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ScottB
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Re: Airbus puts supply chain executive at helm of A220

Thu May 13, 2021 6:45 pm

tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


DL order was made with Bombardier and we all know it was uneconomical for BBD. The B6 order was also negotiated with BBD; there was already an MOU in place when the initial Airbus partnership on the project was announced. Similarly, the Breeze order would have already been under negotiation at that time; I think it's unlikely that Breeze would have only negotiated with Embraer in the absence of A220 as an option.

None of this says the customers wouldn't order A319/320neo in the absence of A220 as a choice.
 
tphuang
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Re: Airbus puts supply chain executive at helm of A220

Thu May 13, 2021 7:02 pm

ScottB wrote:
tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


DL order was made with Bombardier and we all know it was uneconomical for BBD. The B6 order was also negotiated with BBD; there was already an MOU in place when the initial Airbus partnership on the project was announced. Similarly, the Breeze order would have already been under negotiation at that time; I think it's unlikely that Breeze would have only negotiated with Embraer in the absence of A220 as an option.

None of this says the customers wouldn't order A319/320neo in the absence of A220 as a choice.


Right, so in those 3 cases, A319/320NEO was not considered as a viable option despite the fact that BBD was offering A220. So, Airbus was incentivized to offer A319/320NEO to win the sales, but the airlines did not consider it. What does that tell you? They don't want A319/32N0EO. Both DL and B6 only wanted A321NEO.

There is also the AC order which was made in no small part due to the Canadian connection. I don't know enough about AF or airBaltic situation to comment on them. These are your largest A220 customers up to this point.

All these are orders that Airbus picked up without having to sacrifice any potential of A320NEO order. And I'd be shocked if Airbus do not score a lot more firm A220 orders with DL/B6.
 
ScottB
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Re: Airbus puts supply chain executive at helm of A220

Thu May 13, 2021 7:43 pm

tphuang wrote:
Right, so in those 3 cases, A319/320NEO was not considered as a viable option despite the fact that BBD was offering A220. So, Airbus was incentivized to offer A319/320NEO to win the sales, but the airlines did not consider it. What does that tell you? They don't want A319/32N0EO. Both DL and B6 only wanted A321NEO.


We still don't know what the order competitions would have looked like in the absence of the C-Series as an option. I suspect we would have just been looking at the usual A32X vs. 737NG as I don't think Airbus or Boeing would have moved forward with the neo or MAX programs otherwise. DL, B6, Breeze might not have asked for an offer from Airbus if they didn't think they'd meet the fire sale prices BBD was apparently willing to offer to get some momentum behind the program.
 
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reidar76
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Re: Airbus puts supply chain executive at helm of A220

Thu May 13, 2021 8:04 pm

I find it amusing that some here, all the sudden, is so concerned that Airbus isn't making enough short term profits.

Airbus is making profits even though this crises. It is a solid company. There is no reason to pursue short term profits. They a building a solid foundation and are investing in future. The company board and shareholders are all in.

The A220 is important for three main reasons:

1) To have a good product, better than the competitors, covering the 100 to 160 seats market

2) Single aisle is where money is made. It is important to de-risk, and not bet the company on just one aircraft family. Think of the possibilities for Boeing if they had a partially overlapping narrowbody family certified and available when the 737 MAX crises first occurred.

3) All aircraft families comes to an end eventually. It takes decades to industrialise and streamline everything for high volume production like the A320 and 737. When it is time to replace the A320 family, the A220 will be at its hight.

I find it more important to have two narrowbody families than two widebody families. Airbus have the newest clean-sheet narrowbody family and the newest clean-sheet widebody family. Additionally, Airbus have the highest production narrowbody family, with the most in-service aircraft. Airbus have delivered more than 1500 A330 family aircraft since 1994. If we include all aircraft with the same basic fuselage as the A330, the A300, A310, A340, aircraft manufactured on the same final assembly line, at the same time, the total is more than 2700 widebody aircraft.

I would say the A220 makes Airbus a larger and more robust competitor. It doesn't matter if it takes a few more years to make break even on a per unit basis. Remember that Airbus haven't paid much for the aircraft in the first place (innovation, development and certification etc.).
 
tommy1808
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 5:30 am

ScottB wrote:
tphuang wrote:
None of what you said above changes the fact that some airlines just don't want A320NEO. And as time goes on, A320 is only becoming less and less desirable. That's why Airbus is shifting more and more production to the more profitable A321. A220 is getting orders because airlines are finding it very economical. You can give up on A220 right now and not have a replacement for the A319/A320 segment of the market. Or you can take lower margins to build up this replacement and focus your A320NEO family on A321NEO and possible A322 to counter NMA.

