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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 4:56 am

StTim wrote:
william wrote:
So the 10 year A320 backlog is softer than I thought.

Not a single order at any manufacturer can currently be considered firm. What the situation was in January and now are really worlds apart.

Perhaps only Singapore Airlines' orders are the only ones that can be considered firm!

SIA Group reserves liquidity for aircraft purchases
 
LS83
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 8:38 am

Airbus furlough’s 3000 employees at U.K. Broughton Wing plant staggered between 3-6 weeks depending on which program...

https://www.google.co.uk/amp/s/www.bbc. ... s-52436741
 
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lightsaber
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 11:18 am

morrisond wrote:
lightsaber wrote:
Revelation wrote:
The Airbus 2001 annual report says:


And:


Ref: https://www.airbus.com/content/dam/corp ... t-2001.pdf

It also shows their stock price took a steep hit (just like pretty much everything related to aviation). Its high was 25 in June, it tanked to 9 right after the attacks and was back to 15 by March 2002 so quite a bit down from its peak but was trending up.

So, they stopped hiring, reduced spending except for A380, and maintained production levels.

In other words, COVID-19 is a much bigger hit to Airbus than 11 Sept 2001 was.

As Faury said, they've just lost 1/3rd of their business and are preparing to deal with losing even more.

I would be shocked if they (or Boeing) lost only a third if business. In my opinion, this is multiples of 911 as people are now afraid of crowds. I've flown to multiple cities to participate in large events. I don't know anyone who will in 2020. Both myself and my ex-wife were planning cruises (seperate) for the kids. My parents also cancelled cruise plans in Europe.

Production of every model needs to be cut 40% to... well, shut down. The prior cuts were for shorter lockdowns.

To others:

We were already in a widebody glut. That was going to be ugly even before oil prices crashed and this lockdown persisted.

I had proposed that narrowbody production was so high as to be starting a glut. Well... Huge glut.


We also have another financial crisis. Until the junk bond market recovers, we


Please everyone take time to read the Airbus Global Market Forecast:
https://www.airbus.com/aircraft/market/ ... ecast.html

There is no expansion for 2 or 3 years. Yet Airbus notes 64% of aircraft are for growth. Errr... We'll have growth again, but this is global. The demand for 39,000 new aircraft over 20 years was being front loaded. I think the 20 year demand lost:

2500 near term new aircraft demand.
Is resetting the baseline, so demand is closer to 30,000 aircraft. So there is a future. How to cut costs 2020-2022?

Lightsaber


Over three years 2,500 less? Call it 800 frames per year? Rate 40 on the NEO seems too high.

I believe the rates are still too high.. The question is what vendors will not survive? Note that is 2500 less for the industry.
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 12:19 pm

Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.
 
TObound
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 12:24 pm

ixam500 wrote:
IMO, they will cut jobs first in the non-core production countries, such as the UK and US and might get a Bailout through a simple capital increase, with shares isued to Germany, France and Spain.

As France and Germany own 11% each and Spain owns 4% of Airbus, it is likely that they would want to increase their control of the company when providing cash.
If there are cuts in the "shareholding" countries, these will probably be proportional to each other; Airbus won't close all spanish factories while not cutting any jobs in France.


Airbus isn't closing any FALs in the US and China. Unless they want to risk those markets. Those lines will be cut back entirely to rates of production that those markets can support. They won't be exporting much.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 2:12 pm

AFAIK this is the first and worst mayor production rate decrease in Airbus history.
If I'm correct, Airbus has scaled back production three times before.
1) A300 when the A330 was introduced and the project ended.
2) A380 because of falen demand to such low level that the program has to be ended.
3) The A330 reduced demand during the A330CEO to NEO conversion, A350 production grew at the same time.
AFAIK this is the first time in Airbus history they have to scale back production on all programs. So indeed this is the worst crisis for Airbus in it's ~50year existence.

Airbus only has 11 A330-200 left to build to enter the MRTT converion program, thus that won't keep the A330/A340 FAL open. I think Airbus product offering won't change, but the market forecast can go into the waist bin. I wonder is aviation will return to doubling every 15 years. I think we could also see global aviation plateauing (growth stop) at or below the 2019 level. But 2020 is down by >60% compared to 2019.
Plane building has many long lead items, Airbus has ordered these and will have to take them from the suppliers (if they aren't suffering production stand-downs). I think this is the reason Airbus lowered production by 30-40% initially. Another reason is that if Airbus doesn't try to produce as much planes as possible they could lose "force mayor" contract escape clauses.
All airplane manufacturers are bleeding cash into assets (undelivered planes and parts). For the long term contract renegotiation's are AFAIK the best solution for all parties concerned. Production might have so scale back a little further for a short period.

