Airbus annual press conference

Airbus held its annual press conference today, with several news items coming from it:

A400M

This program remains a financial disaster, with Airbus now acknowledging it threatens the well-being of the entire company. This New York Times article sums it up best. This Reuters article also has great detail. This 14 minute podcast by Innovation Analysis Group with the A400M chief test pilot talks about the flight testing.

A380

The A380 will remain a financial drain for “years to come. This Bloomberg article has the low-down on this one.

Airbus predicts 250-300 orders this year and a recovery next year. This short Wall Street Journal/Dow Jones article has the details.

Airbus criticized the USAF KC-X tanker DRFP in this New York Times article.

14 Comments on “Airbus annual press conference

  1. With 20% unemployment in Spain, and 10% throughout the EU, I think they will eat ground glass before they cancel this program. Look for a face saving compromise that will give EADS virtually everything they want.

  2. The most interesting information from the press conference was Leahy’s annoncement that the A350-800 will be developed as an A350-900 “shrink” and modeled on how the A330-200 was developed from the A330-300. This moves the A350-800 into the (original) range territory of the A340-500 (8600+ nm), and up and away from the range of a conceptual re-engined A330-200 with an estimated range of just under 8000 nm

    • From Flightglobal:

      http://www.flightglobal.com/articles/2010/01/15/337132/qatar-airways-backs-airbus-rethink-on-a350-800-design.html

      “Consequently, Airbus decided to base the shorter model directly on the -900, and trade any penalties against a significant range improvement. The A350-800 now has identical structure and gear to the lead variant, the -900, while the Rolls-Royce Trent XWB engines will be offered at two thrusts – a baseline 79,000lb (352kN) and a 74,000lb derate.

      The maximum take-off weight rises by 11t over the previous plan to 259t (with the old variant’s 248t still offered as an option). Range (at the higher weight) increases by 460km (250nm) to 15,800km, or payload by 3t. Standard three-class seating remains the same, at 270 passengers.”

  3. I don’t think Tom Enders is bluffing. But the significance of whether they cancel the A400M goes way beyond the program itself. For years, EADS has said that they must build up their military business and diversify away from the cyclical civil market and as part of this strategy develop their presence in the United States.

    Defense politics suck for EADS. The only worthwhile market for them is the US where they are perceived as foreign and are consequently locked out. There’s no point in taking on the cost of establishing facilities in the US if the local market doesn’t support it. Equally there’s no point partnering with “home” companies if these get tarred by the same brush.

    So even if they do fudge the A400M, the strategy looks to be going nowhere. EADS will essentially remain Airbus – a somewhat successful European civil aircraft manufacturer.

    • I don’t think Enders is bluffing either; I do think he’s well aware that he holds all the high cards in this game. The airbus governments will cave in to whatever EADS demands here. As I noted above, there are very real political issues that must be side-stepped. There are also benefits to maintaining their own defense aerospace infrastructure. At what cost, though, is for the airbus nations to decide.

      At last report (French senate Feb 2009) the A400M unit cost was 145 million euros (presumably the “fly away” cost). That was a year ago. AFAIK, there has been no update in public of the unit costs. The four airbus countries will likely absorb the increased costs and continue on with the program. If they are hoping for international sales, I seriously doubt they’ll be able to price the cost increases into the airframe price. Somewhere along the line, they’ll have to absorb these costs via write downs.

      My best guess is that this program will follow the Typhoon model and they will acquire the desired number of aircraft in “tranches”.

      However, I could be wrong about all of the above and the airbus governments may decide to send Enders a bill and walk away from the program. A (very) remote possibility, but the possibility exists nonetheless.

  4. The difficulty with funding A400M at this point is that Euro defense budgets are stretched thin. As a defense minister, it’s not easy to come up with a billion or two dollars over the next two years.

    Military spending isn’t very popular in Europe to begin with, and if the defense industry had as much political influence over there as they do here, they’d spend a couple of percentage points more of GDP on defense than they do.

    Airbus will largely own the high end of airlift market over the next 20 years if they can come up with the money to finish the aircraft now. But that’s a long range decision at a time when Airbus is focused on competing with Boeing on the commercial side.

    • “Military spending isn’t very popular in Europe to begin with, and if the defense industry had as much political influence over there as they do here, they’d spend a couple of percentage points more of GDP on defense than they do.”

      What good is a glasdagger?

      No amount of Euro defense spending could compensate for
      the destruction US defense spending does to the world.

      Mutually satisfying trade relations are more synergetic and
      thus a lot more efficient in setting up a low potential risk
      environment.

      I find the notion of doing “defense” in your “neighbours living room”
      exceptionally distastefull.
      On the other hand assisting with selfdestructive behaviour may
      be the only way past this situation.

  5. The A400M is particularly vulnerable, beyond the general European difficulty of raising defense funding that Royce that Royce has already identified. The way the contract has been set up, any of the four major customers can walk away, get its money back and the entire project will collapse.

    We can assume Spain and France are strongly committed to the A400M whatever the cost. Germany isn’t all that bothered about the planes themselves, while the UK has a desperate need that could most readily be fulfilled by getting more C130’s and C-17’s. The only thing keeping these countries talking is the effect cancellation would have on local industries.

    50-50 I think.

  6. It may sound a bit wild, but perhaps the answer is re-payable launch aid based on a levy on export sales, instead of a straight EU5 billion handout.
    There are so many elderly military transports out there that have to be replaced sooner or later, and the philosophy behind the A400M will be just as valid for a fair portion of the replacement market as it was for the launch customers.
    Over the next 15 years, maybe a market for 400 export versions is not impossible.
    They may be expensive, but aren’t all military programmes?
    A US buy at some stage would not be impossible.

  7. In addition to the funds Airbus wants to keep the A400M program current, there must be added R&D funds for the weight reduction program, and to bring payload capacity up to at least German expectations allowing them to carry their IFV the expected distance.
    That’s going to be tough. Will there be another “funding” request?

    • My tentative understanding is that:
      * the initial contract was ~22b€ for ~200 units.
      * Airbus cost overrun estimate is another ~12b€
      * Airbus would like customers to shoulder ~50% of overruns
      and take the hit on remains.

      Thus ~200 basic capability planes ( full load as in spec, no terrain following,
      no tanker cap? ) will be delivered for a lump sum of ~28b€.

      I have no idea if the left out options ever were in the initial package deal.

      Did the A400M project receive launchaid under comparable modalities
      as the civil projects?

  8. “Over the next 15 years, maybe a market for 400 export versions is not impossible.
    They may be expensive, but aren’t all military programmes?
    A US buy at some stage would not be impossible.”

    You are really dreaming if you think a US buy will ever be possible. A US purchase of the A400M is no more likely to happen than 1500 VLA sales in the 15 years. And don’t forget for those 400 export orders there will be a lot of competition, the C-17 is assured to remain in production for at least 2014 and given the likelyhood of C-5A replacement orders and further export orders it should be in production for the next decade. Also, the C-130J will be competing, not to mention the Brazilian C-390, the re-engined Russion IL-76, the new Chinese strategic transport and C-130 competitor, the Japanes C-X, and the Russian-Indian MTA medium transport which could be available around the middle of the decade.

    There is simply too much competition for too few export orders to look at future exports being the savior of the A400M program. EADS needs to at the very least break even on the program based on sales to existing 7 A400M customers, since without some sort of devine intervention to convince the USAF to purchase the A400M the export orders predicted by EADS are no more likely than the huge number of A380 sales they predicted.

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