Fundamentally, you are making an argument against investing for the future.


So, to free up production line space for the more profitable A321, they should take losses on A220? That's nonsense..


If the A321 makes you 5 extra million in margin over the A320, and the A220 incurs 4 million in losses a piece, it still makes good economic sense to do just that.

Airbus also needs to sell some 600 or so A32x a year extra to drop production cost another 10~13%, 50 A220s do the same for that program. Selling 500 A32x doesn´t change the backlog by much, selling 500 A220 doubles the backlog. If it costs Airbus 40 million to make one, doubling the backlog, and productions rates with it, may very well save 10 Billion in production cost (10-13% of 1000x40 million). So, aircraft sold at a nominal loss may end up being made at a profit.

Keep in mind that pre-Covid every single A220 would have been build on top on however many A32x Airbus could make ....

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Weatherwatcher1
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 12:45 pm

reidar76 wrote:
I find it amusing that some here, all the sudden, is so concerned that Airbus isn't making enough short term profits.

Airbus is making profits even though this crises. It is a solid company. There is no reason to pursue short term profits. They a building a solid foundation and are investing in future. The company board and shareholders are all in.

The A220 is important for three main reasons:

1) To have a good product, better than the competitors, covering the 100 to 160 seats market

2) Single aisle is where money is made. It is important to de-risk, and not bet the company on just one aircraft family. Think of the possibilities for Boeing if they had a partially overlapping narrowbody family certified and available when the 737 MAX crises first occurred.

3) All aircraft families comes to an end eventually. It takes decades to industrialise and streamline everything for high volume production like the A320 and 737. When it is time to replace the A320 family, the A220 will be at its hight.

I find it more important to have two narrowbody families than two widebody families. Airbus have the newest clean-sheet narrowbody family and the newest clean-sheet widebody family. Additionally, Airbus have the highest production narrowbody family, with the most in-service aircraft. Airbus have delivered more than 1500 A330 family aircraft since 1994. If we include all aircraft with the same basic fuselage as the A330, the A300, A310, A340, aircraft manufactured on the same final assembly line, at the same time, the total is more than 2700 widebody aircraft.

I would say the A220 makes Airbus a larger and more robust competitor. It doesn't matter if it takes a few more years to make break even on a per unit basis. Remember that Airbus haven't paid much for the aircraft in the first place (innovation, development and certification etc.).



Why is Airbus trying to make the A220 profitable amusing? While the A220 makes Airbus larger, I’m not sure a loss making program makes them more robust. It limits their ability to invest elsewhere.

Almost three years after renaming the model to A220 and obtaining good purchase contracts, the European planemaker has not yet managed to make the plane profitable or at least capable of generating less losses.

…ctd

Schultz will have the goal of reducing production costs for the A220 by 20 percent, according to Reuters sources. Airbus would have already managed to move in this direction with suppliers such as Spirit Aero Systems and Raytheon, but it was not enough to stem the loss


https://www.airway1.com/airbus-struggle ... -aircraft/

Schultz is being out in charge to get the airplane profitable with the goal of 20% production cost reduction
 
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Revelation
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 1:07 pm

Weatherwatcher1 wrote:
Why is Airbus trying to make the A220 profitable amusing? While the A220 makes Airbus larger, I’m not sure a loss making program makes them more robust. It limits their ability to invest elsewhere.

Almost three years after renaming the model to A220 and obtaining good purchase contracts, the European planemaker has not yet managed to make the plane profitable or at least capable of generating less losses.

…ctd

Schultz will have the goal of reducing production costs for the A220 by 20 percent, according to Reuters sources. Airbus would have already managed to move in this direction with suppliers such as Spirit Aero Systems and Raytheon, but it was not enough to stem the loss

https://www.airway1.com/airbus-struggle ... -aircraft/

Schultz is being out in charge to get the airplane profitable with the goal of 20% production cost reduction

Good luck to him. It's going to be no easy task getting the supply chain to accept eighty cents on the dollar as they are getting whip-lashed by the ups and downs of the covid epidemic, especially after the two biggest subs have already made concessions "in that direction".
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MIflyer12
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 1:29 pm

Revelation wrote:
Weatherwatcher1 wrote:
Why is Airbus trying to make the A220 profitable amusing? While the A220 makes Airbus larger, I’m not sure a loss making program makes them more robust. It limits their ability to invest elsewhere.

