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planetime
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Airbus Aircraft Prices

Wed Jan 18, 2012 5:19 pm

Why does Airbus offcially price their commercial aircrafts in USD and not in Euros. Seems strange that a Pan-European company using USD for their pricing.
 
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zeke
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 5:22 pm

Quoting planetime (Thread starter):

Most aircraft sales and parts are done in USD, most fuel sales are done in USD....just the way the industry works.
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roseflyer
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 5:28 pm

It is tradition that aviation is done in US dollars. All the companies have contracts in place to buy and sell in US dollars. There is an additional cost for doing this to Airbus. They buy securities to protect against exchange rate fluctuations. Since they sell in dollars, if the price of Euros changes between contract and delivery they are exposed to risk. It is a cost of doing business.

About half of Airbus' costs are in Dollars (I remember an article from 2005 stating that, but things may have changed as the Euro has grown as an international currency). The contracts they have with many of their suppliers are in dollars as well. For example when Airbus purchases a component from a Japanese or UK supplier, they negotiate in dollars. This is true in many industries.
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Pellegrine
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 5:32 pm

Quoting planetime (Thread starter):
Why does Airbus offcially price their commercial aircrafts in USD and not in Euros. Seems strange that a Pan-European company using USD for their pricing.

That's like asking why oil is paid for in US dollars when major oil exporting countries do not use the USD.

It has to do with historical factors and that the US is the world's biggest economy. (Definitely not saying it should be that way.)

There was talk last year though of Airbus taking payments for large purchases e.g. aircraft in euros and not US dollars. Don't know where that went, but I know Airbus has a very good team to deal with currency exchange...because well they need to more than Boeing.
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gilesdavies
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 5:49 pm

If you've seen the state of the Euro-Zone countries and the volitility of the exchange rates, you would soon realise why!

Going back about 4-5 years ago, there use to be about 1.4-1.5 Euro's to the English Pound and this rate is now around 1.05-1.1 Euro's to the pound... The effect has been similar against the Euro/USD.

So in effect if airlines from outside the Eurozone were still having to purchase aircraft in Euro's, even without any price changes by Airbus, aircraft would cost around 30% more.

I think Airbus only switched to selling aircraft in USD a few years back and did previously trade in Euro.
 
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Pellegrine
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 6:02 pm

Quoting gilesdavies (Reply 4):
If you've seen the state of the Euro-Zone countries and the volitility of the exchange rates, you would soon realise why!

Going back about 4-5 years ago, there use to be about 1.4-1.5 Euro's to the English Pound and this rate is now around 1.05-1.1 Euro's to the pound... The effect has been similar against the Euro/USD.

So in effect if airlines from outside the Eurozone were still having to purchase aircraft in Euro's, even without any price changes by Airbus, aircraft would cost around 30% more.

I think Airbus only switched to selling aircraft in USD a few years back and did previously trade in Euro.

IMO the whole currency issue is overblown. But if I were Airbus I'd hedge the EURUSD risk myself by selling airplanes in dollars and euros.
We fly JETS, we don't fly donkeys.
 
chuchoteur
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 6:18 pm

Quoting gilesdavies (Reply 4):
I think Airbus only switched to selling aircraft in USD a few years back and did previously trade in Euro.

The reverse - traditionally had to sell in US Dollars (was also easier for the airlines to compare offers between A & B).

In actual fact some european airlines played the hedging game too, transferring funds into USD to pay Airbus when the exchange rate was favorable.

Recently some aircraft have been sold in Euros, but since the USD/EUR rates are hedged by Airbus/EADS and there is a higher percentage of parts/sub-assemblies coming out of the USD zone, it's more of a comfort thing than an essential one... or at least, that's my opinion.
 
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Stitch
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RE: Airbus Aircraft Prices

Wed Jan 18, 2012 7:22 pm

Quoting gilesdavies (Reply 4):
I think Airbus only switched to selling aircraft in USD a few years back and did previously trade in Euro.

As chuchoteur noted, Airbus recently expressed a plan to offer pricing in Euro, but I am not sure it ever went through.

Also, Airbus announced today they were raising their list prices an average of 3.9%, with the A320neo rising 6.1%.

http://www.marketwatch.com/story/air...st-prices-by-average-39-2012-01-18

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