Airbus

[syscom3]

I figured that Airbus would be cutting costs on the 380 just to get some more sales. In the coming weeks, we will see how the "break even sales point" will stay at 420, or increase. Perhaps Quantus is getting some assembly slots for customers who are deferring their own positions?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBN_NV6ffCk0&refer=home

Oct. 29 (Bloomberg) -- Qantas Airways Ltd., Australia's biggest airline, placed an order for eight more A380 superjumbo planes made by Airbus SAS and valued at as much as $2.4 billion.

The order is on top of 12 that Qantas agreed earlier to buy, with deliveries between 2008 and 2015, the airline said in a statement on its Web site today. The Sydney-based carrier said it negotiated an ``attractive package'' for the A380s, and also ordered four A330-200 aircraft, worth as much as $652 million, according to catalog prices.

``It's a real vote of confidence when a lot of people are questioning what's going on at Airbus,'' said Matt Crowe, a transport analyst at JPMorgan Chase Co. in Sydney. Chief Executive Officer Geoff Dixon ``must be fairly confident that the problems that Airbus have had are coming to an end.''

The additional order by Qantas is a boost to the A380 program, which has suffered delays as Toulouse, France-based Airbus struggles to install wiring in the world's largest commercial plane. Airbus parent European Aeronautic, Defence Space Co. estimated on Oct. 3 that the A380 delays will cut 4.8 billion euros ($6.1 billion) from earnings through 2010.

Yesterday, Tim Clark, president of Emirates, the biggest customer for the Airbus SAS's A380, said his airline is sending a team of auditors to the plane maker's factories to see if delivery of the superjumbo will be delayed for a fourth time.

Emirates Considers 747-800

Clark said the airline had no plans now to follow Virgin Atlantic Airways Ltd., which postponed its order for the plane last week after Airbus said deliveries of the A380 would be delayed for a third time in 16 months to August 2008. Clark said he's considering the Boeing Co. 747-800, the newest version of the plane, to ``supplement'' the A380 order.

``If they are going to delay further we need to know because we can't afford to be let down again,'' Clark said in a phone interview from Dubai, United Arab Emirates.

On Oct 27, Emirates canceled a $4.2 billion order for 10 of Airbus's A340-600 model. The four-engine airplane is being beaten for business by Boeing's 777-300, which is more fuel efficient. Emirates had delayed the order in March to give Airbus more time to develop a better version of the A340.

Virgin Atlantic, controlled by U.K. billionaire Richard Branson, said on Oct. 26 that it's postponing the order for six A380s until 2013. The planes had been scheduled for delivery from late 2009, the airline said.

Disclosure of Difficulties in 2005

Airbus first disclosed difficulties with the A380 in 2005. Prior to today's announcement by Qantas, the plane maker had 159 orders from 16 customers for the aircraft, which has cost at least $13.5 billion to develop. The superjumbo has a range of 8,000 nautical miles and costs $282 million to $302 million each, based on catalog prices.

Qantas first placed its order for 12 of the superjumbos, with an option for another 12, in 2000. The carrier, which in August booked a gain of A$104 million ($79 million) in its full- year earnings on compensation for the delays, will receive its first A380 in August 2008, two years behind schedule.

``Our decision to increase our order has been made after an extensive review of the recent problems at Airbus and the delivery schedule delays of the A380,'' Dixon said in the statement today. ``We are convinced that these problems relate to industrialization issues at Airbus and will be remedied, and in no way relate to the technical capacity of the A380.''

The airline plans to use the 555-seat, double-decker planes for destinations including the U.S., the U.K., Europe and possibly the Middle East, according to its statement.

Airbus A330 Order

Meanwhile, Qantas expects to receive four of the 250-seat A330-200, which each cost between $152.7 million and $163 million based on list prices, from December 2007. It plans to use the plane, which has a range of 6,450 nautical miles (11,949 kilometers), to fill the capacity shortage from the A380 delay.

Qantas, which has a fleet of 219 planes, is counting on fuel-efficient aircraft such as the A380 and the 115 Boeing 787 aircraft it has on order, to cut costs as jet kerosene prices reach record levels.

``The Boeing 787 and the Airbus A380 both have up to 20 percent lower operating costs than existing aircraft and will form the nucleus of the fleets out to 2015 for Qantas and our low-cost airline Jetstar,'' Dixon said today.

The airline has also decided to buy five more Boeing 737- 800, with delivery starting from February 2008, Qantas said in today's statement. The single-aisle plane seats as many as 189 passengers and costs between $66 million and $75 million each based on list prices.

Qantas said the 737-800, along with its 33 existing aircraft of the same model, will be used to serve its domestic routes and to replace aging 737-400s, which will be sold, redeployed or converted to freighters.

 

[Matt308]

Syscom, I agree with you regarding A320s built in PRC. However, the world is a changin'. Without policital clout, PRC won't allow aircraft to be sold in volume to the worlds largest potential market. All the airframers are doing this too. A shame really.

 

[syscom3]

I agree with this gentlemans assessment. Does Airbus have the resources to manage both the 380 and the 350? I would suspect at the moment, no.

"The big issue is, do they have the engineering talent to deal with the launch of the A350 as they're dealing with the problems of the A380?"

Airbus tags more cash for A350 - Business - International Herald Tribune

TOULOUSE, France: Airbus plans to increase spending by 20 percent, to $12 billion, to develop its A350 jet, a long- range plane that would be made mainly of lightweight carbon fiber, two people with direct knowledge of the proposal said Friday.

The European plane maker, which is trailing Boeing in new orders this year, will present designs for the A350 XWB to its parent company, European Aeronautic Defense Space, on Tuesday, according to the people, who declined to be identified before an announcement.

The plane is the sixth attempt by Airbus to come up with a rival to Boeing's 787, which has won 402 orders and may help Boeing overtake Airbus as the world's largest maker of commercial planes. Airbus has struggled to develop its A380 superjumbo, now two years behind schedule and forecast to generate operating losses of €4.8 billion, or $6.1 billion, by 2010.

"They really don't have a choice about doing it, if they want to be competitive with Boeing over the long term," said Phil Finnegan, an analyst at Teal Group, a consulting company in Fairfax, Virginia. "The big issue is, do they have the engineering talent to deal with the launch of the A350 as they're dealing with the problems of the A380?"

In July, Airbus said it had scrapped earlier plans for an A350 based on an existing model and aimed to offer by October an all-new plane, with wings made from carbon fiber, that would cost $10 billion to develop.

The latest concept would be made 50 percent from carbon fiber to reduce weight and save fuel, which is the biggest expense for airlines after labor, the people said.

Boeing's plane, known as the Dreamliner, is 50 percent carbon fiber by weight and 20 percent more fuel-efficient than the planes it replaces, according to Boeing.

The 787 cost the plane maker and its partners $10 billion to develop, according to Paul Nisbet, an analyst at JSA Research in Newport, Rhode Island.

The new A350 XWB would not enter service until at least 2013, a year later than previously planned and five years after the 787 is expected to fly. Making a fuselage from carbon fiber composites will also make the plane more costly to develop, requiring new equipment and technology, the people said.

The A350 XWB would have 270 to 350 seats, depending on the model, and a range of 15,700 kilometers, or 9,800 miles, the people said. That compares with 210 to 330 seats on the 787 and a range of up to 16,300 kilometers.

Meanwhile, the A380's development cost has risen to $13.5 billion. Airbus expects to take €1.1 billion in charges this year because of penalty payments to airlines for late delivery and anticipated losses on some contracts.

EADS talks 'going well'

Chancellor Angela Merkel of Germany said Friday that negotiations about new German investors for EADS were going well and that Berlin wanted to keep the French-German parity in the group, Reuters reported from Berlin.

But a statement issued by Merkel's office after she met with the EADS co- chiefs, Thomas Enders and Louis Gallois, gave no details.

"These negotiations are going well," Merkel said. "We want to send a clear signal that the German government is committed" to French-German parity.

Since EADS was created in 2000, it has maintained a balance between the French and Germans in its shareholder base and management. Berlin is trying to decide how to maintain German influence in EADS after DaimlerChrysler sells part of its stake, as expected.

 

[syscom3]

didnt Airbus say not to long ago that an all composite structure was too risky?

Airbus considers composite fuselage

In what would be a radical change of course for the company, Airbus may switch to a composite fuselage for its next new jetliner.

It would mark the sixth time that Airbus has changed plans as it scrambles for the right airplane to not only challenge The Boeing Co.'s 787 Dreamliner but possibly leapfrog the 777. The two Boeing planes are dominating sales for jets that seat from about 250 to 350 passengers.

Airbus may present its latest A350 design to the board of its parent company, EADS, next week, according to a published report.

"If they are reconsidering the virtues of an all-composite tube (fuselage), that's a smart exercise," said Richard Aboulafia, vice president of analysis for the Teal Group, an industry consulting firm near Washington, D.C.

"They have to decide whether they believe composites is a killer technology," Aboulafia said. "If they believe that it is, then a metal-tubed A350 would be ambushed eventually by a 777 composite replacement."

Airbus has said it would aim the A350 at not only the 787 but the 777, a bigger plane that seats from 300 to 360 passengers, depending on the model.

Boeing's two-engine 777 has been dominating sales for jets its size the past few years. Airlines prefer it over the four-engine Airbus A340, which is less fuel-efficient and has a smaller cabin.

The older 777 has an aluminum fuselage, but a composite tail. The new 787 will be the world's first large passenger jet with an all-composite airframe, including fuselage. Boeing believes composites are the future of commercial jet making and has said it has made its last aluminum jetliner. Composites are stronger and lighter than metal and do not corrode. Among other benefits, the composite fuselage of the 787 will save airlines on maintenance and give passengers an improved cabin environment, according to Boeing.

Airbus, on the other hand, has said Boeing is pushing the technology envelope too far with the 787.

Earlier this year, Airbus redesigned the A350 after criticism from several airline and industry executives that its proposed plane would not be competitive against the 787.

At the Farnborough International Airshow in England in July, Airbus unveiled the redesigned jet, dubbed the A350 XWB (extra wide body). Airbus said then that the A350 would have a composite wing, but not a composite fuselage. Airbus said it would develop three versions of the A350, the first of which would not be ready for airline service until 2012.

But last week, Tim Clark, president of Emirates, an important Airbus customer, told reporters that the A350 XWB was still lacking.

"It has to do better than that," he said of Airbus.

Emirates has been considering either the A350 or 787 as it looks to place an order for as many as 100 midsize jets.

Two weeks ago, the respected online industry publication Air Transport World reported that Airbus was rethinking the A350 design to include a composite fuselage. It quoted "key" unnamed customers as telling Airbus that it had not yet done enough with the plane to combat the 787.

Bloomberg News reported Friday that Airbus has indeed decided to redesign the A350 to include more composite and will present the new design to the EADS board Tuesday. Bloomberg, quoting two unnamed sources, said the latest redesign will push the development costs of the A350 from $10 billion up to $12 billion. The changes will delay the jet's entry into service until at least 2013, Bloomberg quoted the sources as saying.

Boeing plans four versions of its 787, the first of which will enter service in 2008.

The European Aeronautic Defense and Space Co., the world's second-largest aerospace company after Boeing, has not yet approved development of the A350. It has its hands full trying to repair the damage from a series of embarrassing delays in the A380 program. EADS executives recently said they wanted to make sure there are enough engineers, and that EADS has the financial resources, to develop the A350, given the full-court press at Airbus to get the A380 problems fixed.

Industry analysts believe Airbus must develop the A350 or concede the important middle of the jetliner market to Boeing and its 787.

In his recent comments to reporters, Clark, the Emirates Airlines executive, said if Airbus does not come up with a competitive plane to counter Boeing's 787, "they'll be out of business."

 

[twoeagles]

I see that FEDEX has cancelled their order for 10 Airbus and has ordered Boeing. An uptick for FEDEX, but I am pretty much a snotty "buy American"
sort of guy. You just can't beat a Boeing (and I am a Lockheed engineer!)

 

[syscom3]

Here you go......

Hmmmm........ Just like the L-1011 nearly destroyed Lockheed, so may the A380.

Airbus loses its first A380 customer - Business - International Herald Tribune

FedEx backs out on 10 superjumbos worth up to $3 billion
By Carter Dougherty / International Herald TribunePublished: November 7, 2006

FRANKFURT: FedEx, the American freight and logistics company, on Tuesday canceled an order for 10 Airbus A380s, becoming the first customer to abandon the superjumbo jet in the wake of the production delays that have shaken the European company.

The order will instead go to its American rival Boeing, which will supply FedEx with 15 Boeing 777 Freighters, a plane also designed for long-haul cargo flights.

Frederick Smith, chairman and chief executive of FedEx, specifically cited the recent decision by Airbus to delay delivery of the superjumbo jet amid production bottlenecks as the reason for the cancellation.

"This is a disaster for Airbus," said Doug McVitie, managing director of Arran Aerospace, a consultancy in Dinan, France. "The fact that it is a freighter and not a passenger version does not minimize the impact in any way."

FedEx cancels A380 orders, citing delays Though the industry has been rife with speculation about possible cancellations of A380 deliveries, FedEx's decision is nonetheless a jolt to the Airbus order book at a time when it can ill afford such losses. The company has also been jousting with its largest customer, Emirates Airlines, which last month sent teams to Toulouse, France, and Hamburg, the main Airbus production sites, to review its orders for 43 planes. A second team of Emirates engineers is expected to arrive in Toulouse later this month.

Two weeks ago, Virgin Atlantic Airways announced that it would postpone by four years an order for six A380s from Airbus, becoming the first airline to step back from its commitment to the troubled plane and signaling the potential for more trouble

Until FedEx canceled, Airbus had 159 firm orders for the A380. That number has not changed in about a year, making the FedEx decision a painful blow, analysts said.

With Airbus in the deepest crisis of its 36-year history, some analysts have said they believe it will be difficult for the company to obtain many more new orders for the large plane. Airbus has said it expects to sell 751 planes during the life of the program.

"Global demand for air cargo and express services continues to grow rapidly and FedEx has made significant investments in our network to meet customers' needs and fulfill our business objectives," Smith said in announcing the cancellation. "Therefore, it was necessary and prudent for us to acquire the Boeing 777 Freighter."

Airbus, the main subsidiary of European Aeronautic Space and Defense, said it regretted the FedEx decision. "That said, we respect their need to address capacity growth," an Airbus spokesman, David Voskuhl, said.

The passenger version of the A380 lists for about $300 million, but that does not necessarily mean Airbus will lose $3 billion from the cancellation. Freighters are sold for less because their interiors are less elaborate, and the FedEx order was placed at the lower rates that would have prevailed in 2001.

Boeing, for its part, hailed a new success for its 777, the world's longest- range twin engine aircraft, which will replace FedEx's aging fleet of McDonnell Douglas-11F airplanes.

"We're looking forward to working with FedEx on this new chapter in our relationship," said Ray Conner, vice president of sales for the Americas at Boeing Commercial Airplanes.

The order is worth up to $3.6 billion for Boeing based on the list price of the 777, double that if FedEx exercises options it has also obtained to purchase another 15 planes, according to a spokesman, Bob Saling. Discounts on the list price are common.

FedEx announced plans to buy the freighter version of the A380 for its FedEx Express subsidiary in January 2001 after a two-year study of the company's long-term needs for long-range jumbo aircraft. At that time, FedEx chose the A380 over a model of the Boeing 747, saying that no other plane "met our anticipated demands in the international air cargo market as efficiently."

But the A380 delays have now led FedEx to choose the 777 freighter, which was not available in 2001.

Losing an A380 cargo order was particularly painful for Airbus, analysts said. The freighter version, which has a capacity of nearly 40,000 cubic feet and a maximum payload of 330,000 pounds, had the potential to be a major money maker for Airbus, McVitie said. Lacking a complex, customized interior, its manufacturing costs are well below those of the passenger version.

The cancellation means that Airbus now has outstanding orders for just 15 freighter versions of the A380. United Parcel Service has ordered 10 of the planes in 2005 and has options to buy 10 more. The remaining five will go to International Lease Finance, a California- based aircraft leasing company.

 

[syscom3]

Much-delayed superjumbo A380 on sale now for carriers that can wait

Troubled Airbus jet could be bargain - Aviation - MSNBC.com

By Karen West
MSNBC contributor
Updated: 3:54 p.m. PT Nov 9, 2006

The biggest financial crisis in Airbus' 36-year history could be a boon to commercial airlines.

After breaking its delivery dates three times on its super-jumbo A380 jet, Airbus sales executives are courting customers all over again to keep them from dumping the new model.

Even though the plane is overweight and wrought with production snafus, some industry insiders say airlines should think twice before sending the superjumbo packing.

If they're patient and don't urgently need the airplanes, airlines could end up getting "the deal of the century," one analyst said.

"Airbus has to go to every customer hat in hand, get down on their knees and say, What can I do to make it right?'' said Edmund Greenslet, publisher of Airline Monitor, a trade publication. "One way to make it right is to make it cheaper."

In the meantime, A380 customers, many of whom already received 30 to 40 percent discounts for being the first to sign up for the 555-seat "cruise ship of the skies," are demanding financial compensation for three rounds of delivery delays since June 2005.

In just 19 months, the giant, double-decker passenger plane has gone from being Europe's crowning engineering achievement to what some view as a white elephant that is two years behind schedule and expected to cost the company billions in lost profits.

"My advice to airlines would be don't bail out. Stay on board and use your leverage to get all the bells and whistles you want for free,'' Greenslet said.

Aviation consultant Scott Hamilton agrees, saying airlines would be crazy to cancel A380 orders today.

"By the time the airlines get through raking Airbus over the coals, we wouldn't be the least bit surprised if the launch-order A380 pricing wound up being in the $100 million range,'' Hamilton wrote in a recent report to clients. "Getting the A380 for this little amount would be the deal of the century.''

The A380 has a list price of $300 million, although airlines rarely pay the list price for new aircraft.

While deep discounts are expected on the A380, not all airlines can afford to wait it out, noted Forecast International aerospace analyst Raymond Jaworowski.

FedEx Corp., one of Airbus's most loyal customers, this week canceled its order for 10 of the A380 freighter models because of the delivery delays. It turned to rival Boeing Co. for 15 Boeing 777s because they could be delivered more quickly. The 777 has a list price of $178 million to $240 million, depending on the version.

Airbus' 15 remaining freighter orders — 10 from United Parcel Service Inc. and five from International Lease Finance Corp. — still need to be "reconfirmed'' and are in the "cancellation zone,'' according to executives from Airbus' parent, European Aeronautic Defense and Space Co.

UPS and ILFC reportedly are holding onto their orders while they weigh their options with Airbus, which has blamed wiring difficulties for its production delays.

EADS officials last month estimated that the A380 delays will cut $6.1 billion from earnings through 2010. This week the company reported a third-quarter loss of $245 million, largely because of the production delays. Officials have said the company will not make a profit on the A380 until it has sold 420 units, up from last year's forecast of 270.

That could take decades, although some analysts point out that the 747 jumbo jet, which nearly bankrupted Boeing, also took many years to become profitable.

Without FedEx, Airbus still has 149 orders for the A380 from 15 customers, including Emirates, Singapore Airlines Ltd. and Australia's Qantas Airways Ltd.

Richard Aboulafia, vice president of the Teal Group, an industry consulting business in Fairfax, Va., says the A380 debacle casts doubts on the company's ability to fund new planes, such as the A350 — a new widebody jet designed to compete with Boeing's fast-selling 787 and 777.

"That's the airplane they should have built from the word go,'' Aboulafia said, who added that the A380 "should never have been born."

Paul Nisbet of JSA Research in Newport, R.I., said Airbus in time will earn back respect and orders for the A380 by demonstrating the operation and viability of the aircraft.

"Eventually it will be an operational success,'' Nisbet said. "How long it will take or if they ever achieve economic success remains to be seen."

A decision on whether to go ahead with the proposed long-range A350 is expected in the next few weeks.

Without an A350 launch, Airbus will soon have nothing competitive to sell in the crucial 200- to 400-seat segment, Aboulafia said. "Getting the A380 back on track after a two-year delay won't save the company from marginalization without the A350."

In wake of the latest delays, Virgin Atlantic Airways postponed delivery of its first A380s until 2013. Emirates, the Dubai-based airline that is the program's biggest customer with 45 planes on order, said it was sending an audit team to France to check on the latest delivery schedule. Its first A380 is expected to be delivered in August 2008 — a time when the airline originally was supposed to have 18.

Meanwhile, Qantas, which has already been compensated for the delays, recently ordered eight A380 superjumbos on top of the dozen it had already said it would buy. It was the first A380 order this year.

Qantas officials said they had negotiated an "attractive package" for the additional jets. It also ordered four A330s to help fill the gap left by the two-year delay to the A380 delivery timetable.

"I wouldn't be surprised if Airbus threw in those planes (A330s) practically for free,'' Greenslet said. "The pricing power has shifted from the seller to the buyer. Airlines can more or less dictate a price right now, and Airbus is in no position to haggle."

 

[syscom3]

Not only is Airbus going to have to devote a large ammount of resources to develope the -350 and -380, but they will also have some very difficult political choices to make with the Chinese and Russians. Airbus might need to seel their souls to those two countries just to survive. At least Boeing outsourced the more expensive parts of the 787 to countries that have similar economies like the US.

The American Thinker

The past week, which saw Europe celebrating the triumph of America's Democrats, produced more bad news for Airbus. Europe's champion "social enterprise," intended to serve the interests of more than just shareholders, and its chosen instrument rival to America in the strategically-important aerospace industry, has almost no room for error. If it succeeds in maintaining its position as a full line rival to Boeing, it will represent a brilliant and desperate achievement.

In order to remain a viable competitor in the production of advanced airliners, Airbus must thread a needle. Everything must go according to plan, and self-serving interest groups and leaders must be willing to compromise in order to assure the survival of the enterprise. Costs must be dramatically cut by dropping 80% of existing suppliers (mostly European firms), as announced on Monday and concentrating work in the hands of firms who can cut costs by a substantial amount. The strength of the euro against the dollar has severely handicapped Airbus, so it has announced it is seeking low wage suppliers located in dollar zone countries. This would exclude France and Germany.

Russian aerospace and Airbus

Russia is emerging as a key player in Airbus, with China striving to keep its own hand in the pot as well. Both nations can provide very low cost labor compared to Western Europe, and the former USSR aviation engineering establishment contains many talented engineers hungry for work. A month ago I reported on the growing ties between Airbus and Russia, including a substantial capital investment in Airbus by a state-controlled Russian bank.

This week, those ties started to bear fruit. Russian airline Aeroflot defaulted on its order for 20 Boeing 787 Dreamliners, the hot-selling new generation airplane for which Airbus must engineer a rival, or else risk losing the biggest market segment of all: fuel-efficient medium-sized, long range airliners. Airbus has been under pressure to announce the formal launch of its rival A350 XWB model. Russia clearly wants a hand in its development, and wants Aeroflot to swing as many orders as possible to the new airplane as soon as Airbus formally decides to commit its resources to the program.

Industry observers noted that on its own merits, Aeroflot's decision made no sense. Other leading airlines like British Airways and Singapore Airlines have already started vying for the delivery slots opened up by Aeroflot (the 787 is sold out through about 2012 at current rates of production). Moreover, the price agreed to by Aeroflot is thought to be substantially less than any new customer would pay. In effect, it is giving up a discounted price on a highly saleable airplane. Bargaining leverage with Airbus must be worth more to the Kremlin leaders behind this decision.

If Airbus follows the practices of the Japanese and of Boeing, a substantial amount of engineering will be outsourced, along with the actual physical components and systems to be supplied by the new contractors, including Russian and Chinese suppliers. This makes quality control and engineering liaison critical. Airbus has had much less practice at this than Boeing, which has very successfully outsourced major critical components of its jetliners, notably to Japanese suppliers highly skilled in the delicate technologies involved in manufacturing composite-based components, up to and including fuselage sections and even wing components.

Normally, much time and energy are required to work out relationships satisfactory to both sides when critical engineering responsibility is transferred to suppliers. But Airbus does not have the leisure Boeing enjoyed, as it gradually outsourced more work to its key suppliers. Everything must go right for Airbus, and it must go right quickly, if the A350 XWB model is to be produced in time to contest the market with Boeing.

Balancing Russia (and China) versus France (and Germany)

President Chirac announced he will visit Airbus HQ in Toulouse next Tuesday to "find solutions." M. Chirac has so far not notably shown himself interested in solutions which cost French workers their jobs. Germany, for its part, does not want to see jobs lost in Germany, where the A320 is assembled, and where many suppliers may well be cut off in favor of Russian and other low wage suppliers.

Airbus chief M. Gallois, the skillful former president of SNCF, the French railway, will have his work cut our for himself, persuading France and Germany to go along with job cuts. His major leverage comes from a threat to cancel the A350 XWB. But such an abdication would cripple Airbus' efforts to remain a full-line supplier to its airline customers.

Airbus recycled news of the big Chinese order for its aging A320 single plane, in order to garner at least some positive headlines, such as this - "Airbus Gains Ground." In return for the massive order, China will host an assembly line for the A320 jet, This will not contribute to steady employment in either Toulouse or Hamburg, where the 320s are currently assembled.

The A380 freighter program at risk

The real order book news is terrible. The very first outright cancellation of an order for the A380 came as Fedex cancelled its order for 10 superjumbo freighters. The remaining two customers, UPS (10 orders) and leasing firm International Lease Finance Corporation (5) have not yet reconfirmed their orders, and if they do not renew, the program will be dropped, costing the company 25 firm orders. While it would save a lot of engineering resources, this would leave the large freighter market securely in Boeing's hands.

Airbus can ill afford to concede any important segments to Boeing. That is where profits are richest, and Boeing continues to prosper while Airbus shows definite signs of a financial pinch. The financial director of parent EADS put it this way,

"Airbus will have to meet cost-cutting targets if it is to "deliver on all programs at the same time…."

Boeing ramps up

Meanwhile, facing extremely strong demand for its 777 twin jet medium-large long range airliner, Boeing is taking the step of changing its assembly procedures in order to ramp up production by as much as 20% or more. The 777 will be manufactured on a moving assembly line, just like Henry Ford's Model T, albeit it at a slower pace (1.6 inches per minute).

The moving assembly line serves to prompt workers as to the necessary time to be done with each stage of work for which they are responsible. The initial pace, timed to existing achievements in speed, can gradually be increased, as workers master their processes more fully, and as they focus more intently due to the prompting of the physical movement of the airplane. It has been used before to excellent effect by Boeing and other airplane manufacturers.

The 777 freighter, incidentally, is what FedEx is purchasing in place of its cancelled A380 freighter order. Other airlines, facing delays in their expected delivery dates for 380s, have also been ordering 777s. Boeing must be making substantial profits on it.

Pricing pressure on Airbus

The final and perhaps most costly bit of bad news for Airbus is the outbreak of open talk about the heavy discounting it is employing to "move iron" as they say in the airliner business. Qantas, when it re-upped for more 380 options, boasted of the "attractive package" it received, a euphemism for steep discounts. Now, the press is reporting that customers which ordered the old minimally-upgraded A350 design (which was dropped) will be receiving the new version, the XWB, at the old price they negotiated for the older model plane.

The losses per XWB airplane could be very substantial. The exact pricing figures are a closely-held secret, but it was understood that launch customers for the old A350 received deep discounts on an airplane that was to require only a billion euros or so to develop. The new XWB variant will require perhaps 10 billion euros or more. When one is losing money on discounts and is late to the market by a matter of multiple years, it is very hard to make up for low prices on volume

For the A380, it may be even worse.

"Airbus has to go to every customer hat in hand, get down on their knees and say, What can I do to make it right?'' said Edmund Greenslet, publisher of Airline Monitor, a trade publication. "One way to make it right is to make it cheaper."

In the meantime, A380 customers, many of whom already received 30 to 40 percent discounts for being the first to sign up for the 555-seat "cruise ship of the skies," are demanding financial. [....]

"By the time the airlines get through raking Airbus over the coals, we wouldn't be the least bit surprised if the launch-order A380 pricing wound up being in the $100 million range,'' Hamilton wrote in a recent report to clients. "Getting the A380 for this little amount would be the deal of the century.''

The A380 has a list price of $300 million, although airlines rarely pay the list price for new aircraft.

 

[syscom3]

A money-losing quarter

Airbus also announced a net loss for its third quarter, due to write-offs. Surprisingly, the news of the loss contained actual good news: outside of the write-offs on the A380, the rest of the company is moderately healthy. Defense aviation is a strong point, in particular.

However, depending on whether or not the company decides to go ahead with the A350 XWB program, as much as billion euros more in write-offs could be faced in the fourth quarter.

EADS could take A350-related charges of as much as €800 million (US$1 billion) in the fourth quarter, Ring warned, depending on the decision it takes on the program's future.

Even worse, however, is this small bit of verbiage buried in the company's official announcement.

As already announced, EADS will not issue an updated 2006 outlook until further notice.

Matters are clearly very dicey at Airbus. It faces incompatible demands from the marketplace versus powerful state actors it needs to placate, but who are not much interested in compromises that harm their own interests.

M. Gallois, bonne chance!

Thoams Lifson is the editor and publisher of American Thinker.

 

[v2]

Bad news: Airbus to announce major job cuts

PARIS, France (Reuters) -- Planemaker Airbus will announce on Wednesday plans to cut 10,000 jobs in four European countries, but will force contractors to share the pain of cuts which could provoke labor unrest, industry sources said.

more: Airbus to announce major job cuts - CNN.com
( cnn )

 

[Matt308]

And here is how every A380 interior will not look like.

 

[DerAdlerIstGelandet]

I sure would like to fly on that particular one though!

 

[Gnomey]

Yeah, if they were all set up like that, it would make commercial flying more enjoyable again.

 

[Matt308]

Think Greyhound bus with the scum of the earth as passengers. Now include queueing for 3 hours on top of it between taxi-check in-security-tram-boarding-deplaning-tram-luggage-rental bus-rental desk-hotel parking valet-hotel checkin-repeat. That is much more realistic.

 

[Erich]

have you guys seen the big boy 1000 passenger fixed wing that Boeing is putting together as response to the Airbus ?

 

[Matt308]

Yeah the wind tunnel scale version of the flying wing. Boeing has been floating that one in the curtains for years and years. But its radical departure from the existing tube-wings-tail model is likely not going to be a seller in todays near future.

 

[Erich]

I'm not too sure about that . . . . ............. obviously big bucks is a factor

 

[DerAdlerIstGelandet]

I atleast would like to see a flying prototype.

 

[Erich]

I was sent sometime ago a photo of the Boeing on the flight line but with double the engines that is in Matts pic. whether it is a reality now and still going through the "bugs" stages am not sure

E `

 

[DerAdlerIstGelandet]

Ive seen drawings of what you are talking about Erich.