Almost three years after renaming the model to A220 and obtaining good purchase contracts, the European planemaker has not yet managed to make the plane profitable or at least capable of generating less losses.

…ctd

Schultz will have the goal of reducing production costs for the A220 by 20 percent, according to Reuters sources. Airbus would have already managed to move in this direction with suppliers such as Spirit Aero Systems and Raytheon, but it was not enough to stem the loss

https://www.airway1.com/airbus-struggle ... -aircraft/

Schultz is being out in charge to get the airplane profitable with the goal of 20% production cost reduction

Good luck to him. It's going to be no easy task getting the supply chain to accept eighty cents on the dollar as they are getting whip-lashed by the ups and downs of the covid epidemic, especially after the two biggest subs have already made concessions "in that direction".


There's a little more to it than that. It's not as if all production cost is purchased assemblies. Even a 20% price reduction across all parts wouldn't give anything like a 20% cost reduction.

Given the prior statements on zero contribution margin I will hazard that even a 20% manufacturing cost reduction will not give them a normal profit. Overheads and SG&A are not trivial fractions of cost. That means the incentive to sell A32Xneos ahead of A220s will remain.
 
Babyshark
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 2:33 pm

tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.
 
Babyshark
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 3:15 pm

ewt340 wrote:
tphuang wrote:
ScottB wrote:

So, to free up production line space for the more profitable A321, they should take losses on A220? That's nonsense.

I don't disagree that A220 could be an investment in the future -- but it needs to have a clear path to profitability which won't damage margins on the A320neo.

In the end, customers will take the available product which most closely matches their needs at an acceptable price. If the A220-300 (or -500) isn't available, they're probably taking the A320neo or A319neo instead. They're not going to buy 737 MAX or E195-E2 in a fit of pique.


The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Not really, but other airlines seems to like A320neo. It's currently the best selling model of the series. Many LCCs around the world seems to like A320neo.


With nearly 4000 orders for the A320Neo since the CS was announced, I think it's doing "okay". :lol: As to the A321N vs 320N, I think some airlines out here are finding the economics of the 321/321N are just outstanding. Why bother with a smaller revenue version that costs nearly the same?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.
 
tphuang
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 3:20 pm

Babyshark wrote:
tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.

you will never develop a new aircraft with that kind of attitude
 
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Polot
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 3:24 pm

tphuang wrote:
Babyshark wrote:
tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?


Delta purchased 20 used E190s from Boeing and were going to fly them in mainline service: https://news.delta.com/embraer-190-what-you-should-know

After the CS order DL scrapped plans to fly the planes and sold them upon delivery to other parties.
 
ScottB
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 3:30 pm

tphuang wrote:
When did DL ever have E90?


Delta never had the E190 in the active fleet, but they did a deal with Boeing that involved used E190s that Boeing had agreed to purchase from AC to facilitate their order for the 737 MAX. IIRC they even took delivery of those planes from Boeing but they were sold onward to a lessor.
 
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 3:38 pm

tphuang wrote:
Babyshark wrote:
tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.

you will never develop a new aircraft with that kind of attitude


The A220 is already developed, it is totally finished, and it still cannot make money on an ongoing production basis (all development costs excluded!). This is the one and only issue. It certainly appears the smaller versions of the 737MAX and A32XNEO are cheaper to make than the smaller A220. Heck, maybe the A321NEO and MAX9/10 are cheaper to make than the A220-300? A smaller more expensive aircraft with higher CASM is a very tough sell. Because of the the 737MAX and A32XNEO sitting just above it, Airbus really has a challenge in getting costs down. Because so far the market expects the smaller A220 to be cheaper than the 737MAX and A32XNEO just above and Airbus is having zero luck selling this modern "wonder plane" :roll: at a price that covers their costs.
 
Babyshark
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 4:11 pm

Jetport wrote:
tphuang wrote:
Babyshark wrote:

Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.

you will never develop a new aircraft with that kind of attitude


The A220 is already developed, it is totally finished, and it still cannot make money on an ongoing production basis (all development costs excluded!). This is the one and only issue. It certainly appears the smaller versions of the 737MAX and A32XNEO are cheaper to make than the smaller A220. Heck, maybe the A321NEO and MAX9/10 are cheaper to make than the A220-300? A smaller more expensive aircraft with higher CASM is a very tough sell. Because of the the 737MAX and A32XNEO sitting just above it, Airbus really has a challenge in getting costs down. Because so far the market expects the smaller A220 to be cheaper than the 737MAX and A32XNEO just above and Airbus is having zero luck selling this modern "wonder plane" :roll: at a price that covers their costs.


Agreed.

And I wouldn’t be surprised at all if the 321 is cheaper to build then a 220.

The mission of the 220 here was related to controlling the “jumbo regional jet” product on the mainline side. It may not be the cheapest but they had a different perspective.

They knew it had issues. And it has had issues. Hopefully Airbus can fix some but some are just the design.
 
Babyshark
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 4:27 pm

tphuang wrote:
Babyshark wrote:
tphuang wrote:
The 3 largest A220 orders so far:
DL - competition between c-series and 737-700
B6 - competition between A220 and E2
Breeze - most list competition between A220 and E2

None of these airlines wanted A319/A320NEO.


Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.

you will never develop a new aircraft with that kind of attitude


Note I said order.

And developing a new aircraft should not happen if you don’t know if it will be profitable. If it will, do it. But that’s not the issue here, they both exist now, one is the cornerstone of the company and the other loses money. Stretching won’t solve it because what was designed is a 100 seater, it needs more than fuselage plugs.
 
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 4:45 pm

Babyshark wrote:
tphuang wrote:
Babyshark wrote:

Our CS order at Delta was to replace a used E190 order. It had nothing to do with the 73. We even made a deal for a discount if we limited the unnecessary (and now it turns out not really usable) range it supposedly offered.


What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?

I still look at it from an Airbus pov, you have one that is making a lot of money and one that is losing money and needs more investment. I'd concentrate on the one making money. But I guess some think Airbus should replace the one making money with the one not making money.

you will never develop a new aircraft with that kind of attitude


Note I said order.

And developing a new aircraft should not happen if you don’t know if it will be profitable. If it will, do it. But that’s not the issue here, they both exist now, one is the cornerstone of the company and the other loses money. Stretching won’t solve it because what was designed is a 100 seater, it needs more than fuselage plugs.

That is incorrect. Bombardier produced the CS100 first, but by their own words, the CS300 was the base model. The CS100 is a shrink. The (now) A220-300 is 130 seats in a standard 2-class configuration. One stretch, to a -500, is completely normal, and absolutely feasible. If the CS300 had been the biggest size possible, Boeing and Airbus would probably not have introduced the NEO and MAX with such haste.
 
WIederling
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 6:48 pm

aemoreira1981 wrote:
I have to wonder why Airbus didn't can the A319neo completely...at hot and high, the A320neo is just as capable as the A319 is at hot and high airports. That would make the A220-300 basically unchallenged in the 150-seat market. Airbus is competing against itself, especially since the range difference is going to be negligible.


customers may demand commonality. A319/20/21 feed from the same trough.
Buy A220 would require a full new set of infrastructure, pilot pool, ... .
Murphy is an optimist
 
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Polot
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Re: Airbus puts supply chain executive at helm of A220

Fri May 14, 2021 6:54 pm

WIederling wrote:
aemoreira1981 wrote:
I have to wonder why Airbus didn't can the A319neo completely...at hot and high, the A320neo is just as capable as the A319 is at hot and high airports. That would make the A220-300 basically unchallenged in the 150-seat market. Airbus is competing against itself, especially since the range difference is going to be negligible.


customers may demand commonality. A319/20/21 feed from the same trough.
Buy A220 would require a full new set of infrastructure, pilot pool, ... .

Also by the time Airbus got the A220 the A319neo was finished anyways. The first frame had already flown...might as well certify it. It costs Airbus next to nothing to continue offering it, and finishing certification was likely cheaper than scrapping existing frames and paying penalties out for order cancellations.
 
JayinKitsap
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 4:36 am

The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.
 
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Revelation
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 10:52 am

JayinKitsap wrote:
The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.

I don't think performance is being questioned. I think it's more about Airbus's ability to make a profit building them. DL is said to have very attractive pricing. It might be better for the program if DL doesn't take up any options.
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astuteman
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 1:02 pm

Revelation wrote:
JayinKitsap wrote:
The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.

I don't think performance is being questioned. I think it's more about Airbus's ability to make a profit building them. DL is said to have very attractive pricing. It might be better for the program if DL doesn't take up any options.


I will confess to being somewhat puzzled by the tenor of this thread in a couple of ways.......

I find the notion that Airbus won't at some point get the programme up to profitability challenging.
It may take longer than they thought to do so, but the appeal of the product in the marketplace looks pretty established to me.
The market for it certainly seems capable of supporting the 12 per month target that was set.

It's clear that they need to work on the production and supply paradigm.
We seem to have a lot of manufacturing "experts" on here that in reality can't probably spell the word, much less understand it in a complex integrated product environment (at best we will get quotes based on parts production, which is not remotely the same), but this being a web forum, get to peddle their views.....
Ask Boeing. Tripling production when the process is still being transformed is a recipe for disaster.
I wonder how many black belt MRL practitioners we have on here

Aside from the fact that the A220 was never in with a shout at WN whatever the price, that's one of the reasons Airbus won't have been too hard over on it in my opinion.
They'll get those 100 frames at better margin, at better timing for the production process too, at some point.
The Delta options should be considered in that context.

I also don't get the "either/or" tenor of the A32XNEO vs A220 investment either.
The route to investment and volume for the A320 family is established and in process. I don't see them as mutually exclusive.
The A220 investment is complementary in my view, not conflicting, as seems to be suggested.

I recognise that they did not just pay $1 for the Programme, and can see why this solicits an emotional response.
They paid about $600M for the Bombardier share.
There have been investments in both Quebec and Mobile, but some $610M of that was funded by Bombardier.
I don't know how deep Airbus are in terms of capital investment on the programme, but I suspect it's fairly limited due to the above
They've clearly invested in product development in order to certify the MTOW increases.
And yes, they'll have to invest in product development for cost reduction. But that is true for every long-term manufactured product....

I've no idea how many 787's or A350's ended up being sold at a loss, but in both cases it will have been similar to the number of A220's currently on order.
As far as I'm aware, Airbus only broke even on A350 production in 2018, and it makes me wonder just how profitable they are in 2021 at rate 6
I'm sure Airbus would like the A220 backlog to be profitable, but it sort of is what it is - a step to be gone through to long-term profitability.

The A220 will be around for a very long time in my opinion, and will make money for Airbus.
It's never going to make the margins that the high volume A320 series make.
But then I don't see that as "either/or" as I said.
Unless of course the armchair CEO's who have no idea what they don't know are going to profess to know Airbus's cost structure and markets better than Airbus.
I've got news for them - they don't.

Rgds
 
MIflyer12
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 2:19 pm

astuteman wrote:
I find the notion that Airbus won't at some point get the programme up to profitability challenging.


I don't understand why that possibility is hard for you to understand. It's clear BBD didn't tool this to make 40 frames a month to compete on scale with MAXs and 320neos. There are lots of products and services that fail in the marketplace - where there aren't enough people willing to pay the cost of production. And I do mean costs of production - forget about what's been sunk by BBD and Airbus to this point.

The key phrase is zero contribution margin, as cited in this Flight Global piece from February this year: https://www.flightglobal.com/aerospace/ ... 84.article

Asam says the company has seen a “shift away” from twin-aisles which had “good production margins” and a move towards the A220 which is still loss-making.

“There’s a lower contribution margin from widebodies and none from the A220,” he states.


'None' doesn't even state how far below variable cost breakeven the product may be.

Thirteen years from 787 launch Boeing delivered 136 frames (at about 3.5x the list price of an A220), compared to thirty-eight 38 A220s last year.

Just wishing for it, or repeating nonsense, doesn't solve the cost problem. I could ask a few of you what training and experience you have in manufacturing cost accounting or capital budgets management but I think I already know the answer.
 
tsr22
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 2:37 pm

Thank you Astuteman for a balanced view of the A220 likely success and contribution to Airbus profits.
And yes the new Global Procurement Head would be insane not to ignore all the latest learning efficiencies like for example Boeing's amazing in house fully piped wing building systems and myriad of other build process improvements which have decimated their aircraft manufacturing costs.
But his selection may suggest hefty low hanging procurement (purchased parts) savings remain on the table and his task to ensure they are captured as a matter of urgency. Top leasing companies signed up just prior to the pandemic reflected an increasing global appetite for the plane so perhaps Airbus sees this as a timely moment to negotiate "parts" prices down, possibly significantly reducing the aircrafts cost.
 
yyztpa2
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 7:48 pm

Airbus put a sourcing executive in charge of the program why? Many posts on here think because they think the program is not long-term viable. Odd.

Does a.net have an emoticon for an armchair?
 
frmrCapCadet
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 9:03 pm

A lower passenger count and 2-3 abreast seating is inherently less stress and more comfortable than 3-3. I would choose it and pay some extra to fly on the 220. (if I could tell what I were going to get if I bought a ticket). But it has got to be worrisome that the clear paths to profits and good margins still are not clear and determined.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
JayinKitsap
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 9:04 pm

My point is that the A220 is now past its initial orders stage, with a significant backlog at this time, over 6 years production. The availability of other new NB and the large quantity of existing frames on the market is really limiting the opportunity of orders at profitable margins. So the backlog will be worked down for a few years.

