the A380 would drop dramatically.

Have a great day,
 
Buffalomatt1027
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 4:01 am

2175301 wrote:
lightsaber wrote:
For the record, I cannot understand why the 747 and A380 remain in production. Everything I know about economy of scale falls apart below 25 per year. :(
Lightsaber


The 747 line is profitable at 6 per year; and the planes are priced accordingly. For many years it ran at 12 or less per year. My understanding is that it is not "massively" profitable. That the 737 lines and 767 line makes more $ per square ft (or square meter).

Boeing sees a long term future for the 748F... and as long as the program is profitable... there really is no reason to end it.

I personally believe the only reason that Airbus has not ended the A380 program (or announced its end) is for EGO and Marketing "value." They can claim they build the largest airliner in the world... and feel that the intangible value from that is worth building them at a loss...

I see no other reason. Yes, the line would be expensive to shut down... but, that expense will have to occur at some point (which is projectable to current euro values); and there is no real evidence that there actually will be a larger market for the A380 in the future. The same argument keep getting repeated that were used as part of the initial justification of the program (increased air traffic in the world in the future). The last 15+ years have shown that the answer is not the A380; but more smaller aircraft and upgrading to smaller widebodies in certain cases. Take away the slot restricted major airports and the usefulness of the A380 would drop dramatically.

Have a great day,


Agree that EGO is the only reason why the 380 program is still around.
 
trex8
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 4:26 am

50 a year puts them where they were in the early 2000s. I don’t think anyone said they were losing money on the A330 then. Wide body rates of 10/ yr were unheard of a decade ago. They may not be doing as well as they would like or the competition are presently but they are doing just fine.
 
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flee
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 6:38 am

Buffalomatt1027 wrote:
Agree that EGO is the only reason why the 380 program is still around.

Don't agree with this 100% - EK needs the A380 and if Airbus doesn't supply it, the nearest suitable aircraft is the B748. Although it may appear to be purely EGO to A.Net, I am sure Airbus knows that it is also defending its VLC market share...
 
Buffalomatt1027
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 2:25 pm

flee wrote:
Buffalomatt1027 wrote:
Agree that EGO is the only reason why the 380 program is still around.

Don't agree with this 100% - EK needs the A380 and if Airbus doesn't supply it, the nearest suitable aircraft is the B748. Although it may appear to be purely EGO to A.Net, I am sure Airbus knows that it is also defending its VLC market share...


defending the market share ..... is EGO.
 
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flee
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 2:28 pm

Buffalomatt1027 wrote:
flee wrote:
Buffalomatt1027 wrote:
Agree that EGO is the only reason why the 380 program is still around.

Don't agree with this 100% - EK needs the A380 and if Airbus doesn't supply it, the nearest suitable aircraft is the B748. Although it may appear to be purely EGO to A.Net, I am sure Airbus knows that it is also defending its VLC market share...

defending the market share ..... is EGO.

Nope - it is being a competitive player in the market. You cannot give up potential orders without trying to fight for them. That would be lazy!

By your logic, Boeing would also be having a massive EGO too - trying to compete with Airbus so that it can kill off the A330 Neo. However, I do not see it that way - as far as I am concerned, Boeing is trying to kill off the A330Neo because it wants to sell more B787s, not because of EGO.
 
JustSomeDood
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 2:47 pm

flee wrote:
Buffalomatt1027 wrote:
flee wrote:
Don't agree with this 100% - EK needs the A380 and if Airbus doesn't supply it, the nearest suitable aircraft is the B748. Although it may appear to be purely EGO to A.Net, I am sure Airbus knows that it is also defending its VLC market share...

defending the market share ..... is EGO.

Nope - it is being a competitive player in the market. You cannot give up potential orders without trying to fight for them. That would be lazy!

By your logic, Boeing would also be having a massive EGO too - trying to compete with Airbus so that it can kill off the A330 Neo. However, I do not see it that way - as far as I am concerned, Boeing is trying to kill off the A330Neo because it wants to sell more B787s, not because of EGO.


Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...
 
PDPsol
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 4:17 pm

JustSomeDood wrote:
flee wrote:
Buffalomatt1027 wrote:
defending the market share ..... is EGO.

Nope - it is being a competitive player in the market. You cannot give up potential orders without trying to fight for them. That would be lazy!

By your logic, Boeing would also be having a massive EGO too - trying to compete with Airbus so that it can kill off the A330 Neo. However, I do not see it that way - as far as I am concerned, Boeing is trying to kill off the A330Neo because it wants to sell more B787s, not because of EGO.


Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...


By this logic, Airbus is similarly relying on EGO attempting to compete against the Dreamliner. As several have stated, keeping pricing competitive in the most dynamic segment of the wide body aircraft market, the 250-300 passenger segment, is of high strategic value to Airbus. WHY? Principally, real product and price competition erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost. Of course, increasing production volume enhances Boeing's economies of scale and production efficiency. However, if pricing remains at, or too close to, marginal production cost to justify expected capital returns on those investments, then its value will fall over time. Nonetheless, the company's share price has been healthy, currently trading Firm value/LTM EBITDA 15.0x+, with USD 200+ billion Firm value. This compares to Airbus SE's similarly-elevated relative valuation levels, with a very healthy FV/LTM EBITDA 14.9x relative un levered valuation. Both groups operate similar-scale commercial aviation segments, with Airbus reporting EUR 51 billion in FY 2017 commercial aviation segment revenue, and Boeing reporting USD 56 billion during the same FY 2017. However, Boeing's FY 2017 commercial aviation segment operating profitability was USD 5.4 billion, or circa 10%, Airbus realized EUR 3.4 billion, or approximately 6.7%, a materially-lower 330 bps level compared to Boeing's profitability.

All this indicates Airbus is furiously-attempting to enhance its relative profitability, with quite some success over recent years. Its stock price reflects this, increasing 30%+ over the last-twelve-months ("LTM"). I would doubt Airbus is interested in eroding its profitability margins with either further expensive development costs, or unprofitable 'price wars' with Boeing beyond acceptable margins. It does have an interest, however, in applying its A330neo development costs effectively by marketing this model against the Dreamliner. The A330neo is, indeed, competitive with the Dreamliner in that its offers comparable performance levels to the Boeing product at a competitive cost. If the A330neo did not exist in the marketplace, Boeing would certainly attempt to enhance its pricing levels, perhaps closer to the larger-capacity, 350+ passenger B777/A350 type levels. Industry media articles would constantly pitch Boeing's B787 against the A350, not the A330neo; that is a newer development, intensified with the model's 2014 launch. In summary, Airbus is realizing a well-developed investment and commercialization strategy.
 
JustSomeDood
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 5:03 pm

PDPsol wrote:
JustSomeDood wrote:
flee wrote:
Nope - it is being a competitive player in the market. You cannot give up potential orders without trying to fight for them. That would be lazy!

By your logic, Boeing would also be having a massive EGO too - trying to compete with Airbus so that it can kill off the A330 Neo. However, I do not see it that way - as far as I am concerned, Boeing is trying to kill off the A330Neo because it wants to sell more B787s, not because of EGO.


Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...


