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n1786b
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Times Reporting Emirates Goes A350

Fri Apr 20, 2007 7:23 am

http://business.timesonline.co.uk/to...ors/engineering/article1680645.ece

Up to 53% discounts win the deal:

-------------------------------------------------

The European manufacturer has cut the price of its A350 by half and is also offering other inducements to persuade airlines to order its aircraft.
.....

The list prices for the A350-800 and 900 models are $189 million and $215 million, but Airbus is understood to be offering either one for $102 million (£51 million), a discount of 46 per cent and 53 per cent respectively.
Discounts are common in aerospace, but industry sources say that such large price reductions are rare.

...

The decision by Airbus to match Boeing on price means that airline customers are being given big incentives to buy. Emirates is poised to announce an order for 100 A350s next week in a deal that would be worth between $19 billion and $21.5 billion at full price. The discount means that the bill for these aircraft will be about $10 billion, but Emirates is likely to pay even less than that.

Airbus is thought to be giving the airline extra aircraft free as compensation for the two-year delay to the A380, the largest passenger aircraft in production. Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill.
----------------------------------------------------------

Well well well - literally giving them away!

- n1786b
 
777236ER
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 7:26 am

What Airbus needs over the next 5-10 years is cash. A smart move, if true.
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dank
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 7:28 am

Quoting N1786b (Thread starter):
Airbus is thought to be giving the airline extra aircraft free as compensation for the two-year delay to the A380, the largest passenger aircraft in production. Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill.
----------------------------------------------------------

Well well well - literally giving them away!

This is only surprising that Emirates said that compensation wouldn't be tied to another order. My guess is this may be to strengthen their negotiation (somewhat like not telling a car dealer that you are going to trade in your used car until after you have negotiated the price of the new car). If true, this is a big deal for Airbus (and the 150+ orders this year should be quite doable). If true, it looks like Boeing's comments about not upgrading the range substantially on the 787-10 is the way they are going. Really, rolling 380 compensation into another order is a win-win situation (as far as getting the best possible scenario considering the delays); EK gets a deal worth more than the straight cash (my guess is that the value of the discounts is greater than what the payout would have been) and Airbus doesn't have to pay out early and gets a big order.

Cheers.
 
Lumberton
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 7:45 am

Well, this is clever. I never felt for a moment that Doug Parker would buy the 787 after Boeing rebuffed his takeover attempt at Delta, but it seems Doug drove a very nice deal indeed--if true!

Quote:
Emirates is not the only airline benefiting from Airbus’s desire to win orders. US Airways is expected to buy between 20 and 30 A350s this year after Airbus “forgave” a loan of $90 million. According to a US Securities and Exchange Commission filing last May, the American carrier was let off the loan and interest. Airbus said yesterday that the loan was being incorporated into another deal, but would not reveal further details.
"When all is said and done, more will be said than done".
 
fridgmus
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 7:59 am

Forgive my ignorance, I'm not in the Aviation Industry, but how the hell can Airbus do this with all their financial troubles? confused 

Something sounds fishy to me!

Can one of you please elaborate?

Thanks,

Marc
The Lockheed Super Constellation, the REAL Queen of the Skies!
 
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keesje
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:03 am

Quoting N1786b (Thread starter):
The decision by Airbus to match Boeing on price

* Hu? What´s the price of a 787-9/-10 ?!

Quoting N1786b (Thread starter):
Airbus is thought to be giving the airline extra aircraft free as compensation for the two-year delay to the A380, the largest passenger aircraft in production. Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill.

** It seems a bit odd to include the A380 delay compensation into the discount of a new A350 order.

Sour grapes? It would certainly be a blow for Boeing & the Ex-Im Bank (the US goverm Bank that finances Boeing 777´s for EK to create US jobs).

"Never mistake motion for action." Ernest Hemingway
 
legoguy
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:07 am

This really is great news for the A350XWB programme should it turn out to be true! 100 x A350's... quite a windfall!.... Possibly slightly more than $10 billion???

How much does the A350XWB cost to develop? 12 billion euros or dollars or what?

