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dtw2hyd
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:20 pm

Eyad89 wrote:
...
777X is definitely closer to being a clean sheet design than you give it credit.


You don't need a clean sheet design when you just finished a revolutionary product (787) and need a successor to the most successful product (77W), particularly when it is going to be a slow-selling largest plane.

Now I will wait for someone else to argue that it is just an evolutionary product. Then the project shouldn't cost that much.
All posts are just opinions.
 
mjoelnir
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:23 pm

Planeflyer wrote:
sassiciai wrote:
Matt6461 wrote:

Unfortunately for Airbus projections, demand influences both quantity demanded and price. The demand projections were too rosy on both; thus even with perfect execution Airbus would have lost money after 250 frames.

Any effort to do defend the wisdom of this program has to rely on some elementary intellectual error like not understanding the basics of a demand curve.

It's very hot here in Belgium currently, not conducive to search back through old threads about the A380, and Matt6461's contributions to them. What I do see is a complete about face, 180degree turn, to a point now where it seems he is having some trouble even coexisting with the current A380s out there

Back then, no snide and snarky comments like now, but excessively long relatively technical posts telling us all how with a bit of effort here, and a bit there, the A380 would be the greatest thing since sliced bread!

I wonder what caused this change of heart. I'm sure that it wasn't a breakfast with the heads of EK, SQ, BA (and maybe others) for whom the plane is very highly regarded. But maybe you know something that they don't!


Please, if it was so well regarded than all would be lining up to place more orders. The 380 is a lead weight for AB cash flow.


To declare that, one has to show that a sale of an A380 is a cash loss. If the loss selling a A380 includes amortization of production facilities and tools and repayment of the RLI, than it could well be cash positive to sell an A380. The facilities have to be amortized and the RLI repaid anyway. With a low production rate the fixed cost distributs over fewer frames and the fixed costs do not all disappear when you stop production.
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:29 pm

Eyad89 wrote:
777X was officially announced in 2013, and it will likely be delivered to the first customer in 2020. That’s 7 years of development. On the other hand, A350 and 787 spent 8 years in development before their first delivery.

777X is definitely closer to being a clean sheet design than you give it credit.


If corporations were development-time-minimizing entities you'd have an argument.
Reminder: corporations are profit-maximizing-entities.

777X is ~$10bn cheaper to develop than a clean sheet supertwin.

Google "economics" and try again.
 
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Stitch
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:36 pm

Planeflyer wrote:
How much RLI was received? How much is still owed? How much per AC is paid pack?


The initial RLI was 3.5 billion Euros.They also extended an addition 1.4 billion Euro in refundable advances.

As for repayment, UK media pegged it at around 1 million GBP per airframe, which would be around 226 million Pounds. RLI is supposed to be fully repaid within 17 years, but I am guessing this has not happened since Airbus requested a reduction in A380 RLI payments in 2016 due to slow sales.
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:41 pm

and demand extends to A380 parts as well.

Zeke wrote:
every airframe sold Airbus repaid RLI,


First, do we know that Airbus includes RLI as production cost in its accounting?
As others have pointed out, RLI is a liability that exists whether it's paid from royalties or not. A past liability that is independent of production shouldn't be counted as a production cost. That it's paid simultaneously with sales doesn't change this fact - Airbus surely has some development bond/loan payments that coincide temporally with A380 sales but it wouldn't make sense to call these production costs.

Second, even if Airbus is accounting RLI as a production cost, is there any indication that RLI constitutes the difference between negative and positive margin? I see none.
If not - if Airbus would still be losing money absent RLI - then A380 production would still not repay a dime of development cost. Net debt increases; you've just shifted dollars from one holder (government) to another (whichever funding source covers A380 production losses).

Finally, if RLI is accounted for as production cost and makes the difference between negative and positive margins, then we can say that A380 has paid some small portion of its development cost.


Seriously, is there really this much unknown about the RLI aspects of the program?