I hope many 15year old planes will be retired in the coming months, so new production has to be cut less. This will result in a younger more efficient and less noisy global airplane fleet. With the A320CEO, 737NG, and A330CEO production stopping, planes can be scraped to stock spare parts. I think that's one positive aspect timing wise for this crisis.
Airbus does only offer the A330-200F as new-build freighter, but there isn't demand for it. Airbus does support A320, A321, A330-200 and A330-300 P2F programs. These were hampered by high secondary market values, the P2F programs will be another alternative for many CEO's. I hope some company develops a less extensive A330/A340 conversion program, that can result in airplanes that can be used as freighter or as passenger (combo) airplane.
So I expect a lot of part out and P2F work the coming year, and less demand for new-build planes. Medium and long term predictions are very difficult. I expect that airlines will require a A300 like plane, 250pax ~5000nm in a widebody with freight. Another requirement is new regional planes, successors for the C235, C295, ATR's and CRJ's. But this won't enter market before 2025.
First airbus needs to get a clear picture for aircraft demand and stabilize it's production with it's sub-suppliers to that demand. Airbus will require a lot of it's additional working capital (cash) to bridge the crisis.
I know that some European companies have work week reduction scams for crises like Covid-19. (e.a. 40 hour work week reduced to 16 hours. the employee is payed for 16 hours by airbus and 24hours by the government.) I hope Airbus can use this to prevent mayor layoffs. But when the new norm is known I expect layoffs are unavoidable.
 
morrisond
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 2:37 pm

flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


You forget about the 400 still to be delivered and 400 additional parked MAX's. Just returning those and making them available could be 2 years of Current Single Aisle demand - even if it is 400 frames per year.

Assuming MAX RTS - 737 MAX production of 10 new frames per month and A320 at 20-30 still seems excessive.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 2:59 pm

flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


Total demand for new commercial aircraft (narrow or wide bodies) for 2020 is going to be close to zero. Every airline now has far more aircraft than they need. With many airline liquidations coming, used aircraft are about to become available in high quantities and at very low prices. Airbus and Boeing need production rates near zero to match demand for the next 6 - 18 months. That is not possible so they both have to come up with ways to keep going at very low production rates, certainly at far lower rates than Airbus's initial reduction. A330 NEO is toast and 777X is likely delayed.
 
brindabella
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 3:03 pm

william wrote:
So the 10 year A320 backlog is softer than I thought.


Indeed Richard Aboulafia has been saying for some time that both the massive backlogs owned by AB and BA are little better than mirages.
(my words).
He surely has seen the boom-bust cycles before, so it seemed to me that he was probably (sadly) right.
As he was, and is.


cheers

PS - cycles, cycles ... :crying:
Also known as: "it goes around it comes around ..."
:ouch:

After watching Boeing self-destruct yet again by following market fashion, one could only see the COVID as Karma.
For the second time in 20 years it seemed impossible for Boeing not to dominate the Commercial aircraft industry.
Yet they shot themselves in the foot yet again ... and then came COVID.

Yet, perversely, COVID may ultimately work to Boeing's advantage as a "get out of jail" card.

This time, it was Airbus very well-placed to dominate the industry as Boeing's unbelievable stuff-ups hit it like a runaway train.

But at that exact same moment Airbus has also been brought to it's knees by COVID.

The "facts on the ground" still favour Airbus going forward, IMO.

But now the playing-field is much, much more level than it was before even a couple of months ago.

Indeed the playing-field is now much more level than Boeing deserves. :vomit:

But that's life!

:D :D :D


cheers
Billy
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 3:07 pm

morrisond wrote:
flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


You forget about the 400 still to be delivered and 400 additional parked MAX's. Just returning those and making them available could be 2 years of Current Single Aisle demand - even if it is 400 frames per year.

Assuming MAX RTS - 737 MAX production of 10 new frames per month and A320 at 20-30 still seems excessive.


I think so too, I wonder if Boeing will not start MAX production at all this year. There is no real need for it, there are enough parked aircraft around to support the airlines that want it. Might be cheaper to just repaint them than actually produce more. Boeing is in the comfortable situation that the line is already halted so they might just keep it that way and start it again later or in 2021 if demand ticks up. Airbus on the other side has to shrink fast now down to 20-30 per month. Closer to 20 I guess, but they will still bleed cash for a while until lay offs are through and production is right sized.

Looking forward and if nothing worse will happen, Airbus might outproduce Boeing on NB at 2:1 or even 3:1 rate for a while.

It will be a on razors edge to balance deliveries, but luckily for Airbus, the A321 (LR and XLR especially) will be in high demand for Medium to Long Haul in a market with reduced demand. Airlines will want them compared to A320 and MAX-8.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 3:18 pm

Jetport wrote:
flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


Total demand for new commercial aircraft (narrow or wide bodies) for 2020 is going to be close to zero. Every airline now has far more aircraft than they need. With many airline liquidations coming, used aircraft are about to become available in high quantities and at very low prices. Airbus and Boeing need production rates near zero to match demand for the next 6 - 18 months. That is not possible so they both have to come up with ways to keep going at very low production rates, certainly at far lower rates than Airbus's initial reduction. A330 NEO is toast and 777X is likely delayed.



Haven't seen you post before but congratulations.

I am amazed how many people here just don't get this - "pie in the sky" projections!
:cloudnine: :cloudnine: :bigthumbsup: :bigthumbsup:

If only!
:crying: :crying:

cheers


cheers
Billy
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 3:18 pm

FluidFlow wrote:
morrisond wrote:
flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


You forget about the 400 still to be delivered and 400 additional parked MAX's. Just returning those and making them available could be 2 years of Current Single Aisle demand - even if it is 400 frames per year.

Assuming MAX RTS - 737 MAX production of 10 new frames per month and A320 at 20-30 still seems excessive.


I think so too, I wonder if Boeing will not start MAX production at all this year. There is no real need for it, there are enough parked aircraft around to support the airlines that want it. Might be cheaper to just repaint them than actually produce more. Boeing is in the comfortable situation that the line is already halted so they might just keep it that way and start it again later or in 2021 if demand ticks up. Airbus on the other side has to shrink fast now down to 20-30 per month. Closer to 20 I guess, but they will still bleed cash for a while until lay offs are through and production is right sized.

Looking forward and if nothing worse will happen, Airbus might outproduce Boeing on NB at 2:1 or even 3:1 rate for a while.

It will be a on razors edge to balance deliveries, but luckily for Airbus, the A321 (LR and XLR especially) will be in high demand for Medium to Long Haul in a market with reduced demand. Airlines will want them compared to A320 and MAX-8.


Yes - it may make sense to keep the MAX shut - other than losing the tribal knowledge of how to build it. In that case t may make sense to restart even if it's only at something like rate 5. Those employees who will be the ones to restart though could be put to work returning the 400 MAX to service once approved so you don't lose them.

The suppliers will be the problem if shut down too long.

How possible is it for Airbus to shut down effectively 2/3 of Production? Will there Union Contracts allow that without massive cost?

They did not make that big of a margin even last year - how much overhead will have to be reduced as well - or just Socialize the losses for a few years?
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 3:25 pm

morrisond wrote:
flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.

You forget about the 400 still to be delivered and 400 additional parked MAX's. Just returning those and making them available could be 2 years of Current Single Aisle demand - even if it is 400 frames per year.

Assuming MAX RTS - 737 MAX production of 10 new frames per month and A320 at 20-30 still seems excessive.

I was only looking at Airbus production and demand, with the MAX still grounded and only for 2020. Looking at it realistically, it might even be less than 400 now (so far, Airbus have delivered about 110+ narrow body aircraft in 2020), since most flights will still be suspended in May (and possibly June). Not all airlines will be like SQ who have prioritised liquidity to take delivery of new aircraft.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 4:31 pm

brindabella wrote:
After watching Boeing self-destruct yet again by following market fashion, one could only see the COVID as Karma.
For the second time in 20 years it seemed impossible for Boeing not to dominate the Commercial aircraft industry.
Yet they shot themselves in the foot yet again ... and then came COVID.

Yet, perversely, COVID may ultimately work to Boeing's advantage as a "get out of jail" card.

If you read https://www.marketwatch.com/story/boein ... 2020-04-28 it may turn out that Boeing still ends up in jail:

Boeing Co. BA, +0.32% faces criminal and civil scrutiny into years of widespread quality-control lapses on its 737 MAX assembly line, according to people familiar with the details, potentially exposing the plane maker to greater legal liability than previously anticipated by industry and government officials.

The inquiries build on a federal grand-jury investigation into hazardously designed flight-control systems, these people said. As part of the expanded probes, Justice Department prosecutors and federal air-safety regulators have been scrutinizing potentially significant safety problems stemming from 737 MAX production missteps, these people said.

It suggests to me that with regard to MAX, Boeing may have shot itself in both feet.
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Tue Apr 28, 2020 4:37 pm

smartplane wrote:
Revelation wrote:
smartplane wrote:
Can probably count on the fingers of one hand, the number of airlines in the Western World, that haven't created a creditors committee involving their banks, lessors and major creditors, many meeting daily (virtual). Ditto for lessors.

I'm having a hard time picturing why a given airline would want all its different creditors all on one committee, but I don't know how that kind of stuff works in general. Who would chair the committee (CFO?) and what is its goals?

A creditors committee (different names used), is used to communicate (no surprises), and keep all creditors on the same page.

For example, there can't be many airlines that haven't breached financial covenants by now, with loans technically becoming repayable on demand. Ditto for leases. Breaching an especially onerous financial covenant with bank A, usually triggers a breach of other banks covenants relating defaults with other institutions.

So the purpose of the committee is not to manage the client, as that gets participants into potentially dangerous territory, of behaving like directors or senior management, but to manage what they can manage. So covenants will be reset or suspended, to avoid causing more widespread breaches.

For example, Bank A with USD500m exposure, will undertake to communicate and inform Banks B to F, who all have lower exposures. And so on. Major creditors will do the same for smaller creditors. They won't all be participating in person or via Zoom.

Apart from communication customer to creditors, it's also to ensure communication creditor to creditor. The last thing Bank A wants, is for Bank B with USD10m exposure to take unilateral action. Sometimes you just can't influence smaller participants, who would rather have 20c in the dollar next week, and write of the balance, than possibly 40c in the dollar next year, with a lot of oversight meantime.

Creditors with large exposures, take the opportunity to educate, inform and assess the smaller ones, and in some cases when that fails, increase their own exposure to pay off the mavericks, rarely dollar for dollar. The magnitude of this downturn restricts the ability of major creditors to assist.

Also sub-groups in the committee, verifying data, modelling, and reviewing legal implications for the different interest groups. Usually amazing constructive collaboration and camaraderie occurs, which is why some banks re-construct teams from years or decades earlier, and use profiling to select the right people. Participants want to protect their employers / clients interests AND company continue.

Usually chaired by the CFO, though some companies create a new senior management position for the chairmanship role.