[Edited 2007-04-20 01:11:01]
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IC408
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:08 am

IMHO I believe it is better for Boeing to let such deals (if really true) go to Airbus. Boeing's products are proven performers that have time and again met or exceeded expectations and are priced accordingly. No doubt Airbus has a good product as well and both manufacturers discount. But discounting planes by 50% and then offering additional "compensation" discounts cannot be very good on the bottom line. Sell a plane that costs you $100 million to build for $100 million and it really doesnt mean much other keeping an airline from buying your competitors product.

Given the near certainty that DL and AA will buy 787's and UA will possibly order 787's not to mention airlines such as LH and AF/KL who have large fleets of mixed A/B aircraft it may actually be better for Boeing to not give planes away to the likes of EK and QR and keep slots for their loyal customers and actually make a profit on the planes they sell.

And keep in mind that even EK and QR buy Boeing planes - so despite them ordering the 350 dont be surprised if they also buy the 787. There are few major airlines that will end up with a fleet made exclusively of Airbus or Boeing planes - think hard and see if you find many that do.

So again, IMHO let Airbus keep giving planes away - maybe the launch aid allows them to do so but thats a political issue - and see where it leads them. Also, having an assembly line in China isnt going to be as profitable for Airbus as building those planes in Europe. And remember its profits that keep companies in business NOT sales.
Opinions expressed within my posts are my own and do not necessarily reflect those of United Airlines, Inc.
 
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Stitch
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:09 am

If Airbus is offering a single price for new A350XWB orders as well as the original price on A350 orders, then the A350XWB order book is quickly going to swell to levels similar to the 787, but I have to wonder what this is going to do to margins in the latter half of the 2010's when Airbus starts to deliver these planes.

I just hope Airbus is not mortgaging their future to secure orders right now. If they're literally making a few points on each frame they deliver in the latter half of the 2010's, where will they find the monies internally to fund the A320RS and improve the A350XWB and A388 against Y3? And can they rely on additional government incentives or significant investment by foreign entities like Russia and Qatar?
 
EI321
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:11 am

Im gonna put this one on ice until I hear more, but If QR, EK, SU and US signed these orders this year that would be like 232 planes.  Wow!

Here comes Paris.
 
DfwRevolution
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:13 am

Quoting 777236ER (Reply 1):
What Airbus needs over the next 5-10 years is cash. A smart move, if true.

Wouldn't help Airbus' near term situation at all. The deposit required when an order is placed is really pennies in the grand scheme of things. Airbus won't receive payment for an A350 order until mid-2013, more than six years at the earliest.

Quoting Fridgmus (Reply 12):
Forgive my ignorance, I'm not in the Aviation Industry, but how the hell can Airbus do this with all their financial troubles?

They can pray to god that slashing their prices for a customer like EK will make the A350 look like a more legitimate competitor to the 787 in the eyes of other customers like LH and BA. Problem is, when pricing information like this leaks, airlines tend to want the same deal...

I still don't see any reason to get excited. This is EK we are talking about, and anything could happen. Even if Airbus does win the order for 100 A350, observe what happened with the A346. If the A350 does not live up to expectations, EK will weasel their way out and opt for the 787. I'll believe Airbus has won this order when I see aircraft painted and in the skies for EK.
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Iloveboeing
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:14 am

Maybe EK could order both, like they did with the A345 and the 772LR. Have the best of both worlds.
 
777236ER
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:15 am

Quoting DfwRevolution (Reply 19):
Wouldn't help Airbus' near term situation at all. The deposit required when an order is placed is really pennies in the grand scheme of things. Airbus won't receive payment for an A350 order until mid-2013, more than six years at the earliest.

Which is, if you notice, 5-10 years away!
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fridgmus
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:16 am

Quoting IC408 (Reply 16):

Well said IC408.  thumbsup  Even a rookie like me understood that. While I'm a hardcore Boeing fan, I definitely do not want Airbus to fail, but with financial moves like that.......

Thanks,

Marc
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dank
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:18 am

Quoting Keesje (Reply 14):
* It seems a bit odd to include the A380 delay compensation into the discount of a new A350 order.

I think the oddity is in how you refer to things. Since we don't know the exact amount Airbus would have given EK for the 380 delays, it would be difficult to estimate what the "real" (I can't think of a better word; but EK would have gotten money from Airbus if they hadn't ordered any planes, so in lieu of that Airbus probably gave them that value plus a little more to make up for the fact that EK isn't getting that value today to apply to the purchase of the 350s) discount. It is a bit of a semantic difference, I guess. But it is kind of like I owe you 20 bucks. And I tell you that I can give you 20 bucks in cash today, or I can sell you a computer that isn't availble until summer for 420 bucks instead of the 450 it would have sold for (which was regularly priced at 500). You really only got a discount over someone else of an extra 10 bucks. If that just made any sense at all?

cheers.
 
