By Bjorn Fehrm
February 24, 2017, ©. Leeham Co: Airbus Group (“Airbus”) presented results for 2016 in line with guidance. The Airbus CEO Tom Enders said, “This is the best Airbus, ever.”
Yet everything was not as expected; most of the press conference was spent on how the sins of the old Airbus still haunt the present company.
The problem areas, A400M and A380, both stem from the same time period, 2000-2003.
This was when the old, non-integrated Airbus wanted to show the world it could build the largest, most capable aircraft. The resulting lighthouse projects, A400M and A380, are still not out of the woods.
The Airbus revenue and net profit were in line with guidance at €66.6bn and €1bn. Net results were cut by one-time charges of €3.7bn (A400M, Group restructuring, A350 ramp), compensated by one-time gains of €2bn (Dassault sale, Launchers JV).
The A400M provision of €2.2bn (€1bn in 4Q) was higher than expected. Airbus expects more trouble in this program. The Group will now seek a cap on penalties from its troublesome 6-nation customer group.
Apart from A400M (and a to slow A380 program), Airbus is fine. The Group completed its last integration step, realizing that 72% of revenues are from commercial aircraft. The Commercial Aircraft division and the Space segment are the highlights, while Helicopters is doing OK in a bear market. Defense (ex-A400M) is soldiering on in a non-expanding market. The guidance for 2017 was unchanged.
Airbus added €1.2bn in write-offs in 4Q2016 to the €1bn it had announced previously. The provision is necessary to cover the costs of customer damages claims and to ready the full capabilities of the A400M.
Airbus can no longer accept that the six Nations and their procurement agency, OCCAM, do not help with the program. The board directed Airbus to seek concessions on damages and more flexibility on requirements to get the program on track. It remains to be seen how willing the customer Nations are to help Airbus with the outstanding issues with the A400M.
“There is no question the aircraft is the world’s most capable and advanced military transporter,” says Enders, “but we can’t have six different meanings on what is an acceptable adaptation of the requirements so we can deliver a finalized aircraft.”
Airbus plans to deliver close to three times the 2016 deliveries of 68 aircraft, i.e., around 200 units. Key to achieving the target will be engine deliveries, especially from Pratt & Whitney. The Pratt & Whitney engine still has some issues to resolve, according to Group COO and Commercial division head, Fabrice Bregier.
The A330neo program is running to plan, with first flight at end of the second quarter. Delivery is set for first half 2018. The expectation is the neo version will guarantee a continued production rate of 6-7 aircraft a month for the A330 program.
The A350-1000 version is flying with its three prototypes. Deliveries of the -900 version are increasing to plan, but cabin equipment deliveries are on the critical line. The merger process of Safran and Zodiac groups “must not affect cabin equipment deliveries,” warns Bregier.
Airbus is convinced this large aircraft will have its time. But it’s large for today’s market. With the doubling of world travel, “it’s about keeping the production at one a month until the market picks up,” said Bregier. “To make that without losses, we are reducing the fixed costs and streamlining the production process.”
Airbus forecast more than 700 commercial deliveries this year, up from 2016.
Bernstein Research (Outperform)
A350 delivered 23 aircraft in the quarter, meeting the annual delivery target with 49 delivered. The press release noted good progress was made on reducing out-of-sequence work, but supply chain bottlenecks remain. Management expect to continue to ramp in 2017 and meet the target of rate 10/month by end of 2018.
A320neo deliveries are progressing and 68 were delivered in 2016. Airbus noted challenges remain with the ramp, and they expect deliveries in 2017 (guidance ~200) to be back-end loaded again.
Raymond James (Strong Buy)
Airbus’ 4Q 2016 results were slightly mixed, in our view, although there is no change to the big components of the story. It posted a strong 4Q beat vs.
consensus, driven by margins and revenues at the core business, Airbus Commercial Aircraft, with good cash flow and the newly-introduced FY 2017 guidance, which is typically conservative at an early stage in the year, appears to be in-line with current consensus. The snag was in a higher-than-expected charge on the A400M programme of €1.2bn in 4Q, which has become a protracted bleed of profit and cash, and it seems from Reuters headlines this morning, little progress is being made in negotiations with government customers related to this compensation.
Wells Fargo (Overweight)
Airbus said cancellations remain low and were about 2% of the backlog (excluding ceo to neo conversions).
2017 Guidance. Airbus expects to deliver more than 700 aircraft (vs. 650 in 2016) with mid-single digit growth in adjusted EBIT and FCF (before M&A). In addition, Airbus said it will see a working capital increase from the A320 and A350 ramp-up as it builds inventory buffers in 2017 to smooth the delivery profile beyond 2017 and 2018.
Of current issues so little seems to be within the direct control of Airbus. I am surprised that Airbus have not intervened more directly. I am sure that getting into the seats and toilets business is not their great desire but if these are the critical constraints that defer something in the region of $2-$3bn of sales in the coming year it would have been worth it.
Agree 100%. And did you know that Airbus A350’s Toilet Seat Widths are wider than the Boeing 787’s? This results in less “overshoot” so-to-speak, and a more comfortable “Throne” experience.
Yep, you don’t want to over shoot the approach.
Going around is not a good option there.
More Airbus protection as you get near the stall?
first officer = #2
It will be interesting to see how many A330neo/A350 are sold over the next two years. I still think sales are slow at present because of slot issues. But the back log of both will reduce by approximately 160 over the next two years.
I think sales are slow because big customers have placed big orders for up to ten years delivery so as to get better prices, rather than ordering 2 here and 3 there. Cheaper to order your whole requirement of an airliner at once and get a super discount, and you even get to design it for yourself a la EK/QR deal for 777-Xs.