Is AB liable to repay the outstanding amount?

This is a public company. How can so much basic financial information that is material not be known?
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:44 pm

Revelation wrote:
sassiciai wrote:
I am rather interested to know which variables in this non-clean sheet program are not under Boeing's control. Do reveal that , please

Clearly you see trees and not forests, but since I'm good at making Revelations, I'll help you out. Once the decision is made to not do a clean sheet, a lot of variables are no longer under your control. The reason you make such a decision is to limit the amount of resources being dedicated to the project, and in many cases to retain "grandfather's rights". It's a complicated decision that has it's own ramifications so one doesn't do it for it's own sake.

Thanks for your answer. I will however challenge you on the "a lot of variables are no longer under your control" statement

Boeing built the 777, and knows all about its variables. It has all of them strictly under its configuration control, otherwise the aircraft would have never been certified. Boeing knows exactly the compromises it can make by amending the classic 777 variables, and I am sure will do so if it yields an advantage in production, cost, or maintenance down the line. It would of course lead to changes being thoroughly documented and recorded as a new configuration, which does not invalidate any previous configurations that represent active 777 "classics"
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:45 pm

Stitch wrote:
Planeflyer wrote:
How much RLI was received? How much is still owed? How much per AC is paid pack?


The initial RLI was 3.5 billion Euros.They also extended an addition 1.4 billion Euro in refundable advances.

As for repayment, UK media pegged it at around 1 million GBP per airframe, which would be around 226 million Pounds. RLI is supposed to be fully repaid within 17 years, but I am guessing this has not happened since Airbus requested a reduction in A380 RLI payments in 2016 due to slow sales.


So IF Airbus accounts RLI repayment as production cost, and IF each cent of RLI constituted the difference between positive and negative margin, then the A380 has repaid ~1.5% of its development costs.

Even on those generous assumptions, the A380 is still a world-historical failure.
 
bigjku
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:49 pm

dtw2hyd wrote:
Eyad89 wrote:
...
777X is definitely closer to being a clean sheet design than you give it credit.


You don't need a clean sheet design when you just finished a revolutionary product (787) and need a successor to the most successful product (77W), particularly when it is going to be a slow-selling largest plane.

Now I will wait for someone else to argue that it is just an evolutionary product. Then the project shouldn't cost that much.


Agree with this. The 77X is a compromise to address the top of the product range basically. As such it addresses a few key areas for Boeing.

One it puts a lot of pressure on any A380neo to go beyond just new engines and pay the full boat cost to give it a new wing and stretched fuselage. Being even bigger than the A388 making such investments would seem dubious.

Two it stripped off the part of the market that I think really needed the full 77W type capacity in the ME3 and made the unavailable to the A35K. Outside of those airlines I feel like the 789/10 can compete quite well with the A350 family. Denying Airbus high volume and likely strong margin sales to the ME3 hurts them.

Finally it’s a huge part of the program expenses are important investments in the future anyway. The large carbon fiber wing factory is a critical investment for all go forward programs. This was as good of way as any to jump start that process.

Like anything the 77X is a compromise but to me it seems a reasonably well struck one. Money is mostly being spent on areas that have long term company benefits while cost were kept in check enough that you might reasonably make some money in a space that has proven to be dangerous with both the A380 and 748.
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:50 pm

Matt6461 wrote:
Eyad89 wrote:
777X was officially announced in 2013, and it will likely be delivered to the first customer in 2020. That’s 7 years of development. On the other hand, A350 and 787 spent 8 years in development before their first delivery.

777X is definitely closer to being a clean sheet design than you give it credit.


If corporations were development-time-minimizing entities you'd have an argument.
Reminder: corporations are profit-maximizing-entities.

777X is ~$10bn cheaper to develop than a clean sheet supertwin.

Google "economics" and try again.

