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

Wed Apr 29, 2020 5:38 pm

oschkosch wrote:
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..


It is likely a combination of all of the above, depending on the size of the order and the "importance" of the customer. If there are any cash payments, they will be reported (like when Qantas received some $300 million in direct compensation for their original 787 order).
 
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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 5:51 pm

Revelation wrote:
astuteman wrote:
Sokes wrote:
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.


The industry is facing production levels at 10 to 20% of capacity, that implies 75% of the workforce will be excess, destined for layoffs. In 1971, the billboard in Seattle saying "Will the last person leaving SEATTLE -- Turn out the lights". Employment went to 40% of its peak, only the very essential expenditures were made, this will be substantially worse. No NASA plane research unless NASA funds, no donations to charities, no corporate bonuses. Further complicating things will be union seniority, the oldest workes will be retained, all the workers with 10 years or less with the company will be excessed, fast forward 5 years, with retirements most of the trade corporate knowledge will have vanished. In that environment anyone caught intentionally leaving FOD in the planes will be strung up in the parking lot. There will be government support in the form of unemployment insurance to unprecedented levels. As Astuteman noted, "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.:

https://www.historylink.org/File/1287
 
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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 6:06 pm

JayinKitsap wrote:
The industry is facing production levels at 10 to 20% of capacity, that implies 75% of the workforce will be excess, destined for layoffs. In 1971, the billboard in Seattle saying "Will the last person leaving SEATTLE -- Turn out the lights". Employment went to 40% of its peak, only the very essential expenditures were made, this will be substantially worse. No NASA plane research unless NASA funds, no donations to charities, no corporate bonuses. Further complicating things will be union seniority, the oldest workes will be retained, all the workers with 10 years or less with the company will be excessed, fast forward 5 years, with retirements most of the trade corporate knowledge will have vanished. In that environment anyone caught intentionally leaving FOD in the planes will be strung up in the parking lot. There will be government support in the form of unemployment insurance to unprecedented levels. As Astuteman noted, "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.:

https://www.historylink.org/File/1287

Yet today we read Airbus's CEO suggesting rate 40 will stick for the next 2-3 months and they want to be prepared to aggressively go back to rate 60.
Ref: https://www.flightglobal.com/air-transp ... 27.article
Ref: https://www.flightglobal.com/air-transp ... 25.article

I'm not sure what's going on. To me it's a change in tone. Maybe he needs to do this to keep financial firms keen on loaning Airbus the money they need, or maybe he genuinely is getting feedback from customers that they can accept deliveries.

On the Boeing front, WN is deferring planes but also saying things like:

While some Max customers have cancelled orders in recent weeks, Romo says Southwest still prefers to take new jets.

“Our preference is to get new airplanes from Boeing,” she says.

Romo adds that Max’s 14% fuel savings (compared to 737NGs) “is still very meaningful and significant” despite tumbling fuel prices, which have eroded the financial value of efficiency.

Ref: https://www.flightglobal.com/orders-and ... 18.article

Some interesting statements, IMO.
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Sokes
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed Apr 29, 2020 6:29 pm

Some highlights from Q1:
https://www.airbus.com/investors/financ ... ports.html
3,6 billion Euro penalties
Airbus has 94 billion $ currency hedges at average 1,23 $/ Euro. Net fair value of derivatives financial instruments decrease this quarter is 3,4 billion Euro.
Value of asset in Dessault aviation decreased 348 million Euro
One web communication went bankrupt: 273 Mio Euro loss, part asset and part debt

The discount rate increased. Therefore pension provision could be reduced by 1,65 billion Euro. Add another 450 mio other reduced provisions. In total provisions reduced 2,1 billion.
531 million was to be paid to Bombardier for the A220 share.
4 billion is increase in inventory, which means ready planes.
660 mio Euro was spent on research and development.

Loss is 492 mio Euro, but other comprehensive loss is an additional 2,2 billion Euro. The equity shrank in one quarter from 6 billion Euro to 3,5 billion Euro.
With 110,5 billion liabilities that's not exactly abundant equity.
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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 6:39 pm

JayinKitsap wrote:
The industry is facing production levels at 10 to 20% of capacity, that implies 75% of the workforce will be excess, destined for layoffs.


Boeing announced today it intends to trim its total workforce by 10% (16,000 layoffs) and the bulk of that (7-10,000) will come from Puget Sound, which will see a 15% cut in the workforce.