I keep being surprised to see that Airbus (and Boeing too) is not able to cash in much more on their duopoly they have. When demand is much bigger than supply, you’d expect for prices to go up, no? And with a 4,000+ backlog you’d think there’s not that much of a pressure on sales. It seems easier though to get subsidies instead of competing on the market.
What you are suggesting is some form of collusion. They may be a duopoly but at the same time they have closely competitive model lines. As such they can only extract monopoly profit where there is a market segment where little competition exists and that segment is hot. examples may be the 777-300ER or the 321 in recent years. For most models there is a close competitor. The other issue is the high value of each unit which promotes extreme competition for individual sales. This encourages pricing decisions that are often not rational when viewed over time or in relation to cost. Finally there is a proportionately large fixed cost base to support which encourages senior management to find volume at any cost.
I’m not suggesting that Airbus and Boeing should agree on higher prices.
The high fixed costs certainly explain it to a certain extent, yet I would still believe, airlines wouldn’t have much choice. If Airbus suddenly asks 50% more for their single aisles model, where will you get an aircraft if you need it? Certainly not with the competition as they won’t have slots available and neither are able to ramp up production so quickly to alleviate the problem in a short time frame. And I would be surprised if the competition would not quickly follow suit with higher offers; Though that seems to me is easier for Airbus, as their products seem to be better/have a higher demand (A320)
Opportunity cost comes into play then also I would think. Airlines might start to consider alternative strategies. For example if an A321 is the no brainier choice but is too expensive, an airline may decide that a lower pax aircraft is the better choice financially. That in turn could bring the 737 back into play.
just a typo, the European is named OCCAR (Organisation Conjointe de Coopération en Matière d’Armement).
With regards to the A400M, how much of Airbus’ woes are related to the European governments insistence that they use a “European” engine source (Europrop), rather than the proven P&W design and how much is related to other issues?
You’re assuming, of course, that there wouldn’t have been any problems in certifying the engine control software for the P&W paper engine.
Now, among other things, the partner nations on the A400M decided against the option of a P&W engine because they wouldn’t want to be held hostage to US ITAR restrictions. The method of control with ITAR in the US – when it comes to defence related technologies – is in practice to ensure no transfer of technology by any means, whereas in the EU where the A400M is largely based, the transfer is licensed and controlled while exports of the product is normally allowed.
Given PW’s extensive experience in building turboprops, yes I do assume that there would have been far fewer problems than have ensued with the inexperienced Europrop consortium’s first ever project together – problems that go well beyond engine control software. Do you believe a PW engine would have been as problematic?
Your ITAR point may be valid, but is the A400M really free of ITAR controlled goods – no Honeywell or Rockwell-Collins avionics for example? I suspect the real reason was that engines are a high profile and high value value component of any aircraft and European politicians wanted to see those jobs in Europe even if they got a problematic product at a significantly higher cost. Such is the reality of military procurement.
Once it become a military project then the bets are off as to who can supply one.
Little bits and pieces ok, but the engine? Heavens forbid.
As for the engine, short of Russian or
China could anyone have done it worse?
“Given PW’s extensive experience in building turboprops, yes I do assume that there would have been far fewer problems than have ensued with the inexperienced Europrop consortium’s first ever project together – problems that go well beyond engine control software. Do you believe a PW engine would have been as problematic?”
What is that assumption based upon?
The T400 engine is 2.2 times-plus as powerful as the most powerful P&W turboprop engine to date. It required a step-change in capability in order for the A400m to operate at a speed of up to Mach 0.72 and unprecedented quietness (lower rpm for the propellers etc.).
Hence, I don’t buy the assertion that a Pratt & Whitney engine would have been much less problematic to develop than the TP400, when considering the fact that at the outset of the programme the engine spec requirments were pretty much in uncharted waters.
As for ITAR, is it so difficult to understand that European politicians don’t want the US to have veto power on export restrictions for European home-grown products paid for by European taxpayers?
Well if you are going to build a race car, it helps a whole heck of a lot that you build one before.
As we can see, throwing 3 or 4 companies together to build something they have never done before is not a good recipee for success.
If you want a nuclear bomb do you have the janitor do it?
“Well if you are going to build a race car, it helps a whole heck of a lot that you build one before. As we can see, throwing 3 or 4 companies together to build something they have never done before is not a good recipee for success.”
Snecma, MTU Aero Engines and Rolls-Royce are all part of a 50 year old consortium that originally manufactured the 6100 shaft horsepower Tyne turboprop engine for the C-160 Transall – a consortium that has provided life-support for the engine ever since.
if there were some issues with the engine, the Aircraft exhibit as well some issues. One of the current challenge in our business is in the integration of a new engine (including propeller) on a new aircraft which requires some experience. The experience is available in Airbus Toulouse but what about Airbus Madrid?
ITAR is a true burden that is right…and penalizes US export.
My understanding is that the major delays related to the gearbox not the engine which is a GE design and manufactured item – and as said below the need to certify the software for civilian as well as military registration which would have affected any manufacturer equally.
