The Escalating Woes at Airbus (Schadenfreud)

Business Week ^ | MARCH 30, 2006 | Carol Matlack

[nikos1121]

How does Boeing do that?

[SW6906]

Do what, get Airbus to bet everything on the A380 - a limited market ariplane - and then come out with a superior product that Airbus cannot now afford to compete against?

[CitadelArmyJag]

On the contrary, I always read about the Boeing v. Airbus battles... Its beats reality television!

I just havent seen any Airbust koolaid drinkers out there...

[Proud_USA_Republican]

Since putting the A350 on the market in December, 2004, Airbus has logged 100 firm orders -- including an order for nine planes signed on Mar. 30, 2006, by Finnair. That compared with 291 orders booked by Boeing for the 787 since May, 2004.


Let's not forget that Airbust's definition of a "firm" order and Boeing's is completely different.

Airbust finds anyway it can to count, "option" orders which is that the airline company might order those jets in the future, but isn't financially bound to, as "firm" orders. Firm orders are where the airlines are contractually purchasing the planes and dates for the planes being delivered are negotiated. The airline manufacturer will issue a reserved slot on the assembly line for the plane to be built.
Airbust has gotten into the habit of counting option orders as firm orders so it can always claim it sells way more planes than it does.
Airbust in the last days of 2005 tried to count a massive order of planes sold to China which put them past Boeing in total plane orders. China came back later and said this order was still in negotiation and these weren't even option orders yet.

[SW6906]

But you will notice Airbust still counts those Chinese orders in their 2005 order total, just so they can say they sold more than Boeing.

Everyone in the industry sees right through what Airbust did.

[DennisR]

...and the A380 sales have slowed to almost zero...

Airbus: Stupid enough to want to have the biggest commercial airliner, stupid enough to try to build it.

[stefan10]

Do you always post the same things again and again?


"What will the Europeans do? Deny the fact that EADS is heavily subsidies, make counter accusations, keep moving on."

No they answer with facts and numbers

According to your great economic knowledge here you can find what you need to wake up in the real world

EADS in general but also Airbus and Eurocopter

http://www.eads.com/web/lang/en/800/content/OF00000000400004/6/08/30942086.html

perhaps you like this more a smaller and not so complicated summery for the year 2005 with some key numbers

EADS 2005
http://edition.cnn.com/2006/BUSINESS/03/08/eads.profits.reut/index.html?section=edition_business

Eurocopter

You can find the complete and concrete numbers at EADS but a nice overall summery here

Just for the start:
" In 2005, Eurocopter successfully secured its position as the world's No. 1 helicopter manufacturer with a total of 401 orders for new military and civil helicopters"

http://webbolt.ecnext.com/coms2/news_58670_IND

Airbus:

as always you can find the numbers at EADS.com but also in the first link or on dozens financial sites here in the www. It is also interesting to compare financial key numbers of Boeing and Airbus just try it don´t be too shy.



In the next posts we can try to solve the problem of subsidies based on numbers and facts and not on wishful thinking or fantasy.

[stefan10]

"Let's not forget that Airbust's definition of a "firm" order and Boeing's is completely different.

Airbust finds anyway it can to count, "option" orders which is that the airline company might order those jets in the future, but isn't financially bound to, as "firm" orders. Firm orders are where the airlines are contractually purchasing the planes and dates for the planes being delivered are negotiated. The airline manufacturer will issue a reserved slot on the assembly line for the plane to be built.
Airbust has gotten into the habit of counting option orders as firm orders so it can always claim it sells way more planes than it does.
Airbust in the last days of 2005 tried to count a massive order of planes sold to China which put them past Boeing in total plane orders. China came back later and said this order was still in negotiation and these weren't even option orders yet. "



Yea this is really the problem of Airbus and the reason why the deliver more planes than Boeing. They just count fantasy orders and deliver the planes to fantasy airlines that pay fantasy prices for the fantasy planes. So more or less it is a complete fantasy company.

So now we solved the miracle of years and years with record profits and numbers by Airbus.