Beta
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:22 am

Good news if true. EK is getting an excellent airplane at fantastic price. I always feel the A350XWB is better suited to EK's business model. If EK is sold on the B 787, they would have ordered sometime ago, not dithering around. I think this is also good for Boeing in a sense that strong competition from Airbus will keep them on top form and continues to come up with innovation. This deals if true is good for everyone.
 
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keesje
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:24 am

Quoting IC408 (Reply 16):
So again, IMHO let Airbus keep giving planes away - maybe the launch aid allows them to do so but thats a political issue - and see where it leads them.

Pls let me help you. Boeing is not on a moral high ground. Lets not forget the 7e7 didn´t launch as smooth as was hoped. Executives were pressing for orders, wild rumours got around about what ANA actualy paid for the (unspecified) 7e7.

http://money.cnn.com/magazines/busin...chive/2004/07/01/374814/index.htm. Also the Indian, Air Canada and NWA orders are thought to have been very creatively financed. http://www.cei.org/gencon/019,04974.cfm
"Never mistake motion for action." Ernest Hemingway
 
IC408
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:28 am

creative financing and 50%+ discounting are two VERY different things. and i never said Boeing doesnt partake int eh same and/or is on higher moral ground .....

" No doubt Airbus has a good product as well and both manufacturers discount."

as for ANA and the 7e7 that would be considered a "launch" customer but hasnt the 350 already signed up a launch customer ??? oh yeah AY who said they didnt want any of the first planes off the line - great confidence displayed  Smile
Opinions expressed within my posts are my own and do not necessarily reflect those of United Airlines, Inc.
 
spaceshipone
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:40 am

Quoting N1786b (Thread starter):
The discount means that the bill for these aircraft will be about $10 billion, but Emirates is likely to pay even less than that.

Airbus is thought to be giving the airline extra aircraft free as compensation for the two-year delay to the A380, the largest passenger aircraft in production. Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill

At approximately $66,000,000 per plane this decision is a no brainer.
 
Motorhussy
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:41 am

Makes sense to me. EK wanted the 787-10, but Boeing weren't going to increase its range or bring forward its launch; even if they did, deliveries would have been well after the second half of 2013 when they will be starting to receive their new A350's (yet to be confirmed by any truly reliable source).

Wonder how many types they've ordered (or are purported to have).

Regards
MH
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DfwRevolution
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:47 am

Quoting 777236ER (Reply 21):
Which is, if you notice, 5-10 years away!

Well, no. Airbus needs cash now, not 5-10 years from now. Airbus is still very much hurting from the deferred earnings and loss caused by the A380 and it very much remains to be seen how the A350 is financed. If Airbus wins this order, it won't change Airbus near-term position at all.

Quoting MotorHussy (Reply 28):
EK wanted the 787-10, but Boeing weren't going to increase its range

I'm sorry, but that's just plain wrong.
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swissy
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:52 am

Quoting Fridgmus (Reply 12):
Forgive my ignorance, I'm not in the Aviation Industry, but how the hell can Airbus do this with all their financial troubles?

Lets say it is bumpy at the moment......  Wink, Boeing was there in the past I guess it is a cycle of life (business), I am really surprised how many people still get over excited when they read 40,50, 60% discount it is just a "stupid" marketing pi.. match between the manufacturer A, B, C...... thats all, if my cost is 10'000'000 and a need a good healthy 12-18% profit (to keep the shareholders & ( a.neters) happy above that I can give you pretty much any sale price and discount I want, however the numbers (discount) given by A & B are imo ridicules and I do not pay attention to any "sales" price...  Wink

Cheers,
 
777236ER
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:53 am

Quoting DfwRevolution (Reply 29):
Well, no. Airbus needs cash now, not 5-10 years from now

Airbus has cash now. It delivered 434 aircraft in 2006, with the respective cash generated for the business. The A380 setbacks and A350 delays will start hitting the company in 5-10 years when the orders it's losing now to the 787 start to hit. At that point it'll also be developing the A320RS, causing a further cash drain.