The A400M is to Airbus what the KC-46 is to Boeing: Inappropriate appropriation. The KC-46 has been widely discussed here and I have nothing valuable to add. Engine problems have plagued the A400M programme and that’s where the inappropriate appropriation took place. The engine that was initially selected for the A400M was a Pratt & Whitney Canada engine. The reason they won the competition was because they bid 10% lower. Complaints from governmental instances ensued (Jacques Chirac, the wise President that had warned the Americans to stay away from Iraq) about what was viewed as a non European engine. Chirac was right again, because the engine would have been American and that would have put constraints on exports because Europe would have had to ask permission to the US to sell each aircraft. Besides, that engine was not going to be manufactured in Europe. So the contract was never signed. Instead a European consortium was created out of the blue to design and manufacture the engine: a recipe for desaster. Un désastre annoncé, like we say in French. The contract should have been given to a single manufacturer, like Rolls-Royce or Snecma, not to an inexperienced consortium. Unlike for the KC-46 where Boeing is the entity that filed the complaint, in this case Airbus has nothing to do with it. Still, they got themselves into a fine mess.
Why should the A400M partner nations that have been dishing out $10 billion-plus on the project have risked being held hostage to US ITAR restrictions ?
I’m sorry, but a P&W engine was always going to be a non-starter.
“Instead a European consortium was created out of the blue to design and manufacture the engine: a recipe for desaster”
Hmm, wasn’t that how Airbus started out?
“Why should the A400M partner nations … have risked being held hostage to US ITAR restrictions ?”
I don’t know why you raise that issue because we are in complete agreement over it. Please read my post again.
“Hmm, wasn’t that how Airbus started out?”
No, that’s not the way Airbus started out. Airbus was an accident of history whereas Europrop International is a disastrous accident.
“I don’t know why you raise that issue because we are in complete agreement over it. Please read my post again.”
Yes, and I don’t agree the A400M is to Airbus what the KC-46 is to Boeing with respect to the engine. In fact, the A400M is IMJ to Airbus what the C-17 was to Mcdonnell Douglas***.
With all due respect, but the Europrop TP400 engine is IMJ no more “a disaster” than the C-series. 😉
Like the C-series, however, the TP400 seems to work pretty much according to spec:
The EJ 2000 engine for the Eurofighter is, in fact one of the best engines ever designed in Western Europe. I can’t really see much of a difference, though, between the set-up of Europrop and the EuroJet Turbo GmbH consortium — apart from the absence of Snecma from the latter.
There is no comparison between the KC46 and the A400.
One is an all new MILITARY aircraft that is trying to meet the wants of 6 or 8 different air forces. Most of which have a finger in the pie (slice of the program)
The other is a well proven long in production civilian airframe and engine combinations that is a relatively simple conversions (noted that the com system and what it can do is a step up) . Nothing unproven. Issues are failure of execution on simple stuff (relatively speaking, well know and proven tech for 40 years or more. )
While the engines on the A400 have been a big part of the issue, all the nit noids of all the different program partners has been a major burdon. That Airbus agreed to all that is nuts (well they actually eagerly sought it out)
Note the comments about the issues still not resolved that are non engine.
Fro0m a US perspective that is the frustration with Europe.
1. It was an ego project and totally unrealistic setup.
2. Europe spreads its thin defense dollars around and gets far less (costs a lot more) than it should.
C17 did indeed have significant issues and came close to cancellations.
It was far easier to work those out with a single customer than the A400.
And note, subsequent purchasers of the C17 bought the lock stock common version.
No we are adding this, and we are adding that, and we need this stuff.
You want all that you pay for it, and the whole program gets mucked up.
“From a US perspective that is the frustration with Europe.
1. It was an ego project and totally unrealistic setup.”
That “frustration” seems to be based on fake facts.
First, the fact of the matter is that it was Lockheed Martin that left** the FIMA/FLAEG group and thereby wasting time and money for the other partners.
2nd, we’ve been through this before. No European defence OEM was ever invited and allowed to bid on the JSF (X-32 and X-35/F-35), the ATF (YF-22/F-22 and YF-23), the F117, the LWF (YF-16/F-16 and YF-17/F-18), the F-X (F-15), the VFX (F-14), the TFX (F-111), the LRS-B (B-21), the ATB (B-2), the B-1A/B-1B, the C-X (YC-14 and YC-15/C-17), CX-HLS (C-5A), the C-141, the C-130 and the P-3 and P-8 (etc.).
What the US seem to demand is that American defence constractors shall have full access to the European market, while the US market is essentially closed due to the Buy American statute.
So, when the Europeans decide to pay for the development of an airlifter themselves — without any US funds and inputs — it’s an “ego” Project, according to the US, because the “ungrateful” Europeans didn’t choose to buy more C-130s and/or offer major contracts to Boeing/LM.
“2. Europe spreads its thin defense dollars around and gets far less (costs a lot more) than it should.”
Well, the US, aparently spends as much on “defence” as the rest of the world combined. From a non-US perspective, the armed forces of the US is, more often than not, looked upon as more of an imperial global fighting machine, rather than something that is designed to primarily protect the US homeland from an invasion — you know the concept of not having an army designed to shoot sparrows with cannons.
The Europeans don’t want to spend defence money on American perpetual wars in Afghanistan/the-Middle-East and elsewhere — wars that do nothing in order to secure peace in Europe.
With all dues respect, the Europeans do not want to spend money on their own defense.
Otherwise why are they squawking about Trump?
Or why did the US have to go in and clean up the Yugoslavian mess they allowed to fester in their own back yard ? (note the surrender of a Dutch battalion to a bunch of wanna be soldier clowns)
Please note where you get your gas from (Russia) – now why would anyone let a hostile power control their energy?
Oh, that’s right, the US has lots of gas, they can bail us out.
Where does your oil come from? Saudi Arabia etc..
So who is maintaining the forces to keep the sea lanes open, oil flowing and the Russkies off your backs?
Note the Libyan adventure European started and the US had to come bail them out of.