Thanks

[AlexW]

A note of interest, I have a young French friend (17) here in Slovakia. His pastime is spent on his computer, making flight simulations with different makes of planes and destinations.
He loves to show me his latest simulations of takeoffs
and landings.

His favorite large planes are Boeing. He has no interest in Airbus !!
While us Freepers like to beat up on the French, I have to admit that my best friends, and very nice people here, are French and in Slovakia working for French companies.

[ken5050]

IIRC.this month Airbus has the evacuation tests for the A380..Many think the plane will flunk...which means it can't be certified..

[stefan10]

The whole argument lies in the definition of the word "subsidies". My understanding is that Boeing's position is that low or zero interest government "loans" that don't have to be paid back if the product is unsuccessful are clearly subsidies. Airbus tries to cloud the issue with defense contract work that Boeing does and the resulting technology development being used in commercial aircraft is a subsidy. Problem is, Airbus (through EADS) does the exact same thing!! Also, the tax breaks and other stuff Boeing gets from WA state are the same as the tax breaks and road building and canal dredging Airbus got from the Euros.
The only thing I can see that Airbus gets and Boeing does not is the access to below-market "loans".


mainly a very good post beside the last part.
Airbus and EADS get loans that don´t have to be paid back if the project is a failure. The rates are ,025% over the financing costs of the different governments and so slightly bellow the market costs. So this is a clear subsidy for Airbus EADS and this company needs no subsidies. EADS payed all these loans back until now because all projects have been a success.

Boeing gets tax braks, export support, billions of direct subsidies for example from japan for the 787 and not to mention the nASA and military business where EADS also gets military contracts from several european countries. This whole business is heavily subsidies by the taxpayers in several countries.

In terms of EADS and the WTO case. There was an agreement between Airbus and Boeing 1992 to bring the WTO dispute to an end. Airbus always fulfills these requirements and says that the present subsidies (loans) are within the WTO rules while the subsidies that boeing gets especially for the 787 violate these WTO rules. beoeing clearly has a complete different opinion about this topic.

So in the end the WTO will have to decide about this very complicated issue and hopefully we will all safe money in the future given the fact that both companies present very good profits and do not deserve a single euro or dollar from the taxpayers.

[SW6906]

Agreed.

[Red6]

No worries – the Soviet Union was also all fine and OK until it imploded economically. Get into your SMART car and drive to work; that is if you even have a job?

Unlike Germany where all you do is get with France and Italy and consolidate a bunch of previous state run entities under one roof with no competition and appoint some bureaucrat as its head and then massively subsidies it (The literal truth with EADS); in the US we have a “private” aerospace sector, something you don’t understand in your “socialist” world view. You figure since you subsidies everything and have a near state command driven economy others must too have it that way.

You have in the US three major helicopter manufacturers:

Boeing (Owns Hughes now) - http://www.boeing.com/product_list.html
Bell - http://www.bellhelicopter.textron.com/
Sikorsky - http://www.sikorsky.com/details/0,9602,CLI1_DIV69_ETI720,00.html

You’re right though. If you EXCLUDE the defense sector and compare Eurocopter to all individual helicopter manufactures in the US, Eurocopter is bigger as a single entity. But if you add up the total volume of helicopters built for all three you get a very different picture. If you add the defense sector in, it’s even more skewed. Realize that for helicopters, defense is one of the main markets unlike say a PKW where it’s near entirely the civilian sector that drives revenue.

As I said before, be proud of EADS! After all “YOU’RE” paying for it, even if your to ignorant to realize it, just like the “sozialschmarotzer” who leaches off the system who you don’t see as someone “YOU” pay for, EADS is getting this money from somewhere, and it is not from their success with the A380, Eurofighter, NH-90, Galileo, Tiger, Herkules products which are all terds that have been chrome plated. EADS is briefing failure as success.

How does it really work? You take State run entities like SNECMA which was a whopping 35% in private hands by 2000 or so (But there are stock; therefore it’s “private” in your head just like the FRAPORT or DB) was formed by the nationalization of Gnome & Rhône in 1945 and is the primary state turbine builder in France to this day and a main supplier for? Of course the “private” firm Airbus. Aerospatiale (State owned), add in a few other state entities or heavily state controlled firms like DASA and roll them all up under one Pan European aerospace conglomerate called EADS. Tell us who Sud Aviation was? The firm which later became Aerospatiale.