They also announced production cuts to the 787 program to 7 per month by 2022 and the 777/777X will be cut to three per month in 2021. The 767 will remain at 3 per month and the 747 at 0.5 per month.

MAX production is currently planned to slowly ramp to 31 per month in 2021, but that will depend on market demand.

https://www.seattletimes.com/business/b ... tion-cuts/
 
Sokes
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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 6:49 pm

Revelation wrote:
astuteman wrote:
Sokes wrote:
What if Boeing as a consequence decides to restart B757?


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.

I was trying to make a joke. I just now read about Boeing suggesting a B757 successor. At any rate my joke was about the original B757.
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Thu Apr 30, 2020 4:09 am

Dmoney wrote:
Jaysus lads Airbus will be grand. It's more about setting the stage that it's a fight for survival to allow decisions to be made without consulting with stakeholders who would need to be consulted in other circumstances.

If Airbus need to fire 30% of their staff permanently and close say the Spanish factories that kind of decision is only possible if you present an existential situation which requires otherwise unthinkable moves.

While I overall agee with your post, Airbus is a political project. Do you suggest A400 production is shifted to other European countries?

blueflyer wrote:
Let's not fool ourselves. While it may have been an internal communication, the intended audience is also the governments where Airbus has significant operations to prepare them for massive job cuts and possibly shutting down factories. Mobile is first in line as it is the easiest plant to have massive job cuts both from social and political perspectives, up to shutting down all assembly save the A220.

Airbus employees and vendors in the UK are next. Compounding the ever-increasing likelihood of a no-deal Brexit to the virus' economic damages, there is no political risk whatsoever in cutting as much from the UK as possible. In a twist of fate, wing manufacturing may be safe for the mid-term, as there is probably zero appetite right now within Airbus for the significant capital expenditure required to relocate the operations elsewhere. The one risk I see is whether the French government wants to be creative and offers Airbus subsidized loans (*) and loan guarantees to cover the cost of moving wing manufacturing to Toulouse in order to keeps jobs while Airbus shuts down A320 and A380 production in France.

(*) if you think any government, especially the French government, is concerned about issuing financial instruments within the rules set by the EU, WTO, Basel Accords, etc. I have an ocean-view villa in the middle of the Sahara desert for sale you may be interested in.

I don't think Europe has an interest in escalating the trade war with the US. Eye for an eye means if somebody pokes out your eye, you may poke out his. But not more than that. It's a law to prevent escalation.
And just because the British wanted to do their own thing we should punish them?
I want the British back. I suspect that's not going to happen anytime soon. But now, just like any other time, is a good time to show that we want to work with them.To act like a disappointed lover is not helpful.
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Thu Apr 30, 2020 4:43 am

Sokes wrote:
I don't think Europe has an interest in escalating the trade war with the US. Eye for an eye means if somebody pokes out your eye, you may poke out his. But not more than that. It's a law to prevent escalation.
And just because the British wanted to do their own thing we should punish them?
I want the British back. I suspect that's not going to happen anytime soon. But now, just like any other time, is a good time to show that we want to work with them.To act like a disappointed lover is not helpful.

I doubt European governments will volunteer cutbacks in their backyard in order to preserve trans-Atlantic trade relationships. Closing the A320 line in Mobile is not retaliation anyway, it is going first where the cost of terminating jobs is lowest, whether actual or political costs. It's not Alabama politics that will determine the size of the rescue package Airbus will receive from its government shareholders and the constraints that will be attached.

Similar rationale with Airbus UK. The British government is not an Airbus shareholder and cannot make life difficult at the EU level (by attempting to block any rescue package for example). Add that Airbus is already on the record as stating Brexit under any-but-the-easiest form will result in job losses in the UK as activities are transferred back inside the EU's customs-free area, and it is clear that Airbus UK will bear a larger-than-proportional share of group-wide job losses.

Finally, "eye-to-eye" is a trade law? For whom? Certainly not the current occupant of 1600 Penn.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Thu Apr 30, 2020 4:58 am

Francoflier wrote:
Ah yes. This is the time when large companies and corporations break out the tissues and start coming up with the sob stories of how they're on the verge of collapse after a 10 year run of record profits just to see what juicy 'rescue package' they can get from their government.

2008 all over again.