Many countries, under emergency powers, are working on statutory management provisions similar to those in NZ (which are themselves being updated). Not the same as Chapter 11. Some Governments are presumably asked creditors not to act pending revised powers and processes being articulated, while others are hoping they wake up tomorrow and.....................


This all boils down to the old quote: ”If you owe the bank $100k, you have a problem, if you owe the bank $100M, the bank has a problem.”
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 5:00 pm

CFRPwingALbody wrote:
I hope many 15year old planes will be retired in the coming months, so new production has to be cut less.

The existing fleet and bow wave of MAX deliveries are an issue.

Ironically, MAX airlines are better off not having the MAX.

But in a low fuel price environment, asking for mid age aircraft to be retired is wishful thinking. Spot price of is fuel $.44 today.

https://www.airlines.org/argus-us-jet-fuel-index/

Normal us $1.25 to $2.25 and it has gone higher. last week it was $.71. In fiscal 2019, JetBlue used 885 million gallons at $2.09/gallon or $1.85 billion USD.

https://www.statista.com/statistics/528 ... e-airways/

Wikipedia says JetBlue has 264 aircraft or avwrage $7 million in fuel/year. A NEO saves about 20% or then $1.4 million a year for a high utilization airline per Aircraft.

At $0.44, each aircraft, if flown the same, burns $1.5 million (rounded up). A NEO will only save $300k a year, at best.

Resale on that 15 year old aircraft has plummeted (supply/demand). Looking at pre-Covid19 lease rates, A320NEO $295,000 to $350,000 per month. An A320 is $65,000 to $320,000 (new). Or I would estimate a 15 year old A320 leases for $1.8 million less a year, probably has a million more in maintenance and $300,000 or less more in fuel or now costs about a half million less per year.

viewtopic.php?f=3&t=1440991

With 30% of the fleet to be parked, I expect lease returns to be brutal.

If 15 year old aircraft are to be offered at scrap, I expect A320/A321 to become freighters or held for future sale. The already at scrap value A319s are doomed and will drive down scrap values (Obviously Easyjet will stop extending leases).

A flood of good mid age aircraft is going to unravel the leasing marketplace. That will hurt new aircraft sales quite a bit.

The reality is new aircraft demand is stalled. The loans on mid age aircraft cannot be unwound down to next month's scrap value quickly.

To change back the math, fuel must get above $1.25/gallon for break even on the NEO vs. a 15+ year old CEO. The surplus of aircraft must be dried up too (I estimate in 2023.)

I didn't estimate reduced CEO maintenance costs due to the upcoming scrapping, but that will happen. So maybe fuel must raise above $1.50... Unfortunately, the trend isn't the friend of new build demand.

I say this as someone working aerospace R&D. My services won't be in demand for commercial aircraft.

Lightsaber
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
Bricktop
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 5:28 pm

StTim wrote:
william wrote:
So the 10 year A320 backlog is softer than I thought.



Not a single order at any manufacturer can currently be considered firm. What the situation was in January and now are really worlds apart.

So true. Who is going to travel in the next six months except in a dire emergency? Vacations in Spain? Fuhgeddaboutit! No revenues for the time when they are supposed to make the most money. Not just the airilnes. The hotels, resorts and their employees are going to get crushed. It's a vicious circle that I am not sure we can "stimulate" our way out of. The world economy is based on consumer confidence. That's in the toilet right now. It's a very brave CEO who orders new frames now. Right now it's about trying to make do with what they have now. Heck, most airlines have parked more planes than they have on order.

So back to the OP. Yes, I think this is an existential threat to Airbus, but due to the political underpinning of the company. While the US can bail out Boeing if it has the desire to do so, I think Airbus, worthy as it may be for similar treatment, will be a pawn in a game between the French and Germans who will try to maximize for themselves. Every man for himself right now, and let's keep it real, the French are always out for themselves. NTTAWWT.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 6:00 pm

Here’s the problem. Airbus is primarily a builder of commercial airliners. Boeing is a large, diverse company that builds airliners as well as defense, space, and other products. The airliner business is in deep trouble right now, and will likely take some time, possibly years, to recover lto the levels that existed prior to the Coronavirus. Since airlines will have monumental financial problems due to a lack of passengers they will also have no need for lots of shiny new airliners, which is augmented by unusually low oil prices. So both Boeing and Airbus are going to see massive numbers of canceled or deferred orders, and while Boeing was already in trouble due to the MAX fiasco,they are still better positioned to weather this storm because of their other business lines.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
JoseSalazar
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 6:07 pm

SEPilot wrote:
Here’s the problem. Airbus is primarily a builder of commercial airliners. Boeing is a large, diverse company that builds airliners as well as defense, space, and other products. The airliner business is in deep trouble right now, and will likely take some time, possibly years, to recover lto the levels that existed prior to the Coronavirus. Since airlines will have monumental financial problems due to a lack of passengers they will also have no need for lots of shiny new airliners, which is augmented by unusually low oil prices. So both Boeing and Airbus are going to see massive numbers of canceled or deferred orders, and while Boeing was already in trouble due to the MAX fiasco,they are still better positioned to weather this storm because of their other business lines.