Airbus for the new German Euro centrist supra nationalist is more than a firm, it’s a symbol of Europe, a symbol of power economically and technologically. However, it’s “Synthetic”. Unlike P&W or GE or even little Garret and some others; in Europe you have primarily a state run aerospace sector. Your stocks won’t fall, even if Airbus fly’s planes into forests and builds A380s that don’t sell. The state is a major share holder and won’t let Airbus fail, no matter what. But believe me when I say that “You” pay for it.

At this point a failure for Airbus would be catastrophic for the main engines behind it: Germany/France. If Airbus imploded on itself political careers would go up in flames. A whole INDUSTRY would go under. The secondary and tertiary affects economically would be beyond imagination at this point since this would be piled on top of stagnant economies in these two countries which are both running over 12% unemployed, busting their debt caps, have practically no industrial or economic growth, have dropping investments in capital goods and R&D. EADS will just continue to get money injected into it.

But in the meantime, as I told you before, accept the fact that Germany will soon be the 5th largest economy with India and China passing them. Germany and France have economically flat lined for a decade now and show no sign of change. Something you can’t accept since it’s a matter of national pride is that these state subsidies, state holdings, are at least a part of the much larger problem which is crushing the German economy and Airbus in fact EADS all together falls into this category. You didn’t help yourself with massive Braunkohle subsidies for years and silently just doing this without any big advertisement. You didn’t help yourself with subsidies for the Vulkan Werke or over decades the German farmer (Who truthfully can’t compete globally). In the end, there is a real tangible economic cost involved with these games. Just like the Soviets who also ignored basic economic principals (Actually they even partially denied them), you will go down for the same reasons. 20 years my little friend. Germany today is already done economically. You’re just waiting to die.

Strange how India is economically exploding – almost like Germany during the Wirtschaftswunder, or China where near all growth is from the private sector…….. Want more examples? Ireland, Chile, UK under Thatcher, US under Reagan/Bush…….. Want some examples of applied socialist market theories? DDR, UdSSR, China ca. pre 1985, Cuba, Iraq (Under Saddam – Yes, the Ba athists where socialists and Iraq did have social medicine etc)…….

Even in the US we have a “mixed” economy. There is Social Security, HUD, and and and. But…. the percent of state ownership, the total amount subsidized as a percent of GDP, the degree of state regulation etc is in comparison to Germany far far less. Almost all your arguments are based on a relative comparison where you try to equate a defense contract to a subsidy. Where you say “look look the US subsidizes agriculture too!” But what you fail to accept is that firms like Boeing are truly private firms and in the hands of private shareholders. Unlike ZDF, ARD, HR3, SWF, DW, NDR, WDR…. we only have PBS. One nation with 3.5 times the people and near 5 times the economic volume has one (1) state run channel. But like with Boeing, a fool like you would say “You too have state run media, see you have PBS!” While Boeing does make some money on defense contracts, this is not the same as direct money injections worth 15 billion Euro by 2005 for the development of private and for commercial use aircraft as Airbus has had. The A350 is being developed to a large degree with state subsidies! You can’t say that about the 787, 777, 767, 757, 747, 737….707.

While Boeing will get the contract for the new air to air tanker and will make some “profit” off of it. This is not the same as a direct subsidy with the intent to develop an airplane to be marketed on international markets as the A350 will be. See a difference? Probably not. But it does not matter. Since like the cancer patient in denial, you will eventually economically die from the disease you defend.

[stefan10]

You do not read posts or links do you.

It really cost me time to do this. So i guess that was my last try. Good luck on your planet.

1. Ownership of EADS and Airbus

i told you several times.

