A look behind the headlines of Airbus’ Investors Forum

Subscription Required Update, 0530 PST Dec. 15: Aviation Week posted an article that indicates Airbus and Rolls-Royce are closing in on an engine deal that will lead to the A380neo and a stretch. Introduction Last week’s Airbus Global Investors Forum proved to be a debacle due to a rogue customer and two miscues by management. First, Group CFO Harald Wilhelm indicated Airbus may decide in 2018 to terminate the A380 program, causing consternation from Tim Clark, president of Emirates Airlines, which has 44% of the order book. Airbus Commercial management spent a good part of the next day in damage control. Second, with little forewarning, Airbus told analysts that production rates for the A330ceo would come down in advance of introduction of the A330neo. This news shouldn’t have come as a surprise, but for some it did. If they had closely followed sales efforts for the A330ceo, the lack of success and the production gap, news that Airbus will bring rates down more than the 1/mo decline previously announced shouldn’t have surprised. Still, Airbus had not previously sent strong enough warning signals. Third, profit and free cash flow warnings weren’t well received. Finally, Akbar Al-Baker, the prickly CEO of Qatar Airways, chose the first day of GIF to announce he wasn’t going accept delivery of the first A350-900 three days later. The result: the stock price plunged 10% on Day 1 of GIF and another 4.3% on Day 2. Summary
  • It’s time to look behind the headlines of the debacle and analyze what the meaning is;
  • The implications of Wilhelm’s A380 statement;
  • Better detail on the A330 rate reduction; and
  • Implications for Boeing.

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