User avatar
rotating14
Topic Author
Posts: 1390
Joined: Sat Jan 21, 2012 11:54 pm

Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Thu Jun 20, 2019 7:55 pm

I personally don't see the point in this strategy but I can see why they're doing it.

https://www.aerotime.aero/parisaishow/2 ... or-200-max
Last edited by SQ22 on Fri Jun 21, 2019 8:06 am, edited 1 time in total.
Reason: Title updated
 
DCA350
Posts: 41
Joined: Sat May 04, 2019 7:27 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:14 pm

I do wonder what was pulling the strings behind this order. The fact that Airbus states they didn't even receive an invite to bid leaves one to think was this a PR stunt or was the price so low they knew it would be an insult to ask Airbus to match...
 
Sooner787
Posts: 2463
Joined: Thu Jul 18, 2013 1:44 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:24 pm

I'm sure IAG got a helluva deal on these new 737's, but I also believe IAG
will inherit the delivery slots reserved for Jet Airways, so Boeing will be able
to deliver their birds before Airbus can.

Guess the other question is did
Boeing offer the handful of undelivered Max's that were destined for 9W?
 
VSMUT
Posts: 2702
Joined: Mon Aug 08, 2016 11:40 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:27 pm

Sooner787 wrote:
I'm sure IAG got a helluva deal on these new 737's, but I also believe IAG
will inherit the delivery slots reserved for Jet Airways, so Boeing will be able
to deliver their birds before Airbus can.

Guess the other question is did
Boeing offer the handful of undelivered Max's that were destined for 9W?


Delivery from 2023:
https://www.flightglobal.com/news/artic ... ts-459119/
 
mwhcvt
Posts: 968
Joined: Sun Oct 05, 2008 2:01 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:37 pm

Sooner787 wrote:
I'm sure IAG got a helluva deal on these new 737's, but I also believe IAG
will inherit the delivery slots reserved for Jet Airways, so Boeing will be able
to deliver their birds before Airbus can.

Guess the other question is did
Boeing offer the handful of undelivered Max's that were destined for 9W?


I see lots of people mentioning the 9W slots but given delivery’s for this order are not scheduled for at least 4 years I doubt the 9W anything more than a marginal part in the equation as a lot of them will have been used or passed long before IAG deliveries even start
Must think up a new one soon, slow moving brain trying to get into gear ;)
 
User avatar
mr02
Posts: 124
Joined: Wed Jul 11, 2018 2:51 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:39 pm

DCA350 wrote:
I do wonder what was pulling the strings behind this order. The fact that Airbus states they didn't even receive an invite to bid leaves one to think was this a PR stunt or was the price so low they knew it would be an insult to ask Airbus to match...

The price must have been rock bottom. And I dare to say they also got a nice deal on future 787 orders.
 
Strato2
Posts: 417
Joined: Sat Sep 24, 2016 3:52 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:44 pm

Isn't predatory pricing illegal?
 
musman9853
Posts: 712
Joined: Mon May 14, 2018 12:30 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 8:48 pm

Strato2 wrote:
Isn't predatory pricing illegal?


only if you're selling at a loss like BBD was with the c-series. boeing will make a profit on these birds, albeit probably a very small one.
Welcome to the City Beautiful.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:26 pm

DCA350 wrote:
I do wonder what was pulling the strings behind this order. The fact that Airbus states they didn't even receive an invite to bid leaves one to think was this a PR stunt or was the price so low they knew it would be an insult to ask Airbus to match...


If the goal was to diversify part of the group's overall narrowbody fleet, there are only two (realistic) OEMs and since they already have deals in place with Airbus it is possible that IAG decided to work with Boeing exclusively.

Next, if the UK government was somehow involved in this decision (which they shouldn't considering the governance of both IAG and their subsidiaries), one would imagine the LoI would have been announced during the State Visit, which is the usual protocol for such things.

And finally, if Boeing really is offering IAG such a super-amazing deal, why would Airbus want to fight so hard for it, knowing they would have to cut an even superer-amazinger deal?
Last edited by Stitch on Thu Jun 20, 2019 9:30 pm, edited 3 times in total.
 
golfingboy
Posts: 42
Joined: Tue Aug 05, 2008 5:03 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:31 pm

Strato2 wrote:
Isn't predatory pricing illegal?


