Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
MD11Lover
Topic Author
Posts: 436
Joined: Sat Oct 18, 2003 4:40 am

EasyJet Goes For Airbus!

Sun Oct 19, 2003 6:07 am



I remember watching a documentary on EasyJet a few years back and clearly remember Stelieos stating that he could substantially reduce operating costs by only having 737s on his fleet. But now, they have A319s (maybe A320s??). Does anyone know why he opted to change his tactic? Is it maybe because EasyJet is doing really well?

Ces
 
Airplanepics
Posts: 2610
Joined: Fri Jun 27, 2003 4:12 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 6:11 am

Stelios doesnt run EasyJet no more. I think he handed over the role to his assistant manager.

Simon

[Edited 2003-10-18 23:26:32]
Simon - London-Aviation.com
 
Guest

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 6:23 am

Apparently Airbus presented easyJet with a deal too good to be true and so they simply couldn't refuse. With that kind of offer, what you may have said in the past flies out of the window!
 
by738
Posts: 3127
Joined: Wed Sep 20, 2000 7:59 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 6:54 am

I think he meant that a single type fleet, originally in this case 737's, would be the most efficient. The idea is to eventually be an all Airbus fleet. I think Airbus are paying all the transition costs and deficit lost from having 2 aircraft types just now.
 
jwenting
Posts: 9973
Joined: Mon Apr 23, 2001 10:12 pm

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 5:02 pm

Easyjet got their A319s at or below production cost, including free training and maintenance contract for 5 years or so.
Boeing can't offer such deals, Airbus just gets more "loans" (interestfree, no repayment terms) to cover the losses.
Airbus wanted the deal for its PR value no matter what the cost, so they didn't mind loosing money on the deal.
I wish I were flying
 
bobrayner
Posts: 2038
Joined: Sun Apr 27, 2003 8:03 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 5:12 pm

Airbus just gets more "loans" (interestfree, no repayment terms) to cover the losses.

Do you actually have any evidence for this? Why would governments ever want to give Easyjet aircraft at below cost price?

(Especially as flag-carriers, with big lobbying budgets, are feeling the pain)

Airbus wanted the deal for its PR value no matter what the cost, so they didn't mind loosing money on the deal.

Of course!

Shareholders only want PR, and directors are rewarded for quarterly PR performance, yes?
Cunning linguist
 
A388
Posts: 8030
Joined: Mon May 21, 2001 3:48 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 5:52 pm

Jwenting,

What about Boeing's 2 for 1 deal with Ryanair for 150 737NG's? Isn't that the same idea, it's just the way business is being done nowadays. In times like these aircraft manufacturers get desperate and do anything to get any deal done, especially with low-cost airlines running the business now. They have the power at the moment. I also agree that it may not be the right way to do business but on the other hand, I can understand it looking at the worldwide economy at the moment.
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 5:54 pm

Jwenting, that is definately up there with dumbest statements I have heard, it adds nothing to the conversation since its factually wrong. Loans on the A320 series have in many cases now been repayed (i.e. UK Government) and Airbus are now paying a bonus to the UK government fro each aircraft sold.

Also, no loans are interest free.

Thanks for making me smile !!

RickB

[Edited 2003-10-19 11:15:02]
 
Ikarus
Posts: 3399
Joined: Mon Jan 08, 2001 10:18 pm

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 8:16 pm

Rickb: Funny. Could have sworn that the majority of the A380 funding is interest free loans from the EU....

In terms of the reason: Ryanair had just bought shitloads of 738s from Boeing, so the production line was not under as much pressure (remember, post-11/09 it seemed the only airlines actually buying new planes were LCCs). Ergo, Boeing would not go quite as low on price as Airbus. Add to that the pilot and maintenance training and the contract clauses that say Airbus pays Easyjet all costs that arise from operating 2 types (i.e. the A319 fleet costs Easyjet exactly the same as their 737 fleet - costwise, Easyjet is operating a single type!), Airbus' willingness to modify the A319 design for this single customer, and the sheer number of purchases and options signed for (was it 120 fixed, 120 options?) and you can see why Easyjet made that decision: It was the best bargain ever signed by any airline.

Regards

Ikarus
 
wietse
Posts: 3630
Joined: Thu Oct 18, 2001 12:49 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 8:21 pm

uh oh, its all big conspiracy, isnt it, Jwenting?

evil europeans using obscure methods to bring down boeing. And AF is only out to destroy KLM, and thus creating hundreds of thousands of jobs being lost?

 Yeah sure

Wietse de Graaf
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 10:11 pm

Ikarus,

You of all people should know that the loans 1. Arent interest free and 2. Aren't the majority of A380 funding.