Quoting DfwRevolution (Reply 29):
Airbus is still very much hurting from the deferred earnings and loss caused by the A380

Nope. Loss in A380 earnings will only be truly felt over the next 5 years or so.
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EI321
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:53 am

Quoting DfwRevolution (Reply 29):
Well, no. Airbus needs cash now, not 5-10 years from now. Airbus is still very much hurting from the deferred earnings and loss caused by the A380 and it very much remains to be seen how the A350 is financed. If Airbus wins this order, it won't change Airbus near-term position at all.

People need to differentiate between orders and income. Similarly, Boeing is not flush with cash right now, as the 787 cash wont come in until the planes are delivered. Both companys have a R & D budjet for each year which is funded through aircraft deliverys (sales)

[Edited 2007-04-20 01:58:45]
 
dank
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 8:56 am

Quoting DfwRevolution (Reply 29):

Quoting MotorHussy (Reply 28):EK wanted the 787-10, but Boeing weren't going to increase its range
I'm sorry, but that's just plain wrong.

Evidence suggests that parts of this may be true. EK has criticized the 787-10 proposals. Reports have suggested Boeing has gone back and upped the specs of the -10, but not to the range that EK had wanted (nor what Airbus is promising with the 350). Now was this a move on EK's part to spur Airbus along, and get a better deal from them? Possibly. Who knows with EK.

cheers.
 
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Zkpilot
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:01 am

Quoting Fridgmus (Reply 12):
Forgive my ignorance, I'm not in the Aviation Industry, but how the hell can Airbus do this with all their financial troubles?

Something sounds fishy to me!

Can one of you please elaborate?

Thanks,

Marc

Airbus owes EK money for the delays to the A380... rather than paying EK cash (something which Airbus needs right now), they have found away to compensate EK in the future rather than right now, at the same time they get to notch up a significant number of orders to get the ball rolling so to speak on the A350. I highly doubt they will continue with the discounts for very long once they have a few more sets of orders from other airlines.

Quoting Stitch (Reply 17):
Airbus is offering a single price for new A350XWB orders as well as the original price on A350 orders, then the A350XWB order book is quickly going to swell to levels similar to the 787, but I have to wonder what this is going to do to margins in the latter half of the 2010's when Airbus starts to deliver these planes.

It will take quite a lot for the A350 to catch up to the 787 orders... This is a good start however! As I mentioned above, I doubt they will keep up the discounts for long, they are just trying to notch up a good start to the program... I'd tentatively suggest that once they reach 250-300 orders they will revert to standard pricing (which of course is then subjected to discounts for large purchases etc).
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Motorhussy
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:13 am

Quoting DfwRevolution (Reply 29):
I'm sorry, but that's just plain wrong.

I don't feel it is, but am happy for you to disprove me in a well reasoned and mature manner.

Regards
MH
come visit the south pacific
 
Beta
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:14 am

Providing that news is true. Then now is the best time to order the A350XWB for interested airlines. Early delivery slots, attractive price discount are available now, but wont be there for too long. Once the order book gets thicker, the delivery time will get further out, and the price will go up. Clearly, Paris Air show is going to be a launch pad to launch this bird into orbit, so to speak. Exciting time in aviation, indeed.
 
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Stitch
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:18 am

AY must be feeling kinda down, since Airbus took them to the cleaners. What many thought was a "killer deal" getting the A350XWB at A350 prices turned out to be a measly 25% discount. When they read that EK, QR, and SU all got upwards of 60% off...
 
dank
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:20 am

Quoting Stitch (Reply 37):
AY must be feeling kinda down, since Airbus took them to the cleaners. What many thought was a "killer deal" getting the A350XWB at A350 prices turned out to be a measly 25% discount. When they read that EK, QR, and SU all got upwards of 60% off...

I assumed that Finnair got the XWB for the discounted price of they had negotiated for their original 350 order (I'm assuming that your 25% figure would be that the original 350 is 75% of the cost of the XWB)...
Cheers.
 
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Stitch
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:26 am

Quoting Dank (Reply 38):
I assumed that Finnair got the XWB for the discounted price of they had negotiated for their original 350 order (I'm assuming that your 25% figure would be that the original 350 is 75% of the cost of the XWB)...