Yeh! Let's wait and see if the outcome justifies the $10B "savings" over a clean sheet. Sometimes penny-wise ends up being pound foolish! Again, it is pointless to argue now, it is down the road that the results will show up. then you cane make your assertions again, based on fact and figures then!
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:51 pm

Regards the 777X lets use AB's projections for the xlarge market segment. AB projects 1700 but given their poor track record projecting this segment lets be conservative and only assume 1100 deliveries over the next 20 years.

Lets further assume 150 380's and 565 350-1000 giving AB a 65% market share. Does BA make money on 385 AC + the freighter portion of the market? I honestly don't know
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 2:52 pm

Sassicai wrote:
Yeh! Let's wait and see if the outcome justifies the $10B "savings" over a clean sheet. Sometimes penny-wise ends up being pound foolish! Again, it is pointless to argue now, it is down the road that the results will show up. then you can make your assertions again, based on fact and figures then!


Yeah let's wait on judging whether Boeing should have built a clean sheet.
BUT THAT'S NOT THE ARGUMENT.
Whether a clean sheet is/will be wise is analytically distinct from (1) whether 777X is materially different from a clean sheet and (2) whether 777X is a failure on the scale of A380.

I believe Boeing should have built a clean-sheet 500-seat VLA instead of 777X, so I'm very willing to say 777X wasn't the right move.
Don't confuse yourself between "maybe not the right move" and "world-historical failure."
 
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par13del
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:01 pm

As for the VLA sales projections, should we have a caveat to determine which period we are talking about:
Period 1 only the 747, 748i and A380
Period 2 any frame capable of 400 pax.

If the standard for VLA has been lowered we should ensure that the switch to increase the numbers is stated up front or the numbers would be misleading.
 
Eyad89
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:08 pm

Matt6461 wrote:
Eyad89 wrote:
777X was officially announced in 2013, and it will likely be delivered to the first customer in 2020. That’s 7 years of development. On the other hand, A350 and 787 spent 8 years in development before their first delivery.

777X is definitely closer to being a clean sheet design than you give it credit.


If corporations were development-time-minimizing entities you'd have an argument.
Reminder: corporations are profit-maximizing-entities.

777X is ~$10bn cheaper to develop than a clean sheet supertwin.

Google "economics" and try again.


A few points here:

1- where did you get the $10bn figure from? We know that A350 had developments costs of $15bn as stated by Airbus, so are you saying that 777X has developments cost of $5bn? I do not know the exact cost, but I definitely guess it should be more than that. Boeing had to spend $1bn on the new wing plant alone.

2- there’s definitely some correlation between developments cost and the time spent on doing that. I am not saying it’s a linear relationship, nor am I saying the correlation between the two is the same for all projects. I am only guessing that Boeing had to wait that many years because it had to so much work to do. It was a major change after all. Why do you think Boeing had to wait 7 years to deliver its first frame then? They would really appreciate any cash inflow they can get, why wait until 2020 then?

3- I never said it was actually a clean sheet design, I just said it was closer to a clean sheet design than some might make it sound.
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:20 pm

Eyad89 wrote:
Why do you think Boeing had to wait 7 years to deliver its first frame then?


GE9X development time largely drove program schedule. An engine takes ~7 years to develop.

Eyad89 wrote:
where did you get the $10bn figure from?


I've read figures of $5-7bn for 777X.
That means $8-10bn saved versus a clean sheet.

Eyad89 wrote:
there’s definitely some correlation between developments cost and the time spent on doing that. I am not saying it’s a linear relationship, nor am I saying the correlation between the two is the same for all projects.


Sure but why do that? Surely you agree that we care about costs instead of time?
You can google a bit for actual development cost estimates.
I don't feel like doing that work for you unless you agree that it's costs that matter.

Eyad89 wrote:
I never said it was actually a clean sheet design, I just said it was closer to a clean sheet design than some might make it sound.


