Thanks for the reply, Bringiton. I (think I) understood it.
FWIW it's ONLY the production cost bit of the Gellman Report which I am pretty certain (as opposed to guessing) is wide of the mark.
Aboulaifa penned the market analysis which I am not qualified to comment on, (but he is...) and the sections on contract conditions and discounts is another I have no experience of (but they may well have). so whilst I might have views on them, I wouldn't go out on a limb and challenge them per se.
I do know the production cost model basis used by Gellman for is so seriously flawed as to be dangerous. Production Cost just doesn't work that way (and production cost IS
my area of expertise
I don't KNOW what the production cost of an A380 is for certain, but I do interact with some fairly senior production engineers from Airbus UK from time-to-time, and they tell me that the Morgan Stanley production cost figures are much more representative (i.e c$120-125M ex engines).
The difficulty, I think with the $194m in the Gellman report is the fact that he states that, because of discounts, the realised selling prices start at $145m, and NEVER GET TO
$194m through the life of the programme.
i.e. no frame will EVER make an operating profit, no matter how many Airbus sell - clearly a ridiculous notion.
From the vast array of comments and information produced on Airliners.net, I can only deduce that the Gellman report statements on realised selling prices is nearer the truth than his modelled production cost.
Therefore I believe your assumption of 20% average discount to list to be optimistic in favour of Airbus. I think the discounts have been higher than that, and by a fair bit.
(FWIW, Morgan Stanley believe the level of discount from list to have started at 45%, and reduced to c35% for the frames sold to date).
, I'm entirely happy with your analysis which shows that the margin on the bulk of the frames sold to date had to have been of the order of $45m per frame, BEFORE the major delays hit the programme.
If EADS regulatory statement is to be believed, the 65 frames carried over from pre-2010 to post 2010 because of the delays, still have E2Bn operating profit embedded in them (i.e. E33M, or c. $40m per frame - still....)
Which sort of supports an original
c $45m margin.
So in summary, I'm inclined to believe the Morgan Stanley realised price figures (particularly as they pretty much correspond to the Gellman ones
Therefore, to make the operating profit which would originally
secure break-even at 270 frames, and will now
make (apparrently) break-even at 420 frames, the production cost HAS to be a lot lower than Gellman calculated, and be in the $160m - $165m ballpark with engines.
Of course, the difficulty with "production cost" is that it is an amalgam of all sorts of things, including overheads, which are inflenced by throughput on other programmes in the year in which they're calculated too. Therefore, I don't think there is such a thing as a definitive
"production cost" for any aircraft from any manufacturer, except for that one which is tracked by the business's ERP system, and which will change slightly every day until the day the frame is delivered.
Hope that helps.