Seems to be a pretty constant story since 1914.
Let the defense laps, get a war going, then cry for help.
Of course LM pulled out of FIDO.
We know you can’t have 6 masters training one dog!
The US has a traction of helping others out, but we expect them to do what they can for themselves. Not become dependent forever.
Its no longer a closed world. Things happening across the globe affects everyone.
US ensuring Freedom of Navigation in the South China Sea keeps commerce flowing for everyone.
Helping Europe out also helps us out.
The US is far from perfect, I know and get that.
Europe needs to take a hard look in the mirror though.
Who do you think is most deeply involved with ISIS that has far more impact on Europe than the US?
Afghanistan was left to fester and we got El Qaida
Do you really think we want anything to do with a dried up husk of a backwards region that offers nothing? I and all Americans would happily let Afghanistan sink into its own muck if not for the fact that we see what happens when that occurs.
If you want Bratwurst someone has to slaughter the pig.
Me, I have shot, gutted and butchered my own game. Its not pretty, its not fun, but its part of what life is about.
You can’t always have someone else do your work for you, as bloody, nasty and dirty that it be.
We’re getting off-topic.
However, to imply that the Europeans are not spending money on their own defence is breathtakingly Trumpian.
Now, as a matter of fact it’s Trump who’s the one who’s squawking. The Europeans are merely responding to the Bannon/Trump manifesto that calls for the destruction of the EU.
As for the breakup of Yugoslavia, perhaps a better take on history would be helpful.
As for the rest of your rant, one would be hard-pressed to come up with a better example of how skewed perceptions of potential threats lead to profoundly irrational policy than the US government’s responses to acts of terrorism and the fallout from human-induced climate change. Fearmongering has shifted an enormous amount of funding from the latter to the former. The dramatic increase in US spending on counter-terrorism is based on an over-hyped threat, which in turn is driven in part by defense industry lobbyists, and in part by politicians looking to be seen as “tough on terror.”
In contrast, many current-living Europeans grew up with the threat of “home-grown” terrorists, in addition to quite a few international terrorists operating on the European continent.
Thus, many Europeans are pretty much immune to the fearmongering originating in Washington DC.
I think it maringly in topic
Apparently even an old fart like me with poor memory has to remind younger people with better memories that Obama also expressed frustration with NATO in that very same regard and pretty bluntly by Sec Defense.
Keep in mind Trump is just an echo of what is on the news (he has no original thought) , how he goes about is beyond bad, but its not always wrong either.
Its not a Trump issue, its an alliance issue.
They did make a specific defense commitment and most are not meeting it.
Kudos to the ones that are.
With all dues respect, the Europeans do not want to spend money on their own defense.
You might want to revisit a few of the European speeches at the Munich Security Conference last week.
Also, “spend more” is a somewhat silly demand and not exactly a fully-formed policy, to say the least.
“We feel some of our spending in area XYZ benefits you more than us – what are you going to do about it?” starts a different conversation – and even fits into a tweet!
Otherwise why are they squawking about Trump?
Lots of reasons. Military spending not even being very high up on the list.
<Please note where you get your gas from (Russia) – now why would anyone let a hostile power control their energy?
Oh, that’s right, the US has lots of gas, they can bail us out.
Firstly, that’s not what reality looks like.
Secondly, exchanging a dependency on Putin for a dependency on Trump doesn’t seem like a very good idea to me.
Where does your oil come from? Saudi Arabia etc..
The EU-28 in 2014 (latest data I could find) imports less than 10% of its crude oil from Saudi Arabia. Germany, for one, produces more oil itself than it imports from Saudi Arabia (as of 2016).
Russia figures highly in gas and oil imports to the EU, but a) number have been in decline for the last decade or so and b) renewables account for more of the total energy production in the EU than gas and oil combined.
So while there is a dependency on energy imports, the dependency isn’t quite what you made it out to be.
People tend to forget Norway in all of this, by the way.
Helping Europe out also helps us out.
The US is far from perfect, I know and get that.
Europe needs to take a hard look in the mirror though.
Europe tends to do that a lot more than the US – although of course the perspective Europe has when looking at itself in the mirror is – naturally – European one, just like the US looking in the mirror produces a US perspective.
Which is why, with all that mirror-gazing, Europe still tends to be European and the US American. I.e. Europe tends to argue a lot among them, probably overthinks things because of the various eventualities and “what then”s to consider. By contrast, the US has more of a bias for action.
Who do you think is most deeply involved with ISIS that has far more impact on Europe than the US?
It didn’t start that way, though. Al Quaida was an American concern at first, and as such it started the series of events and interventions that led to the Iraq war, which most of Europe opposed and which led to a power void that ISIS made pretty good use of. The story now continues with the fight against ISIS.
Going in to fight ISIS is all fine and well. But be aware of the consequences, i.e. what to do with all the refugees that ISIS, the war against ISIS and the war in Syria create.
That’s what what Europe currently has to deal with – and that’s neither easy nor cheap. Note the morally ambiguous and costly deal with Turkey in particular.
My point being (I guess) that there’s usually two sides to most of these things – and exchanging views with an open mind is essential to make sure there’s a common understanding for each other – even if one doesn’t agree on every single thing.
“The Europeans don’t want to spend defence money on American perpetual wars in Afghanistan/the-Middle-East and elsewhere — wars that do nothing in order to secure peace in Europe.”
Please stop. That statement is so divorced from reality that Putin himself could have written.
Look at the facts… NATO members have agreed to spend 2% of their GDP on defense and thus far only four countries in Europe are doing so..
That’s it, four out of 28 countries. Four.