By this logic, Airbus is similarly relying on EGO attempting to compete against the Dreamliner. As several have stated, keeping pricing competitive in the most dynamic segment of the wide body aircraft market, the 250-300 passenger segment, is of high strategic value to Airbus. WHY? Principally, real product and price competition erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost. Of course, increasing production volume enhances Boeing's economies of scale and production efficiency. However, if pricing remains at, or too close to, marginal production cost to justify expected capital returns on those investments, then its value will fall over time. Nonetheless, the company's share price has been healthy, currently trading Firm value/LTM EBITDA 15.0x+, with USD 200+ billion Firm value. This compares to Airbus SE's similarly-elevated relative valuation levels, with a very healthy FV/LTM EBITDA 14.9x relative un levered valuation. Both groups operate similar-scale commercial aviation segments, with Airbus reporting EUR 51 billion in FY 2017 commercial aviation segment revenue, and Boeing reporting USD 56 billion during the same FY 2017. However, Boeing's FY 2017 commercial aviation segment operating profitability was USD 5.4 billion, or circa 10%, Airbus realized EUR 3.4 billion, or approximately 6.7%, a materially-lower 330 bps level compared to Boeing's profitability.


I fail to see the logical connection between competing in the medium-sized widebody market, which has repeatedly proven to be highly profitable for both OEMs for decades and will likely do so for decades to come, to the VLA market, which has been very much the opposite of profitable for the last 10 years and counting. Again, a purely rational participant would've either shut down the A380 production line years ago, or made major changes in order to make the plane more palatable to the markets, given the large opportunity costs of keeping the A380 line running over the years.

Your talk of 'strategic value' also strikes me as misinformed, Airbus SE, as a public company, should always, always, always, care about maximizing shareholder value above all else. Airbus, and it's shareholders, should rightfully not give one shit about whether "real product and price competition [in the 330neo] erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost", they should give plenty of shits about whether the A330neo's marginal extra sales & profits can cover its own development cost, regardless of what the Dreamliner is doing. There's a good reason that neither A or B introduced new clean-sheet planes as direct competitors to their competitiors (A350 vs 787 & 777, 787 vs A330, A330 vs 767...etc)
 
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adambrau
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 5:17 pm

Geoff1947 wrote:
SC430 wrote:
Boeing could well be delivering more Dreamliners per year than all (3) Airbus WB programs put together.


That’s very necessary for Boeing because the 787 is all they have as a passenger widebody for the next few years.

Geoff



I think it's fair to point out that Boeing is producing 3 versions of the 787, just as Airbus is multiple versions of the A350.
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Planeflyer
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 5:31 pm

PDPsol wrote:
JustSomeDood wrote:
flee wrote:
Nope - it is being a competitive player in the market. You cannot give up potential orders without trying to fight for them. That would be lazy!

By your logic, Boeing would also be having a massive EGO too - trying to compete with Airbus so that it can kill off the A330 Neo. However, I do not see it that way - as far as I am concerned, Boeing is trying to kill off the A330Neo because it wants to sell more B787s, not because of EGO.


Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...


By this logic, Airbus is similarly relying on EGO attempting to compete against the Dreamliner. As several have stated, keeping pricing competitive in the most dynamic segment of the wide body aircraft market, the 250-300 passenger segment, is of high strategic value to Airbus. WHY? Principally, real product and price competition erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost. Of course, increasing production volume enhances Boeing's economies of scale and production efficiency. However, if pricing remains at, or too close to, marginal production cost to justify expected capital returns on those investments, then its value will fall over time. Nonetheless, the company's share price has been healthy, currently trading Firm value/LTM EBITDA 15.0x+, with USD 200+ billion Firm value. This compares to Airbus SE's similarly-elevated relative valuation levels, with a very healthy FV/LTM EBITDA 14.9x relative un levered valuation. Both groups operate similar-scale commercial aviation segments, with Airbus reporting EUR 51 billion in FY 2017 commercial aviation segment revenue, and Boeing reporting USD 56 billion during the same FY 2017. However, Boeing's FY 2017 commercial aviation segment operating profitability was USD 5.4 billion, or circa 10%, Airbus realized EUR 3.4 billion, or approximately 6.7%, a materially-lower 330 bps level compared to Boeing's profitability.

All this indicates Airbus is furiously-attempting to enhance its relative profitability, with quite some success over recent years. Its stock price reflects this, increasing 30%+ over the last-twelve-months ("LTM"). I would doubt Airbus is interested in eroding its profitability margins with either further expensive development costs, or unprofitable 'price wars' with Boeing beyond acceptable margins. It does have an interest, however, in applying its A330neo development costs effectively by marketing this model against the Dreamliner. The A330neo is, indeed, competitive with the Dreamliner in that its offers comparable performance levels to the Boeing product at a competitive cost. If the A330neo did not exist in the marketplace, Boeing would certainly attempt to enhance its pricing levels, perhaps closer to the larger-capacity, 350+ passenger B777/A350 type levels. Industry media articles would constantly pitch Boeing's B787 against the A350, not the A330neo; that is a newer development, intensified with the model's 2014 launch. In summary, Airbus is realizing a well-developed investment and commercialization strategy.



Good analysis, I think we have some posters extrapolating short negative events for the 330 into false long term trends.

Having said that, I don’t expect 330neo sales to be produced at more than 4 a month and would expect production rates to decline into a 2 per month rate 3-5 years out.
 
cledaybuck
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 5:56 pm

flee wrote:
Buffalomatt1027 wrote:
Agree that EGO is the only reason why the 380 program is still around.

Don't agree with this 100% - EK needs the A380 and if Airbus doesn't supply it, the nearest suitable aircraft is the B748. Although it may appear to be purely EGO to A.Net, I am sure Airbus knows that it is also defending its VLC market share...
I think the next suitable aircraft would be the 777x.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
cledaybuck
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 6:00 pm

Planeflyer wrote:
PDPsol wrote:
JustSomeDood wrote:

Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...


By this logic, Airbus is similarly relying on EGO attempting to compete against the Dreamliner. As several have stated, keeping pricing competitive in the most dynamic segment of the wide body aircraft market, the 250-300 passenger segment, is of high strategic value to Airbus. WHY? Principally, real product and price competition erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost. Of course, increasing production volume enhances Boeing's economies of scale and production efficiency. However, if pricing remains at, or too close to, marginal production cost to justify expected capital returns on those investments, then its value will fall over time. Nonetheless, the company's share price has been healthy, currently trading Firm value/LTM EBITDA 15.0x+, with USD 200+ billion Firm value. This compares to Airbus SE's similarly-elevated relative valuation levels, with a very healthy FV/LTM EBITDA 14.9x relative un levered valuation. Both groups operate similar-scale commercial aviation segments, with Airbus reporting EUR 51 billion in FY 2017 commercial aviation segment revenue, and Boeing reporting USD 56 billion during the same FY 2017. However, Boeing's FY 2017 commercial aviation segment operating profitability was USD 5.4 billion, or circa 10%, Airbus realized EUR 3.4 billion, or approximately 6.7%, a materially-lower 330 bps level compared to Boeing's profitability.

All this indicates Airbus is furiously-attempting to enhance its relative profitability, with quite some success over recent years. Its stock price reflects this, increasing 30%+ over the last-twelve-months ("LTM"). I would doubt Airbus is interested in eroding its profitability margins with either further expensive development costs, or unprofitable 'price wars' with Boeing beyond acceptable margins. It does have an interest, however, in applying its A330neo development costs effectively by marketing this model against the Dreamliner. The A330neo is, indeed, competitive with the Dreamliner in that its offers comparable performance levels to the Boeing product at a competitive cost. If the A330neo did not exist in the marketplace, Boeing would certainly attempt to enhance its pricing levels, perhaps closer to the larger-capacity, 350+ passenger B777/A350 type levels. Industry media articles would constantly pitch Boeing's B787 against the A350, not the A330neo; that is a newer development, intensified with the model's 2014 launch. In summary, Airbus is realizing a well-developed investment and commercialization strategy.



Good analysis, I think we have some posters extrapolating short negative events for the 330 into false long term trends.