I disagee. Corona isn't the fault of Airbus. Gambling losses were the fault of banks or better politicians changing rules.

At the end of financial year 2016 Airbus had 3,6 billion Euro equity and 107,4 billion Euro liabilities.
At the end of financial year 2017 Airbus had 13,4 billion Euro equity and 100,6 billion Euro liabilities.
At the end of financial year 2018 Airbus had 9,7 billion Euro equity and 105,5 billion Euro liabilities.
At the end of financial year 2019 Airbus had 6 billion Euro equity and 108,4 billion Euro liabilities.

2017 had 2,9 billion Euro normal profits and 10,6 billion Euro change in fair value of cash flow hedges, I believe that refers to their currency derivatives. Total comprehensive income was 10,6 billion Euro. Equity in this year improved from 3,7 to 13,3 billion Euro.

I'm confused. The annual report of 2017 states equity of 2017 with 13,4 billion Euro, while the annual report 2018 states the 2017 equity as 10,7 billion Euro.

Anyway 2017 1 billion Euro and 2018 1,2 billion Euro was distributed to shareholders.
Airbus used it's huge 2017 profit to increase equity. It's not 2008 all over again.

file:///C:/Users/User/Downloads/FY2017-Airbus-FINANCIAL-STATEMENTS-FINAL.pdf
file:///C:/Users/User/Downloads/FY2018-Airbus-FINANCIAL-STATEMENTS.pdf

Airbus is not exactly a lucky company. A340 didn't get the promised engines. A380 was a wrong decision. A400 didn't work out as desired.
At least their products now are good and most of development expenses and early production losses are behind them.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Thu Apr 30, 2020 5:16 am

leghorn wrote:
When their Management team start reassuring the Market that they are in the peak of health like some notable Airlines which have entered bankruptcy and administration then and only then will I get worried.

+1

morrisond wrote:
With all the massive increases in production over the last decade - why did Airbus not have a bigger rainy day fund? They paid Billions in Euros of Dividends and engaged in stock buybacks to neutralize executive stock compensation.

Do you have a particular year in mind?
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Thu Apr 30, 2020 5:56 am

Stitch wrote:
JayinKitsap wrote:
The industry is facing production levels at 10 to 20% of capacity, that implies 75% of the workforce will be excess, destined for layoffs.


Boeing announced today it intends to trim its total workforce by 10% (16,000 layoffs) and the bulk of that (7-10,000) will come from Puget Sound, which will see a 15% cut in the workforce.

They also announced production cuts to the 787 program to 7 per month by 2022 and the 777/777X will be cut to three per month in 2021. The 767 will remain at 3 per month and the 747 at 0.5 per month.

MAX production is currently planned to slowly ramp to 31 per month in 2021, but that will depend on market demand.

https://www.seattletimes.com/business/b ... tion-cuts/


I'm probably more pessimistic, looking at the extent of the fleets being parked right now, hard to imagine 80% back in service before spring 2021. With that, it will be the rare airline that can afford to accept their deliveries.

Boeing has to restart production and the rates you noted seem prudent, but there will be a number of planes getting stored until the airline can finance.
 
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Re: Airbus CEO: "“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company,”

Thu Apr 30, 2020 12:44 pm

Sokes wrote:
Dmoney wrote:
Jaysus lads Airbus will be grand. It's more about setting the stage that it's a fight for survival to allow decisions to be made without consulting with stakeholders who would need to be consulted in other circumstances.

If Airbus need to fire 30% of their staff permanently and close say the Spanish factories that kind of decision is only possible if you present an existential situation which requires otherwise unthinkable moves.

While I overall agee with your post, Airbus is a political project. Do you suggest A400 production is shifted to other European countries?


I wasn't making a specific point I don't know the details of Airbus internal workings. I'd imagine since that's defense and they make MRTT there they get paid regardless so that will stay open. But if they need to make cuts somewhere you can justify it with needs must.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Thu Apr 30, 2020 3:05 pm

Airbus and Boeing and the airlines and the supply chain and the banks and the EU/US governments need to be in conversation on how to survive.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Fri May 01, 2020 3:19 am

Boeing has announced that they have secured $25 billion via bond sales and will not seek funding from capital markets or the US Government at this time.

https://www.seattletimes.com/business/b ... -of-bonds/

(And I see we have a separate discussion on this at viewtopic.php?f=3&t=1445491)
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Fri May 01, 2020 4:23 am

Boeing's move will pressure Airbus to not seek a government bailout solution. Could make things interesting for them.
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RJMAZ
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Fri May 01, 2020 6:11 am

It will be very interesting indeed. Airbus would find it much more difficult to raise money privately. With production scaling back there has to be big job cuts. With Airbus being partly government owned each country will be fighting to keep jobs in their respective countries.