The US spends 3.62% while footing roughly 3/4 of the total budget. Our neighbors to the north in Canada? A grand total of 1%.
Germany with the largest economy in Europe spends a pathetic 1.18%.They have gutted their army and air force to such a degree it’s doubtful they could even defend their own territory let alone aid other members.
To put it bluntly those wonderful socialist states with all their benefits are much easier to create when you don’t spend squat on your own defense. They have that luxury because of the US Armed Forces (imperialist pigs that they are)!
No thanks is expected or necessary but it would be nice if they started meeting their obligations before lecturing the US on how important NATO is when they clearly don’t want to do their share.
These are not “fake facts” but the unvarnished truth…
“The US spends 3.62% while footing roughly 3/4 of the total budget. Our neighbors to the north in Canada? A grand total of 1%.
Your claim is a commonly quoted misperception, or misleading Trumpian-type quote. The stat says nothing about the U.S. relationship to NATO. It simply states that the United States is the world’s greatest military spender. In a Trumpian way, you just sum up the total defense budgets of NATO’s members and counts that as its resources. By that measure, the US represents about 72 percent of NATO. But that hardly captures America’s role because its defence budgets are shaped not by the commitment to NATO, but rather by a determination to fund unassailable military forces with global reach. Since Ike’s farewell address, the military, industrial and congressional complex in the US has created a grotesquely oversized military
Even your friend, the Donald, seems to be wanting to boost US military spending by an additional $500 billion to $1 trillion — because it was “so weakened”, apparently, under Obama. LOL!
As for the NATO budget, here’s a more accurate picture:
To put it bluntly those wonderful socialist states with all their benefits are much easier to create when you don’t spend squat on your own defense
Considering comments are moderated, I’m not sure why such flame-bait even gets past moderation.
Look at the facts… NATO members have agreed to spend 2% of their GDP on defense and thus far only four countries in Europe are doing so.
Here’s another fact: NATO only agreed on this guideline (!) during the NATO summit in September 2014, and the idea was for members to achieve that target “within a decade”, i.e. by 2024.
Note how that target is only a guideline and was only agreed during a NATO summit, with no debate in the respective member state parliaments, nor any sort of ratification process or democratic debate in those member states. Which means it’s really all down to what sort of budgets get passed in each country for the next decade or so.
None of which gives you an idea of how sensible that 2% number is to begin with, either.
Nor what those 2% should be spent on.
Which are both points still being debated.
Case in point: Greece, who’re actually down from 3.1% to about 2.4% (the plan originally was to spend even more).
How great for them they meet the spending goal and are the 5th largest importer of military equipment worldwide.
How decidedly not so great for them that a lot of that spending contributed greatly to their debt woes.
To not even go into how sensible each piece of equipment is for the needs of the Greek military.
Germany with the largest economy in Europe […] have gutted their army and air force to such a degree it’s doubtful they could even defend their own territory let alone aid other members.
There was a contract that Germany signed in 1990 which among other things made them reduce their total number of soldiers (sea, land, air) from about 650,000 to fewer than 370,000.
Guess who demanded that this be put into the contract?
In case you’re wondering what I’m talking about: This is put down in contract Germany had to sign with the US, Russia, France and the UK to pave the way to German reunification. It’s still a binding contract.
There are also restrictions in the German constitution about how and when its military can be used. Guess why those are there and what countries made sure they were?
Consequently, there was a joke popular in the 80s and 90s in Germany which you still hear from time to time: “The German Bundeswehr is only there to try and distract the enemy until real military arrives.”
To now be told to “spend more on defense” by some of the same countries whose prime concern hitherto was to ensure Germany’s military didn’t get too effective/large/powerful is… confusing.
And it’s not that big a concern in the public, either, because Germany has (finally) stopped defining itself by its military might.
So as such, Germany hasn’t really gutted its military, it was told to not do too much about it to begin with and in consequence kind of lost interest, which meant it ended up not taking very good care of it. Minister of defense was never a powerful post to aspire to in Germany.
Other stuff was more important anyway. Things like infrastructure, reunification, etc. took higher priority. After the end of the Cold War, putting up defenses against Russia for instance was pretty low on everybody’s list of priorities.
So as things stand, the military – despite a lot of marketing effort off late – isn’t exactly Germany’s darling pet project that everybody’s eager to spend resources on.
The military budget, like any other, is subject to parliament approval. The government says it’s fully committed to NATO’s 2% goal – but the main opposition parties… not so much. The electorate in general: Neither. 2/3 of Germans are against any increase in defense spending.
Doesn’t mean they can’t be convinced, but knowing the Germans they’ll need a bit more convincing than just pointing at an abstract NATO spending guideline and shouting “YOU HAVE TO DO THIS!”. That’ll probably prove counter-productive. Education and paying off debt tend to rank much more highly in the German psyche’s list of priorities than tanks, fighter planes and machine guns.
As it happens, general elections are set in Germany for September this year so we’ll see whether that becomes an hotly debated issue and if so, with what result.
Looking at inefficiently run military-industrial projects the products of which are then used to conduct wars with mostly negative consequences for all parties concerned, plus questionable effectiveness of big-budget weapons against current threats like terrorist attacks, I’d expect “more military spending” to be a really tough sell to a lot of people.
All of which kind of brings us back to the whole thing of “it’s not that black and white either way”.
“World WAY complicated than a tweet or a PowerPoint. Sad.”
(Not an actual quote. Yet.)
What you don’t get is that rather than argue the issue, you first need to listen to what has your best partner in the world bothered.