Having said that, I don’t expect 330neo sales to be produced at more than 4 a month and would expect production rates to decline into a 2 per month rate 3-5 years out.

It is possible we may see rate parity between the 767 and A330. I never would have thought that would be possible.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
CFRPwingALbody
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 7:50 pm

Polot wrote:
CFRPwingALbody wrote:
:idea: Airbus still has 27x A330MRTT and 4x A330F left to deliver. AFAIK especially the MRTT conversion is time consuming. This production rate decrease could very well be caused by a increase of MRTT and Freighter production on the A330 FAL line. The FAL could very well be running at a higher rate than deliveries for about two years time.

It doesn’t take longer to build a MRTT and freighter than a pax A330 on the FAL. The MRTT is built as a green aircraft, then “delivered” to Airbus Military who performs the necessary conversions elsewhere. It doesn’t roll off the FAL as a completed MRTT and delivered straight to the final customer.

I know that the A330MRTTs are build as regular A330-200 and converted in Spain. But the conversion takes a long time. And AFAIK Airbus isn't counting A330-200 delivered to the MRTT conversion program as delivered airplanes. I counted nine A330 frames in the conversion MRTT conversion program. In the MSN1850-1900 range there are another five MRTT's. And most likely this trend of increasing number of A330-200 in the MRTT conversion program means less deliveries on the short term.

I also checked Airbus march O&D file. A330CEO orders left:
17x A330-200 for MRTT conversion program. (Government, Executive or Private jets)
A330-200: 8x Iran Air, 5x JET Airways, 3x IAG, 2x HiFly X Ireland, & 2x Undisclosed
A330-200F: 3x MNG Airlines & 1x Synergy Aerospace Corporation (Avianica)
A330-300: 14x CASC, 9x Hong Kong Airlines, 4x Hong Kong International Aviation Leasing, 1x Egypt Air, 22( - 2)x Undisclosed
So a total of 89 A330CEO with 22 to undisclosed customers, and 8 to Iran Air.
With the large A330NEO orders from Air Asia X, Delta and Iran Air; and many orders to lessors. The delivery rate has to be reduced.

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.
 
Planeflyer
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 9:23 pm

CFRPwingALbody wrote:
Polot wrote:
CFRPwingALbody wrote:
:idea: Airbus still has 27x A330MRTT and 4x A330F left to deliver. AFAIK especially the MRTT conversion is time consuming. This production rate decrease could very well be caused by a increase of MRTT and Freighter production on the A330 FAL line. The FAL could very well be running at a higher rate than deliveries for about two years time.

It doesn’t take longer to build a MRTT and freighter than a pax A330 on the FAL. The MRTT is built as a green aircraft, then “delivered” to Airbus Military who performs the necessary conversions elsewhere. It doesn’t roll off the FAL as a completed MRTT and delivered straight to the final customer.

I know that the A330MRTTs are build as regular A330-200 and converted in Spain. But the conversion takes a long time. And AFAIK Airbus isn't counting A330-200 delivered to the MRTT conversion program as delivered airplanes. I counted nine A330 frames in the conversion MRTT conversion program. In the MSN1850-1900 range there are another five MRTT's. And most likely this trend of increasing number of A330-200 in the MRTT conversion program means less deliveries on the short term.

I also checked Airbus march O&D file. A330CEO orders left:
17x A330-200 for MRTT conversion program. (Government, Executive or Private jets)
A330-200: 8x Iran Air, 5x JET Airways, 3x IAG, 2x HiFly X Ireland, & 2x Undisclosed
A330-200F: 3x MNG Airlines & 1x Synergy Aerospace Corporation (Avianica)
A330-300: 14x CASC, 9x Hong Kong Airlines, 4x Hong Kong International Aviation Leasing, 1x Egypt Air, 22( - 2)x Undisclosed
So a total of 89 A330CEO with 22 to undisclosed customers, and 8 to Iran Air.
With the large A330NEO orders from Air Asia X, Delta and Iran Air; and many orders to lessors. The delivery rate has to be reduced.

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.


Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours
 
CFRPwingALbody
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 9:28 pm

trex8 wrote:
50 a year puts them where they were in the early 2000s. I don’t think anyone said they were losing money on the A330 then. Wide body rates of 10/ yr were unheard of a decade ago. They may not be doing as well as they would like or the competition are presently but they are doing just fine.

You're missing that Airbus produced the A340 on with the same assets. If you add the A330 and A340 deliveries Airbus started delivering >60 wide-bodies in 1999. Around the A340-600/500 introduction, delivery rate dropped slightly below 60 (2001 & 2002).
The last time Airbus delivered less than 50 planes from the A330/A340 FAL was 1998. The last time below 60 was 2002.
 
Planeflyer
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 9:36 pm

Yep AB has gotten a ton of mileage out of the 300/330/340 combination.

They’ve got to do the same w 350 because B is as the top of learning curve w the 787 which will make the 330 less desirable.
 
CFRPwingALbody
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 9:53 pm

Planeflyer wrote:
Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours

The only Boeing planes Lufthansa is operating are the 747-400, 747-8 and as replacement of the 747-400, the 777-9 will be introduced. All other planes are Airbuses. If Lufthansa wants larger planes they could decide to order A350-900s, but I expect a 1:1 A340-300 replacement with A330-900. That's what the A330NEO really is the replacement for the A340-200 and -300. The A350s are the replacement for the A340-500 and -600. For fleet commonality and pilot training Airbuses make a lot more sense then Boeings for Lufthansa.
The fuel prices are increasing again. This makes operations with A340s less economical, thus it gets more likely that airlines want to replace A340s with more efficient Airplanes.
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals. I've written down before that Brexit and engines are holding back Airbus. But if the A330 line is threatened to have to be shut down, Airbus is very likely to pursue this. Possibly even with a generation older engines (lower thrust Trent 7000) so introduction can happen before 2025.
The first move for this was just been made several days ago.
Let's add that this would also be a threat to Boeing freighter new-build monopoly. So may Boeing be warned. :duck: :wave:
 
rbavfan
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 10:15 pm

LAX772LR wrote:
RickNRoll wrote:
LAX772LR wrote:
Losing AA and the surprisingly high-profile HA order, had to sting. :(

HA ordered a plane with a much longer range for a reason. The A330 didn't fit that basic requirement.

:shakehead: Prior to cancellation, it actually did.
The recent 251T uprate option gives the A338 the same range as the A358 proposal.

A358 range - 8200nm
A338 range - 8150nm

And not only that, but according to Leeham, the A338 will also out-distance the 789, given the same payload.
https://leehamnews.com/2018/03/29/is-ai ... 300-seats/

So range can't be the issue, it had to be cost.


That 251t was at an increased price and would not be available for HA's first deliveries. Thats a tough combination choice and sent it to Boeing.
 
amdiesen
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 10:40 pm

CFRPwingALbody makes excellent data supported points:
CFRPwingALbody wrote:
:idea: Airbus still has 27x A330MRTT and 4x A330F left to deliver. AFAIK especially the MRTT conversion is time consuming. This production rate decrease could very well be caused by a increase of MRTT and Freighter production on the A330 FAL line. The FAL could very well be running at a higher rate than deliveries for about two years time. What also stands out, is the fact that Airbus build the A330 completion center in China, but there are no A330NEO orders from China. :banghead: But indeed it's not surprising A330 production drops further. :twocents:

excellent data and perspective:
lightsaber wrote:
To build on Justsimedood's comment:. Cutting the production will add about 10% to the cost of building the aircraft w/nacelles. The engine economy of scale isn't as impacted due to T1000 production. The costs would have gone up 15% or so if it wasn't for part commonality and demand for parts from the in service fleet. Not crippling, but not good. About a 6% increase from the 110 build rate over-all. Maybe only a 2.5% increase from this year. But certainly not helping with the 787 at 3x the rate or 10% to 15% lower overall cost just from economy of scale. For the record, I cannot understand why the 747 and A380 remain in production. Everything I know about economy of scale falls apart below 25 per year. :( Lightsaber

Airbus is rationally responding to a short/medium term environment within the context of its responsibilities to itself and its supplier eco-system. Boeing's adaptive 787 strategy actions are having an impact on its competitor.
re: 'white tails'- Airbus is experiencing 'ntu' risks with HNAs A330s, Qatar's A350s, and Emirates A380s (pls consider the increase in risk before allowing your intellect to trigger a defense of these carriers)
flee wrote:
Momo1435 wrote:
We know right now that Airbus is reducing the production rate. They would not have done if they would expect enough orders in the near future to maintain the current rate or even increase it...