1. Government rate of interest + 0.25%
2. Subsidies are limited to 33% of development costs.

RickB
 
Greg
Posts: 5539
Joined: Sat May 28, 2005 1:11 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 11:14 pm

The aircraft are identical in operating cost.
Airbus can produce them cheaper...hence, the lower cost.
Depreciation is still the largest portion of ownership/operating cost.
It would be silly of them to go to Boeing.

Airbus guaranteed that costs would not rise for two years during introduction and crew training.

A very savy proposal from which Boeing learned a lot (let's hope).

As Easyjet has said..'the aircraft are interchangeable...."

You can argue technology/politics/nationalism all you want....the true issue is crystal clear: AIRBUS AN / ZGGG), China">CAN PRODUCE AN AIRCRAFT FOR LESS COST.
This is what scares Boeing the most--and has made them change their production methods on four of the product lines.
 
Korg747
Posts: 502
Joined: Thu Mar 06, 2003 5:18 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 11:15 pm

What kind of profit does airbus get from easyjet? name? because if it's Name then they definetly lost to boeing. who would want to sell there profit just for name this days?
Please excuse my English!
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Sun Oct 19, 2003 11:50 pm

Korg747 - dunno - better ask Ryanair what profit Boeing made on their deal?

RickB
 
motech722
Posts: 177
Joined: Sat Aug 30, 2003 12:10 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 12:38 am

Ikarus, as Rickb said, "You of all people should know that the loans 1. Aren't interest free and 2. Aren't the majority of A380 funding." Of the $10.7 billion cost of the A380 program, the governments can only provide up to $2.5 billion due to a 1992 treaty, stating that governments did not exceed loans over 1/3 of the total cost. After the governments' contribution (which the loans are to be repaid within 17 years), $3.1 billion came from risk-sharing partners and sub-contractors. Airbus itself had to come up with the remaining $5.1 billion on its own.

Jwenting, while Airbus does not get these interest-free loans, Airbus, the EasyJet sale is not the first time Airbus has tried to snatch up PR. Within weeks of when Forgeard took over the consortium, he scored a deal with BA for 59 A319/320s with option for an addition 129. According to then BA chairman, Robert Ayling, the reason for buying the Airbus was because they were cheaper to operate then the B737-600s, and because of the price that Airbus was willing to sell them, giving BA a 1 billion (pound) discount on the sale in the shape of special terms for maintenance, the purchase of BA's old, unwanted airplanes, and compensation for BA's decision to scrap its options on more B737s.

Of course as A388, Boeing scored a huge deal with Ryanair giving discounts to them. I also remember a few years ago when Boeing offered Singapore new B777s and in return, Boeing would buy the A340 fleet from Singapore. Airbus was furious, just as Boeing had been back when the BA order occurred. But the truth is, in the aircraft manufacturing world, this is all part of the business.
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 1:32 am

Easyjet got their A319s at or below production cost

This is a fabrication. There's no way to know this for anyone outside of Airbus or Easyjet.

N
 
MD11Lover
Topic Author
Posts: 436
Joined: Sat Oct 18, 2003 4:40 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 1:43 am



So is it true that Steleos doesnt run EasyJet anymore? Does he still run the other "Easy branches"? Motech 722....How are Airbus' A319/A320 opertating costs lower than the 736?

Ces
 
Ikarus
Posts: 3399
Joined: Mon Jan 08, 2001 10:18 pm

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 5:09 am

1. Government rate of interest + 0.25%

What's the current rate of inflation?

MD11Lover: Stelios owns most of the Easy empire, selling Easyjet shares regularly in order to fund new ventures. But like Branson he appears to generally take a step back once a business is on its feet and let other managers deal with it. The Easy Group PLC currently contains EasyCar, EasyValue, EasyInternetCafe, EasyCinema, EasyBus, EasyPizza, EasyDorm, EasyCard and soon EasyCruise.

Regards

Ikarus
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 5:24 am

Ikarus,

Current rate of inflation in the EU is 2.1% as of September 2003 although EU15 was down at 1.9%.

http://www.paris-europlace.net/eu/doc62149.htm

Care to share what you think Airbus are paying ? Since Government rates are linked to inflation and Airbus pays 0.25% above that rate - hard to see where the interest free is coming from?

RickB

[Edited 2003-10-19 22:24:57]
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 5:32 am

Airbus also agreed to pay for costs of operating a mixed fleet. Airbus needed to get into the lo-co market and bought their way in.

Airbus pays below market interest rates. If they paid actual market rates, they would be borrowing from banks and capital markets and not governments.
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 5:36 am

N79969,

Wondered how long it would be before we saw you in this thread  Wink/being sarcastic

Can we just clarify that only 1/3 of capital can come from government interest rates?