Airlines that have the A220 are finding out the real performance of it. They have options that are priced at the initial order discounts, substantially lower than current pricing should be. IF the airlines like the plane it is logical that these options will be exercised. That will be the foundation of an excellent program.

Case in point: the 77W - it started out well but the surge of initial orders stalled by the time of EIS. A couple of years later after the actual performance was established a second surge of orders occurred, followed later by a third big surge. It turned the program from a good to excellent performer. I hope the A220 has a similar trajectory.


astuteman wrote:
Revelation wrote:
JayinKitsap wrote:
The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.

I don't think performance is being questioned. I think it's more about Airbus's ability to make a profit building them. DL is said to have very attractive pricing. It might be better for the program if DL doesn't take up any options.


I will confess to being somewhat puzzled by the tenor of this thread in a couple of ways.......

I find the notion that Airbus won't at some point get the programme up to profitability challenging.
It may take longer than they thought to do so, but the appeal of the product in the marketplace looks pretty established to me.
The market for it certainly seems capable of supporting the 12 per month target that was set.

It's clear that they need to work on the production and supply paradigm.
...

The Delta options should be considered in that context.

...

Unless of course the armchair CEO's who have no idea what they don't know are going to profess to know Airbus's cost structure and markets better than Airbus.
I've got news for them - they don't.

Rgds
 
Vicenza
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Re: Airbus puts supply chain executive at helm of A220

Sat May 15, 2021 9:36 pm

yyztpa2 wrote:
Airbus put a sourcing executive in charge of the program why? Many posts on here think because they think the program is not long-term viable. Odd.


Because, for whatever reason, they believe he is the right choice at this time. It probably would come as a shock to some on here but it's a guaranteed bet that Airbus know what they are doing with, and within, their business infinitely more than any poster on here.....who only like to guess and pretend to themselves they do.
 
astuteman
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 1:57 am

MIflyer12 wrote:
astuteman wrote:
I find the notion that Airbus won't at some point get the programme up to profitability challenging.


I don't understand why that possibility is hard for you to understand. It's clear BBD didn't tool this to make 40 frames a month to compete on scale with MAXs and 320neos. There are lots of products and services that fail in the marketplace - where there aren't enough people willing to pay the cost of production. And I do mean costs of production - forget about what's been sunk by BBD and Airbus to this point.

The key phrase is zero contribution margin, as cited in this Flight Global piece from February this year: https://www.flightglobal.com/aerospace/ ... 84.article

Asam says the company has seen a “shift away” from twin-aisles which had “good production margins” and a move towards the A220 which is still loss-making.

“There’s a lower contribution margin from widebodies and none from the A220,” he states.


'None' doesn't even state how far below variable cost breakeven the product may be.

Thirteen years from 787 launch Boeing delivered 136 frames (at about 3.5x the list price of an A220), compared to thirty-eight 38 A220s last year.

Just wishing for it, or repeating nonsense, doesn't solve the cost problem. I could ask a few of you what training and experience you have in manufacturing cost accounting or capital budgets management but I think I already know the answer.


I'm not sure why my previous post got deleted, but in answer to your question, I have 30 years firstly as a line manager, and then as an executive, in the cost structures and capital budgets associated with complex manufacturing, and am doing so today.
I understand what "no contribution" means.

To correct that and set the programme for the long term is why Airbus have put a top sourcing executive into the programme - no?

Rgds
 
rbavfan
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 3:43 am

Elementalism wrote:
My opinion and I am being cynical.

Airbus saw the A220 as a way to gain access to a plane that had potential and snuff Boeing at the same time. But their goals were to float the plane long enough to bury it and the competition. The overall costs of the program are production, not development. They control the costs by pricing the A220 to keep orders low. I suspect if we were a fly on the wall, there are plenty examples of A220 potential sales being converted to A320.

I dont see the A220-500 for a reason. It would compete with the A320. What is more valuable to Airbus. A220-100 through 500? Or A319 to A321? The other of course is development costs. Why would Airbus incur the costs to develop an A220-500 and then have it competed against its own product? The A220 has 649 confirmed orders through 12 years on the market. The A320 has what, 3600 in half that time?