This has in the past been made public and it is a very dirty look for any potential investor. The A400m fiasco saw all respective parties trying to avoid payment for cost overruns. It showed how unwilling each party was to invest and a lack of faith in their own product. Airbus and Emirates fighting over a potential A380NEO was also a bad look. It was like Airbus had no money to fund development and wanted Emirates to foot the bill. This behaviour is what happens when a company has very little money in the bank and the financial department has full control of the company.

This is what potential investors look at when making a decision.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Fri May 01, 2020 8:23 am

RJMAZ wrote:
It will be very interesting indeed. Airbus would find it much more difficult to raise money privately. With production scaling back there has to be big job cuts. With Airbus being partly government owned each country will be fighting to keep jobs in their respective countries.

This has in the past been made public and it is a very dirty look for any potential investor. The A400m fiasco saw all respective parties trying to avoid payment for cost overruns. It showed how unwilling each party was to invest and a lack of faith in their own product. Airbus and Emirates fighting over a potential A380NEO was also a bad look. It was like Airbus had no money to fund development and wanted Emirates to foot the bill. This behaviour is what happens when a company has very little money in the bank and the financial department has full control of the company.

This is what potential investors look at when making a decision.

When the A400 contract was signed, who was supposed to pay for cost overruns? IIRC Airbus.
If only Emirates wanted the A380Neo, it makes sense that Airbus wants them to pay for it.
Maybe Airbus had no money because they don't work with deferred production costs?

Airbus credit ratings are A2 or A-, Boeings credit ratings Baa2 or BBB-.
http://cbonds.com/organisations/emitent/37531
http://cbonds.com/organisations/emitent/24323
That means Boeing is just good enough to qualify for FED bond purchases and therefore you are probably right that Airbus may have more difficulties raising money.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Fri May 01, 2020 12:07 pm

RJMAZ wrote:
It will be very interesting indeed. Airbus would find it much more difficult to raise money privately. With production scaling back there has to be big job cuts. With Airbus being partly government owned each country will be fighting to keep jobs in their respective countries.


They don't have to raise private money. Airbus can take another € 15 billion credit line, if they want, like they did last month.

Rasing private money is a nice position to be in, but not a requirement for survival.

This has in the past been made public and it is a very dirty look for any potential investor. The A400m fiasco saw all respective parties trying to avoid payment for cost overruns. It showed how unwilling each party was to invest and a lack of faith in their own product. Airbus and Emirates fighting over a potential A380NEO was also a bad look. It was like Airbus had no money to fund development and wanted Emirates to foot the bill. This behaviour is what happens when a company has very little money in the bank and the financial department has full control of the company.


Even without the credit line Airbus had € 15 billion in cash. I wouldn't name that "little money".
Good moaning!
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 05, 2020 2:46 pm

FG: Germany’s Airbus suppliers ‘face ruin’, warns trade association says:

“Unless we can guarantee a minimum delivery level for Airbus, a whole industry that has been built over 40 years will collapse. If we don’t get to that minimum level – 50% for widebodies and 60% for narrowbodies – we are finished,” he says.

The problem is being masked because Airbus is still paying for parts in the pipeline but that will end within 90 days, according to the article.

Many of these firms have bills to pay based on raw materials they've ordered in advance and machines they've ordered to try to meet the high production rate goals Airbus had set before COVID-19.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Mon May 11, 2020 8:29 pm

All the aid that the Government of Canada has granted Bombardier with impunity, the obstacles and delays that the EU has imposed on Boeing-Embraer plans, Chinese openly subsiding COMAC and now the expressive government aid that is expected to be provided to the Boeing and Airbus giants makes me think of an unusual route.
What if the Brazilian government lent US $ 3 billion to Embraer to develop a family of Airbus A321/320 direct competing aircraft in VERY favourable conditions? Much of the technology of the E2 and KC-390 could be used, certainly in 5 years time ...
 