I think Airbus is just being realistic and don't want to be building white tails. Also, cutting A330 production will free up capacity for an increase in A350 production as the original plan was for the A350 to replace the A330...However, with military and freighter orders at stake, they might not want to give up so easily... only the B787 seems to be winning these orders.

+1
Planeflyer wrote:
Good analysis, I think we have some posters extrapolating short negative events for the 330 into false long term trends.

respecting the data filled content and intelligent conclusions of CFRPwingALbody's post:
CFRPwingALbody wrote:
..^search post 66^.. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.

for your consideration, Turkish may be the key consumer. The A339 is an ideal cycle replacement for their route network. Lufthansa tends to: respect technological evolution, longer term thinking; as they fully intend to use their purchase throughout its life-cycle.
....

The Anet board might consider that rational Airlines may view the A330neo program as having material uncertainties affecting any 25 year purchase at this moment in time.
-One, RR needs to get its house in order. As the Trent 7000 is the sole engine supplier, currently facing a range of challenges from grounded or impaired frames as a direct result of their product to brexit uncertainties, what are the reliability and cost factors?
-Two, The A339 is a paper/test airplane. What are reliable, good faith estimates of cost over time under a variety of external conditions compared to other choices?
Fabrice likes to quote "we need to sharpen our pencils"; you would need an analyst that understands fuzzy math to prognosticate any hard numbers for an airplane purchase that is expected to make revenue flights through 2045 from an airline/engine manufacturer that produced the A346.

hypothesis:
-Aircraft manufacturing history will view the A339 passenger and A339 package freighter as industry successes.
-Airbus's strategic choice of evolving the highly successful A330 is influenced by their observing the mis-steps of Boeing in handling the 767-->787 transition.
-Time will provide clarity by addressing uncertainties. -The A332MRTT is an excellent boutique platform. By and large the Anet community is ignorant of MRTT demand.
-The risks of building, or being left holding ntu, white tails have been mis-calculated by Airbus. Contractual language is being retooled for future agreements.
-Airbus is unlikely to be overly concerned about this Anet kerfuffle
-The A332F & A333P2F has the under-appreciated advantage of being supported by multiple engine suppliers. There is a challenge to giving your engine supplier a position of strength over a sub-fleet.
puzzling over:
1) proper amortization of long-lived assets where costs and revenue are complex, in a technologically evolving environment.
2) the economics of gate real estate
 
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Momo1435
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 10:52 pm

CFRPwingALbody wrote:
Planeflyer wrote:
Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours

The only Boeing planes Lufthansa is operating are the 747-400, 747-8 and as replacement of the 747-400, the 777-9 will be introduced. All other planes are Airbuses. If Lufthansa wants larger planes they could decide to order A350-900s, but I expect a 1:1 A340-300 replacement with A330-900. That's what the A330NEO really is the replacement for the A340-200 and -300. The A350s are the replacement for the A340-500 and -600. For fleet commonality and pilot training Airbuses make a lot more sense then Boeings for Lufthansa.
The fuel prices are increasing again. This makes operations with A340s less economical, thus it gets more likely that airlines want to replace A340s with more efficient Airplanes.
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals. I've written down before that Brexit and engines are holding back Airbus. But if the A330 line is threatened to have to be shut down, Airbus is very likely to pursue this. Possibly even with a generation older engines (lower thrust Trent 7000) so introduction can happen before 2025.
The first move for this was just been made several days ago.
Let's add that this would also be a threat to Boeing freighter new-build monopoly. So may Boeing be warned. :duck: :wave:
With your arguments it would make more sense for LH to just order more A359s, something they will most likely be doing. And with a just a 'small' Boeing fleet it could also make sense to order the 787-10, making better use of economies of scale for their Boeing fleet.

The main issue with the A330neo is the competition with the A350 and 787. Most of the large A330ceo operators have also ordered the A350 and/or the 787. Making it from the perspective of a lot of reasons that are given why airlines should order the neo more logical to just order the A350 or 787 instead. Making the A330neo just a niche aircraft (just like how people say the same for the 777X). The Airbus sales team will be very busy when their predicted A330ceo replacement cycle starts from 2020 and onwards.
 
Planeflyer
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Re: Airbus Cuts Production Plans for A330 Jet

Sat Apr 28, 2018 11:33 pm

Momo1435 wrote:
CFRPwingALbody wrote:
Planeflyer wrote:
Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours

The only Boeing planes Lufthansa is operating are the 747-400, 747-8 and as replacement of the 747-400, the 777-9 will be introduced. All other planes are Airbuses. If Lufthansa wants larger planes they could decide to order A350-900s, but I expect a 1:1 A340-300 replacement with A330-900. That's what the A330NEO really is the replacement for the A340-200 and -300. The A350s are the replacement for the A340-500 and -600. For fleet commonality and pilot training Airbuses make a lot more sense then Boeings for Lufthansa.
The fuel prices are increasing again. This makes operations with A340s less economical, thus it gets more likely that airlines want to replace A340s with more efficient Airplanes.
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals. I've written down before that Brexit and engines are holding back Airbus. But if the A330 line is threatened to have to be shut down, Airbus is very likely to pursue this. Possibly even with a generation older engines (lower thrust Trent 7000) so introduction can happen before 2025.
The first move for this was just been made several days ago.
Let's add that this would also be a threat to Boeing freighter new-build monopoly. So may Boeing be warned. :duck: :wave:
With your arguments it would make more sense for LH to just order more A359s, something they will most likely be doing. And with a just a 'small' Boeing fleet it could also make sense to order the 787-10, making better use of economies of scale for their Boeing fleet.

The main issue with the A330neo is the competition with the A350 and 787. Most of the large A330ceo operators have also ordered the A350 and/or the 787. Making it from the perspective of a lot of reasons that are given why airlines should order the neo more logical to just order the A350 or 787 instead. Making the A330neo just a niche aircraft (just like how people say the same for the 777X). The Airbus sales team will be very busy when their predicted A330ceo replacement cycle starts from 2020 and onwards.


I think a 359/787-10 a likely outcome at LH.

I could also see a 797 at LH if it is launched.

LH chooses the right aircraft for the mission. Sure they may give last look to the home team so the selections they make will be telling.
 
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par13del
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 12:03 am

CFRPwingALbody wrote:
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals.

So to be clear, Airbus is going to build its MOM which will have better economics than the Boeing 797 which has not yet been authorized by the board, design nor yet finalized etc etc etc......Ok
 
brindabella
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 1:44 am

par13del wrote:
CFRPwingALbody wrote:
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals.

So to be clear, Airbus is going to build its MOM which will have better economics than the Boeing 797 which has not yet been authorized by the board, design nor yet finalized etc etc etc......Ok


Yep, the AB MOM which will be based on the heavy old A330 frame "will have better economics than the Boeing 797".