We need some citation that Germany agreed to gut their military that was not respected in the first places.
And come on, the wall came down 20 years ago, how long do you use that argument.
Keep in mind that their MO was in Afghanistan where they got a quite zone and then agreed not to bother the Taliban if they did not bother them.
All I am hearing is sophist arguments to justify why they don’t spend on their own . Trump at least boldly lies.
I am stunned at the weird rationalizations for not spending on your own defense. We care more about it than you do? Wow. It was not the US that got invaded twice in 40 years, if anyone knows better it should be Europe.
You will note I make not mention of Socialism. You do have to be suspect that its part of the problem, but I am not going there as its just a unsupported theory.
As NATO countries in mass match Russian, they should have at least the capability without the US.
None of you have answered why NATO is upset at the US stance when in fact apparently you feel that you are more than adequately defended?
In short, it was what we call Co dependent.
That in turn has led to an entitlement attitudes.
Yes the US benefits from a stable Europe, Europe still in turn more than benefits by a US military that maintains some semblance of normal around the world
In a marriage if one person does 90% of all the work, there is resentment.
And you can’t argue Europe pisses away its defense resource on top of low spending.
You have 3 major tanks. How many different t MBTs do you need?
Note the US did demined that Rhinemaneatl made a vastly superior tank gun and that has been adapted into the M1. Brits are still using a rifled 120 mm? Come on.
How many different IFVs do you need. You have at least 3 and some sub types.
Of course the US is not going to buy that stuff, you get into joint projects and fighting to get a capability is nuts.
We may not have the best (though most of our stuff is) but its solidly, supported, maintained, not compromised by committee.
How many different fighters do you need?
How many different infantry rifles, mortars, artillery etc etc.
You have Typhoon, Rafael and Grippen (Sweden should be part of this, they butt is on the line as well.
Greece: Their issue is no one pays taxes and its totally corrupt.
The defense spending is just a sub set of a screwed up economy.
You need to pay for it, plane and simple and you need to collect your taxes.
You don’t need the damned Olympics.
Since wheb is the truth flamebait?
Just because the facts are unpleasent ypu want them banned?
I just pointed out Europe’s abysmal record of spending on self defense.
No amount of rationalization can excuse it away.
Maybe because they would have got a plane that was delivered close to schedule, that actually worked and that was at considerably lower cost. Not to mention it would have saved a transnational European champion from billions of dollars of writedowns.
Airbus will never be able to earn back those writedowns through sales of the A400M to nations that would have been rejected due to ITAR. You have also conveniently failed to address my suggestion that the A400M still falls under ITAR, because I’m pretty sure the aircraft has restricted US content. This link shows a number of the major component contractors and features american companies including Ametek, Eaton, Hexcel, Honeywell, Moog, UTC
“Maybe because they would have got a plane that was delivered close to schedule, that actually worked and that was at considerably lower cost.”
Yes, just like the C-17 and F-35. The fact of the matter is that military procurement is notorious for delivering late and over budget.
What you seem to gloss over, though, is that Airbus naively and stupidly signed a fixed-price contract with the partnering nations — it would eat any overruns. Most military contracts are cost-plus, that is, the risk of rising costs is borne by both the developer and the customer.
In contrast, no US defence contractor would never have signed a fixed-price contract with the US government on such terms.
With respect to ITAR and your link, you make the mistake in believing that “ITAR-free”** means 100 percent free of US content.
Also, according to Wikileaks, 😉 some Honeywell Products seem to be “ITAR-free”:
Didn’t Boeing sign a contract that they did all COR on the KC46?
Come on, the A400M was all new: All new airframe; all new engines; nearly all new manufacturing infrastructure (i.e. re-use of A33o fuselage — same 222 inch diameter).
In contrast, the KC-46 is based on the old and outdated 767 airframe and on old and outdated fuel-guzzling engines.
OV-099, we agree that Airbus was naive and stupid to sign a fixed price contract. But US Defense contractors also have been burned by the same “mistake”. Presumably that is why Boeing has been taking writedowns on the KC-46 program.
We seem to disagree profoundly on whether a P&W engine would have resulted in the same cost over-runs as the actual engine supplied by an untested consortium.
You seem to be dancing around the ITAR issue – I have presented links that indicate US equipment is used on the A400M. “As free as possible” doesn’t mean ITAR-free. As your link showed, even a single “minor” ITAR component can hold up delivery. Please confirm that the A400M is in fact free from ITAR restrictions – otherwise ITAR is a spurious explanation for the engine choice. Developing domestic European capability is a key reason for the choice – but I maintain that the POLITICAL choice has cost Airbus dearly.
BTW, I am not American.
Please do name a large, all new US defence procurement programme that was awarded on a fixed-price basis.
Comparing the fixed-price contract for the KC-46 to the fixed-price contract for the A400M is, in fact, therefore nothing but ludicrous.
As for providing “evidence” of an ITAR-free A400M, it seems to me that it’s you who should provide evidence that the A400M — according to you — has ITAR-unique content aboard.
Nevertheless, here’s a link providing evidence that US suppliers are providing the A400M with products that are of “dual use”:
Source: Page 320
Can you make your response even bigger and bolder because you know we have trouble reading if you post like everyone else.
“nearly all new manufacturing infrastructure (i.e. re-use of A33o fuselage — same 222 inch diameter).”
That wasnt a reuse in the sense you say
‘”When we did that we realised the upper diameter was only a few centimetres less than the cross-section of the A330/A340. So we decided to set the diameter to the same amount for commonality. Not a single frame is the same, but by sharing similar dimensions we can use many of the same parts of the manufacturing and assembly process such as the stretch-forming tools and panel-carrying trolleys.”