Dmoney
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Mon May 11, 2020 11:31 pm

Sokes wrote:
Some highlights from Q1:
https://www.airbus.com/investors/financ ... ports.html
3,6 billion Euro penalties
Airbus has 94 billion $ currency hedges at average 1,23 $/ Euro. Net fair value of derivatives financial instruments decrease this quarter is 3,4 billion Euro.
Value of asset in Dessault aviation decreased 348 million Euro
One web communication went bankrupt: 273 Mio Euro loss, part asset and part debt

The discount rate increased. Therefore pension provision could be reduced by 1,65 billion Euro. Add another 450 mio other reduced provisions. In total provisions reduced 2,1 billion.
531 million was to be paid to Bombardier for the A220 share.
4 billion is increase in inventory, which means ready planes.
660 mio Euro was spent on research and development.

Loss is 492 mio Euro, but other comprehensive loss is an additional 2,2 billion Euro. The equity shrank in one quarter from 6 billion Euro to 3,5 billion Euro.
With 110,5 billion liabilities that's not exactly abundant equity.



Please stop. This is painful to read. Learn the difference between cash and non-cash.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 8:23 am

Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 8:44 am

VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.

While they have a huge backlog, one wonders what kind of quality this backlog is. Airbus will have to comb through the backlog to weed out the weaker customers to determine the strength of their order book. I won't be surprised if half the orders are not taken up!
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 8:48 am

VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.


The backlog is worth nothing. If they deliver a 1/3 of the planes would be a surprise.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 9:37 am

VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.

Backlog is not great collateral. It is not some tangible thing that banks get take possession of and sell in the event that Airbus fails to pay their loan, in fact it is entirely worthless in the event Airbus fails (which they won’t but still). Banks will use the backlog in assessing risk of lending to Airbus though.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 11:10 am

Polot wrote:
VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.

Backlog is not great collateral. It is not some tangible thing that banks get take possession of and sell in the event that Airbus fails to pay their loan, in fact it is entirely worthless in the event Airbus fails (which they won’t but still). Banks will use the backlog in assessing risk of lending to Airbus though.

Yes, for example, having a good backlog of non-performing orders will worsen the prospects of getting loans at a good rate.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 11:50 am

jeffrey0032j wrote:
Polot wrote:
VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.

Backlog is not great collateral. It is not some tangible thing that banks get take possession of and sell in the event that Airbus fails to pay their loan, in fact it is entirely worthless in the event Airbus fails (which they won’t but still). Banks will use the backlog in assessing risk of lending to Airbus though.

Yes, for example, having a good backlog of non-performing orders will worsen the prospects of getting loans at a good rate.


Woooo, what are you insinuating there?
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 12:22 pm

seahawk wrote:
VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.


The backlog is worth nothing. If they deliver a 1/3 of the planes would be a surprise.


And how much of the backlog of the other manufactuerer do you expect to be delivered?
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 12:30 pm

VV wrote:
jeffrey0032j wrote:
Polot wrote:
Backlog is not great collateral. It is not some tangible thing that banks get take possession of and sell in the event that Airbus fails to pay their loan, in fact it is entirely worthless in the event Airbus fails (which they won’t but still). Banks will use the backlog in assessing risk of lending to Airbus though.

Yes, for example, having a good backlog of non-performing orders will worsen the prospects of getting loans at a good rate.


Woooo, what are you insinuating there?

Not insinuating, otherwise I wouldn't have used the words "for example".
 
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seahawk
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 12:44 pm

US319 wrote:
seahawk wrote:
VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.


The backlog is worth nothing. If they deliver a 1/3 of the planes would be a surprise.


And how much of the backlog of the other manufactuerer do you expect to be delivered?


I can not see why the outlook for Boeing should be different, outside the military orders that is. We must understand that cancellations and deferrals have the same effect on the supply chain. So if you look at the 2020-2025 time frame, I think things look pretty bad.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 12:59 pm

seahawk wrote:
VV wrote:
Airbus has such a big backlog, it should not be a problem to get loans from banks with good interest rate. They can also issue bonds.

The backlog can be the collateral.

The backlog is worth nothing. If they deliver a 1/3 of the planes would be a surprise.

And yet Airbus has only cut its production rate by 1/3rd.

It must be a heck of a job to figure out which airplanes to build and which ones to not build.

Some airlines have already begun to refuse deliveries (Air Asia X), others have just made announcements they don't intend to take any more airplanes in 2020 (QF), some seem to be taking airplanes on schedule (maybe because they would lose too much money otherwise), others seem to want them earlier if possible (Air Baltic, Wizz).