RickB
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 6:27 am

Rickb,

If $3 billion is 1/3, then sure we agree. 33% is a huge percentage of the capital. But I would not even call it a "loan" because it does necessarily have to be paid back.

http://www.time.com/time/globalbusiness/article/0,9171,1101020729-322621,00.html

It only must be paid back IF the A380 is profitable. Thus the terms of the "loan" create a perverse incentive for Airbus to avoid profit so that repayment is not triggered during whatever timeframe the EU has used.

Those A380 launch customers got a very sweet deal for what should be apparent reasons.
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 6:31 am

N79969,

Thanks for the article - good reading - like the bit - "Boeing gets indirect handouts through its lucrative defense contracts" !!

RickB
 
flyingbronco05
Posts: 3484
Joined: Fri May 10, 2002 11:43 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 7:38 am

Apparently Airbus presented INSERT ANY AIRLINE HERE with a deal too good to be true and so they simply couldn't refuse. With that kind of offer, what you may have said in the past flies out of the window!


Easyjet got their A319s at or below production cost, including free training and maintenance contract for 5 years or so.

Who doesn't get the planes for dirt cheap?!?!
Never Trust Your Fuel Gauge
 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 8:25 am

Flyingbronco05,

Yeah - coz the Ryanair deal was a great deal for Boeing !!

I love the US - but at times even im embarrassed by peoples statements on here.

RickB

[Edited 2003-10-20 01:27:13]
 
User avatar
clickhappy
Posts: 9175
Joined: Thu Sep 13, 2001 12:10 pm

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 8:32 am

didn't Airbus also guarantee Easyjet a certain resale value on the 737's they would be getting rid of?
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 8:41 am

RickB,

What you repeatedly attempt to do and logically cannot is assume that there is parity between the lavish largesse that Airbus receives and the relative table scraps that Boeing CAG gets in comparison.

While Boeing certain gets some good contracts from the defense department, the owners of Airbus also get generous cost plus contracts. That is before government 'loans.'

 
RickB
Posts: 807
Joined: Mon May 19, 2003 3:11 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 8:51 am

N79969,

Ah - you finally admit Boeing is subsidised - thank you - thought it would be a cold day in hell before I heard you say that.

Any comment on the fact that Boeing is allowed to receive 3% of turnover in indirect subsidies according to the 1992 agreement yet received over 7% in 1998?

Half way to converting you to reality !! Only another leap of faith and you will see that Fox news isn't unbiased in its reporting of Airbus.

Oh and logically - you cling to mis-information regarding the majority of your allegations of Airbus' finances - yet reality doesn't seem to be dawning just yet  Big grin

To back up your statement about military spending - could you please clarify whether or not you can understand the fact that in the last financial year - EADS total revenue was 29.9 billion euros (including Airbus, space and military) and Boeings was $54 billion with $28.8 billion in the commercial division. given that Boeings non commercial divisions are about the same size as EADS and Airbus combined?

RickB



[Edited 2003-10-20 01:53:49]

[Edited 2003-10-20 02:12:54]
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 12:09 pm

Rickb,

As far as Airbus subsidies et al you can continue live your in fantasy world. I am not going argue with you. I have seen you attempt to use numbers to draw completely illogical conclusions and then argue about it. You have little grasp of reality on this matter. But please, by all means, enjoy the fantasy.
 
dynkrisolo
Posts: 1849
Joined: Mon Feb 12, 2001 12:12 am

RE: EasyJet Goes For Airbus!

Mon Oct 20, 2003 1:22 pm

RickB:

Since you're so into the military indirect subsidies, let me give you a homework assignment. Your homework is to add up all the revenues (commercial and non-commercial) of EADS and BAE Systems as well as their predecessors who were part of the Airbus Consortium, namely, Aerospatiale, DASA, CASA, BAe, etc., since the A300 launch in 1967. Then you add up all the revenues of Boeing during the same period. I can tell you that you will find Airbus's parents have had more government-related revenues both in absolute and relative terms than Boeing has. During the same period, the European governments fully funded the A300, 310, 320, and funded 50% of the original 330/340, and 1/3 of the 345/346 and 380. The A300/310 was never fully paid back. The 320 was paid back, at least to the UK while France, Germany and Spain never disclosed any concrete numbers. The UK government claimed that they have yet to fully recover the 330/340 investment. The point here is whatever you claim Boeing has, Airbus most likely has it, too. And if you did your homework that I asked you to do in the beginning of this post, you would know they had more military subsidies than Boeing had. Boeing doesn't have the luxury of launch aids which took Airbus about 15 years to pay pack their governments with their most successful program, the A320. Then how long would it take for the less successful programs?

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos