Posted on 11/14/2006 1:16:17 PM PST by Zakeet
Are there any advance sales for the 350 yet? Airbus has orders in-hand for the 380 and a lot of angry customers. Those customers would be hopping mad if the 380 were cancelled since they've already invested in the infrastructure to service the beast.
Airbus executives have 1 foot on the dock (the 350) and the ship (the 380) is slowly pulling out. They can't straddle much longer.
If it comes down to either the 350 or 380; they'll go ahead and finish the 380 for the reasons you suggested...I think. They can't let those customers down now. But I kinda doubt they can afford the 350 AND 380. The 350 will probably be pushed out to some fantasy, drawing board date well into the future.
Proof that Boeing was crazy like a fox when they initially looked at a super-jumbo. Airbus jumped on the idea and sunk billions into development about the time being went the Dreamliner route... Now Airbus is too heavily invested in the A380- and cannot touch Boeing. Unless they get their A380 problems straightened out and get a lot of units produced and out the door (delivered) and a BUNCH more orders- they are going to have to worry about a lot more than the A350's future- they will be trying to figure out if Airbus has a future...
They are pretty late in the development cycle. If they bail now, they lose the many billions they've invested in development with no return on that investment.
Even though the A380 may never be profitable, it will likely bring in enough revenues to offset most of the billions they spent developing it.
In other words, they've gone too far to bail out now. They need to finish it and earn what they can.
The problem they are facing with the A350 is that their development and production costs are too high. It simply costs them too much to develop the plane and produce it in Europe because of the high wages without the efficiency to justify them.
If they canceled the A380, it wouldn't help them with the A350. Instead they would have to figure out how to pay off the billion in loans for the development costs of the A380 with decreasing revenues and no major new products coming out for most of a decade.
Bailing out on the A380 now would bankrupt Airbus if it were a privately held company.
If would also mean laying off huge numbers of worker that are ramping up to build parts for those planes, and wouldn't be needed since the A350 won't be going into production for a very long time.
Losing those jobs, and having to bail out Airbus would put a serious strain on the already stagnant/troubled European economy.
I sure wouldn't want to be the guy charged with figuring out a business plan to get these guys out of the hole they've dug for themselves.
They have a pretty good idea of what they need to do, however since so much of the company is government owned, decisions are far too influenced by politics for them to take the steps that they know they must take. Even worse, are socialist leaning governments which means that making good business decisions are less important than supporting failed ideals.
To make serious changes they have to admit that their socialist policies are flawed, and that shakes the foundation of their society so deeply that it's political suicide.
They are also also owned by a group of different governments, and while business power plays can be difficult and unproductive, political ones are even worse.
At best they'll agree on some form of balancing out job cuts that doesn't allow them to consolidate operations enough to be efficient, but by the time the negotiations are over the actually cuts will get negotiated down in size as they keep reducing cuts in one area or another to get everyone to reach a consensus.
They've got a hard task ahead of themselves, and I don't think things have gotten bad enough that the European people will accept what needs to be done. Therefore their problems are likely to get worse before they will get better.
Here is what's going to happen: Boeing finishes design work on the 787 right about the same time Airbus begins design work on the A350XWB. Boeing turns their attention to an all composite replacement for the single isle 737 while Airbus is in the middle of developing the A350.
By the time Boeing is rolling Composite 737s off the production line, Airbus is just starting to concentrate on a composite replacement for the A320 family. Meanwhile, Boeing will move on to the large twin isle composite replacement for the 777 which will compete against the A350-1000.
Airbus can short circuit this decades long catchup game by dropping development of the A350 and going directly to the A320 series. The two biggest sellers in the market in terms of numbers are the A320 and the 737. It ain't glamourous, but it's profitable.
There are plenty of shops in the US that can bid for this work. They might as well be building Boeing and Airbus parts.
The Russian investment, coupled with excess capacity in that country and a lower cost structure might mean that some of the work will be done east of the Urals.
"You forgot to include a rubber band or two and a paper clip."
How about the C47 Goony-bird repair kit? Bubble gum and bailing wire.
I agree that the 380 should go to allow the 350 to get to market, but, I don't think it will happen.
In addition to the 350 being late to market and no money to fund it, Airbus is looking at the threat of a "plastic" 737 (737P) putting their very popular 320 family out of contention.
Truly the folks at Airbus are "living in interesting times"! LOL
They are going to take the black aluminum approach to the A350. Boeing considered and rejected the black aluminum approach. Their savings in weight,parts count, labor etc would be negated.
The black aluminum approach is alot like the current method of building an airplane. That is attaching composite panels to a composite airframe instead of aluminum.
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