The article noted by the OP said they got the A350XWB-900 for the (list?) price of the original A350-900, or $44 million per frame off.

However, EK and QR are getting their A350XWB-900s at $113 million off. I expect SU will get the same deal, and probably SQ, as well (no wonder they didn't want anymore 777-200ERs). This price, if offered to BA, is going to make it hard for BA to resist, since I cannot see Boeing selling the 787-10 (which I expect to list for around $200 million) at half-off.
 
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par13del
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:30 am

Here's my 5 cents regarding the discounts.
Bad business move, from a money point of view. Boeing's order book is so full now that if any airline wants
a B-787 they have to wait how many years? Airbus may just as well charge full price, no need to discount.
If they discount too much to a A-380 customer due to compensation, they run the risk of non-A380 customers
wanting the same deal as it would be apparent that the discount goes above and beyond, no loyalty discount.

As for the cash flow in later years, not a problem for Airbus, unlike Boeing who has to go to the capital market
for financing, Airbus has that plus "other sources"
 
DfwRevolution
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:31 am

Quoting 777236ER (Reply 31):
The A380 setbacks and A350 delays will start hitting the company in 5-10 years

A380 deliveries were suppose to begin over a year ago. Airbus is already feeling the pinch from deferred earnings and losses.

Quoting 777236ER (Reply 31):
Loss in A380 earnings will only be truly felt over the next 5 years or so.

Which would coincide wonderfully with the A350 development cycle, no?

Quoting MotorHussy (Reply 35):
I don't feel it is, but am happy for you to disprove me in a well reasoned and mature manner.

What you are assuming is that Boeing could have tailored the 787-10 to EK's requirements but simply chose not to.

Quoting EI321 (Reply 32):
Similarly, Boeing is not flush with cash right now, as the 787 cash wont come in until the planes are delivered.

Boeing has a fraction of their resources tied into the 787 as Airbus has invested in the A380.
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scrubbsywg
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:35 am

Quoting Fridgmus (Reply 12):

Many times in business, you get larger cutomers that you make literally very little on, or nothing at all. These are the customers that essentially pay for your overhead, like heating and lights. Their money allows you to cover the costs of making stuff for other customers who you can hopefully charge a premium for and make good margins on them.

Lots of companies in every industry do this. Retail stores do this as well. Home depot, for example, makes very little if any money on lumber, yet they sell a lot of it. The 'constant' flow of money allows them to operate and the markups on other products are much higher.


This is all on top of getting a volume discount for 100 planes, and compensation for the 380 delays.
 
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Stitch
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:36 am

Quoting EI321 (Reply 32):
Similarly, Boeing is not flush with cash right now, as the 787 cash wont come in until the planes are delivered.

As of December 2006, Boeing was sitting on more then $6 billion in cash and equivalents with EADS at $8 billion, so neither company looks to be "dying on the vine" at the moment.

[Edited 2007-04-20 02:39:59]
 
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Stitch
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:48 am

Quoting ScrubbsYWG (Reply 42):
Many times in business, you get larger cutomers that you make literally very little on, or nothing at all. These are the customers that essentially pay for your overhead, like heating and lights. Their money allows you to cover the costs of making stuff for other customers who you can hopefully charge a premium for and make good margins on them.

Which is true, and with a list essentially equal to that of the 777-200ER, if an airline wanting 10 planes instead of 100 demands 55% off, Airbus can tell them to pound sand because that airline is unlikely to buy a 772ER at 40% off vs. an A350XWB at 30%. The 10% in list will be easily offset in operating economics over the life of the plane.

So Airbus could be doing a "loss leader" event to secure a quick 200 orders for Paris and then go back to "standard" discounts for future deals, secure in the knowledge Boeing isn't going to gut themselves on the 787 and even if they wanted to on the 777, they can only go so low and the A350XWB should be able to make up the difference (and then some) in operating economics.
 
dank
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:49 am

Quoting Stitch (Reply 39):
The article noted by the OP said they got the A350XWB-900 for the (list?) price of the original A350-900, or $44 million per frame off.

Yeah, that is the vague part of the wording in this article. It doesn't specify whether it is the old list price or the old discounted price (and whether the 44 mil is 44 mil less than the new list price or how much more the new one should have been over the discount). I had been under the impression that they got it for what they signed for before. But I could very well be wrong.