I think Airbus is over producing. My previous link shows the supply chain is producing to earlier pre-covid orders. The key point will be when new orders need to be made.
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 1:43 pm

seahawk wrote:
US319 wrote:
seahawk wrote:

The backlog is worth nothing. If they deliver a 1/3 of the planes would be a surprise.


And how much of the backlog of the other manufactuerer do you expect to be delivered?


I can not see why the outlook for Boeing should be different, outside the military orders that is. We must understand that cancellations and deferrals have the same effect on the supply chain. So if you look at the 2020-2025 time frame, I think things look pretty bad.

Not only will the supply chain lose volume, but Airbus and Boeing must cut costs.

It is worse for Boeing as the MAX debacle means customers can cancel or defer at whim.

So far the Airbus A220 looks good with AirBaltic and JetBlue looking to accelerate deliveries.

Boeing will be hard hit due to the success in widebodies.

GE has already significantly furloughed. We can expect RR, Woodward, UTC (includes Pratt), Moog, and Meggitt to follow. Some have enough military contracts to be better off than others.

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

Tue May 12, 2020 2:39 pm

lightsaber wrote:
seahawk wrote:
US319 wrote:

And how much of the backlog of the other manufactuerer do you expect to be delivered?


I can not see why the outlook for Boeing should be different, outside the military orders that is. We must understand that cancellations and deferrals have the same effect on the supply chain. So if you look at the 2020-2025 time frame, I think things look pretty bad.

Not only will the supply chain lose volume, but Airbus and Boeing must cut costs.

It is worse for Boeing as the MAX debacle means customers can cancel or defer at whim.

So far the Airbus A220 looks good with AirBaltic and JetBlue looking to accelerate deliveries.

Boeing will be hard hit due to the success in widebodies.

GE has already significantly furloughed. We can expect RR, Woodward, UTC (includes Pratt), Moog, and Meggitt to follow. Some have enough military contracts to be better off than others.

Lightsaber


Did they state why they are accelerating deliveries for A220s? I do not understand the logic behind this.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 2:45 pm

Let’s not go overboard with JetBlue accelerating deliveries. Right now they are only receiving one more additional A220 next year (2021) compared to pre-covid fleet plans, and still only 1 in 2020.

Unsure how/if 2022 plans changed because not sure what pre-covid delivery schedule was.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 5:22 pm

Dmoney wrote:
Sokes wrote:
Some highlights from Q1:
https://www.airbus.com/investors/financ ... ports.html
3,6 billion Euro penalties
Airbus has 94 billion $ currency hedges at average 1,23 $/ Euro. Net fair value of derivatives financial instruments decrease this quarter is 3,4 billion Euro.
Value of asset in Dessault aviation decreased 348 million Euro
One web communication went bankrupt: 273 Mio Euro loss, part asset and part debt

The discount rate increased. Therefore pension provision could be reduced by 1,65 billion Euro. Add another 450 mio other reduced provisions. In total provisions reduced 2,1 billion.
531 million was to be paid to Bombardier for the A220 share.
4 billion is increase in inventory, which means ready planes.
660 mio Euro was spent on research and development.

Loss is 492 mio Euro, but other comprehensive loss is an additional 2,2 billion Euro. The equity shrank in one quarter from 6 billion Euro to 3,5 billion Euro.
With 110,5 billion liabilities that's not exactly abundant equity.



Please stop. This is painful to read. Learn the difference between cash and non-cash.

I spoke of highlights. Do you mean to say that important events are either cash or non cash?
Which part of what I wrote do you object to?
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JoseSalazar
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Tue May 12, 2020 5:33 pm

Polot wrote:
Let’s not go overboard with JetBlue accelerating deliveries. Right now they are only receiving one more additional A220 next year (2021) compared to pre-covid fleet plans, and still only 1 in 2020.

Unsure how/if 2022 plans changed because not sure what pre-covid delivery schedule was.

As of now the B6 2022 new planned delivery schedule keeps A220 deliveries the same (8) and NEO deliveries reduced from 15 to 7 (all 7 being LR).
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed May 13, 2020 12:09 am

JonesNL wrote:
lightsaber wrote:
seahawk wrote:

I can not see why the outlook for Boeing should be different, outside the military orders that is. We must understand that cancellations and deferrals have the same effect on the supply chain. So if you look at the 2020-2025 time frame, I think things look pretty bad.