The A320 series. was launched in 1984. The A320neo was an upgrade launched in 2010. The A220 was launched in 1998. Those fast 3600 number you quote included quite a few that were replacements for decades old A320 CEOs. The A220 did not have a prior version to boost sales out of the gate. There were also large fleets of fairly new A319's that were not ready yet for replacements, while there were lots of A320's ready for replacment. So it's a bad comparison.
 
rbavfan
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 7:13 am

JoseSalazar wrote:
Polot wrote:
tphuang wrote:

Yet B6 and DL opted for the larger A321NEO rather than A32neo. What does that tell you? They don't find A320NEO economical enough.

No it doesn’t. It tells you that they view the larger A321neo as a better buy for their current fleet plans. That does not mean they will never have any interest in the A320neo or don’t view it as economical enough.

Delta hasn’t taken an A320 since 2008. B6 hasn’t taken any since 2012 or so. Neither has any on order, but both do have 220 and 321 variants on order. what makes you think they will all of a sudden start ordering 320NEOs? Only way I see that happening is if 320NEOs become more competitive against the Max8 via a slight stretch, a la 320.5NEO.


Because the A321's were for expansion, Mint & larger Core markets. They already had the A320's they needed and needed larger A321 & Smaller E190's so thats what they ordered. THe older A320's were fine. At some point they will add Some A320neo or A220-500 (if produced). Or maybe they will order both and configure some A320neo with Mint for some smaller premium markets & some A220-500 for A320 core seating replacements. After all the A225 would be better CASM on short markets & A320neo for long thin markets.
 
rbavfan
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 8:20 am

tommy1808 wrote:
ScottB wrote:
tphuang wrote:
None of what you said above changes the fact that some airlines just don't want A320NEO. And as time goes on, A320 is only becoming less and less desirable. That's why Airbus is shifting more and more production to the more profitable A321. A220 is getting orders because airlines are finding it very economical. You can give up on A220 right now and not have a replacement for the A319/A320 segment of the market. Or you can take lower margins to build up this replacement and focus your A320NEO family on A321NEO and possible A322 to counter NMA.

Fundamentally, you are making an argument against investing for the future.


So, to free up production line space for the more profitable A321, they should take losses on A220? That's nonsense..


If the A321 makes you 5 extra million in margin over the A320, and the A220 incurs 4 million in losses a piece, it still makes good economic sense to do just that.

Airbus also needs to sell some 600 or so A32x a year extra to drop production cost another 10~13%, 50 A220s do the same for that program. Selling 500 A32x doesn´t change the backlog by much, selling 500 A220 doubles the backlog. If it costs Airbus 40 million to make one, doubling the backlog, and productions rates with it, may very well save 10 Billion in production cost (10-13% of 1000x40 million). So, aircraft sold at a nominal loss may end up being made at a profit.

Keep in mind that pre-Covid every single A220 would have been build on top on however many A32x Airbus could make ....

best regards
Thomas


So you have Airbus corp figures to verify those estimates.
 
rbavfan
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 8:34 am

aerolimani wrote:
Babyshark wrote:
tphuang wrote:

What? When did DL ever have E90?

Did you miss out the point of my post that none of the large A220 orders had A320NEO as a competitor? So, A220's success does not hurt A329NEO?


you will never develop a new aircraft with that kind of attitude


Note I said order.

And developing a new aircraft should not happen if you don’t know if it will be profitable. If it will, do it. But that’s not the issue here, they both exist now, one is the cornerstone of the company and the other loses money. Stretching won’t solve it because what was designed is a 100 seater, it needs more than fuselage plugs.

That is incorrect. Bombardier produced the CS100 first, but by their own words, the CS300 was the base model. The CS100 is a shrink. The (now) A220-300 is 130 seats in a standard 2-class configuration. One stretch, to a -500, is completely normal, and absolutely feasible. If the CS300 had been the biggest size possible, Boeing and Airbus would probably not have introduced the NEO and MAX with such haste.



If the CS300 had been bigger it would have got them to launch as that model was Boeings excuse to launch their tariff fight.
 
rbavfan
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 8:39 am

JayinKitsap wrote:
The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.


Delta has already added to their A220 orders.
 
tphuang
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Re: Airbus puts supply chain executive at helm of A220

Sun May 16, 2021 9:48 am

rbavfan wrote:
JoseSalazar wrote:
Polot wrote:
No it doesn’t. It tells you that they view the larger A321neo as a better buy for their current fleet plans. That does not mean they will never have any interest in the A320neo or don’t view it as economical enough.

Delta hasn’t taken an A320 since 2008. B6 hasn’t taken any since 2012 or so. Neither has any on order, but both do have 220 and 321 variants on order. what makes you think they will all of a sudden start ordering 320NEOs? Only way I see that happening is if 320NEOs become more competitive against the Max8 via a slight stretch, a la 320.5NEO.