The tidbit about US was quite interesting since it counters the impression that the loan had actually been paid off directly.

Quoting Stitch (Reply 39):
However, EK and QR are getting their A350XWB-900s at $113 million off. I expect SU will get the same deal, and probably SQ, as well (no wonder they didn't want anymore 777-200ERs). This price, if offered to BA, is going to make it hard for BA to resist, since I cannot see Boeing selling the 787-10 (which I expect to list for around $200 million) at half-off.

 checkmark  Things will depend, of course, on what happens to other 777 sales.

BA is an intriguing prospect. Maybe they will split some 787s for the 767 replacement and some 350s for the 777s? A year ago I would have said that they were a slam dunk for the 787. Six months ago I would have said they would be on the slight plus side of a 50% chance of 787. Now... This should be an interesting few months, n'est ce pas? Which is good, imho, if you like to see some competition (which helps both manufacturers in the long run)

cheers.
 
kaitak744
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:51 am

Quoting 777236ER (Reply 1):
What Airbus needs over the next 5-10 years is cash. A smart move, if true.

What??? How is giving away aircraft going to help Airbus gain cash? It costs them money to make the aircraft you know.

Quoting N1786b (Thread starter):
a discount of 46 per cent and 53 per cent respectively.



Quoting N1786b (Thread starter):
The discount means that the bill for these aircraft will be about $10 billion, but Emirates is likely to pay even less than that.



Quoting N1786b (Thread starter):
Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill.

If the deal is true:
Qatar and Emirates will be the A350's only large orders. (the only other airlines to place large orders, American, Delta, and United are likely to go with the 787.) So if Airbus gives the A350s to Emirates at nearly 75% discount, I just do not see what other major orders they will have to make up this loss.

However, this is mighty great from Emirate's point of view. Well done.
 
hinckley
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 9:55 am

Quoting N1786b (Thread starter):
The list prices for the A350-800 and 900 models are $189 million and $215 million, but Airbus is understood to be offering either one for $102 million (£51 million), a discount of 46 per cent and 53 per cent respectively.
Discounts are common in aerospace, but industry sources say that such large price reductions are rare.

Industry sources suggest that Emirates will receive a two-for-one deal, effectively cutting a further third off the bill.

These numbers just can't be right. A 50% discount and then 2-for-1? That's a 75% discount in total. In other words, they're selling $215 million planes (list, I know) for $51 million each. They'd HAVE to lose real money on each plane. Certainly the labor and material cost of the plane is more than $51 million? And forget about amortizing R&D costs.
 
Beta
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 10:08 am

If this deal is true, I have a question for people with more wisdom than me. Would Airbus be somewhat beholden to EK given the mega order for both A380 and A350? "Beholden" may not be the right word, but maybe strong vested interest in seeing EK growth expansion comes true? A downturn in fortune at EK could flood the market with used/slight used A380 and/or A350?
 
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kc135topboom
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 10:28 am

Quoting 777236ER (Reply 1):
What Airbus needs over the next 5-10 years is cash. A smart move, if true.

They don't get the cash they need with deals like this one.

Quoting Legoguy (Reply 15):
How much does the A350XWB cost to develop? 12 billion euros or dollars or what?

I believe it is 12B Euros.

Quoting N1786b (Thread starter):
The list prices for the A350-800 and 900 models are $189 million and $215 million, but Airbus is understood to be offering either one for $102 million (£51 million), a discount of 46 per cent and 53 per cent respectively.

Other airlines are going to want the same deal. BTW, the list prices for the B-787 go from a low of $138M US for the -300 to a high of $188M US for the top end -900.

http://www.boeing.com/commercial/prices/index.html

Quoting Stitch (Reply 17):
where will they find the monies internally to fund the A320RS and improve the A350XWB and A388 against Y3?

Where they always find development money. From the French, German, and British tax payers.

If this deal is true, it is great news for Clark and EK. In the long run, it may be a good deal to launch the A-350XWB program off the ground, finally.
 
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 10:31 am

Quoting Kaitak744 (Reply 46):
Qatar and Emirates will be the A350's only large orders. (the only other airlines to place large orders, American, Delta, and United are likely to go with the 787.) So if Airbus gives the A350s to Emirates at nearly 75% discount, I just do not see what other major orders they will have to make up this loss.