Airbus Defence and Space? https://en.m.wikipedia.org/wiki/Airbus_ ... _and_Space
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 6:10 pm

JoseSalazar wrote:
SEPilot wrote:
Here’s the problem. Airbus is primarily a builder of commercial airliners. Boeing is a large, diverse company that builds airliners as well as defense, space, and other products. The airliner business is in deep trouble right now, and will likely take some time, possibly years, to recover lto the levels that existed prior to the Coronavirus. Since airlines will have monumental financial problems due to a lack of passengers they will also have no need for lots of shiny new airliners, which is augmented by unusually low oil prices. So both Boeing and Airbus are going to see massive numbers of canceled or deferred orders, and while Boeing was already in trouble due to the MAX fiasco,they are still better positioned to weather this storm because of their other business lines.

Airbus Defence and Space? https://en.m.wikipedia.org/wiki/Airbus_ ... _and_Space

It is much smaller than Boeing’s and much less able to subsidize the airliner division.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
strfyr51
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 6:25 pm

I look at this like theater. Boeing is pretty much in the US Northwest and western US, Their plant in the east CHS is producing the 787-9 and -10 and this only gives them time to do the FAA mandated mods on the 737Max airplanes they need to do anyway to even sell them.
Boeing will not be hurt anymore than they already were. So Airbus shouldn't even be hurt that much.. A lot of poor Mouthing going on here.
Boeing should be spending this time getting all the KC-46 issues and any Navy P-8 issues resolved while they're Pondering the 737 Max. 777X and NMA to come. This whole thing might well be worse for Airbus as this might just be the time that Boeing needs to "reload"! Everything Else? Is "Window dressing"...
 
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Stitch
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 9:17 pm

SEPilot wrote:
(Airbus Defence and Space) is much smaller than Boeing’s and much less able to subsidize the airliner division.


Based on the most recent figures I can find, Boeing DSS brings in roughly twice the revenue ADS does, but it is still only around 30% overall compared to the 50% BCA does. And the US Government accounts for around 30% of Boeing's overall revenue. So neither Airbus nor Boeing can really expect their other divisions to "subsidize" a significant reduction in commercial aviation and associated services revenues.
 
ewt340
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue Apr 28, 2020 9:21 pm

If I own a large company that wanted to get a piece of dem taxes bailout. I would pretend to say that my company are in dire need of cash injectionS.
I would make it seems like my company are ready to declare bankruptcy in 5 seconds if we don't get large sums of government bailouts.

Unless these companies publicly shown their own book, I don't think we need to believe or help them.
 
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ghost77
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 5:12 am

This is what happens when you increase production at stupid levels! Boeing was on the same path, and once MAX is free, they'll have 400 planes ready for delivery, that's A LOT OF SEATS in unmature markets!

You're not giving enough time to airlines to grow slowly, today, it's not only new planes, like 30 years ago, today there are still some Fokker 50/100, Boeing 737 classics, old A320s flying and lots of heavies too flying out there!

This was going to happen sooner or later... and it's got worse with a global crisis!

g77
 
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seahawk
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 6:01 am

And suddenly all those new planes burn a lot of money. A 15 year old fully paid for 737NG costs not much more than parking, a new A320NEO is burning cash like crazy.
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 6:38 am

seahawk wrote:
And suddenly all those new planes burn a lot of money. A 15 year old fully paid for 737NG costs not much more than parking, a new A320NEO is burning cash like crazy.
Same thing goes with a new and grounded 737 MAX - so Covid-19 has leveled the playing field! ;)

Airbus has just reported its 2020 Q1 results. It was partially affected by Covid-19.
https://www.airbus.com/newsroom/press-r ... sults.html
 
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seahawk
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 6:42 am

The funny thing is, that a MAX makes money at the moment for the airline, as Boeing has to pay compensations for the grounding.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 7:17 am

seahawk wrote:
And suddenly all those new planes burn a lot of money. A 15 year old fully paid for 737NG costs not much more than parking, a new A320NEO is burning cash like crazy.


Too easy to say. If both have been purchased outright from a cash-flow point of view both have "burned" a lot of money as they were paid for on delivery. Thus not "burning cash like crazy" for a new A320neo vs a 737NG. On cash-flow level the A320neo will actually be better than the 737NG due to lower maintenance costs and fuel costs. In other words: the 737NG "is burning cash vs an A320neo".

From an accounting point of view the 737NG is much better than the A320neo as the former has been fully depreciated and does not have any CAPEX attached to it. The A320neo will generate monthly depreciation costs, thus generating costs on the balance sheet.

Depreciation is the tool for companies to make sure you´re [bookwise] re-earning your investment to have enough capital accrued or at least your capital spent regained to have enough available for a replacement investment down the line. This is an accounting instrument. If all goes by plan you´re having positive cash at the end of your project (depreciation re-earned and your profit on top). If your cash-flow is below depreciation level you´re not even earning your capital costs.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 7:41 am

flee wrote:
Airbus has just reported its 2020 Q1 results. It was partially affected by Covid-19.
https://www.airbus.com/newsroom/press-r ... sults.html


Bleeding cash is right. :shock:
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seahawk
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 7:43 am

Flying-Tiger wrote:
seahawk wrote:
And suddenly all those new planes burn a lot of money. A 15 year old fully paid for 737NG costs not much more than parking, a new A320NEO is burning cash like crazy.


Too easy to say. If both have been purchased outright from a cash-flow point of view both have "burned" a lot of money as they were paid for on delivery. Thus not "burning cash like crazy" for a new A320neo vs a 737NG. On cash-flow level the A320neo will actually be better than the 737NG due to lower maintenance costs and fuel costs. In other words: the 737NG "is burning cash vs an A320neo".