That will be hard for Airbus to prove as they have to demonstrate a pattern (not one off) that Boeing is repeatedly pricing their product at a highly uncompetitive price that will potentially force Airbus out of the UK commercial aircraft market. A long sell given IAG has ordered plenty of airbus birds over the past few years and even ordered A321XLRs during the airshow.

However, if Airbus feels they can offer a great deal that could sway IAG's opinion and then they absolutely should send something over. All a part of competing to win some business.
 
runway23
Posts: 2244
Joined: Sat Jan 15, 2005 2:12 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:38 pm

Contrary to all here, I think Airbus' response is genius.

They know the order is far from done and that at any time IAG can walk away from the 737MAX.

They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.
 
grbauc
Posts: 1338
Joined: Sat Mar 28, 2015 9:05 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:46 pm

Stitch wrote:
DCA350 wrote:
I do wonder what was pulling the strings behind this order. The fact that Airbus states they didn't even receive an invite to bid leaves one to think was this a PR stunt or was the price so low they knew it would be an insult to ask Airbus to match...


If the goal was to diversify part of the group's overall narrowbody fleet, there are only two (realistic) OEMs and since they already have deals in place with Airbus it is possible that IAG decided to work with Boeing exclusively.

Next, if the UK government was somehow involved in this decision (which they shouldn't considering the governance of both IAG and their subsidiaries), one would imagine the LoI would have been announced during the State Visit, which is the usual protocol for such things.

And finally, if Boeing really is offering IAG such a super-amazing deal, why would Airbus want to fight so hard for it, knowing they would have to cut an even superer-amazinger deal?



thank you for answering the craziness of some poster with a fair logical and reasonable analyst. PR stunts, Trump, politics yikes :scratchchin:
 
User avatar
Polot
Posts: 9284
Joined: Thu Jul 28, 2011 3:01 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:52 pm

runway23 wrote:

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

Not really. The PR benefit has already occurred. Nobody except aviation enthusiasts is ever going to notice if the LOI is never firmed. Most people don’t know what a LOI vs firm order even is.
Last edited by Polot on Thu Jun 20, 2019 9:53 pm, edited 1 time in total.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 9:57 pm

runway23 wrote:
Contrary to all here, I think Airbus' response is genius. They know the order is far from done and that at any time IAG can walk away from the 737MAX. They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.


If the primary goal from IAG was to get the absolute best possible deal by playing Airbus and Boeing off against each other, then why not issue an RFP to both OEMs in the first place?


runway23 wrote:
And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.


Boeing has 4500 orders in the MAX backlog and this is the nearside of a decade worth of deliveries (the 200 frames being discussed are not even a year's worth of production). And if this LoI is firmed, the frames would not be scheduled to be delivered for almost five years (and would then be delivered for another five or more years after that). To me, Boeing does not need this order "badly".


runway23 wrote:
So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.


I know the partisan a.net narrative is that the other OEM is so bad that nobody would buy their product unless it was almost given to them and their OEM of choice is so good that airlines gladly pay above list to bribe their way onto the order book, but if that was true, then either Airbus or Boeing (whomever is the "enemy" in one's eyes) would have long ago gone bankrupt delivering so many hundreds of planes a year while only making (at best) a few Dollars / Euros off each of them while the other would have long ago beaten Apple to a Trillion-Dollar Market Cap on the strength of their annual results.
 
chiad
Posts: 1182
Joined: Tue May 16, 2006 4:24 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:14 pm

runway23 wrote:
Contrary to all here, I think Airbus' response is genius.

They know the order is far from done and that at any time IAG can walk away from the 737MAX.

They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.


Makes sense to me.
Nevertheless ... great PR move by IAG unless the MAX stays grounded for another year or more.
 
PlymSpotter
Posts: 10524
Joined: Thu Jun 17, 2004 7:32 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:20 pm

Stitch wrote:
runway23 wrote:
Contrary to all here, I think Airbus' response is genius. They know the order is far from done and that at any time IAG can walk away from the 737MAX. They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.


If the primary goal from IAG was to get the absolute best possible deal by playing Airbus and Boeing off against each other, then why not issue an RFP to both OEMs in the first place?


Supposedly, because a long-winded RFP to both manufacturers would have done nothing here and now to boost confidence in the MAX for Boeing and secure a preferential deal on 777X frames for IAG.

