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Aesma
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 5:10 am

AWACSooner wrote:
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.


The biggest foreign investors in France are US companies, year after year. There is absolutely nothing preventing Boeing from building a FAL here, it would probably get incentives for it, in fact. And of course France is "right-to-work" as you say.
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planecane
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 5:20 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.


Do any of you think about the logic of what you write? The goal of Airbus is to sell as many aircraft as they can produce at the highest profit margin possible, not to "beat" Boeing or force Boeing to make less on 200 aircraft. Let's say for whatever reason Boeing offered IAG the 737MAX at a $100,000 profit. Now let's say Airbus decides they need to "win" and offers A320s at cost. If IAG calls their bluff what has Airbus gained. Now they have to produce 200 A320s at no profit using production slots that could have made a normal profit margin.

These are business, not Olympic teams. Stop looking at everything as a "fan" of a team. Also, everybody assumes that the LOI is non-binding. Unless you've seen it, you don't know. LOIs can be binding pending a contract.
 
majano
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 5:33 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.

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.)

With all due respect, please read the comments attributed to Walsh in this "LOI". He specifically referred to the spurring of competition. Now, if you want to spur competition, you surely would not limit yourself to a single supplier before the "competition" even starts.
 
marcelh
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 5:39 am

Pyrex wrote:
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...

Nope, look at Boeing and the Bombardier “issue”. Is just business as usual
 
marcelh
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 5:43 am

Aesma 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.

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.

This. IAG has always the opportunity to stay with Boeing and ignore the proposal of Airbus.
 
DarkKnight5
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 5:52 am

RickNRoll wrote:
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.

Public companies are not governments.
 
sciing
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 6:11 am

rotating14 wrote:
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


I do not read this in your link. I only see that the creator of the headline seems to learn English in this forum.
I learned that in English the position of verbs is quite different for questions and normal sentences.
So the correct headline is „Will Airbus challenge the deal?“
The rest of the text gives no answer to this question, only a link to another news that Airbus was not involved in the deal to bid.

So your conclusion „yes, they do“ is not supported. But as thread opener for the fanboys here it works perfect.

I really wonder why clickbait traps work so well? We all know that they exist, but we absolutely take no care but even accelerate it. A question, rumor becomes fact in this forum and nobody disagree or challenge it.
 
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william
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 6:50 am

planecane 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.

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.


Do any of you think about the logic of what you write? The goal of Airbus is to sell as many aircraft as they can produce at the highest profit margin possible, not to "beat" Boeing or force Boeing to make less on 200 aircraft. Let's say for whatever reason Boeing offered IAG the 737MAX at a $100,000 profit. Now let's say Airbus decides they need to "win" and offers A320s at cost. If IAG calls their bluff what has Airbus gained. Now they have to produce 200 A320s at no profit using production slots that could have made a normal profit margin.

These are business, not Olympic teams. Stop looking at everything as a "fan" of a team. Also, everybody assumes that the LOI is non-binding. Unless you've seen it, you don't know. LOIs can be binding pending a contract.


Well said.
 
BA777FO
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 7:41 am

Okcflyer wrote:
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.


This is it exactly. Airbus was well aware that IAG was exclusively A320 family for narrowbody aircraft and apparently was unwilling to offer reasonable pricing on frames or parts. Note also that Boeing is supplying Airbus parts as part of this deal. Airbus didn't think IAG would opt to mix their short haul fleet and IAG played their bluff.

Now IAG can, going forward, play them off against each other.
 
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zkojq
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 7:55 am

par13del wrote:
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.
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?

Do you have any actual evidence that Airbus is trying to sabotage the MAX's recertification?
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BrianDromey
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 8:00 am

BA777FO wrote:
This is it exactly. Airbus was well aware that IAG was exclusively A320 family for narrowbody aircraft and apparently was unwilling to offer reasonable pricing on frames or parts. Note also that Boeing is supplying Airbus parts as part of this deal. Airbus didn't think IAG would opt to mix their short haul fleet and IAG played their bluff.

Now IAG can, going forward, play them off against each other.


But Airbus claim they were not invited to participate for the business. IAG never publicly said they were shopping for narrow bodies. Prior to the PAS there were some rumours of 50 A220s, but nothing on the scale of the MAX order. I’m still surprised IAG didn’t order the A220 and I think this order reduces the chance of that. The ~60 A319s will effectively be replaced by these 737s. IAG probably could have used ~100 A220s to replace the A319 (IB, VY and BA) and E-Jets (BACF).