Reuse of the panel carrying trolleys!
Thanks, I meant to say “re-use of A330 fuselage production insfrastructure”.
And your point is?
“Come on, the A400M was all new: All new airframe; all new engines; nearly all new manufacturing infrastructure (i.e. re-use of A33o fuselage — same 222 inch diameter).
In contrast, the KC-46 is based on the old and outdated 767 airframe and on old and outdated fuel-guzzling engines”
So what and what the relevance.
There is no comparisons and you throw out chaff.
My point is that a fixed-price contract is more than reasonable for an off-the-shelf tanker, but that a fixed-price contract was not at all reasonable for an all new military airlifter.
It makes no sense, therefore, comparing the KC-46 with the A400M.
Because the KC-46 is based on the old and outdated 767 airframe that is powered by old and outdated fuel-guzzling engines, just underscores my point that the KC-46 is essentially off-the-shelf. Remember, the USAF actually sought an off-the-shelf tanker in the KC-X RFP.
Impressive, though, how Boeing managed to mess up building a tanker using off-the-shelf tech and existing airframe and engine.
A400M is to Airbus what the 787 was meant to be to Boeing, a roadmap forward. It gives Airbus and EP partners the know how to build a large airliner using turboprops. Imagine short/mediam haul A320 and A330 replacements for ranges up to say 200 miles using high approaches into congested airports to deliver 2000 mile routes in the same block time as competing jets, but with less fuel and more available slots.
There is a reason ATR can´t get the go ahead for larger designs, and cost overruns are warrented from Airbus´point of view, even cancelling the program if the customers don´t come around won´t hurt too much as so much has been learnt. The question is if Airbus will use the knowledge it gains, or throw it away as Boeing is doing with it´s hard learnt B787 knowhow. (no more moonshots, no clean sheets etc etc)
I still find net profit margins to be slim (even if there weren’t any write downs).
I would like to see profit margins >10% (may 12%-15% region). I don’t know Boeing’s recent profit margins but generally they were >10%.
I still think the A380 will cause a major headache for the Airbus Group. I also don’t see the A330NEO generating too much revenues down the road. IMHO the A350XWB (especially the A359XWB) and A32XNeo (especially the A321NEO) are probably going to be Airbus “profit centers” for a while.
Good to see this current iteration of management at Airbus doing a good job and we’re not seeing “meet the new boss, same as the old boss” …:-)
Frankly taking on responsibility for the engine’s that were imposed on them was nuts.
But then the management at the time was a bit off the edge.
Agreeing to penalties on top of p[ay for the cost overruns? Even Boeing the poster child of dum0 would not be that dumb
Probably the one area that Airbus should say no on. We will not pay any more penalties.
We admit we were not so smart, it has to stop.
You want an A400 or don’t you?
Interesting on the A330NEO. Still seeing how that one plays out.
The A400 was a development mess run by Airbus. They want someone else to pay for the financial cleanup. Make them eat their own mess so they wont do it again. If they don’t want to make the plane anymore let them pay that bill instead.
The A400M cost overruns were E5-6 Billion from what I found. In some nations that would be absolute peanuts / no news.
Look at the JSF, F22, C17 and other massive cost overruns. It puts everything in pespective. Unless you’re not interested in that.
Another factor was the A400M is payed for by 6 democracies, with their changing governments and strong opposition parties, looking for opportunities to charge and gain PR points by attacking wastefull militairy programs during the global recession/ cost cuttings. Militairy pride has been low in Europe for decades.
Agreed on the JSF.
F-22 for the most part did well and got killed off as it was getting going.
C-17. An issue, but they were workable issues and its been stellar.
Not sure how the A400 will rate over time.
I don’t see the benefit of it.
Mix of strategic and close field .
Do you really want to risk a 200 million Euro aircraft into a combat zone?
More better to fly the stuff into the region then Herc it into the local fields (or C-27, I like that bird a lot)
“More better to fly the stuff into the region then Herc it into the local fields (or C-27, I like that bird a lot)”
The problem is that there is stuff that won’t fit inside the small cargo compartment of a C-130. E.g. some new vehicles won’t fit inside a C-130. Even the old Stryker used by US army won’t fit inside without modifications. Bradley – no way. The C-130J is just longer. Not one inch wider or higher.
There is no other military transport aircraft available on the market to lift new infantry fighting vehicles except the A400M.
“Do you really want to risk a 200 million Euro aircraft into a combat zone?”
That is the purpose of such an aircraft.
I would change the last part to that is the risk chosen, it is not sane and I expect you will never see them used that way.
A lost Herc is not going to kill you mission wise, a lost A400 is going to have a huge impact.
And the A400 cannot carry most IFVs. It can carry a stripped down Puma, sans armor , not sure on wheeled ones.
It needs a second aircraft to carry the armor.
While that is cool, you are not going to have much if any effect with one.
So at that point, you need 4 to 20 to be effective, you need fuel and you need ammo.
The C5 delivered (two or 3) M1s to Saudi, but they were delvier3ed and then sent into the field on transports into a pre arranged supply setup that was also not air lifted in.
A C17 can deliver an M1 that actually is invulnerable into a 3500 ft field .
“A350 delivered 23 aircraft in the quarter, meeting the annual delivery target with 49 delivered.”
Actually the target was 50 but close enough for government work!