From an accounting point of view the 737NG is much better than the A320neo as the former has been fully depreciated and does not have any CAPEX attached to it. The A320neo will generate monthly depreciation costs, thus generating costs on the balance sheet.

Depreciation is the tool for companies to make sure you´re [bookwise] re-earning your investment to have enough capital accrued or at least your capital spent regained to have enough available for a replacement investment down the line. This is an accounting instrument. If all goes by plan you´re having positive cash at the end of your project (depreciation re-earned and your profit on top). If your cash-flow is below depreciation level you´re not even earning your capital costs.


At the moment neither is burning fuel, as they are not flying and both create no income either. That is the point of a balanced fleet. With a part of the fleet being older and fully paid off, you can more easily adjust to changing demand and also have a better operational reserve. This value of the old birds has been ignored by many players in the industry in the last decade.
 
RvA
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 7:46 am

seahawk wrote:
The funny thing is, that a MAX makes money at the moment for the airline, as Boeing has to pay compensations for the grounding.


Does compensation for previously lost earnings count as making money now? The MAX did the damage before this already, but still isn’t flying anyway still on what little routes they could have maybe used them right now. You see the few flights BA, LH etc. are still operating mostly being done by NEOs now to take as much advantage as possible. Not something unfortunately the airlines that have MAXs sitting around are able to do.
 
oschkosch
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 8:25 am

seahawk wrote:
The funny thing is, that a MAX makes money at the moment for the airline, as Boeing has to pay compensations for the grounding.



Question is, is Boeing actually paying anything right now to Airlines? Or have they just offered a sort of fantasy comp i.e. compensation on paper in form of futuristic discounts on maintenance, spare parts or new orders? I don't think much cash has exchanged hands due to the max grounding..
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seahawk
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 8:48 am

I would bet that a lot of cash has exchanged hands. Do you think that the airlines paid the wetleases out of their own pocket in return for some promises or future discounts? Do you believe any airline would exchange actual money for some future discounts at the moment? If they would, they would probably exchange it for the cancellations fees for the rest of their MAX order.
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 8:52 am

oschkosch wrote:
seahawk wrote:
The funny thing is, that a MAX makes money at the moment for the airline, as Boeing has to pay compensations for the grounding.

Question is, is Boeing actually paying anything right now to Airlines? Or have they just offered a sort of fantasy comp i.e. compensation on paper in form of futuristic discounts on maintenance, spare parts or new orders? I don't think much cash has exchanged hands due to the max grounding..

I remember that when Airbus paid compensation for the A380 delivery delays, they were separately disclosed by the airlines in their accounts. Is anyone aware of any airline reporting the Max compensation in their financial statements?
 
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 11:41 am

Stitch wrote:
Jetport wrote:
Airbus may be forced to go back to its original setup as a quasi-governmental consortium to survive.


As with Boeing, Airbus will receive what direct and indirect support it needs from the government to keep operating. It will be harder for Airbus to unilaterally shed jobs and close locations to cut costs, but on the flip side, the EU governments are more proactive at providing direct support to help keep people employed and sites open even if they are superfluous at the moment which in itself can help Airbus keep those people on staff and those locations open.


Unlike Boeing, Airbus will not ask for government support and will secure additional credit lines.
Good moaning!
 
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Polot
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 11:51 am

PepeTheFrog wrote:
Stitch wrote:
Jetport wrote:
Airbus may be forced to go back to its original setup as a quasi-governmental consortium to survive.


As with Boeing, Airbus will receive what direct and indirect support it needs from the government to keep operating. It will be harder for Airbus to unilaterally shed jobs and close locations to cut costs, but on the flip side, the EU governments are more proactive at providing direct support to help keep people employed and sites open even if they are superfluous at the moment which in itself can help Airbus keep those people on staff and those locations open.


Unlike Boeing, Airbus will not ask for government support and will secure additional credit lines.


Airbus is already talking with various governments.

It makes sense, the moral high ground is only useful for fanboys on A.net. If Airbus can get in a better position using government support they will take it, especially if their direct competitor ends up getting government support too.
 
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PepeTheFrog
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 11:57 am

Polot wrote:
Airbus is already talking with various governments.

It makes sense, the moral high ground is only useful for fanboys on A.net. If Airbus can get in a better position using government support they will take it, especially if their direct competitor ends up getting government support too.


Guillaume Faury is not a A.net fanboy.

Faury said Airbus is not seeking government support
Good moaning!
 
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Polot
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 12:02 pm

PepeTheFrog wrote:
Polot wrote:
Airbus is already talking with various governments.

It makes sense, the moral high ground is only useful for fanboys on A.net. If Airbus can get in a better position using government support they will take it, especially if their direct competitor ends up getting government support too.


Guillaume Faury is not a A.net fanboy.

Faury said Airbus is not seeking government support

That article is over a month old now. A lot has changed as the situation turned much more serious than many were expecting in the West. Note in the article how he still thinks narrowbody demand will be strong, and just wide body demand will suffer...Airbus is singing a different tune now.
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 12:19 pm

Polot wrote:
PepeTheFrog wrote:
Polot wrote:
Airbus is already talking with various governments.