It is an interesting situation and there is a lot to be firmly ascertained.
...love is just a camouflage for what resembles rage again...
 
StTim
Posts: 3358
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:20 pm

It isn’t like Boeing doesn’t have a history of crying unfair is it?

Take the tanker contract? The US would have lots of lift by now if Boeing and their tame politicians hadn’t spat their dummies (pacifiers) our.

Take running to Govt when they couldn’t sell warmed over 737-700’s to Delta.
 
User avatar
SilverwingSpttr
Posts: 15
Joined: Wed May 03, 2017 3:07 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:21 pm

I always said Boeing needed a big show of confidence in the MAX to get it back on track, either in the form of Southwest, Ethiopian, or Lion Air being willing to fly it again first, or a big order. Looks like the received the latter first. And Airbus is just being Airbus. A competitor is never satisfied until there is no more competition.
_____
@SilverwingSpotter on IG, Flickr, YouTube, and Twitter
A306, A319, A320, A321, A332, A333, A346, A388, B712, B732, B733, B734, B73G, B738, B739, B744, B752, B753, B762, B763, B764, B772, B77L, B788, C172, C208, DC-3, DC-10, MD-11, MD-81, MD-82
 
WeatherPilot
Posts: 433
Joined: Sun Jun 25, 2017 1:51 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:30 pm

Motorhussy wrote:
The headline should read IAG rather than AIG.


Maybe Boeing wants to get in on the derivatives market and bet it all on credit default swaps.
 
AWACSooner
Posts: 2381
Joined: Tue Jan 22, 2008 12:35 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:52 pm

StTim wrote:
It isn’t like Boeing doesn’t have a history of crying unfair is it?

Take the tanker contract? The US would have lots of lift by now if Boeing and their tame politicians hadn’t spat their dummies (pacifiers) our.


Especially when the DoD FORCED the USAF to buy those A330 tankers when they stated all along that it was too big for their needs and not what their RFP was even for? Wow...just wow. Boeing had every right to challenge that contract, as it completely countermanded what the military asked for.

I'll back Airbus's whining about lost orders and unfair advantages when the EU allows Boeing a final assembly factory on their turf. Until then, this reeks of sour grapes.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 10:52 pm

PlymSpotter wrote:
Supposedly, because a long-winded RFP to both manufacturers would have done nothing here and now to boost confidence in the MAX for Boeing and secure a preferential deal on 777X frames for IAG.


But if Boeing had to offer IAG such a low price, how does that "boost confidence" in the MAX? Would not the narrative be "the MAX is so tainted that Boeing has to offer unprecedented discounts to get anyone to buy it"?

And how does IAG look? Are they trading the safety of their customers for profits for their shareholders and executives by choosing the MAX because it was so cheap?

And if IAG is willing to buy "cheap" MAXs to get "cheap" 777Xs, then does that mean we can soon expect to see large MAX orders from Lufthansa, Cathay, Emirates, Singapore, ANA and Qatar? Could the Dubai Air Show be a 1000+ MAXapalooza?
 
StTim
Posts: 3358
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:10 pm

AWACSooner wrote:
StTim wrote:
It isn’t like Boeing doesn’t have a history of crying unfair is it?

Take the tanker contract? The US would have lots of lift by now if Boeing and their tame politicians hadn’t spat their dummies (pacifiers) our.


Especially when the DoD FORCED the USAF to buy those A330 tankers when they stated all along that it was too big for their needs and not what their RFP was even for? Wow...just wow. Boeing had every right to challenge that contract, as it completely countermanded what the military asked for.

I'll back Airbus's whining about lost orders and unfair advantages when the EU allows Boeing a final assembly factory on their turf. Until then, this reeks of sour grapes.


Has Boeing ever wanted to build an assembly line in Europe?
 
flash330
Posts: 22
Joined: Tue Nov 30, 2010 9:58 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:22 pm

Surely the IAG shareholders will want to know why a contract this size was awarded with no RFP? even if the intention was to order the Max anyway, shouldn't you at least dot the Is and cross the Ts?
 
airzona11
Posts: 1482
Joined: Wed Dec 17, 2014 5:44 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:36 pm

The meltdown people are having over this order has made decades being on this site as worth while.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:37 pm

flash330 wrote:
Surely the IAG shareholders will want to know why a contract this size was awarded with no RFP? even if the intention was to order the Max anyway, shouldn't you at least dot the Is and cross the Ts?