Not only will the supply chain lose volume, but Airbus and Boeing must cut costs.

It is worse for Boeing as the MAX debacle means customers can cancel or defer at whim.

So far the Airbus A220 looks good with AirBaltic and JetBlue looking to accelerate deliveries.

Boeing will be hard hit due to the success in widebodies.

GE has already significantly furloughed. We can expect RR, Woodward, UTC (includes Pratt), Moog, and Meggitt to follow. Some have enough military contracts to be better off than others.

Lightsaber


Did they state why they are accelerating deliveries for A220s? I do not understand the logic behind this.

JetBlue is differing A321s and probably has A320s it could return (leased). The E-jets will probably be returned soon or sold. The logic is substituting lower cost to fly the reduced passenger loads.

AirBaltic is taking a risk that their lower cost basis will allow them to expand.

My opinion is lower cost airlines will be at an advantage during the recovery. I do expect 1st class to sell better, but people will want to travel on their reduced budgets.

I also speculate that aircraft pricing will never be lower than it is now. You realize we're talking deliveries 18 months to 3 years from now?

In other threads we've discussed Vietjet accelerating. I speculate Ryanair will slow until 2022 then come out in a growth surge.

I expect poor yields for years. There is a reason only those airlines with costs under control are planning growth. For those airlines, there is a huge growth opportunity ahead. The question is timing. Accept early... bad losses. Accept late, miss the opportunity to buy aircraft cheap and easy hiring.


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

Wed May 13, 2020 9:23 pm

The Telegraph ( https://www.telegraph.co.uk/business/20 ... 0000-jobs/ ) tells us:

Airbus could axe more than 10,000 staff within days as the European aerospace behemoth slashes costs in the face of a collapse in air travel.

Executives are due to hold a high-level conference call next week to thrash out details of where the blow will fall among the company’s 134,000 staff amid the worst ever crisis for the industry.

One senior source warned cuts will be “imminent and savage”, adding: “Boeing cut 10pc of its workforce and something along the same lines is expected."

So no definitive announcement, but it looks like layoffs are likely.
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Bricktop
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Wed May 13, 2020 11:09 pm

Revelation wrote:
The Telegraph ( https://www.telegraph.co.uk/business/20 ... 0000-jobs/ ) tells us:

Airbus could axe more than 10,000 staff within days as the European aerospace behemoth slashes costs in the face of a collapse in air travel.

Executives are due to hold a high-level conference call next week to thrash out details of where the blow will fall among the company’s 134,000 staff amid the worst ever crisis for the industry.

One senior source warned cuts will be “imminent and savage”, adding: “Boeing cut 10pc of its workforce and something along the same lines is expected."

So no definitive announcement, but it looks like layoffs are likely.

Yes, but under 10%? I would call that a win at this point.
 
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Thu May 14, 2020 12:13 am

Bricktop wrote:
Yes, but under 10%? I would call that a win at this point.

Me too. It's been noted on this forum that it seems the airlines are doing heavier layoffs than the vendors. In the tech sector, companies do 10% layoffs in response to softer business projections, never mind a worldwide pandemic with unknowable impact on future business. I'm not sure what to make of it.
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flee
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Re: Airbus CEO: "“We’re bleeding cash; may threaten existence of company"

Thu May 14, 2020 2:20 am

Revelation wrote:
Bricktop wrote:
Yes, but under 10%? I would call that a win at this point.

Me too. It's been noted on this forum that it seems the airlines are doing heavier layoffs than the vendors. In the tech sector, companies do 10% layoffs in response to softer business projections, never mind a worldwide pandemic with unknowable impact on future business. I'm not sure what to make of it.

Perhaps, aerospace industry employees are considered as highly skilled workers. They take many years to train and bring up to speed. Airbus may be weighing up the cost to retain these people vs the cost of training new employees when they are required 3 or 4 years down the road. Perhaps, those who remain may also be asked to take some pay cut (maybe a 10% pay cut).

Airbus also believes that in the long term, demand for airliners will be maintained - they may consider this as a short term setback. However, Covid-19 is unprecedented - it has affected every country and everyone. Recovery from this may take longer than anyone of us imagined. Air travel may never be the same again. So lets see what happens!

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