Posted on 04/26/2007 9:21:48 PM PDT by Excuse_My_Bellicosity
LONDON - Flanked by a large red background and perched on a row of stools together with a set of Boeing executives, Richard Branson hardly looked like the flaxen-haired poster boy of Airbus on Tuesday.
The founder of Virgin Group and Virgin Atlantic, irked last year by the delay in the European plane maker's A380, looked to have stuck the knife into his European supplier by ordering 15 of its arch rival Boeing (nyse: BA - news - people )'s 787 Dreamliners. Virgin also took an option for eight 787s and purchase rights for 20 other aircraft, a deal potentially worth $8 million.
Adding a little ethical salt to the wounds: Virgin added that its new partnership with Boeing would be better for the environment, since the American plane maker's 787-9 burns around 27% less fuel per passenger than the Airbus A340-300 aircraft it will replace in 2011, according to Virgin.
On Monday Branson even called the A380 aircraft "a financial disaster," because he couldn't see how Airbus would "ever sell sufficient numbers of the aircraft."
He has a point. Wiring problems have made the double-decker plane almost two years late, and while Airbus has managed to take in orders for around 150 A380's it needs to sell 450 to keep from losing money on the project. (See: "Airbus Must Sell More A380s To Break Even")
Branson's Virgin Atlantic has ordered six A380s, worth around $2 billion, but in October last year the carrier complained that a third delay to the aircraft meant "serious implications" for its order.
"Branson definitely has a jaundiced view of Airbus and little faith in their promises now," said aerospace analyst Doug McVitie. "He'd hoped to steal a march on British Airways (nyse: BAB - news - people ) with the A380, and in common with every other airline that ordered the A380, has seen his airline's plans suffer."
McVitie said that Branson would be "making the same mistake twice" if he went on to commit to one of Airbus' newest models, the A350 extra wide body plane. "To put all your eggs in another Airbus basket, especially a new-tech, all-composite future one, is a big risk for a CEO with an airline to run and shareholders to satisfy." Airbus launched the A350 as a response to Boeing's 787, but while the A350 has garnered 100 orders, none are from first-tier carriers (See: "Boeing Set To Fly Past Airbus")
Boeing's 787 aircraft has meanwhile taken in around 400 orders from some of the world's top carriers, and will enter service in 2008. Air Canada said this week that it was increasing its order to 37 from 14, making it the largest North American customer for the Boeing plane.
Airbus, whose parent company is European Aeronautics Defense and Space (other-otc: EADSF - news - people ), booked only 790 orders last year, well below the 1,044 won by Boeing.
“a deal potentially worth $8 million”
That has got to be wrong. Maybe 8 billion??
Airbus is doomed.
Definitely billion with a “b”.
Whatever. It looks to me like Airbus was weilding the knife, not Mr. Branson. He's not the bad guy for seeing a bad business case in staying with Airbus and saying so. Airbus is the one making crappy business decisions and acting in bad faith.
The fate of ALL Government run "enterprises" who must satisfy customers who DON'T have the unlimited resources of the Treasury, but DO have investers and customers who MUST be satisfied..
Semper Fi
What exactly went wrong with airbus anyway?
Amen, bro, amen!
I got flamed last time I pointed out how Forbes's standards have slipped, but they appear to be well off the mark here. I suspect a deal for 28 787s is worth more than a few million. If Boeing is marking them down that much, I could probably put together a deal for one.
“Wiring problems have made the double-decker plane almost two years late, and while Airbus has managed to take in orders for around 150 A380’s it needs to sell 450 to keep from losing money on the project.”
Wiring problems aren’t the half of it. The wings failed early when being tested (http://www.freerepublic.com/focus/f-news/1659758/posts). Fuselage and tail structural problems have been documented (http://www.freerepublic.com/focus/f-news/1671514/posts and http://www.freerepublic.com/focus/f-news/1670666/posts). Airbus and the media have decided that wiring problems are more palatable, so that’s what they always talk about. I wouldn’t fly on an A380.
Old fashioned Socialism.
It’s probably a lot easier to tell you what hasn’t gone wrong with Airbus. A380 electrical problems, tail structural problems, wing structural problems, fuselage structural problems, insider trading scandals, and executive board room screaming matches are just the tip of the iceberg.
So, how much does this deal have to do with Branson’s desire to start a US carrier? (Stupid question.)
Somewhere I read that in the UK, a “million” to them is a “billion” to us.
US Airways dumps $3.2 billion Airbus order, goes with Boeing
Let's see, 15, plus an option for 8, and 20 is 35 with an option for 8 more...for that price...that's a mere $230,000 a plane. Wow! If I had known Boeing was selling them so cheaply...
Its a wonder that they haven't put Cessna and Piper (well for another time) out of business. (Yeah, Cirrus, Diamond, etc...)
They don't use the word 'billion'. They will say 3,000 million instead of 3 billion.
Perhaps you’re thinking of “a thousand million”?
And, being way overweight, wing problems aside, for fuel efficiency and paying customer carrying capacity.
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