2. profit and balance sheet

i told you several times

"Your stocks won’t fall, even if Airbus fly’s planes into forests and builds A380s that don’t sell"

really! why don´t you buy a stock with such a guaranty. This is a dream for every investor. The chances of stocks with no risks. This is a very very good product. can we make a deal i buy EADS stocks and if they fall you pay me my loss?
I hope your wife is responsible for the investments in your family.


3. subsidies

look at the other posts here and perhaps you should simply start to read some real informations and facts. You spent time here just make a break for a week and read something about that issue. it is really interesting at least for me. Come on i know you can do that.


Well if you want to discuss macroeconomic issues feel free to start a reasonable discussion but concentrate on one single issue.

But perhaps you want to compare key numbers between Airbus and Boeing.
OK that would not fit into your world.

Perhaps you want to talk more serious about the problems of Airbus with widebody planes and airbus really has some problems at the moment. But discussions are a little bit boring if someone is unwilling to discuss and is only interested to preach.


"While Boeing will get the contract for the new air to air tanker and will make some “profit” off of it"

Yea they really hope to get that for the old 767. If the US air force should buy such an old product is a different question.

[AxelPaulsenJr]

Check out this guy.

To: SW6906 Thanks, I am an airline junkie and I am constantly amazed at the abuse Airbus takes by people that don't know otherwise.

Boeings are made up of all kinds of foreign parts and there are lots of American built parts on the airbus.

Its OK for us to drive German cars with lots of French parts, but not for us to fly on an Airbus because of the European parts.

Rolls Royce makes the best, most dependable airline engines around, they are amazing and they are on lots of Boeing planes, but nobody rips on them.

39 posted on 03/30/2006 11:22:56 AM PST by Central Scrutiniser (No one censors speech they agree with.) [ Post Reply | Private Reply | To 34 | View Replies | Report Abuse ]

[jpsb]

The Airbus Boeing rivalry is fun to watch. I don't mind a bit that Europe has a state of the art aerospace industry. Much better Europe then China. Boeing is one hell of a find airplane maker, they will certainly give Airbus a good run for the money.

[NZerFromHK]

Freepers from Europe and Britain would be good bets.

Also, I remember from another aviation discussion board a bona-fide American conservative (an air force veteran no less) who was one of the most hardcore Airbus fans I have ever encountered. He was so lockstepped with Airbus policies that his posts on aviation industry were like "Airbus, right or wrong". Haven't seen him around for ages - not since 9/11 so I don't know what happened to him. Perhaps he is a Freeper now? ;-)

[stefan10]

I think there is too much politics involved in that industry.

From the orders to the subsidies.

It is good for Airbus and Boeing but not really for the taxpayers.


Beside that i am interesting in aviation because it is a interesting and emotional business but the Airbus bashing shows most of the time only the unwillingness to inform and that the guys are not really interested in the subject.

I think Airbus is really in a complicated situation with the widebody planes where the 777 and the 787 seems to be the more attractive products. So it will be interesting to see how Airbus will react.
But the same argumentation would be true for narrowbody planes where the A320 clearly outperforms the 737.
So every supporter has something to bash the other site.

I do not know if you speak a foreign language but what is really funny to see is the different spin in the media in different countries.
For example after the A380 test the US headlines where mainly focused on the injuries and the problems while the german headlines where about the successful test and a world record and so on.

So it is clearly often a problem of national pride on both sites of the atlantic and for many not a normal business.

[Cronos]

mmmmmm.... Bratislava -- gorgeous place, not quite as glitzy as Prague but far fewer tourists!

[jpsb]

"So it is clearly often a problem of national pride"

Very true, back in the old days then there was Boeing, Lockheed and MacDonnel Douglas there was a lot of bashing going on too. Now there just Boeing and Airbus but the bashing continues, LOL. Anyway I am glad Europe has a state of the art Aerospace industry. Airbus will keep Boeing honest and vice versa, my Dad flew a few years for Luftansa, great airline, IMHO the best.

The 380 is an amazing airplane, long term it is a real threat to Boeing. The 350 as planned ain't gonna cut it. Boeing on the other hand has pushed the 747 about to the limit, I see the 380 replacing it and Boeing not contesting that market. I could be wrong but does the world need two super sized airliners?