My guess is that Boeing offered a great price for signing at the PAS, which was well below the options IAG had on NEOs. Boeing even threw in support for BAs A320 fleet to get the deal - imagine the deal they offered on their own aircraft parts? Boeing needed the publicity, needed the sales and the parts business will help cash flow too.
 
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zkojq
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 8:03 am

BA777FO wrote:
Okcflyer wrote:
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.


This is it exactly. Airbus was well aware that IAG was exclusively A320 family for narrowbody aircraft and apparently was unwilling to offer reasonable pricing on frames or parts. Note also that Boeing is supplying Airbus parts as part of this deal. Airbus didn't think IAG would opt to mix their short haul fleet and IAG played their bluff.

Now IAG can, going forward, play them off against each other.


Why does Airbus have to be offering "reasonable pricing". They have the superior narrowbody offering and they can't build them fast enough. Thus they need to focus on maximising their yields. As we've seen from Paris Airshow, plenty of airlines are happy to pay the premium for the A321neoXLR, so it makes no sense to offer 200neos to IAG at ultra low margins.

IAG already has neos on order and in fleet, so it's not as if they're not getting a slice of the pie.

The overreactions in this thread are hilarious.
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BA777FO
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 8:56 am

zkojq wrote:
BA777FO wrote:
Okcflyer wrote:
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.


This is it exactly. Airbus was well aware that IAG was exclusively A320 family for narrowbody aircraft and apparently was unwilling to offer reasonable pricing on frames or parts. Note also that Boeing is supplying Airbus parts as part of this deal. Airbus didn't think IAG would opt to mix their short haul fleet and IAG played their bluff.

Now IAG can, going forward, play them off against each other.


Why does Airbus have to be offering "reasonable pricing". They have the superior narrowbody offering and they can't build them fast enough. Thus they need to focus on maximising their yields. As we've seen from Paris Airshow, plenty of airlines are happy to pay the premium for the A321neoXLR, so it makes no sense to offer 200neos to IAG at ultra low margins.

IAG already has neos on order and in fleet, so it's not as if they're not getting a slice of the pie.

The overreactions in this thread are hilarious.


Because when Airbus failed to offer reasonable pricing IAG decided to buy from Boeing, who did. Simple business transaction. Airbus took IAG's business for granted and IAG decided to put them on notice.
 
marcelh
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 9:04 am

BA777FO wrote:
Now IAG can, going forward, play them off against each other.


IAG can also play it too hard. According to Airbus, they weren’t aware of the 200 NB IAG wanted.
 
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cv990Coronado
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 9:27 am

marcelh wrote:
BA777FO wrote:
Now IAG can, going forward, play them off against each other.


IAG can also play it too hard. According to Airbus, they weren’t aware of the 200 NB IAG wanted.


They must have been aware of the age of the various narrow-bodied aircraft in the fleets of the IAG airlines. They would also have had cycles and hours.
Great move by Boeing and IAG, Willy Walsh is a very smart operator and is working in the interest of his shareholders, not the Boeing or Airbus shareholders.
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seb76
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 9:36 am

It's incredible how much people on this forum can speculate on the intentions of IAG, A or B based just on nothing more than their own assumptions. "They god huuuuge discounts", "They will cancel the LOI since they did it just to get a better price for Airbus", "buing planes without issuing a tender is poor management from IAG"... Truth is, we don't know in fact !

The airlines under IAG have a long history of operating mixed fleets, so it's not like Boeing just stealed an exclusive customer from Airbus. We can also assume that Airbus will not start playing the kind of politic games that Boeing used to put BBD (deeper) into trouble with their C series just because they missed a nice sales opportunity on a moment they thought they had the upper hand.
As many say, Airbus was probably not even cabable to build this many planes in the right timing given their backlog, so maybe it was Boeing's order to loose from the beginning...

And thinking about sore loosers, I doubt Airbus or Boeing see themselves as loosers on #PAS19. After all, they demonstrated solid sales for their A321XLR and Boeing did more than save the furniture given the difficult context.

What is obvious however is that commercial aviation in general is not doing as good as a couple of years ago. See the situation with ME3 Airlines, the collapse of several LCCs in US/EU, JetAirways, the concerns on Norwegian,... NB sales are doing OK, but on the widebody front it's been very calm those last times despite all predictions of air travel increase and pilot shortages. A bubble is probably bursting.
 
tommy1808
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 9:36 am

par13del wrote:
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?


Alternatively they planed to sign the order at the PAS, but put it into a LoI until the max is certified again.

Best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
afgeneral
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 9:40 am

In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.
 
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par13del
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 10:44 am

zkojq wrote:
Why does Airbus have to be offering "reasonable pricing". They have the superior narrowbody offering and they can't build them fast enough.

So the reason for challenging the LOI is what, pride?
It is amazing how on this site we talk about both OEM's making profit's on service and support items of their products in the years after initial sales, but suddenly, in this case, offering a low selling price to recoup in support at a later date is not an issue or even thought about.
Keeping a competitor out of the market is a long term strategy, not a short term vision that fans of the OEM's sees.
 
marcelh
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 10:45 am

afgeneral wrote:
In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.

As said already by others, IAG hasn’t bought anything yet. This is a LoI, an intention to buy
 
afgeneral
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 10:46 am

marcelh wrote:
afgeneral wrote:
In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.

As said already by others, IAG hasn’t bought anything yet. This is a LoI, an intention to buy


LOIs are usually covered by the same procurement rules.
 
JQ321
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 10:52 am

Aesma 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.

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.

They can't win an order 'back' if it was never theirs.
 
PlymSpotter
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 10:54 am

Stitch wrote:
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?


You're focusing on the 737 MAX's price here, but I'm not convinced the MAX deal was necessarily that 'cheap'.

Clearly a major blue-chip group, like IAG, placing such a substantial order for an aircraft which is under serious scrutiny looks like a strong vote of confidence in both the frame and Boeing. Naturally this paves the way for additional orders from other carriers.
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Pyrex
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 11:24 am

afgeneral wrote:
In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.


This is not France, where most publicly-traded companies are really just government companies in disguise.
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tommy1808
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 11:32 am

Pyrex wrote:
afgeneral wrote:
In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.


This is not France, where most publicly-traded companies are really just government companies in disguise.


Spending 10 billion or so without a tender will always invite challenges from shareholders, and if damage to them can be demonstrated, criminal charges. Not just in France, there is a certain US investor that does it all the time...

But a LoI doesn't mean any money spend yet, so I think they are golden as long they get other pricing before actually signing a purchase agreement.

Best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
Amiga500
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 11:59 am

There could be a very simple explanation for why Airbus were never asked.

If, in prior negotiations for NEOs, it became clear there were no slots available before 202X without paying through the nose for it, and WW knew he needed new airframes before then - well - who else does he go and ask but Boeing? Boeing then came back with racey pricing - that he knew Airbus would never match - so he very happily went with the LOI.
 
BrianDromey
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 12:00 pm

tommy1808 wrote:
Spending 10 billion or so without a tender will always invite challenges from shareholders, and if damage to them can be demonstrated, criminal charges. Not just in France, there is a certain US investor that does it all the time...

But a LoI doesn't mean any money spend yet, so I think they are golden as long they get other pricing before actually signing a purchase agreement.

Best regards
Thomas


I did think about this and Im sure IAG managers did too. They will know, for certain, the prices on their A32x options, if the deal offered by Boeing can be shown to improve on that price and the Airbus parts supply deal was part of that overall deal, it would be hard to show that the Boeing deal is not in the interests of IAG shareholders.

The comments on this thread are totally sensationalist - anyone from Trump, The Queen, Boeing not having a factory in France, corporate corruption have been suggested as reasons for IAG to order the 737. The reality is that the 737 is one of the largest selling aircraft of all time. 5 of the 10 largest A320 operators AA, China Southern, China Eastern, Delta and United all operate the A320. Collectively the IAG group operate 452 A32x, the worlds largest fleet, with more NEOs and XLRs on the way. Long-term the IAG fleet will be in the region of 500 narrow body aircraft - easily large enough to justify a split.
 
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par13del
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 12:21 pm

Amiga500 wrote:
There could be a very simple explanation for why Airbus were never asked.

If, in prior negotiations for NEOs, it became clear there were no slots available before 202X without paying through the nose for it, and WW knew he needed new airframes before then - well - who else does he go and ask but Boeing? Boeing then came back with racey pricing - that he knew Airbus would never match - so he very happily went with the LOI.

In that case, I think the strategy is that Airbus will now find near term slots for a blue chipper versus letting them go to Boeing, price will not be an issue.
BA did hold out on pricing for the A380, but how much more would Airbus have been willing to charge for early slots for the A320xx?
I suspect the simple fix would be to get in touch with those carriers with early slots who may be "financially" challenged and have them defer for a year or two to allow IAG to move up.
Its been done before so....if this is about early delivery, Airbus has it in the bag.
 
Amiga500
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 12:36 pm

par13del wrote:
In that case, I think the strategy is that Airbus will now find near term slots for a blue chipper versus letting them go to Boeing, price will not be an issue.
I suspect the simple fix would be to get in touch with those carriers with early slots who may be "financially" challenged and have them defer for a year or two to allow IAG to move up.
Its been done before so....if this is about early delivery, Airbus has it in the bag.


But they are then having to offer up those early slots at what is likely a very low price. So why bother?

IAG are too big to be tied to single-type fleets. Winning this order at any cost does not really mean you'll make the money back and more in the long term.

Airbus are likely to make more money off those "distressed" slots at some point in the future - they also certainly aren't going to lose money on them.

Its a deal that is
- extremely good for IAG, who are getting what will be a good product at likely great prices and in timely fashion while keeping other suppliers honest in future,
- very good for Boeing, who are getting endorsement of a temporarily troubled product at a critical time - but will have paid for it in pricing,
- and will end up being palatable to Airbus when they get an understanding of the prices the airframes have went at.
 
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Revelation
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 12:47 pm

majano wrote:
With all due respect, please read the comments attributed to Walsh in this "LOI". He specifically referred to the spurring of competition. Now, if you want to spur competition, you surely would not limit yourself to a single supplier before the "competition" even starts.

You are presuming he wanted competition for this deal, not for the next N deals.

Since he already has working knowledge of A320 backlog and prices, he knows he can't get a good deal on A320s in the current environment, so he goes for the shock effect and makes a big commitment to Boeing.

He's got hundreds of aging planes to replace going forward and time around Airbus will take him dead serious.

Notice how Airbus says they were not given the opportunity to compete but didn't say they would meet or beat Boeing on price, performance and delivery schedule, so it's posturing rather than trying to close business.
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Gulfstream500
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 12:58 pm

A price match from airbus would do the trick. Most IAG fleets already have the A320neo, so there is no strategical place for the MAX in the fleet, especially given that the A320neo serves the exact same purpose.

Well, that and I’m sure that they probably have to pay quite a bit of import taxes on the MAX, so the NEO would be cheaper with a price match.
So... when will the Northwest DC-9s be retired?
 
clipperlondon
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 12:58 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.


This was my initial reaction when this was first announced. Desperate times indeed...
 
tommy1808
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 1:00 pm

BrianDromey wrote:
tommy1808 wrote:
Spending 10 billion or so without a tender will always invite challenges from shareholders, and if damage to them can be demonstrated, criminal charges. Not just in France, there is a certain US investor that does it all the time...

But a LoI doesn't mean any money spend yet, so I think they are golden as long they get other pricing before actually signing a purchase agreement.

Best regards
Thomas


I did think about this and Im sure IAG managers did too. They will know, for certain, the prices on their A32x options, if the deal offered by Boeing can be shown to improve on that price and the Airbus parts supply deal was part of that overall deal, it would be hard to show that the Boeing deal is not in the interests of IAG shareholders.


Better have a quotation to proof it.

With the rest I agree. The max is a good plane, and as it always has been between being and Airbus, will be better on some mission profiles than the other way round.

Best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
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tlecam
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 1:19 pm

Wait - are people really taking the position that IAG order of 200 737MAX, announced at major air show, that didn’t even get a competitive bid from the other big aircraft manufacturer, is business as usual and has nothing to do with the fact that the MAX has been pulled out of the air for several months and likely won’t return until at least the fall? Really?
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majano
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 1:21 pm

Revelation wrote:
majano wrote:
With all due respect, please read the comments attributed to Walsh in this "LOI". He specifically referred to the spurring of competition. Now, if you want to spur competition, you surely would not limit yourself to a single supplier before the "competition" even starts.

You are presuming he wanted competition for this deal, not for the next N deals.

Since he already has working knowledge of A320 backlog and prices, he knows he can't get a good deal on A320s in the current environment, so he goes for the shock effect and makes a big commitment to Boeing.

He's got hundreds of aging planes to replace going forward and time around Airbus will take him dead serious.

Notice how Airbus says they were not given the opportunity to compete but didn't say they would meet or beat Boeing on price, performance and delivery schedule, so it's posturing rather than trying to close business.

Fine, but let me just point out that I am not the only one being presumptuous on this. I relied on Walsh's words. That you believe he is referring to some future unspecified orders instead of the order he is commenting on is also an assumption, and if I may say so, a more far-fetched one.
 
Ellofiend
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Re: Airbus seeks to break Boeing/IAG deal

Fri Jun 21, 2019 1:23 pm

Pyrex wrote:
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...


Only when you want them to forget something! :rotfl:
 
Pavlakakos
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 1:26 pm

What bothers me most is the "dark politics" regarding this whole matter. Here we have an (obviously) flawed plane, 347 people dead, unknown date of returning to service....

....and suddently you get a vote of confidence, most probably for PR. I mean, flying cattle class does not actually mean people ARE cattle and will believe something just because Willie Walsh said it.

Total disrespect for all those who perished if you ask me.
 
PixelPilot
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 1:39 pm

Pavlakakos wrote:
What bothers me most is the "dark politics" regarding this whole matter. Here we have an (obviously) flawed plane, 347 people dead, unknown date of returning to service....

....and suddently you get a vote of confidence, most probably for PR. I mean, flying cattle class does not actually mean people ARE cattle and will believe something just because Willie Walsh said it.

Total disrespect for all those who perished if you ask me.


And another specialist with hurt ego.
I'm pretty sure IAG knows a lot about the state of MAX and the history of every frame from every manufacturer that share the skies these days in contrary to some on a.net
 
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Stitch
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:43 pm

majano wrote:
With all due respect, please read the comments attributed to Walsh in this "LOI". He specifically referred to the spurring of competition. Now, if you want to spur competition, you surely would not limit yourself to a single supplier before the "competition" even starts.


With all due respect, if you only order from one of two vendors, how do you spur competition?


PlymSpotter wrote:
You're focusing on the 737 MAX's price here, but I'm not convinced the MAX deal was necessarily that 'cheap'.


I'm focusing on the MAX's price because everyone I am responding to is claiming Boeing only secured this LoI because they offered IAG a price so low they could not refuse to work with Boeing to take them up on it.

My personal comments on this deal have little to nothing to do with price.


PlymSpotter wrote:
Clearly a major blue-chip group, like IAG, placing such a substantial order for an aircraft which is under serious scrutiny looks like a strong vote of confidence in both the frame and Boeing. Naturally this paves the way for additional orders from other carriers.


The existing 4500-frame customer base (including the two who suffered fatal hull losses) continuing to hold on to their orders is a stronger vote of confidence.

IAG has signaled an intent to take their first MAX five years from now. That is more hedging a bet than a vote of confidence. If they had signaled an intent to take their first MAX five months] from now...
 
MD80Ttail
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 1:47 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.

Take running to Govt when they couldn’t sell warmed over 737-700’s to Delta.


The US Military should fly American designed and built products made by American owned companies. The issue w Delta was a little more complex than just whining over loosing a contract. There were fundamental trade issues involved. The situation was bigger than just one order to DL.
 
StTim
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 2:09 pm

MD80Ttail 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.

Take running to Govt when they couldn’t sell warmed over 737-700’s to Delta.


The US Military should fly American designed and built products made by American owned companies. The issue w Delta was a little more complex than just whining over loosing a contract. There were fundamental trade issues involved. The situation was bigger than just one order to DL.


What would Boeing, Lockheed etc do if European countries adopted the same approach? They would cry foul. You cannot just pick arguments that suit your view in a particular situation. The air force would have had tanker lift much earlier if it wasn't for the shennanigans.
 
kennyomg
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 2:16 pm

Stitch wrote:
The existing 4500-frame customer base (including the two who suffered fatal hull losses) continuing to hold on to their orders is a stronger vote of confidence.

The existing 4500-frame customer base did very little to arrest the erosion of BA stock lately. The 200 strong order bumped it by 8% in pretty much a day.
 
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par13del
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:22 pm

Amiga500 wrote:
IAG are too big to be tied to single-type fleets. Winning this order at any cost does not really mean you'll make the money back and more in the long term.

No, but any business who sells at low margins attempt to recoup over the long haul, let's recall that inspite of the fan boy comments about giving a/c away, Airbus has been willing to take lower margins to build market share, a strategy which has paid off in spades. Note I said lower margins, not giving a/c away for free and or taking a loss.

BA switched from 737 to A320, IAG came onboard they knew about WN and FR being single fleet yet this is the first time that they are thinking about being tied to one OEM? Did they think of that when they started ordering NEO's?
Single fleet detriment is a complaint we usually hear about with all Boeing fleets, not Airbus, after all, Airbus are the one's who made type commonality a significant part of their a/c designs, Boeing's only attempt at that was the 757 / 767.
 
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par13del
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 2:24 pm

kennyomg wrote:
The existing 4500-frame customer base did very little to arrest the erosion of BA stock lately. The 200 strong order bumped it by 8% in pretty much a day.

Did it fall when EK confirmed that they allowed their LOI to expire?
Well to be fair, it may have maintained its value since in the same vein, they talked about still looking at the 787, so it may have been a wash.
 
kengo
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:42 pm

Gulfstream500 wrote:
A price match from airbus would do the trick. Most IAG fleets already have the A320neo, so there is no strategical place for the MAX in the fleet, especially given that the A320neo serves the exact same purpose.

Well, that and I’m sure that they probably have to pay quite a bit of import taxes on the MAX, so the NEO would be cheaper with a price match.


I didn't know imported Boeing planes are taxed in EU. First time hearing this......learned something new today. :?
 
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Polot
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:46 pm

kengo wrote:
Gulfstream500 wrote:
A price match from airbus would do the trick. Most IAG fleets already have the A320neo, so there is no strategical place for the MAX in the fleet, especially given that the A320neo serves the exact same purpose.

Well, that and I’m sure that they probably have to pay quite a bit of import taxes on the MAX, so the NEO would be cheaper with a price match.


I didn't know imported Boeing planes are taxed in EU. First time hearing this......learned something new today. :?

There are no import taxes (tariffs) on civil aircraft between the US and EU.
 
kengo
Posts: 278
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:53 pm

Polot wrote:
kengo wrote:
Gulfstream500 wrote:
A price match from airbus would do the trick. Most IAG fleets already have the A320neo, so there is no strategical place for the MAX in the fleet, especially given that the A320neo serves the exact same purpose.

Well, that and I’m sure that they probably have to pay quite a bit of import taxes on the MAX, so the NEO would be cheaper with a price match.


I didn't know imported Boeing planes are taxed in EU. First time hearing this......learned something new today. :?

There are no import taxes (tariffs) on civil aircraft between the US and EU.


Yes, I know and that's why the "confused" emoji at the end.
 
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Polot
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:55 pm

kengo wrote:
Polot wrote:
kengo wrote:

I didn't know imported Boeing planes are taxed in EU. First time hearing this......learned something new today. :?

There are no import taxes (tariffs) on civil aircraft between the US and EU.


Yes, I know and that's why the "confused" emoji at the end.

I was t sure if you knew or not due to the emoji, but figured it would be best to nip it at the bud and be clear before someone takes the taxes argument and runs with it.
 
jsfr
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Re: Media: Airbus to challenge IAG, Boeing deal for 200 MAX?

Fri Jun 21, 2019 2:56 pm

Pyrex wrote:
afgeneral wrote:
In almost all European publicly traded companies you can hardly buy anything over 100k Euros without going through a tender process. This protects shareholder interests and prevents shady deals. People are fired and sometimes go to jail for not following these rules all the time.

Airbus says they never even knew? This wreaks of corruption.


This is not France, where most publicly-traded companies are really just government companies in disguise.


Correct, it's Spain.

Which (like the UK) has the same Corporate oversight legislation as France and the rest of the EU.

Working in the EU we waste a huge amount of time answering RFP's which we know we will never win and which we only received because of required due process and ethical business requires competition and transparency. It doesn't mean that the "cheapest" will win - on the contrary, very often the cheapest offer is often decined for a variety of reasons (such as wanting to diversify suppliers).

However, for a large publicly traded company to so blatantly ignore this in such a visible and spectacular manner is just really weird. Totally unusual and bizarre - so much so that there must be a tactic / reason behind it....

I am just surprised that the first people challenging are Airbus and not IAG shareholder groups...

If I were Airbus, I would have just sat quietly, taken the moral high ground, and watched as IAG/Boeing dug themselves out of another mess with the invevitable legal challenges from market authorities/shareholders, etc...
 
Scorpio
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Re: Airbus seeks to break Boeing/AIG deal

Fri Jun 21, 2019 3:00 pm

AWACSooner wrote:
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.


LOL! You seriously think Boeing doesn't have a final assembly line in Europe because ... the EU doesn't allow it? Are you for real? What on EARTH makes you think the EU would stop Boeing from doing that??

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