Why?

Well, because it just will, silly!

;)

cheers

(Ooops - better be careful - amdiessen will start lecturing me about my intellect as above!
:tapedshut: :cry2:
Billy
 
amdiesen
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 5:10 am

brindabella wrote:

Yep, the AB MOM which will be based on the heavy old A330 frame "will have better economics than the Boeing 797".

Why? Well, because it just will, silly! ;)

cheers

(Ooops - better be careful - amdiessen will start lecturing me about my intellect as above!
:tapedshut: :cry2:


~200 smileys, where is the 'tip-hat' or 'polite bow in respect',....
puzzling over:
1) proper amortization of long-lived assets where costs and revenue are complex, in a technologically evolving environment.
2) the economics of gate real estate
 
astuteman
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 7:21 am

CFRPwingALbody wrote:

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.


I think you have missed another point affecting the A330NEO at the moment.

As it runs into the transition from the CEO, and at the same time suffers delays, as a number of posters have pointed out, financing might be a key differentiator between the A330NEO and 787.
I think that in the usual run of things, Airbus would not blink at providing the finance necessary to ensure the stability of the programme.
However, they have experienced the double whammy of inventory build up, but slow deliveries absolutely hammering cashflow, and also the export bank facilities usually available to them were withdrawn as a result of the bribes scandal.

The export credit is in the process of being restored.
Airbus predict c. E2Bn positive cashflow by year end as production hold ups unwind.

I pretty strongly believe that given financial stability the A330NEO will be just fine.
Why?
Typically, when we have seen one product totally dominate another, the operating difference has been close to double-digit.
As an example, the 777W had a fuel burn advantage approaching 10% when it nailed the lid on the coffin of the A340NG

I accept that the A330NEO doesn't really bring anything to the table that the 787 doesn't, but that of itself is not a reason for failure.
The A320 and 737-8 have slight differences, but only slight, and both do well.

The A330-900 has at worst a 1-3% operating cost disadvantage from the 787-9.
The Leeham analysis done to support the Delta purchase reinforces this
Yes it's an older design with older aerodynamics and a slightly heavier airframe.
But Airbus's expedient solution was to add 4m to the wingspan and give it a better A/R wing.
In 251t guise, it is some 450Nm behind the 787-9 in range.
Given how the original A330-300 sold with 1000Nm less range, I struggle to see this as a differentiator that kills the programme.
It may matter for some airlines.

So I think the A330NEO will be around for a good while, in -900 form at least.
I think Airbus will have to suck up low margins on it for a few years and underpin the financing, and really nail the cost base.
Not easy at 5 per month

Rgds
 
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seahawk
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 8:18 am

Planeflyer wrote:
CFRPwingALbody wrote:
Polot wrote:
It doesn’t take longer to build a MRTT and freighter than a pax A330 on the FAL. The MRTT is built as a green aircraft, then “delivered” to Airbus Military who performs the necessary conversions elsewhere. It doesn’t roll off the FAL as a completed MRTT and delivered straight to the final customer.

I know that the A330MRTTs are build as regular A330-200 and converted in Spain. But the conversion takes a long time. And AFAIK Airbus isn't counting A330-200 delivered to the MRTT conversion program as delivered airplanes. I counted nine A330 frames in the conversion MRTT conversion program. In the MSN1850-1900 range there are another five MRTT's. And most likely this trend of increasing number of A330-200 in the MRTT conversion program means less deliveries on the short term.

I also checked Airbus march O&D file. A330CEO orders left:
17x A330-200 for MRTT conversion program. (Government, Executive or Private jets)
A330-200: 8x Iran Air, 5x JET Airways, 3x IAG, 2x HiFly X Ireland, & 2x Undisclosed
A330-200F: 3x MNG Airlines & 1x Synergy Aerospace Corporation (Avianica)
A330-300: 14x CASC, 9x Hong Kong Airlines, 4x Hong Kong International Aviation Leasing, 1x Egypt Air, 22( - 2)x Undisclosed
So a total of 89 A330CEO with 22 to undisclosed customers, and 8 to Iran Air.
With the large A330NEO orders from Air Asia X, Delta and Iran Air; and many orders to lessors. The delivery rate has to be reduced.

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.


Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours


Absolutely. The 787 will be ordered soon, as they have already ruled out the A330NEO and the 767, early 777, A343s and early A330 need to be replaced within the group.
 
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MrHMSH
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 9:56 am

seahawk wrote:
Planeflyer wrote:
CFRPwingALbody wrote:
I know that the A330MRTTs are build as regular A330-200 and converted in Spain. But the conversion takes a long time. And AFAIK Airbus isn't counting A330-200 delivered to the MRTT conversion program as delivered airplanes. I counted nine A330 frames in the conversion MRTT conversion program. In the MSN1850-1900 range there are another five MRTT's. And most likely this trend of increasing number of A330-200 in the MRTT conversion program means less deliveries on the short term.

I also checked Airbus march O&D file. A330CEO orders left:
17x A330-200 for MRTT conversion program. (Government, Executive or Private jets)
A330-200: 8x Iran Air, 5x JET Airways, 3x IAG, 2x HiFly X Ireland, & 2x Undisclosed
A330-200F: 3x MNG Airlines & 1x Synergy Aerospace Corporation (Avianica)
A330-300: 14x CASC, 9x Hong Kong Airlines, 4x Hong Kong International Aviation Leasing, 1x Egypt Air, 22( - 2)x Undisclosed
So a total of 89 A330CEO with 22 to undisclosed customers, and 8 to Iran Air.
With the large A330NEO orders from Air Asia X, Delta and Iran Air; and many orders to lessors. The delivery rate has to be reduced.

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.


Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours


Absolutely. The 787 will be ordered soon, as they have already ruled out the A330NEO and the 767, early 777, A343s and early A330 need to be replaced within the group.


When did LH group rule out the A330neo?
 
brindabella
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 9:56 am

amdiesen wrote:
brindabella wrote:

Yep, the AB MOM which will be based on the heavy old A330 frame "will have better economics than the Boeing 797".

Why? Well, because it just will, silly! ;)

cheers

(Ooops - better be careful - amdiesen will start lecturing me about my intellect as above!
:tapedshut: :cry2:


~200 smileys, where is the 'tip-hat' or 'polite bow in respect',....


Gracefully done - I'm not so good on the bows but a h/t is certainly in order! :D

cheers
Billy
 
billreid
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 11:56 am

I just flew HEL-ICN r/t on a Finnair A350. Great airplane, if I never see another A330 (any model) and get A350's instead I will be a happy camper. From a PAX perspective both the B787 and the A350 make the A330 feel like an A300 after the B777 came out. As I have said a thousand times kill the A330 and push the A350.
Some people don't get it. Business is about making MONEY!
 
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flee
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 12:08 pm

billreid wrote:
As I have said a thousand times kill the A330 and push the A350.

I think Airbus will do that in due course. Currently, Airbus is unable to build the A350 as cheaply as the A330 - so to cease A330 production would be premature. Once the ramp up of the A350 has stabilised, Airbus will look at it again.

The A330 Neo will feature a new A350 inspired Airspace cabin - so it will not the the same as that of the A330 Ceo.
 
SC430
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 12:35 pm

flee wrote:
billreid wrote:
As I have said a thousand times kill the A330 and push the A350.

I think Airbus will do that in due course. Currently, Airbus is unable to build the A350 as cheaply as the A330 - so to cease A330 production would be premature. Once the ramp up of the A350 has stabilised, Airbus will look at it again.

The A330 Neo will feature a new A350 inspired Airspace cabin - so it will not the the same as that of the A330 Ceo.


So you think "mood lighting" will make a big difference?
 
PDPsol
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 2:33 pm

JustSomeDood wrote:
PDPsol wrote:
JustSomeDood wrote:

Defending market share, for a market that has been clearly unprofitable for all the incumbents involved for over a decade....is many things, but it very much doesn't fit the mould of economic rationality. At this current juncture, the A380 is the only pax VLA that's being seriously marketed and it's still fighting to break-even production wise...


By this logic, Airbus is similarly relying on EGO attempting to compete against the Dreamliner. As several have stated, keeping pricing competitive in the most dynamic segment of the wide body aircraft market, the 250-300 passenger segment, is of high strategic value to Airbus. WHY? Principally, real product and price competition erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost. Of course, increasing production volume enhances Boeing's economies of scale and production efficiency. However, if pricing remains at, or too close to, marginal production cost to justify expected capital returns on those investments, then its value will fall over time. Nonetheless, the company's share price has been healthy, currently trading Firm value/LTM EBITDA 15.0x+, with USD 200+ billion Firm value. This compares to Airbus SE's similarly-elevated relative valuation levels, with a very healthy FV/LTM EBITDA 14.9x relative un levered valuation. Both groups operate similar-scale commercial aviation segments, with Airbus reporting EUR 51 billion in FY 2017 commercial aviation segment revenue, and Boeing reporting USD 56 billion during the same FY 2017. However, Boeing's FY 2017 commercial aviation segment operating profitability was USD 5.4 billion, or circa 10%, Airbus realized EUR 3.4 billion, or approximately 6.7%, a materially-lower 330 bps level compared to Boeing's profitability.


I fail to see the logical connection between competing in the medium-sized widebody market, which has repeatedly proven to be highly profitable for both OEMs for decades and will likely do so for decades to come, to the VLA market, which has been very much the opposite of profitable for the last 10 years and counting. Again, a purely rational participant would've either shut down the A380 production line years ago, or made major changes in order to make the plane more palatable to the markets, given the large opportunity costs of keeping the A380 line running over the years.

Your talk of 'strategic value' also strikes me as misinformed, Airbus SE, as a public company, should always, always, always, care about maximizing shareholder value above all else. Airbus, and it's shareholders, should rightfully not give one shit about whether "real product and price competition [in the 330neo] erodes Boeing's investment returns to shareholders, impairing the value of its multi-USD-billion capitalized development cost", they should give plenty of shits about whether the A330neo's marginal extra sales & profits can cover its own development cost, regardless of what the Dreamliner is doing. There's a good reason that neither A or B introduced new clean-sheet planes as direct competitors to their competitiors (A350 vs 787 & 777, 787 vs A330, A330 vs 767...etc)


Before accusing others of being 'misinformed', perhaps you should read their posts. All commercial enterprises, including Boeing and Airbus, exist to maximize their value, and enhance the wealth of their owners, or shareholders in the case of corporations. Publicly-traded corporations have their equity priced every trading day, with valuation open for all to see. Both Airbus and Boeing trade at similar, very elevated, relative valuation levels, approximately 15.0x LTM EBITDA, quite high, indeed. All Airbus decisions are made to maximize its stock price and valuation. The same logic was applied when making the decision to launch the A330neo, and then now to reduce the A330 FAL to a lower, 50-unit annual production level.

Airbus is maximizing its valuation by selling its A330neo at prices exceeding its marginal production costs + amortized development costs. By doing so, it also saps its sole competitor in the global wide body aircraft market from exercising monopolistic pricing power. The point is Airbus would never be able to do this unless the A330neo were actually 'competitive' with the Dreamliner. In other words, unless Airbus offered a model with comparable operating CASM/CASK, comparable range, comparable comfort and flexibility, and comparable acquisition costs, let alone passenger capacity, then Boeing would have NO competition. However, the A330neo offers all these performance characteristics, without the burden of a mega-multi-USD-billion capitalized development cost balance to amortize over the life of the program.

Will it be difficult to compete with Boeing on acquisition price if the A330 FAL produces 50 annual units vs. 150+ annual units with the B787 FALs in Washington state and S. Carolina? Probably, considering the advantage of a 3x production rate. However, as has been stated here, the A330 FAL has been in production for, well, forever, so Airbus must know a thing-or-two about efficiency and product pricing. The plan may be to increase production on the A330 FAL to a circa 70-80 annual production level, once the model receives several 'bulk orders' for the model from large Airbus operators over the next several years. Posters appear to forget the A330neo is still in certification testing, it has yet to be delivered.
 
WIederling
Posts: 9462
Joined: Sun Sep 13, 2015 2:15 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 2:37 pm

SC430 wrote:
flee wrote:
billreid wrote:
As I have said a thousand times kill the A330 and push the A350.

I think Airbus will do that in due course. Currently, Airbus is unable to build the A350 as cheaply as the A330 - so to cease A330 production would be premature. Once the ramp up of the A350 has stabilised, Airbus will look at it again.

The A330 Neo will feature a new A350 inspired Airspace cabin - so it will not the the same as that of the A330 Ceo.


So you think "mood lighting" will make a big difference?


Ask around ( or go back in this sites posting history ;-). It did for the 787. Just like all the other super gimmicks
( Then: the A333/A339 is how many quantum steps heavier than the 789 ?)
Last edited by WIederling on Sun Apr 29, 2018 2:37 pm, edited 1 time in total.
Murphy is an optimist
 
Swadian
Posts: 562
Joined: Sun Sep 11, 2016 4:56 am

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 3:51 pm

CFRPwingALbody wrote:
Planeflyer wrote:
Id be surprised if LH does not go for the 787-10. They have the traffic to make use of the extra seats and have many routs that are between 7-11 hours

The only Boeing planes Lufthansa is operating are the 747-400, 747-8 and as replacement of the 747-400, the 777-9 will be introduced. All other planes are Airbuses. If Lufthansa wants larger planes they could decide to order A350-900s, but I expect a 1:1 A340-300 replacement with A330-900. That's what the A330NEO really is the replacement for the A340-200 and -300. The A350s are the replacement for the A340-500 and -600. For fleet commonality and pilot training Airbuses make a lot more sense then Boeings for Lufthansa.
The fuel prices are increasing again. This makes operations with A340s less economical, thus it gets more likely that airlines want to replace A340s with more efficient Airplanes.
In my opinion Boeing should watch out. If the A330NEO gets squeezed to much, Airbus could decide to improve the A330NEO and develop a real replacement for the A330-200 and A330-300 and possibly also A300. This is a MOM that would have beter economics that Boeings 797 proposals. I've written down before that Brexit and engines are holding back Airbus. But if the A330 line is threatened to have to be shut down, Airbus is very likely to pursue this. Possibly even with a generation older engines (lower thrust Trent 7000) so introduction can happen before 2025.
The first move for this was just been made several days ago.
Let's add that this would also be a threat to Boeing freighter new-build monopoly. So may Boeing be warned. :duck: :wave:


Lufthansa already operates A359 and their subsidiaries LX and OS operate 777 and 767. Either way, I would expect LH to order more A359 rather than A339.

FatCat wrote:
Fleet Commonality has to be an important factor - having, I say, 300 pilots with A330 Type Rating and don't have to pay them another type rating, i.e. for the 787, can save mucho dinero


OTOH, Chinese airlines also have lots of 787s.
 
WIederling
Posts: 9462
Joined: Sun Sep 13, 2015 2:15 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 3:58 pm

Swadian wrote:
OTOH, Chinese airlines also have lots of 787s.


Setting up a local completion line for the A330 doesn't really speak for the 787, does it?
Murphy is an optimist
 
BHXLOVER
Posts: 220
Joined: Mon Feb 23, 2015 2:20 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 4:30 pm

seahawk wrote:
The beginning of the end. With such a low production rate, they can not compete with the 787 on price and this weakens the weak position even further.


What about the 100's of 330ceo's that are flying around and not yet due for replacement? As pointed out, fleet commonality and type rating are important cost savings.

Anyway, I hate this A v B stuff on here. Fanboyism is killing this place.
 
JAAlbert
Posts: 1980
Joined: Tue Jan 31, 2006 12:43 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 5:56 pm

Arion640 wrote:
Only 50/year....that's still a fair few jets. Look at A380 production ...


I agree - 50 widebody jets a year isn't shabby. And six years worth of production left. This jet is fine for the time being.

I also don't think the HA turnaround is all that significant. HA's requirements were such that Airbus didn't have the best jet for its needs.
 
Eyad89
Posts: 664
Joined: Fri Sep 02, 2016 10:47 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 6:38 pm

Some folks are acting as if economies of scale is the only factor that determines the cost of building two completely different products.

Economies of scale says that producing 14 B787 per month costs less per unit than producing 10 B787 per month. It tells you nothing about the costs of producing 4 A330s per month compared to that.

That should not form a basis for comparison when trying to figure out which one costs less overall. Economies of scale is just a tiny factor that determines cost per unit, not the whole story.
 
Planeflyer
Posts: 1528
Joined: Fri Mar 14, 2014 3:49 am

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 6:49 pm

This is a real question because I really don’t know but if anybody has real info on the relative cost of using automatic tape machines and curing equipment vs the traditioal fuselage assembly methods(both for metal and composites) it would make for a productive discussion.
 
JayinKitsap
Posts: 2299
Joined: Sat Nov 26, 2005 9:55 am

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 7:45 pm

astuteman wrote:
CFRPwingALbody wrote:

I think there were three things hampering A330NEO sales:
1) Low fuel prices, thus no incentive to replace less efficient aircraft.
2) Engine trouble with the related RR Trent 1000. AFAIK, the Trent 7000 is a derivative of the Trent 1000 TEN. (knok on bare wood, no problems with these engines jet.
3) Airbus sales team reorganised last year, and the head of sales retired.
Besides Boeing is fiercely trying to push the A330 out of the market. (with 787 ramp-up and sales companes and speculation about the MOM)

On the bright side many loyal Airbus clients haven't ordered jet. Especially Lufthansa is likely to order A330-900s to replace the A340-300s. They haven't placed replacement orders for their A340-300 AFAIK.


I think you have missed another point affecting the A330NEO at the moment.

As it runs into the transition from the CEO, and at the same time suffers delays, as a number of posters have pointed out, financing might be a key differentiator between the A330NEO and 787.
I think that in the usual run of things, Airbus would not blink at providing the finance necessary to ensure the stability of the programme.
However, they have experienced the double whammy of inventory build up, but slow deliveries absolutely hammering cashflow, and also the export bank facilities usually available to them were withdrawn as a result of the bribes scandal.

The export credit is in the process of being restored.
Airbus predict c. E2Bn positive cashflow by year end as production hold ups unwind.

I pretty strongly believe that given financial stability the A330NEO will be just fine.
Why?
Typically, when we have seen one product totally dominate another, the operating difference has been close to double-digit.
As an example, the 777W had a fuel burn advantage approaching 10% when it nailed the lid on the coffin of the A340NG

I accept that the A330NEO doesn't really bring anything to the table that the 787 doesn't, but that of itself is not a reason for failure.
The A320 and 737-8 have slight differences, but only slight, and both do well.

The A330-900 has at worst a 1-3% operating cost disadvantage from the 787-9.
The Leeham analysis done to support the Delta purchase reinforces this
Yes it's an older design with older aerodynamics and a slightly heavier airframe.
But Airbus's expedient solution was to add 4m to the wingspan and give it a better A/R wing.
In 251t guise, it is some 450Nm behind the 787-9 in range.
Given how the original A330-300 sold with 1000Nm less range, I struggle to see this as a differentiator that kills the programme.
It may matter for some airlines.

So I think the A330NEO will be around for a good while, in -900 form at least.
I think Airbus will have to suck up low margins on it for a few years and underpin the financing, and really nail the cost base.
Not easy at 5 per month

Rgds


Great points. Two other factors are:
1. The dollar is at .82 to the Euro now vs .90's for the 3 years before. Yes, both A & B have blended supplies priced in $ & E but A is probably only 1/3 $ while B is 2/3 $. But this shift may give B a 5% advantage in the exchange rate difference in their price.
2. The new US tax law could be providing a 2 to 3% advantage in pricing.

So nearly 10 factors are running in slight favor against the A339 & A338. But nearly all of those factors can swing back the A339 way.

So history will show that the A330 is not doomed, it will certainly have good and great years ahead. Look at the 767, it has been pronounced dead and buried at least 5 times in 20 years, but it just had a production boost announced.

I think the biggest thing right now for the A330 neo is the residual value concern 10 years from delivery. Some further orders from a blue chip will change that.
 
CFRPwingALbody
Posts: 379
Joined: Thu Oct 19, 2017 8:13 pm

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 8:15 pm

Another :idea: , could this just be a production slow down for one or two years (2019 and ?2020?)!?
Airbus is going to introduce the 251mT MTOW A330NEO in 2020. The A330NEO produced in 2018 and 2019 are 242mT MTOW. Possibly there is some more to the MTOW increase that has been released jet.
For the A330MOM I was referring to lower operating cost including plane financing, and including higher freight revenues. The 797/Boeing MOM would have lower operating cost when plane financing is ignored.

For economies of scale, I think the story is much more complicated than many state here. AFAIK Boeing has duplicated all 787 production assets. A stupid example:
Let's assume the winding proces of a fuselage segment takes five days, counting 30 days per month, one winding machine could produce six fuselage segments per month. If two machines are available these can produce 12 segments per month. Now there are two ways to increase output above 12. Adding a third winding machine or decreasing production time, both will require investments. A faster production proces reduces fixed cost per unit, a additional line will cause fixed cost to increase.
AFAIK the same is true for conventional production assets. It could also be the case that Airbus can shut down half of their production assets when they decrease production to 50/year. This could cause the economies of scale to increase. Or fixed cost per unit to decrease.

I think the most important for low production cost is to use production assets at their optimum point.
Boeing had to divert billions of production cost because they didn't use their production assets optimally. Most likely the rate 14 is the optimum point for the two Boeing 787 production lines (2x rate7).
The A330 line had reached a production rate record of 108 deliveries annually. This is also using two sets of tooling in one FAL facility. Possibly reducing delivery rate to 50/year could happen on one set of tooling. I don't know how the A330 sub-assemblies are build.
Possibly the A330NEO MTOW bump require a major change in production strategy, a lower production rate in 2019 could provide time to change the production proces.
The A350 FAL also contains two sets of tooling. Again I don't know the sub-assembly production proces. Is rate 10 the maximum, or is rate 13/14 the maximum. (AKA rate 14 with several days down time per year = rate 13) I don't know. :confused:

If demand for the A330NEO remains to be low (I don't expect this), Airbus could use the A330MOM to optimally use the A330/A340 production assets. AFAIK Boeing requires another production line for their MOM, thus that would be a expansive project. That's why I expect the A330MOM to have beter economics (including plane finance) than a Boeing 797 MOM. :white:
I'm curious for the outcome of the Farnborough Airshow, I expect we'll know what is happening afterwards.

I most likely come forward as a Airbus fanboy, but I think competition in the aviation market is far beter than a monopoly in one segment of the market. If Airbus has to shut down the A330NEO line, Boeing will increase the prices of the 787. This would cause highter ticket prices, leading to a lower demand. :roll: I'm oversimplifying thing here, but this is why I hope Airbus will stay competitive in the widebody market, and Boeing in the narrow-body market. :twocents:
 
JayinKitsap
Posts: 2299
Joined: Sat Nov 26, 2005 9:55 am

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 8:32 pm

Everett has produced as many as 9/mo on the 787, typically is running at around 7-8/mo. Charleston is now near 5-6/mo. The month total now is about 11 to 12.

https://docs.google.com/spreadsheets/d/ ... d=29833794

It is likely that when 14 a month it will be 8 & 6. I think the limit is probably 8 per line for efficient production.
 
Planeflyer
Posts: 1528
Joined: Fri Mar 14, 2014 3:49 am

Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 10:19 pm

CFRPwingALbody wrote:
Another :idea: , could this just be a production slow down for one or two years (2019 and ?2020?)!?
Airbus is going to introduce the 251mT MTOW A330NEO in 2020. The A330NEO produced in 2018 and 2019 are 242mT MTOW. Possibly there is some more to the MTOW increase that has been released jet.
For the A330MOM I was referring to lower operating cost including plane financing, and including higher freight revenues. The 797/Boeing MOM would have lower operating cost when plane financing is ignored.

For economies of scale, I think the story is much more complicated than many state here. AFAIK Boeing has duplicated all 787 production assets. A stupid example:
Let's assume the winding proces of a fuselage segment takes five days, counting 30 days per month, one winding machine could produce six fuselage segments per month. If two machines are available these can produce 12 segments per month. Now there are two ways to increase output above 12. Adding a third winding machine or decreasing production time, both will require investments. A faster production proces reduces fixed cost per unit, a additional line will cause fixed cost to increase.
AFAIK the same is true for conventional production assets. It could also be the case that Airbus can shut down half of their production assets when they decrease production to 50/year. This could cause the economies of scale to increase. Or fixed cost per unit to decrease.

I think the most important for low production cost is to use production assets at their optimum point.
Boeing had to divert billions of production cost because they didn't use their production assets optimally. Most likely the rate 14 is the optimum point for the two Boeing 787 production lines (2x rate7).
The A330 line had reached a production rate record of 108 deliveries annually. This is also using two sets of tooling in one FAL facility. Possibly reducing delivery rate to 50/year could happen on one set of tooling. I don't know how the A330 sub-assemblies are build.
Possibly the A330NEO MTOW bump require a major change in production strategy, a lower production rate in 2019 could provide time to change the production proces.
The A350 FAL also contains two sets of tooling. Again I don't know the sub-assembly production proces. Is rate 10 the maximum, or is rate 13/14 the maximum. (AKA rate 14 with several days down time per year = rate 13) I don't know. :confused:

If demand for the A330NEO remains to be low (I don't expect this), Airbus could use the A330MOM to optimally use the A330/A340 production assets. AFAIK Boeing requires another production line for their MOM, thus that would be a expansive project. That's why I expect the A330MOM to have beter economics (including plane finance) than a Boeing 797 MOM. :white:
I'm curious for the outcome of the Farnborough Airshow, I expect we'll know what is happening afterwards.

I most likely come forward as a Airbus fanboy, but I think competition in the aviation market is far beter than a monopoly in one segment of the market. If Airbus has to shut down the A330NEO line, Boeing will increase the prices of the 787. This would cause highter ticket prices, leading to a lower demand. :roll: I'm oversimplifying thing here, but this is why I hope Airbus will stay competitive in the widebody market, and Boeing in the narrow-body market. :twocents:


Good input. Fanboys are not the problem as long as they bring some content. Keep it coming!
 
A320FlyGuy
Posts: 285
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Re: Airbus Cuts Production Plans for A330 Jet

Sun Apr 29, 2018 11:39 pm

One thing people tend to forget about the A330 line - a lot of the tooling was long ago paid for and has been amortized. Don't forget - the A330 uses the A300 fuselage. Much of the tooling on the line is the same tooling that was used to build A300 fuselage components many years ago. So that reduced the costs. A330/A340 wing design was common to both models and again, the costs were amortized early on in both programs. So now you have 2 major costs that are not factored into the price. Now, look at the avionics platform - that's an outgrowth of the A320. So aside from cabin design changes and the incremental changes that always happen over time, you've got an aircraft that isn't actually "all-new" and wasn't all new at launch in the 1980s - the A330 is and has always been a derivative that has borrowed from other programs. So Airbus can afford a production cut without taking a huge hit to the bottom line. Also, Airbus has a rather interesting method of accounting for its commercial programs that are almost byzantine in complexity. In short, I think the people in Toulouse who are paid far more than those of us speculating on this forum know what they are doing.
My other car is an A320-200
 
Planeflyer
Posts: 1528
Joined: Fri Mar 14, 2014 3:49 am

Re: Airbus Cuts Production Plans for A330 Jet

Mon Apr 30, 2018 12:12 am

As an investor in AB, Everything up to Byzantine sounded good.

Byzantine can mean many things but efficient is not on the list. I look at the low gross margins reported by AB and I know I’m missing something.

Either the 320 is not the profit machinecwe think it is, the 380 is worse than we know or the 350 is not moving down the learning curve as fast as we hoped.

Whatever the reasons I’m hoping for improvement. Even a few margin points of improvement would really help the business.
 
User avatar
par13del
Posts: 10406
Joined: Sun Dec 18, 2005 9:14 pm

Re: Airbus Cuts Production Plans for A330 Jet

Mon Apr 30, 2018 12:24 am

JayinKitsap wrote:
Great points. Two other factors are:
1. The dollar is at .82 to the Euro now vs .90's for the 3 years before. Yes, both A & B have blended supplies priced in $ & E but A is probably only 1/3 $ while B is 2/3 $. But this shift may give B a 5% advantage in the exchange rate difference in their price.
2. The new US tax law could be providing a 2 to 3% advantage in pricing.

So help me out with your two points:
1. So the massive amount of US parts that we were told about in the famous tanker and potential Air Force One a/c threads is just 1/3?

2. The Trump Tax breaks do not apply to any Airbus production / products finalized in the USA?
 
SC430
Posts: 190
Joined: Tue Dec 26, 2017 11:45 pm

Re: Airbus Cuts Production Plans for A330 Jet

Mon Apr 30, 2018 2:57 am

A320FlyGuy wrote:
One thing people tend to forget about the A330 line - a lot of the tooling was long ago paid for and has been amortized. Don't forget - the A330 uses the A300 fuselage. Much of the tooling on the line is the same tooling that was used to build A300 fuselage components many years ago. So that reduced the costs. A330/A340 wing design was common to both models and again, the costs were amortized early on in both programs. So now you have 2 major costs that are not factored into the price. Now, look at the avionics platform - that's an outgrowth of the A320. So aside from cabin design changes and the incremental changes that always happen over time, you've got an aircraft that isn't actually "all-new" and wasn't all new at launch in the 1980s - the A330 is and has always been a derivative that has borrowed from other programs. So Airbus can afford a production cut without taking a huge hit to the bottom line. Also, Airbus has a rather interesting method of accounting for its commercial programs that are almost byzantine in complexity. In short, I think the people in Toulouse who are paid far more than those of us speculating on this forum know what they are doing.


What you are describing is an airplane that is relatively inexpensive to make and highly profitable. This makes the situation worse. Make a few less A380's , who cares the cost more to build than you sell them for. A330's are very profitable, delivering less of them bears heavily on the companies profits.

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