I would like to believe that what they care about is did IAG secure a deal that will grow the airline's revenues and, by extension, their stock price. If adding the MAX to the A320 is how AIG does that, then I would not be surprised if they are satisfied.
Last edited by Stitch on Thu Jun 20, 2019 11:42 pm, edited 2 times in total.
 
RickNRoll
Posts: 1664
Joined: Fri Jan 06, 2012 9:30 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:41 pm

Stitch wrote:
flash330 wrote:
Surely the IAG shareholders will want to know why a contract this size was awarded with no RFP? even if the intention was to order the Max anyway, shouldn't you at least dot the Is and cross the Ts?


I would like to believe that what they care about is did IAG secure a deal that will grow the airline's revenues and, by extension, their stock price. If adding the MAX to the A320 is how AIG does that, then I would not be surprised if they are satisfied.
It's about following a proper prices when a company intends to sound billions of dollars. Public companies are obliged to do so.
 
tropical
Posts: 91
Joined: Wed Dec 17, 2008 2:04 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:45 pm

It's tit-for-tat stuff, and far from unprecedented. As we all know, Boeing just couldn't stomach the thought of the all-Airbus narrowbody order American Airlines was going to place back in 2011, and went to extraordinary lengths to sabotage the deal, with fateful consequences. One could also mention the far more appalling behaviour regarding the Bombardier C-Series Delta order. It's not nice but they're both at it.

Ironically this MAX order could play out in Airbus' favour. The last thing Airbus wants is the complete collapse of the MAX program and Boeing deciding to launch the NSA now.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:47 pm

RickNRoll wrote:
It's about following a proper prices when a company intends to sound billions of dollars. Public companies are obliged to do so.


They can negotiate exclusively with Boeing with a price in mind they are willing to pay. If Boeing can meet it, then IAG can agree to work towards a deal. If Boeing cannot meet it, IAG is not required to take Boeing's offer and can either open up the RFP to Airbus or just go to Airbus and negotiate exclusively with them (since IAG probably has options and purchase rights with pre-defined pricing).

And it is not like Boeing is unaware that IAG has moved to operate A320 family frames exclusively and that they would need to offer a proposal that would convince IAG to agree to work with them towards a deal. So IAG does not need Airbus standing outside the door to force Boeing to offer a price lower than Full List.
 
flash330
Posts: 22
Joined: Tue Nov 30, 2010 9:58 pm

Re: Airbus seeks to break Boeing/AIG deal

Thu Jun 20, 2019 11:50 pm

Stitch wrote:
flash330 wrote:
Surely the IAG shareholders will want to know why a contract this size was awarded with no RFP? even if the intention was to order the Max anyway, shouldn't you at least dot the Is and cross the Ts?


I would like to believe that what they care about is did IAG secure a deal that will grow the airline's revenues and, by extension, their stock price. If adding the MAX to the A320 is how AIG does that, then I would not be surprised if they are satisfied.


Stitch, can you imagine a company handing out a billions of dollars order without putting it to tender, with the excuse of `it was such a great deal there was no point asking for counter bids'?

Sounds like boeing was desperate for a mega order to save their blushes and IAG bit, don't know why they want to be associated with a product perceived to be dangerous at the moment. If Samsung are in the news for phones breaking and bad designs, I'm not gonna be rushing out to buy one.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 12:17 am

flash330 wrote:
Stitch, can you imagine a company handing out a billions of dollars order without putting it to tender, with the excuse of `it was such a great deal there was no point asking for counter bids'?


If there are only two (realistic) vendors for that order and you already are buying from one? Yes I can. Because you already know what you are paying the other vendor (Airbus) so it should not be difficult to identify what you should be paying the new vendor (Boeing).

Some people are wedded to the idea that IAG's only goal was to get the lowest price. If that was the case, they would have ordered the COMAC C919. :silly:

If IAG had other criteria in mind - criteria that made them feel the 737 was the best option - then the only real decision that needed to be made was whether or not Boeing would agree to the terms that made them come to that decision.


flash330 wrote:
Sounds like boeing was desperate for a mega order to save their blushes and IAG bit, don't know why they want to be associated with a product perceived to be dangerous at the moment. If Samsung are in the news for phones breaking and bad designs, I'm not gonna be rushing out to buy one.


Which is why I find these arguments nonsensical. If the MAX is perceived as dangerous, why would a major airline group buy it? And how would a major airline group buying a product perceived as dangerous suddenly make it seem non-dangerous?

Every MAX customer is still holding on to their orders. Even the ones who are rumored to cancel (like Garuda) are said to be doing so for financial reasons and not because they suddenly feel the plane is unsafe. Lion Air and Ethiopian are still behind it and they lost close to 400 people between them. Southwest is still behind it. The US3 are. SilkAir still intends to switch away from the A320 to it.

The "Boeing must always lose" crowd will claim Boeing is sending them rebate checks to keep them (reminds me of the "why are A320 orders always divisible by five? Because Airbus gives you one free for every four you buy" nonsense), but it's because those airlines still have faith in the product. So why does Boeing need IAG to validate the MAX? IAG's opinion is not more important than every other airline's combined.
 
LDRA
Posts: 262
Joined: Fri Jan 15, 2016 3:01 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 12:42 am

I would be interested in knowing detailed terms of the deal.

From recent news coverage on max program, it appears 737 sales team have a reputation for promising technical content that is hard to achieve by engineering
 
TTailedTiger
Posts: 1167
Joined: Sun Aug 26, 2018 5:19 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 12:45 am

LDRA wrote:
I would be interested in knowing detailed terms of the deal.

From recent news coverage on max program, it appears 737 sales team have a reputation for promising technical content that is hard to achieve by engineering


Uh, I'm sure IAG has plenty of data on the performance and efficiency of the 737 Max. It's not a new aircraft and has been in service for several years.
 
AngMoh
Posts: 968
Joined: Fri Nov 04, 2011 5:03 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 12:48 am

Stitch wrote:
RickNRoll wrote:
It's about following a proper prices when a company intends to sound billions of dollars. Public companies are obliged to do so.


They can negotiate exclusively with Boeing with a price in mind they are willing to pay. If Boeing can meet it, then IAG can agree to work towards a deal. If Boeing cannot meet it, IAG is not required to take Boeing's offer and can either open up the RFP to Airbus or just go to Airbus and negotiate exclusively with them (since IAG probably has options and purchase rights with pre-defined pricing).

And it is not like Boeing is unaware that IAG has moved to operate A320 family frames exclusively and that they would need to offer a proposal that would convince IAG to agree to work with them towards a deal. So IAG does not need Airbus standing outside the door to force Boeing to offer a price lower than Full List.


But it is weird to have an exclusive deal for such a large order. As a procurement department it is your job to play off suppliers against each other to get the best deal for yourself. It is unlikely that an exclusive negotiation with one supplier gets you the best deal. Any serious airline only "likes" themselves and not Airbus or Boeing.

I don't buy that Boeing made them such a good deal that there is no need to talk to Airbus, because you don't know what the best Airbus can do when having a serious counterproposal from Boeing. Remember Norwegian when the bought A320neos: they stated that buy buying from both Boeing and Airbus, they got a better deal than if they bought all from a single supplier.

The minimum Airbus gets out of this is to get a vocal shareholder like Qatar to make a phonecall to IAG management with the question "what are you doing?".
727 732 733 734 735 73G 738 739 739ER 742 743 744 752 753 762 772 77E 773 77W 788 A300 A310 A319 A320 A321 A332 A333 A343 A345 A346 A359 A35K A388 DC-9 DC-10 MD11 MD81 MD82 MD87 F70 ERJ145 E170 E175 E190 E195 ATR72 Q400 CRJ200 CRJ700 CRJ900 BAE146 RJ85
 
TTailedTiger
Posts: 1167
Joined: Sun Aug 26, 2018 5:19 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 12:58 am

AngMoh wrote:
Stitch wrote:
RickNRoll wrote:
It's about following a proper prices when a company intends to sound billions of dollars. Public companies are obliged to do so.


They can negotiate exclusively with Boeing with a price in mind they are willing to pay. If Boeing can meet it, then IAG can agree to work towards a deal. If Boeing cannot meet it, IAG is not required to take Boeing's offer and can either open up the RFP to Airbus or just go to Airbus and negotiate exclusively with them (since IAG probably has options and purchase rights with pre-defined pricing).

And it is not like Boeing is unaware that IAG has moved to operate A320 family frames exclusively and that they would need to offer a proposal that would convince IAG to agree to work with them towards a deal. So IAG does not need Airbus standing outside the door to force Boeing to offer a price lower than Full List.


But it is weird to have an exclusive deal for such a large order. As a procurement department it is your job to play off suppliers against each other to get the best deal for yourself. It is unlikely that an exclusive negotiation with one supplier gets you the best deal. Any serious airline only "likes" themselves and not Airbus or Boeing.

I don't buy that Boeing made them such a good deal that there is no need to talk to Airbus, because you don't know what the best Airbus can do when having a serious counterproposal from Boeing. Remember Norwegian when the bought A320neos: they stated that buy buying from both Boeing and Airbus, they got a better deal than if they bought all from a single supplier.

The minimum Airbus gets out of this is to get a vocal shareholder like Qatar to make a phonecall to IAG management with the question "what are you doing?".


Aren't you contradicting yourself? You seem to support Norwegian going after Airbus so they aren't reliant on one OEM but you seem to be against IAG doing the same thing.

And yes I imagine Airbus would fall out of their chair at the discount IAG probably got. Boeing will make a hairline profit. Why would Airbus want to sell planes at a loss? That's what they would have to do to get this order.
 
MIflyer12
Posts: 5225
Joined: Mon Feb 18, 2013 11:58 pm

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:05 am

AngMoh wrote:
But it is weird to have an exclusive deal for such a large order. As a procurement department it is your job to play off suppliers against each other to get the best deal for yourself. It is unlikely that an exclusive negotiation with one supplier gets you the best deal. Any serious airline only "likes" themselves and not Airbus or Boeing.


Nobody here is acknowledging the Boeing exclusive supplier deals of the late 90s (DL, CO, AA), beside which this single-type deal pales. It's arrogant to suggest IAG doesn't know how to buy aircraft - especially with terms unknown.
 
User avatar
TheRedBaron
Posts: 3269
Joined: Tue Mar 29, 2005 6:17 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:07 am

airzona11 wrote:
The meltdown people are having over this order has made decades being on this site as worth while.



I am happy about Boeing getting this nice order, but they have 100 truckloads of maxes to deliver so its another glass of water in a very full bucket.... but lets consider:

They really need to get the MAX fiasco over with and mode on, so this order is a huge PR and confidence in the company
IAG did not put Airbus to compete for this order, so it shows that it was a Deal done between parties as favors, one gets a good PR the other gets a really nice price.
IAG is confident Boeing will lsort out the problem super fast in a desicive manner and a huge aircraft order is the way to say it loud and clear.
Airbus will try to compete for this order because they already lost it , so in the end they only can win in any scenario.

In the end A and B have so many SA aircraft to deliver that this is a non issue, The A380 early death and the 777X delays in my view are more important to both manufacturers.

Best Regards
TRB
The best seat in a Plane is the Jumpseat.
 
Okcflyer
Posts: 556
Joined: Sat May 23, 2015 11:10 pm

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 1:18 am

I suspect Airbus had provided “best pricing” for neo models and was quite greedy with the rates / discounts. IAG talked to Boeing who wanted the business “more” and took less profit as a result. The industry is small, most exes know what the other airlines are buying close enough. So IAG goes with the Boeing offer. Airbus got caught, and this talk about no RFP is just them complaining they didn’t get a chance to revise pricing when customer was seriously considering competitor (where was their sales person intel! That’s job #1, know your customer and what they’re doing!!) Meanwhile, IAG got the warning shot across the bow. General pricing requests will (likely) be sharper from Airbus moving forward as it’s clear IAG will talk to competitors without RFPing and make big decisions with existing intel.
 
DCA350
Posts: 41
Joined: Sat May 04, 2019 7:27 pm

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:23 am

Stitch wrote:
DCA350 wrote:
I do wonder what was pulling the strings behind this order. The fact that Airbus states they didn't even receive an invite to bid leaves one to think was this a PR stunt or was the price so low they knew it would be an insult to ask Airbus to match...


If the goal was to diversify part of the group's overall narrowbody fleet, there are only two (realistic) OEMs and since they already have deals in place with Airbus it is possible that IAG decided to work with Boeing exclusively.

Next, if the UK government was somehow involved in this decision (which they shouldn't considering the governance of both IAG and their subsidiaries), one would imagine the LoI would have been announced during the State Visit, which is the usual protocol for such things.

And finally, if Boeing really is offering IAG such a super-amazing deal, why would Airbus want to fight so hard for it, knowing they would have to cut an even superer-amazinger deal?


Valid points.. In an era where airlines seem to be polarizing towards a single manufacturer whether Aircraft or Engine. IAG truly believes in diversification.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:29 am

AngMoh wrote:
But it is weird to have an exclusive deal for such a large order. As a procurement department it is your job to play off suppliers against each other to get the best deal for yourself. It is unlikely that an exclusive negotiation with one supplier gets you the best deal. Any serious airline only "likes" themselves and not Airbus or Boeing.


Then they should have bought the C919 or Tu-204 since that would certainly have gotten them the best deal.


AngMoh wrote:
I don't buy that Boeing made them such a good deal that there is no need to talk to Airbus, because you don't know what the best Airbus can do when having a serious counterproposal from Boeing.


Which is why I do not believe IAG's focus was getting the cheapest price available.

For whatever reasons, for this one deal IAG wanted the MAX and they did not want the A320. So they only talked to Boeing and during those talks they came to a preliminary agreement that IAG was satisfied enough to sign a Letter of Intent to (work to) define the final details necessary for them to subsequently decide to turn it into a firm order.


AngMoh wrote:
Remember Norwegian when the bought A320neos: they stated that buy buying from both Boeing and Airbus, they got a better deal than if they bought all from a single supplier.


Did IAG ever seriously RFP the 737NG and A320? If they didn't, then they de facto negotiated exclusively with Airbus in the past. And IAG must have options and/or purchase agreements in place with Airbus. They know what they will pay for more A320s so if all they gave a shit about was price, then they need just show those to Boeing and say "beat it". And Airbus would have priced those options and/or purchase agreements with the idea that Boeing would want back in to British Airways, at least, but likely the other airlines, as well.


AngMoh wrote:
The minimum Airbus gets out of this is to get a vocal shareholder like Qatar to make a phonecall to IAG management with the question "what are you doing?".


Knowing AAB, it is more likely he'd call IAG management and ask him how he can get a similar deal from Boeing. :rotfl:
 
musman9853
Posts: 712
Joined: Mon May 14, 2018 12:30 pm

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:33 am

runway23 wrote:
Contrary to all here, I think Airbus' response is genius.

They know the order is far from done and that at any time IAG can walk away from the 737MAX.

They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.


how often has iag not firmed up a LOI though? clearly BA isn't interested in the a320 atm since they didn't even give airbus a RFP.
Welcome to the City Beautiful.
 
User avatar
Stitch
Posts: 26240
Joined: Wed Jul 06, 2005 4:26 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 1:40 am

If IAG does not eventually firm this LoI, all it means is that they couldn't come to a final agreement that they were satisfied with.

If it was just a ploy by Boeing to generate positive buzz for the MAX, why stop at IAG? Why not get LH and AF/KLM to place "phantom LoI's" as well? A 500+ frame MAX LoI haul at PAS19 really would have goosed the model's fortunes under this narrative.

Or are these folks saying that IAG is too dumb to know they were being played by Boeing? That LH and AF/KL were smart enough to see through the facade while IAG (which I guess stands for Idiotic, Airheaded and Gormless) fell for it like dopes? Maybe Boeing took them all to the local bar and while the French and Germans could hold their liquor, the British got :drunk: and signed. :tongue2:

(And yes, I know IAG is registered in Madrid, but their Head Office is in London so the analogy still fits.)
 
RawSushi
Posts: 59
Joined: Sun Aug 19, 2018 9:02 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 2:26 am

runway23 wrote:
Contrary to all here, I think Airbus' response is genius.

They know the order is far from done and that at any time IAG can walk away from the 737MAX.

They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.


I agree. This is all about Airbus not giving IAG/Boeing a free pass for Airbus not being given a chance to bid.
 
User avatar
par13del
Posts: 8554
Joined: Sun Dec 18, 2005 9:14 pm

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 2:55 am

Stitch wrote:
If IAG does not eventually firm this LoI, all it means is that they couldn't come to a final agreement that they were satisfied with.