It makes sense, the moral high ground is only useful for fanboys on A.net. If Airbus can get in a better position using government support they will take it, especially if their direct competitor ends up getting government support too.

Guillaume Faury is not a A.net fanboy.

Faury said Airbus is not seeking government support

That article is over a month old now. A lot has changed as the situation turned much more serious than many were expecting in the West. Note in the article how he still thinks narrowbody demand will be strong, and just wide body demand will suffer...Airbus is singing a different tune now.

This is from today's 2020 Q1 media release:

Given the current COVID-19 environment, various measures were announced in late March 2020 to protect the Company’s financial liquidity and continue to fund its operations. These included securing a new credit facility amounting to € 15 billion, withdrawing the 2019 dividend proposal and suspending the voluntary top up in pension funding. In addition, a € 2.5 billion bond was issued, partially terming out the € 15 billion credit facility, and settled on 7 April 2020. In coming quarters, the Company will continue to focus on cash preservation and will be reducing cash outflows. Besides reducing expected 2020 capital expenditure by around € 700 million to around € 1.9 billion, the activated measures also include the deferral and suspension of activities which are not critical to business continuity and to meeting customer and compliance commitments.

The 2020 guidance was also withdrawn in March. The impact of COVID-19 on the business continues to be assessed and given the limited visibility, in particular with respect to the delivery situation, no new guidance is issued.

Unless I missed it, there is no mention of aid from governments.
 
jeffrey0032j
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 12:31 pm

flee wrote:
Polot wrote:
PepeTheFrog wrote:
Guillaume Faury is not a A.net fanboy.

Faury said Airbus is not seeking government support

That article is over a month old now. A lot has changed as the situation turned much more serious than many were expecting in the West. Note in the article how he still thinks narrowbody demand will be strong, and just wide body demand will suffer...Airbus is singing a different tune now.

This is from today's 2020 Q1 media release:

Given the current COVID-19 environment, various measures were announced in late March 2020 to protect the Company’s financial liquidity and continue to fund its operations. These included securing a new credit facility amounting to € 15 billion, withdrawing the 2019 dividend proposal and suspending the voluntary top up in pension funding. In addition, a € 2.5 billion bond was issued, partially terming out the € 15 billion credit facility, and settled on 7 April 2020. In coming quarters, the Company will continue to focus on cash preservation and will be reducing cash outflows. Besides reducing expected 2020 capital expenditure by around € 700 million to around € 1.9 billion, the activated measures also include the deferral and suspension of activities which are not critical to business continuity and to meeting customer and compliance commitments.

The 2020 guidance was also withdrawn in March. The impact of COVID-19 on the business continues to be assessed and given the limited visibility, in particular with respect to the delivery situation, no new guidance is issued.

Unless I missed it, there is no mention of aid from governments.

Not in official communications from Airbus but Reuters is mentioning this:

Source: https://www.reuters.com/article/us-heal ... SKCN2280S3

People familiar with the matter say Airbus is also in active discussions with European governments about tapping schemes to assist struggling industries, including billions of dollars' worth of state-guaranteed loans.
 
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flee
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 1:04 pm

jeffrey0032j wrote:
flee wrote:
Polot wrote:
That article is over a month old now. A lot has changed as the situation turned much more serious than many were expecting in the West. Note in the article how he still thinks narrowbody demand will be strong, and just wide body demand will suffer...Airbus is singing a different tune now.

This is from today's 2020 Q1 media release:

Given the current COVID-19 environment, various measures were announced in late March 2020 to protect the Company’s financial liquidity and continue to fund its operations. These included securing a new credit facility amounting to € 15 billion, withdrawing the 2019 dividend proposal and suspending the voluntary top up in pension funding. In addition, a € 2.5 billion bond was issued, partially terming out the € 15 billion credit facility, and settled on 7 April 2020. In coming quarters, the Company will continue to focus on cash preservation and will be reducing cash outflows. Besides reducing expected 2020 capital expenditure by around € 700 million to around € 1.9 billion, the activated measures also include the deferral and suspension of activities which are not critical to business continuity and to meeting customer and compliance commitments.

The 2020 guidance was also withdrawn in March. The impact of COVID-19 on the business continues to be assessed and given the limited visibility, in particular with respect to the delivery situation, no new guidance is issued.

Unless I missed it, there is no mention of aid from governments.

Not in official communications from Airbus but Reuters is mentioning this:

Source: https://www.reuters.com/article/us-heal ... SKCN2280S3

People familiar with the matter say Airbus is also in active discussions with European governments about tapping schemes to assist struggling industries, including billions of dollars' worth of state-guaranteed loans.

Yes, they are tapping into aid governments are providing for all employers. There was no mention of specific aid for Airbus alone. Governments may be having discussions with them as shareholders. But lets wait and see what happens...
 
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par13del
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 1:11 pm

PepeTheFrog wrote:
Unlike Boeing, Airbus will not ask for government support and will secure additional credit lines.

We know that Boeing requested support for its supply / support chain and declined government investment to the point where some politicians were angry, while other's said a bailout of Boeing should not be done. IMO Boeing may be the last one to request government support, especially when the mindset may still exist that they have not yet paid for the MAX fiasco and CODVID is just delaying the inevitable.
 
brindabella
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 1:27 pm

Jetport wrote:
flee wrote:
Looking at narrow bodies, it is still difficult to assess what Airbus' production rate needs to be given that the MAX is still grounded. If total demand for factory brand new narrow bodies is 400 in 2020, most of that will have to be fulfilled by Airbus. Those who want 737s will have to settle for leasing used 737NGs.