Might it perhaps be the case that not all large orders need be 'American'? Lufthansa is likely to need a few planes of this size. BA must be another possibility. Singapore are so far hedging their bets. Then there's China. And it's a 20-30 year programme we're talking about with sales predicted of, what, 3,000+ ? It's a tad premature to assume that all the big fish have gone.

Anyway, I'm not sure a UA order for A350s can be dismissed as quickly as you seem to want to.  Wink
 
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glideslope
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 10:52 am

Quoting Par13del (Reply 40):
As for the cash flow in later years, not a problem for Airbus, unlike Boeing who has to go to the capital market for financing, Airbus has that plus "other sources"

A wise man this one is. Let's watch the WTO. The Belgian's are making quite a fuss over the fact that B has an extremely high cash flow, and poor little A is the orphan child. A may be hedging a bet here. It would not the first time. Paris will be a 350 event, Let's wait and see what B has behind door #2. The 787 will roll out in a few weeks, The 350, IMO, will be lucky to taxi by 2015. It's a paper airplane with no design freeze. Selling with 55% discounts for delayed 380 operators that will irritate future operators.. You won't see a single new 380 operator at Paris. Although the Russians may take some frames for a "bigger piece of the action."

 Smile
To know your Enemy, you must become your Enemy.” Sun Tzu
 
2wingtips
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 11:32 am

I think this is definitely going to happen and good luck to EK for possibly squeezing the best deal ever in this industry. I'm not sure the article has all it's facts straight. It mentions discounts for the A350-800/-900 but aren't EK interested in the -1000? I could see them spiltting b/w -900s and -1000s but I don't think we will see the -800 in EK's colours. Could be wrong there, though.
I'm unclear on the article when it mentions "extra free planes". How many of these and what type? I would guess A330s.
Then it mentions more 2 for 1 deals on top of this. Is that for more A330s/350s/380s, or a mix?
But it is known EK are having a large announcement next week. It was purportedly to do with Results Announcements, but I think we now know what the announcement will be Wink
BTW, I try to look at these deals as a balance b/w Airbus/Boeing and I believe many of the world's leading carriers deliberately try to balance their orders out, so that both OEMs will eventually get some piece of the pie. This order would tilt the balance at EK way in Airbus' favour, so I wonder if there will also be a Boeing component(either now or later)? I guess I'm really thinking about a potential 748I order here.
 
kaitak744
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 11:37 am

Quoting 2wingtips (Reply 54):
It mentions discounts for the A350-800/-900 but aren't EK interested in the -1000?

Emirates is interested in the 787-10 / 787-9 or the A350-900 / A350-800. The A350-1000 is larger than the 787-10 and competes with the 777-300ER. Emirates has I think over 30 brand new 777-300ERs in their fleet plus many more on order. They are not in a place to start replacing them.
 
2wingtips
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 11:48 am

Quoting Kaitak744 (Reply 55):
Emirates is interested in the 787-10 / 787-9 or the A350-900 / A350-800. The A350-1000 is larger than the 787-10 and competes with the 777-300ER. Emirates has I think over 30 brand new 777-300ERs in their fleet plus many more on order. They are not in a place to start replacing them.

That's patently wrong. EK themselves have said many times they are looking at the 350-1000. They will likely start replacing some 773ERs from 2015/16, when the 350-1000 is due to enter service. EK has mixed their 773ERs b/w direct purchase from Boeing and leasing from ILFC/GECAS. I wonder whether either of these lessors could be involved in the deal.
 
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 12:16 pm

Quoting Glideslope (Reply 53):
The Belgian's are making quite a fuss

The Belgian's what?  Confused And which Belgian? There are several million of them.

Quoting Glideslope (Reply 53):
The 787 will roll out in a few weeks, The 350, IMO, will be lucky to taxi by 2015. It's a paper airplane with no design freeze.

Yeah. Airbus think they can build a plane in only eight years? Who do they think they're fooling?!  Yeah sure
 
HughesAirwest
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 12:17 pm

Quoting Fridgmus (Reply 12):
Forgive my ignorance, I'm not in the Aviation Industry, but how the hell can Airbus do this with all their financial troubles?