My bet is that will happen AFTER the MAX returns to the air, there will be a lot of talk about this and that but at the end of the day, I do not believe that this LOI will ever get firmed up. Kisses go with favors I think that is what this is, funny thing would be if any Airbus experts are working with EASA reviewing the MAX MCAS adjustments, would they suddenly come down with a flu, have family emergencies, etc etc etc?
 
grbauc
Posts: 1338
Joined: Sat Mar 28, 2015 9:05 pm

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 3:28 am

airzona11 wrote:
The meltdown people are having over this order has made decades being on this site as worth while.



good way of looking at it..

I keep reminding myself of this "‘Never argue with an idiot. They will only bring you down to their level and beat you with experience." to keep myself from wanting to constantly remind some with simple logic.

Are view of these kinds of deals is so limited.. Like looking at a battle ship through a straw hard get the whole picture.
 
gcskye
Posts: 2
Joined: Mon Jul 11, 2016 7:19 pm

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 3:37 am

What has happened is that the Risk Management department at IAG woke up. They have realized that if one type of aircraft can be grounded for a prolonged period of time, ANY type of aircraft can be grounded. They don’t want all narrow bodies sitting on the ground for a year while Airbus deals with some hypothetical problem, so they are hedging their bets. There will likely be a lot more major carriers doing the same thing—sole sourcing contracts to either Airbus or Boeing, depending on their exposure in an attempt to create diversity. This has been a “thing” in widebodies, to some extent, but has gotten somewhat lost in the narrows.

I am confident that IAG used their A320 pricing as a starting point to ensure good pricing on the new agreement and that financial control, coupled with the critical need for diversity, Is reflected in the business case to the Board.
 
acechip
Posts: 27
Joined: Fri Nov 30, 2018 12:22 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 3:50 am

The shareholders of IAG should really demand to know what is the basis of choosing the Max at this point when it stands grounded, with no timeline for return to service?
 
sibibom
Posts: 373
Joined: Fri Aug 12, 2016 7:04 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 4:17 am

This will go down as a classic Anet thread!

Here is my take

1) IAG has gotten an amazing deal, Boeing needed this PR win, they got it. Will the LOI ever firm? depends on MAX's entry back into service. IAG will take it if Boeing can get people to trust MAX again. The ball is in Boeing's court.
2) While IAG may have broken its own rules, Airbus going after them isn't the most healthy idea, their relationship is more than just one order.
3) Airbus response hasn't been the worst, they are saying they will fight for it on price, what's wrong with that? This is probably what IAG wanted. Boeing has done far worst to Cseries.
4) The only real winner here is IAG, they are going to get 200 narrowbodies with a screaming deal when backlogs have ensured no deep discounts and it may even be applicable for future orders. Well played!
Last edited by sibibom on Fri Jun 21, 2019 4:33 am, edited 1 time in total.
 
Pyrex
Posts: 4593
Joined: Thu Aug 25, 2005 7:24 am

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 4:32 am

If there is one thing you never do in business, is go publicly to they press to tell it what your customer told you. Or didn't tell you. The public butthurt reaction by Airbus will cost them a lot more than just this order. If there is one thing Willie Walsh did not need when taking a gamble like this is to have a major supplier publicly question his motives, and people have long memories...
Read this very carefully, I shall write this only once!
 
jeffrey0032j
Posts: 605
Joined: Wed Jun 15, 2016 3:11 pm

Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 4:34 am

They are probably still sore that the A320 parts supply contract went to Boeing. Plus the 777X and now the Max.

I don't think their reaction to the Max order is going to help , in fact quite the opposite.
 
User avatar
Aesma
Posts: 11552
Joined: Sat Nov 14, 2009 6:14 am

Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 4:55 am

runway23 wrote:
Contrary to all here, I think Airbus' response is genius.

They know the order is far from done and that at any time IAG can walk away from the 737MAX.

They also know that if they provide a price that is lower than what IAG got from Boeing, IAG will try to and get Boeing to match Airbus' price.

And Boeing with the current state of the 737Max program needed and still needs this order very badly. Therefore they will pretty much have to align on any price Airbus might pitch. How humiliating and bad PR would it be to lose this order of 200 aircraft.

So basically Airbus is forcing Boeing to take an even bigger financial hit on a large order, IAG will in the end get an even better deal and Airbus will keep production slots that it can sell at a higher unit price.


Yes, Airbus should offer the lowest price they're comfortable with. If they don't win the order back, they know Boeing isn't making any money on the order.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams

Who is online

Users browsing this forum: No registered users and 15 guests

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