And the primary standard for "close to clean sheet" is cost. We can use other standards for other argument but they don't matter to the decision point once we're agreed on what corporations are for.
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:33 pm

Matt6461 wrote:
Sassicai wrote:
Yeh! Let's wait and see if the outcome justifies the $10B "savings" over a clean sheet. Sometimes penny-wise ends up being pound foolish! Again, it is pointless to argue now, it is down the road that the results will show up. then you can make your assertions again, based on fact and figures then!


Yeah let's wait on judging whether Boeing should have built a clean sheet.
BUT THAT'S NOT THE ARGUMENT.
Whether a clean sheet is/will be wise is analytically distinct from (1) whether 777X is materially different from a clean sheet and (2) whether 777X is a failure on the scale of A380.

I believe Boeing should have built a clean-sheet 500-seat VLA instead of 777X, so I'm very willing to say 777X wasn't the right move.
Don't confuse yourself between "maybe not the right move" and "world-historical failure."

World-historical failure is not my quote, so I should avoid confusing myself with it. Actually, it is a phrase penned by you, part of your ever deepening vitriolic attack on a machine. Go out more often, have some kids - that will right your perspective of what you view as a screw up that could have been avoided if only they had listened to you!

Remember that what you post is generally your opinion. Only the blindly arrogant forget that, and go on as if it were fact!

World War 1, closely followed by World War 2, and many other wars before and since, global warming, the uncontrolled use of plastic, chicken flu - those are world historical failures. Electing The Donald might prove to be another. The A380 is just an aircraft with some good and bad features - not worth your Fatwa against it
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:43 pm

Sassicai wrote:
World War 1, closely followed by World War 2, and many other wars before and since, global warming, the uncontrolled use of plastic, chicken flu - those are world historical failures. Electing The Donald might prove to be another. The A380 is just an aircraft with some good and bad features - not worth your Fatwa against it


Ok fine "world-historical failure" is obviously hyperbole.
Nonetheless, my fatwa stands.

I call on the community of believers in affordable, efficient, comfortable air travel to pray for the death of the A380 or its substantial revision as soon as possible.
I rule it pious for a believer to wish for either the A380's death and replacement or its resurrection in another, better form.

Oh you faithful - take heed. Woe unto those who recognize not the error of their ways and maintain idolatry of the A388.
They shall suffer the humiliation of years of wrong predictions and foolish public statements.
Most shall retreat from public life in shame - a few poor souls shall parade their foolishness until the Day of Judgment on the A380.

I pray for the resurrection of the VLA, and the flights of the world to come.
 
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kanban
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:45 pm

Standard spare parts and services generally carry a 200% mark up over cost... however so many "freebie" factors from field service to parts storage and packaging eat into this so the real "profit" comes down to about 15%.

I think the whole argument basically boils down to unless the A380 can entice new customers and reorders (which assume a market for used planes), continued life will provide little profit to the company eventually dooming the program. on the 777 side, the 8/9 market may not be as robust as the 777 basic, however with lower investments and a continuing 777F market, Boeing can afford to wait out the cyclical market. The most expensive production change is the wing, yet the facility was not built with just the 777 in mind, it has the capability to take on wings for the 797 as well. One difference we've discussed in previous threads is Airbus builds its facilities for single model production and tends to scatter them around adding more when needed. Boeing builds generic production facilities with a flow thru production process.. these differences minimize facility costs to Boeing and increase facility costs to airbus.
 
OldAeroGuy
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 3:52 pm

Eyad89 wrote:
Revelation wrote:


Hint: If 777x was a clean sheet we could perhaps start to make a sober comparison because pretty much every variable would then be under Boeing's control. That's what you get when you pay the exorbitant price to do a clean sheet. The fact that Airbus had every variable under its control and has found itself at this point with the A380 program is probably the most damning thing about it. They could have done anything they wanted with tens of billions of Euros and are now stuck with this outcome. Boeing is spending far less money and has correspondingly lower aspirations.



777X was officially announced in 2013, and it will likely be delivered to the first customer in 2020. That’s 7 years of development. On the other hand, A350 and 787 spent 8 years in development before their first delivery.

777X is definitely closer to being a clean sheet design than you give it credit.


779 development time has been driven by the engine, not the airframe. If the airframe had been the pacing item, the 779 EIS would have been 1-2 years earlier.
Airplane design is easy, the difficulty is getting them to fly - Barnes Wallis
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 4:13 pm

“World Historical failure” is hyperbole but largest commercial failure is not.

And now that it is clear that even the most knowledgeable AB posters don’t understand the RLI amounts It is probably larger than we know.

It is fair question to ask if the only reason the program hasn’t been canceled is because the cash flow impact of a ballon repayment of RLI is greater than the losses per plane?

The fact that this question even can be asked is indication of the size of the failure.
 
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zeke
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 4:42 pm

Planeflyer wrote:
First, do we know that Airbus includes RLI as production cost in its accounting?
As others have pointed out, RLI is a liability that exists whether it's paid from royalties or not. A past liability that is independent of production shouldn't be counted as a production cost. That it's paid simultaneously with sales doesn't change this fact - Airbus surely has some development bond/loan payments that coincide temporally with A380 sales but it wouldn't make sense to call these production costs.


It would be helpful if you actually read what I quoted before going off the handle.

RLI is a repayable loan for the program development, what I responded to was

“Matt6461 wrote:
It has never repaid and probably will never repay a dime of its development cost. ”

Therefore Airbus is repaying development costs, and it is also obviously buying parts from the risk sharing partners who are being repaid their development costs that way.

I don’t give a toss how they are accounted for as each airframe is delivered, all I was demonstrating was the A380 is repaying development costs.

Yet another fake news factoid from the Boeing fan boys club.
"Airbus has the NEO. Boeing has the knee jerk" Judson Rollins in "10 Minutes About the A321XLR and Why Boeing Can’t Compete"
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 5:25 pm

Zeke wrote:
I don’t give a toss how they are accounted for as each airframe is delivered


If only all our jobs were to drive from A to B.
"Tis a gift to be simple 'Tis a gift to be free..."

Nonetheless the analytical disticlnction between recurring cost and development cost remains, regardless of accounting practice.
 
StTim
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 5:34 pm

The RLI discussion is interesting and somewhat opaque. What it is however is Repayable and there is no end to that. So the European countries that offered RLI for the A380 will get their money back - plus some interest - no matter how many Airbus sell.

For the A320 family Airbus are still paying royalties so the Governments got a far better return than was ever expected.

Now the alternative seems to be a straight tax break which pays out (or rather doesn't collect) come what may.

I know which countries seem to be getting the better deal!
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 5:48 pm

zeke wrote:
Planeflyer wrote:
First, do we know that Airbus includes RLI as production cost in its accounting?
As others have pointed out, RLI is a liability that exists whether it's paid from royalties or not. A past liability that is independent of production shouldn't be counted as a production cost. That it's paid simultaneously with sales doesn't change this fact - Airbus surely has some development bond/loan payments that coincide temporally with A380 sales but it wouldn't make sense to call these production costs.


It would be helpful if you actually read what I quoted before going off the handle.

RLI is a repayable loan for the program development, what I responded to was

“Matt6461 wrote:
It has never repaid and probably will never repay a dime of its development cost. ”

Therefore Airbus is repaying development costs, and it is also obviously buying parts from the risk sharing partners who are being repaid their development costs that way.

I don’t give a toss how they are accounted for as each airframe is delivered, all I was demonstrating was the A380 is repaying development costs.

Yet another fake news factoid from the Boeing fan boys club.


Repayable it may be but since no one seems to to understand the monies involved we really know very little.

Would you as a pilot even taxi out on the runway so running the full checklist to ensure you had enough fuel to complete the flight?

Would you be happy w “sure, we do” or would you like know the numerical values?

I don’t think asking the same of the 380 program is unreasonable.
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 5:55 pm

StTim wrote:
The RLI discussion is interesting and somewhat opaque. What it is however is Repayable and there is no end to that. So the European countries that offered RLI for the A380 will get their money back - plus some interest - no matter how many Airbus sell.

For the A320 family Airbus are still paying royalties so the Governments got a far better return than was ever expected.

Now the alternative seems to be a straight tax break which pays out (or rather doesn't collect) come what may.

I know which countries seem to be getting the better deal!


Somewhat opaque is a huge understatement.

The fact that nobody can site any of the details is very revealing.
 
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zeke
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 6:13 pm

Significant detauls of RLI can be found in the various WTO submissions (it would take weeks to go through). It is not the topic of this thread.

The false claim that not a dime of A380 development costs has been paid has been shown to be clearly false. A dime is a very low bar of proof required.
"Airbus has the NEO. Boeing has the knee jerk" Judson Rollins in "10 Minutes About the A321XLR and Why Boeing Can’t Compete"
 
Planeflyer
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 6:38 pm

[quote="zeke"]Significant detauls of RLI can be found in the various WTO submissions (it would take weeks to go through). It is not the topic of this thread.

The false claim that not a dime of A380 development costs has been paid has been shown to be clearly false. A dime is a very low bar of proof required.[/quote

I think it is highly likely that some of the RLI has been repaid but given the lack of info the discussion is unsatisfactory.

Looking at the WTO documents is a good idea.
 
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Matt6461
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 6:40 pm

Zeke wrote:
The false claim that not a dime of A380 development costs has been paid has been shown to be clearly false.


Zeke we all know how to difficult it is for you to follow a multi-step argument. Nonetheless, I'd advise going back to my reply and maybe writing a checklist of issues you need to meet. Sometimes paper can hold what a mind cannot.
 
StTim
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 6:42 pm

Not necessary!
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 6:56 pm

Arrogance coupled with a juvenile intellect will produce the stuff he spouts
 
wingman
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 7:02 pm

Yes, surely more than a dime has been repaid on the 380 but still no one knows exactly how much or what the terms are. Boeing's a greedy little pig too, just like any other American or foreign company selecting work sites in the US (see Amazon!). All very nasty beasts but all slightly less opaque I'd argue when it comes to financial incentives/loans. I bet even Airbus' financial incentives to build a FAL in Alabama are explicit and public. And to me that's a bit of the rub, US state-level tax breaks are a boondoggle for anyone to take advantage of but I don't zee Zara, Siemens and Aston Martin getting RLI goodies every time they launch new stilettos, trains or convertibles. Could be wrong though, maybe every company in Europe has access to RLI.

The WTO rulings are literally incomprehensible and as far as I can see involve only the principles and mechanisms. But here is a piece from an English newspaper and it addresses the fact that no one knows the numbers but that the "investors" in the RLI "win some and lose some" and that Airbus is trying to get them to win less on the 320 because there's been so much winning already. The 340 and 380 are cited as examples of the "lose some" variety. And yet Airbus is still a profitable enterprise each and every year so it's hard to understand how this paper would characterize guaranteed repayable loans as sometimes winning or sometimes losing. If only we knew what "guaranteed" meant and more importantly what the terms are.
http://www.telegraph.co.uk/business/201 ... al-launch/
PS: the VLA era is not over and the 779 and A35K are not too large.
 
WIederling
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 7:41 pm

Planeflyer wrote:
Seriously, is there really this much unknown about the RLI aspects of the program?


IMU This has been made public on a regular basis. But it is ignored on the same regular
basis as some poster can't have their strange narrative deflated.

See also RLI as "Reimbursable Launch INVESTMENT" vs the more popular "launch aid".
Murphy is an optimist
 
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Stitch
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 7:49 pm

Planeflyer wrote:
Seriously, is there really this much unknown about the RLI aspects of the program?


As zeke noted, it's spelled out pretty well in the WTO complaints. The UK House of Commons records also define it and note the amounts the UK has invested for the A320, A330/A340, A340NG and A380 programs. I would expect the German, French and Spanish legislative records would also detail the amounts they have invested.


Planeflyer wrote:
Is AB liable to repay the outstanding amount?


The A320 and A330/A340 RLI have expired and been fully repaid.

The A340NG (-500 and -600) has also expired, but it's not clear if it was fully repaid due to the low sales.

The A380 RLI should be expiring soon (17 years from date of approval) and has not been fully repaid. Per the contract it is supposed to be, but Airbus is at least trying to extend the repayment schedule due to the "low" sales.
 
mffoda
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 7:54 pm

"If only we knew what "guaranteed" meant and more importantly what the terms are."

Wingman, your linked article does show a possible number though.

http://www.telegraph.co.uk/business/201 ... al-launch/

"How much is paid back on each airliner sold is a closely guarded commercial secret, but one industry source said Airbus could hand over $1m for each A380 it delivers."
harder than woodpecker lips...
 
Planesmart
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 8:15 pm

zeke wrote:
Momo1435 wrote:
And sure Airbus will be making money on aftermarket services, but I doubt that the profits on that part of the business will be enough to get the program to break even if Airbus would have used program accounting.


Airbus already makes more per year in after market support for its aircraft than it spent out of its pocket for the single A380 development program. They are expanding that side of the business and aim to earn 10 billion a year just from that (across all fleets).

After market support is big business for the airframe and engine OEMs.

It is big business for air frame and engine OEM's, and originally very profitable (still profitable with most customers), but margins are squeezed as thin as the foil you used to find in cigarette packets by the US3, ME3, EU3 and largest leasors.

Parts and service are not the cash cows they used to be.
 
PlanesNTrains
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 8:31 pm

sassiciai wrote:
Remember that what you post is generally your opinion. Only the blindly arrogant forget that, and go on as if it were fact!

World War 1, closely followed by World War 2, and many other wars before and since, global warming, the uncontrolled use of plastic, chicken flu - those are world historical failures. Electing The Donald might prove to be another. The A380 is just an aircraft with some good and bad features - not worth your Fatwa against it


Remember that this is an aviation forum. Thank you for your rundown of historical drama, but it's ok to focus on aviation here.

zeke wrote:
Yet another fake news factoid from the Boeing fan boys club.


What a lame copout. Either call out the mindless Airbus defense folks as well or keep it to yourself. BTW, I've always taken Matt as having no sacred cows. I've seen him as pro-A380 (in some form) as anti-A380 (in current form), and he's thrown Boeing products under the bus as well.

rheinwaldner wrote:
Overall a balanced poster should attack the 777X as much as he does attack the A380...


That's why I've always looked forward to your posts. They have always been equally balanced pro- and anti- A and B. ..... Er, wait.....
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 8:45 pm

Hey, Dave,

Are you starting to do it as well? I always felt that you were balanced and, well, neutral. What's happening here on this site - polarisation everywhere?
 
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sassiciai
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 8:53 pm

I didnt pick up on it immediately in your post, so here's a second reply

"world historical failures" was a contribution from your friend Matt while talking about his favorite topic, the A380! I only responded to that, but it seems that you didn't read that - it was only a few threads up from here anyway! How can anyone think that the world can fail when some engineering company produces a mechanical device? And how anyone with an iota of common sense can get bogged down in hating such a device?
 
Planesmart
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 8:56 pm

bigjku wrote:
The 77X is a compromise to address the top of the product range basically. As such it addresses a few key areas for Boeing.

One it puts a lot of pressure on any A380neo to go beyond just new engines and pay the full boat cost to give it a new wing and stretched fuselage. Being even bigger than the A388 making such investments would seem dubious.

Two it stripped off the part of the market that I think really needed the full 77W type capacity in the ME3 and made the unavailable to the A35K. Outside of those airlines I feel like the 789/10 can compete quite well with the A350 family. Denying Airbus high volume and likely strong margin sales to the ME3 hurts them.

Finally it’s a huge part of the program expenses are important investments in the future anyway. The large carbon fiber wing factory is a critical investment for all go forward programs. This was as good of way as any to jump start that process.

Like anything the 77X is a compromise but to me it seems a reasonably well struck one. Money is mostly being spent on areas that have long term company benefits while cost were kept in check enough that you might reasonably make some money in a space that has proven to be dangerous with both the A380 and 748.

The 777X is a compromise, influenced by the Boeing Board capping development costs very early, and in turn, the requirement to exploit grandfathering to the nth degree.

At the time of X conception, it was fashionable to distance from the 787 family. In hindsight, a new 787 wing and fuselage extension would have been more cost-effective.

The politics within Boeing would have followed a similar path to Airbus, with A330CEO management switching to A350 and then performing a reverse takeover, if the 787 birth had been trouble free. The 748 and 777 models would be winding down, there would be two 787 wing options, and an 11 and even possibly a 12.

The X certainly raises the A380NEO bar, but don't under-estimate how CEO pricing has hurt Boeing on early X sales, and the need to 'bridge' the 777 production line with below cost sales (which also delays future 787 and X sales).

Even if the X is spot on with delivery and performance, the first decade's production is crimson, to the extent Boeing would probably like a few cancellations, so they can re-sell production profitably.

The X is a culdesac, whereas further 787 developments to create the same capabilities would have been a super highway. Nonetheless Boeing will make lemonade with the X. Whether the distraction and revenue will be justified, time will tell.
 
PlanesNTrains
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Re: Leeham: VLA era is over; are 779/A35K too large?

Mon Jul 09, 2018 9:36 pm

sassiciai wrote:
I didnt pick up on it immediately in your post, so here's a second reply

"world historical failures" was a contribution from your friend Matt while talking about his favorite topic, the A380! I only responded to that, but it seems that you didn't read that - it was only a few threads up from here anyway! How can anyone think that the world can fail when some engineering company produces a mechanical device? And how anyone with an iota of common sense can get bogged down in hating such a device?


My friend Matt? Lol He already said it was hyperbole. You chose to make it a literal thing. Aside from that, you seem to take his derision of the A380 business case personally. That's your choice. I don't care if it's a success or failure, but at least he's stating his reasons why he feels that way. I've always been a proponent of the stretch/neo (preferably a -1000). I'm also thrilled to see if taken on by HiFly. Does that mean we can't discuss it's shortcomings as well?

Anyhow, I'm sorry I don't fit in the box you want to put me in.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
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zeke
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Re: Leeham: VLA era is over; are 779/A35K too large?

Tue Jul 10, 2018 12:17 am

Stitch wrote:
[
The A320 and A330/A340 RLI have expired and been fully repaid.


RLI royality payments continue regardless if the initial investment value has been fully repaid. For some programs the initial investment amount has been fully repaid a number of times over.
"Airbus has the NEO. Boeing has the knee jerk" Judson Rollins in "10 Minutes About the A321XLR and Why Boeing Can’t Compete"
 
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Stitch
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Re: Leeham: VLA era is over; are 779/A35K too large?

Tue Jul 10, 2018 3:06 am

zeke wrote:
RLI royality payments continue regardless if the initial investment value has been fully repaid. For some programs the initial investment amount has been fully repaid a number of times over.


Yup, as has already been mentioned multiple times in the thread (so I felt saying it again would just be superfluous).
 
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lightsaber
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Re: Leeham: VLA era is over; are 779/A35K too large?

Tue Jul 10, 2018 3:10 am

This thread has deteriorated into personal attacks.
I cannot wait to get vaccinated to live again! Warning: I simulated that it takes 50%+ vaccinated to protect the vaccinated and 75%+ vaccinated to protect the vac-hesitant.

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