It is called European gov't subsidies. Airbus does not have to payback any gov't loans unless an aircraft makes a profit. So by selling them for a considerable loss Airbus gains two things: 1.) Do not have to pay their loan back 2.) Sell more aircraft than Boeing.

I just hope that the A350 does not turn out to be yet another A346. Airlines are spending money and they should get their monies worth.

Before anyone starts, let me say I am Pro Boeing and Pro Airbus. The only way for the industry to grow and produce new quality innovative aircraft is to have two viable aircraft manufacturing companies.
"One man practicing Teamwork is far better than fifty preaching it."
 
NAV20
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 12:26 pm

Difficult to believe that Airbus could make exactly the same mistake again - get a few orders, never mind if the prices are below cost, then launch the programme and hope like hell you'll be able to jack the prices up to economic levels later. Which is hardly likely as all the OTHER possible customers will see you coming.

For comparison, here's an article that was written some time ago (actually March 2001) showing that Airbus did the exact same thing with the A380. And look how THAT turned out......  

"Giving 'Em Away? -The incentives Airbus is using to sell its A380 now may backfire later.

"Since July, Leahy has logged 60 orders for the A380, which even can be configured to hold up to 800 passengers. It will be the biggest commercial aircraft ever made. Leahy has made archrival Boeing Co. (BA) look like an also-ran as he has signed up industry pacesetters such as Singapore Airlines and Federal Express (FDX) and lured away Boeing stalwarts such as Qantas Airways. Indeed, Boeing hasn't won a single order for a stretch version of the venerable 747 that it's offering as an alternative to the A380.

"A dazzling start, no doubt. But is it a good deal for Airbus? BusinessWeek has learned that the company is giving extraordinarily generous terms to early buyers. It's selling the cargo model of the A380 for as low as $133 million and the passenger model for just over $140 million--about 40% off list prices and less than the going rate of $140 million to $150 million for Boeing's 747. Airbus is accepting down payments as low as $500,000 per plane while giving customers the option of canceling orders 12 months before delivery without customary penalties. Airbus has offered lenient terms to buyers of established models before. But experts say it's unusual to offer them on a new plane.

"True, manufacturers always sweeten the pot for first-time buyers of new aircraft, discounting them and throwing in everything from free pilot training to spare parts. And Leahy, a New Yorker who joined Airbus in 1985, is renowned for luring customers. His dealmaking skills helped the European company break into the U.S. market in the 1980s and boost its global market share from 21% to nearly 50% in the past five years. But, says an airline executive who has seen the terms Leahy is offering on the A380, ''I don't know of a deal that has ever been quite this generous.''

These concessions only steepen the already difficult path to profitability for the A380. To meet its break-even targets, Airbus says it expects to deliver 250 superjumbos by 2011. But to offset the deep discounts and raise needed working capital, it will have to demand bigger up-front payments from future customers and charge them close to list prices--$218 million to $235 million, says aerospace analyst Paul H. Nisbet of Newport (R.I.)-based JSA Research. Cost-conscious airlines won't readily agree to pay 40% more than their competitors did, say industry watchers."


http://www.businessweek.com/2001/01_10/b3722107.htm

[Edited 2007-04-20 05:37:18]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
BigAppleCoder
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RE: Times Reporting Emirates Goes A350

Fri Apr 20, 2007 12:28 pm

Based on what I read in the article the prices for the A350-800 and A350-900 are listed at $189 million for the former and $215 million for the latter. Airbus is discounting both to around $102 million each. This matches the discounted price Boeing is offering the 787 which lists for $153 million but is being offered at around $102 million each. Since the A350-800 competes against the 787-9 and the A350-900 against the 777-200ER/787-10 models the airlines are getting more plane for their money (albeit a few years after the 787 EIS).

I don't see anything on the A350-1000 in that article. So it's hard to gauge the cost per unit. But it does seem like EK is in the catbirds seat as they have the unique position of being owed the biggest chunk of compensation for the A380 delays. So, it would not be surprising at all to see their order go to Airbus at fire sale prices.

Boeing may not be able to provide an A350-1000 competitor with the 787-10. However, they do have a couple of years to assess how the market is shaping up and to develop a response to protect the upper end of their market. With the dollar forecast to decline further in the coming years it might be difficult for Airbus to continue to match pricing unless it draws much further upon international suppliers.

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