Because the A321's were for expansion, Mint & larger Core markets. They already had the A320's they needed and needed larger A321 & Smaller E190's so thats what they ordered. THe older A320's were fine. At some point they will add Some A320neo or A220-500 (if produced). Or maybe they will order both and configure some A320neo with Mint for some smaller premium markets & some A220-500 for A320 core seating replacements. After all the A225 would be better CASM on short markets & A320neo for long thin markets.


They will not add A320NEO. It's simply not economical enough. The initial A220-300 routes are mostly replacing A320 markets. A220-300 has slightly lower CASM than A320NEO. It just doesn't make sense for them to order A320NEO.
 
VV
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Re: Airbus puts supply chain executive at helm of A220

Thu May 20, 2021 11:35 am

Airbus took over the C Series program on 1 July 2018 or almost three years ago.

Recently Airbus executives said during the Q1 2021 earnings call that the A220 program would be losing money until 2026 or so.

It means it would take them about eight years to turn the program to a positive cash flow after acquiring an aircraft project that had already obtained the type certificate at $1.

Now, "supply chain executive'" is put at the helm of Airbus Canada.

Is there any indication the current CEO did not do his job well?

I am just asking questions.
 
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Revelation
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Re: Airbus puts supply chain executive at helm of A220

Thu May 20, 2021 12:19 pm

VV wrote:
Airbus took over the C Series program on 1 July 2018 or almost three years ago.

Recently Airbus executives said during the Q1 2021 earnings call that the A220 program would be losing money until 2026 or so.

It means it would take them about eight years to turn the program to a positive cash flow after acquiring an aircraft project that had already obtained the type certificate at $1.

Now, "supply chain executive'" is put at the helm of Airbus Canada.

Is there any indication the current CEO did not do his job well?

I am just asking questions.

A little research shows at least one indication:

Parent company Airbus SE said Friday it named Benoît Schultz chief executive of its Mirabel-based Canadian unit, effective Sept. 1. Schultz, 48, is currently senior vice-president of procurement at Airbus headquarters in Toulouse, France. He will replace Philippe Balducchi, who has decided to pursue other opportunities outside the company.

Ref: https://montrealgazette.com/business/lo ... -september
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VV
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Re: Airbus puts supply chain executive at helm of A220

Fri May 21, 2021 12:08 pm

Revelation wrote:
VV wrote:
...

Is there any indication the current CEO did not do his job well?

I am just asking questions.

A little research shows at least one indication:

Parent company Airbus SE said Friday it named Benoît Schultz chief executive of its Mirabel-based Canadian unit, effective Sept. 1. Schultz, 48, is currently senior vice-president of procurement at Airbus headquarters in Toulouse, France. He will replace Philippe Balducchi, who has decided to pursue other opportunities outside the company.

Ref: https://montrealgazette.com/business/lo ... -september


The person might have had enough with SIX months of winter in Montreal during three years.Or perhaps the person applied for the voluntary severance offered by Airbus and then leave for an early retirement.

Your link does not tell anything.
 
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Re: Airbus puts supply chain executive at helm of A220

Fri May 21, 2021 12:26 pm

rbavfan wrote:
JayinKitsap wrote:
The A220 is being evaluated by its current customers. Things will go well if Delta or Breeze convert a bunch of options, that is the sign the plane is performing. Right now there is incredible competition with all the white tails and lease returns, It may be easier to get new 737 or A320 fast compared to the long backlog of the A220.


Delta has already added to their A220 orders.

Expand that, Delta, JetBlue, and Breeze all expanded orders. Buying or leasing an aircraft is a long term commitment. The dispatch reliability has really improved.

Yes there is competition from white tails. That makes it even more imperative to take out cost.

The A220 now has four quantity airline buyers: Delta(959, Breeze (80), JetBlue (70), and AirFrance (60). There is no reason to think more will fail to be added. It is a question of when.

We were looking at possible orders from IAG, TAP Portugal, AeroMexico, and Qantas before Covid19. While only a few countries will open up in 2021, we can expect better times ahead. EU capacity still down two thirds:
https://centreforaviation.com/analysis/ ... ens-561400

It will take 3 years to clear the aircraft market in my opinion.

Lightsaber
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Revelation
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Re: Airbus puts supply chain executive at helm of A220

Fri May 21, 2021 3:32 pm

VV wrote:
Your link does not tell anything.

It does tell that his Airbus career ended as head of Airbus Canada rather than his career continuing at an equal or higher position within Airbus.

It does not tell why.
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