Total demand for new commercial aircraft (narrow or wide bodies) for 2020 is going to be close to zero. Every airline now has far more aircraft than they need. With many airline liquidations coming, used aircraft are about to become available in high quantities and at very low prices. Airbus and Boeing need production rates near zero to match demand for the next 6 - 18 months. That is not possible so they both have to come up with ways to keep going at very low production rates, certainly at far lower rates than Airbus's initial reduction. A330 NEO is toast and 777X is likely delayed.



Quite.

Boeing's 10/Month is presumably to keep skills alive.

Airbus' 10/Month similar, although harder to apportion across a multiplicity of of FALs.


Not to mention vicious Nationalistic interests involved.

But make no mistake - the newly-minted frames are on their way to the parking-lot.
Whether MAXs or 320neo-family frames.
No difference- A320-neo family frames or MAXs.

:shakehead:

All going to the parking lot.

cheers
Billy
 
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lightsaber
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 1:30 pm

Airbus consumed 8 billion Euros ($8.7B USD), half due to bribery settlement:

https://finance.yahoo.com/amphtml/news/ ... 26280.html
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 1:59 pm

PepeTheFrog wrote:
Stitch wrote:
Jetport wrote:
Airbus may be forced to go back to its original setup as a quasi-governmental consortium to survive.


As with Boeing, Airbus will receive what direct and indirect support it needs from the government to keep operating. It will be harder for Airbus to unilaterally shed jobs and close locations to cut costs, but on the flip side, the EU governments are more proactive at providing direct support to help keep people employed and sites open even if they are superfluous at the moment which in itself can help Airbus keep those people on staff and those locations open.


Unlike Boeing, Airbus will not ask for government support and will secure additional credit lines.

Fact check: Airbus is doing so according to Reuters. And fact check 2: Boeing is still not drawing on government aid, may even walk away from government aid if it meant government taking an equity stake. For now, Boeing is ok with getting liquidity from the market.
 
frmrCapCadet
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 2:48 pm

If we could have competence at the US, there would be behind the scenes discussion as to how aviation in the US and UK/EU will be restructured and saved. I am not a fan of America First or any other neo-fascist crap.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
astuteman
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 4:06 pm

Sokes wrote:
Vladex wrote:
He needs to keep or restart A380 and cut A330 .

What if Boeing as a consequence decides to restart B757?


What doesn't seem to be on people's radar is how much the current situation resets, or otherwise, the sorry WTO saga on both sides.
I use the word "reset" deliberately, as I can't see it being anything else.
It's going to be pretty difficult for any party to make any claims about "subsidies" from a high ground going forward, once the true scale of essential government intervention unravels.

Notwithstanding any of those who insist on "facts", alternative or otherwise. :)

Rgds
 
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Revelation
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 4:38 pm

astuteman wrote:
Sokes wrote:
Vladex wrote:
He needs to keep or restart A380 and cut A330 .

What if Boeing as a consequence decides to restart B757?

What doesn't seem to be on people's radar is how much the current situation resets, or otherwise, the sorry WTO saga on both sides.
I use the word "reset" deliberately, as I can't see it being anything else.
It's going to be pretty difficult for any party to make any claims about "subsidies" from a high ground going forward, once the true scale of essential government intervention unravels.

Notwithstanding any of those who insist on "facts", alternative or otherwise. :)

I also think people aren't understanding all the companies involved are thinking about survival more than strategic moves. None of the lending entities are going to be happy to see the money go onto speculative ventures such as a new 757 sized airplane. The main strategy going forward is to survive till the airlines are healthy enough to take some of the airplanes they have on order, not put more money into developing new models that will need costly engineering and testing resources and production ramp up till they can deliver any cash to help pay off the huge loans that have relatively short expiration dates.
Wake up to find out that you are the eyes of the world
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Wake now, discover that you are the song that the morning brings
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PepeTheFrog
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 5:13 pm

jeffrey0032j wrote:
Fact check: Airbus is doing so according to Reuters. And fact check 2: Boeing is still not drawing on government aid, may even walk away from government aid if it meant government taking an equity stake. For now, Boeing is ok with getting liquidity from the market.


Eh, "according to Reuters" doesn't make it a fact.

Here's another fact: Faury said Airbus is not seeking government support

Unless you choose to believe Reuters instead of the CEO of the company.
Good moaning!
 
jeffrey0032j
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Wed Apr 29, 2020 5:29 pm

PepeTheFrog wrote:
jeffrey0032j wrote:
Fact check: Airbus is doing so according to Reuters. And fact check 2: Boeing is still not drawing on government aid, may even walk away from government aid if it meant government taking an equity stake. For now, Boeing is ok with getting liquidity from the market.


Eh, "according to Reuters" doesn't make it a fact.

Here's another fact: Faury said Airbus is not seeking government support

Unless you choose to believe Reuters instead of the CEO of the company.

As mentioned, this quote was from a month back, things have changed for the worse since, the outlook is clearer but bleaker. Therefore, there is less of a reason to discount Reuter's reporting.

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