According to the statistics on Wikipedia, the 777X has firm orders of 306 (nearly 60%) while the A350-1000 has only 211 (40%). It will be even more lopsided when the Singapore deal goes firm. This is starting to look like a repeat of the 777-300ER vs. A340-500/-600 face off over a decade ago when the A340 went into a death spiral despite having four engines for the long haul. I will surprised if the A350-800 is built. So it looks like the A350-900 is an orphan fleet.
The 777-9X is bigger than the A350-1000. If you compare A350-1000 orders with 777-8X orders (and not the whole 777-X family) or the whole A350 family with the whole 777 family, you would get totally different market shares. Anyway this kind of comparisons are premature as the A350-1000 and the 777X are not yet in service. There was the same kind of comparisons between the 787 orders and A350 Mk1 orders. But A330 orders should have been included (the A330 has got lots of orders since 787 EIS, more than ever). If you add A330 orders with A350-900 orders over the years, the comparison with the 787 orderbook is much more in favor of Airbus.
Why does Boeing invest so much a 2.3 m 777-300ER stertch?
They think it will pay off?
I don’t see this as the B77W/A346 debacle. The A350JXWB will eventually pick up a lot more orders as more B77W’s start to get retired/replaced. While all of those orders won’t go to the A350JXWB, a good number will. I expect them to eventually sell 300-400 of those planes.
The A346 simply wasn’t efficient enough against the B77W whereas the A350JXWB is (actually its much, much more efficient at that pax number class).
OK, everyone, listen up.
This post is not about NATO. It’s not even about the 777, A340 or A350. It’s certainly not about taking prohibited shots at one another. It’s not about dragging Trump into the debate.
Shape up, or I will close Comments.
I hate to be the one that points this out to you, but it certainly is about the A350.
Totally agree Scott. Make the Reader’s Comment Board Great Again!
How about we open up a NATO discussions?
We have had some good ones previously and it stayed within reasonable bounds (or so I think)
While I have not agreed with the conclusions, I have learned a great deal bout attitudes on the other side (and hopefully they have as well)
And its greatly about aircraft.
As MartinA pointed out in a comment above:
MartinA is, of course, exactly right!
Taking it from there, I can suggest this link to interested readers:
Jumbo City Flyer
As I inferred to in an earlier comment, the A400M fuselage has the same cross section as the A330 — i.e. the circular 222-inch diameter part of it– and is thus manufactured partly using the A330 fuselage production insfrastructure; dukeofurl was kind enough to provide a link:
It doesn’t require too much of an imagination, therefore, to grasp that Airbus could quite easily develop an A430-800 turboprop aircraft using the A330 fuselage and the wing and engines from the A400M.
Since, the upper fuselage of the A330 and A400M are dimensionally identical, the entire A400M wing assembly could be bolted on to the top of a modified centre section of the A330 fuselage (i.e. including wing carry through cut-out and all new MLG bays etc.). However, the A400M wing span should be extended from 42,4 m to around 50 m with A350-type wing extensions and winglets to improve L/D (i.e. not exceeding ICAO Category D: wingspan < 52 m).
An A430-800 could be similar in size to an A330-200/-200. An A430-900 could be as long as the A330-300/-900, while a dash 1000 could be similar in length to the 787-10. Due the length of the fuselage(s), a T-tail would probably not be required, which means an A430 family could re-use the existing A330 empennage (minus the horizontal tailplane — HTP). In contrast, a shorter A310-type A430 would, in all likelihood, require a T-tail. Now, since the A400M wing is roughly the same size as the A310 wing, the HTP on an A430 should be similar in size to the A300/A310 HTP.
Design range for an A430 family should be around 1,500 nm and MTOW between 140 and 170 metric tonnes — MTOW of A400M being 141 metric tonnes.
Finally, with respect to the Jumbo City Flyer — described in detail in the link above — it doesn’t require too much of an imagination to go one step further. However, I would re-use the A380 fuselage, instead of designing an all new double decker fuselage. The (4) engines should be derived from the Europrop TP400 (e.g. “easily” scalable due to the three-shaft architecture) and scaled up by as much as 80 percent, to some 20,000 hp. MTOW should be around 300 metric tonnes. Design range for this beast (A480-800?) should also be around 1,500 nm. However, the wing should IMJ be a “high-wing” one — i.e. essentially a scaled up A400M wing — in order to later facilitate designing a direct replacement (A490M?) for the C-5 and An-124 that would use the same wing and engines as an A480-800.
I like it, and with airport expansion on hold in most of the World is it maybe inevitable?
I think OV-99 would make a fine sci fi writer.
Kind of like the twin A380, she no a gonna fly.
Flight of the Phoenix?
“I think OV-99 would make a fine sci fi writer.”
In case you don’t know, though, science fiction has a Technological Readiness Level (TRL) near zero. On a scale from 1 – 9, an A430-800 would be at TRL level 8 (EC def.) and an A480-800 would be at TRL level 6 (EC def.).
I think we need to separate out a high TR from a realistic readiness level (RR) of zero.
I will point out that none of the proposed versions have even hit a lets take a look level (LTL) which would then be zero also.
“I will point out that none of the proposed versions have even hit a lets take a look level (LTL) which would then be zero also.”
Is that absolute certainty of yours based upon your intimate knowledge of what’s going on inside Airbus?
Governments are constantly trying to find ways to subtly help their aerospace companies, it’s counter productive to then push for compensation for late delivery
I agree. This may be the contract but why enforce it?
All that gets you is a dumped program when the cost e4xceede the return.
While I normally am not a violin player for the mfgs, this is really pretty stupid.
Airbus got itself into a jam, they all seem to want this aircraft (as unfathomable is that you have a strategic lets land it in a combat zone airlifter is to me) .
You never really know what is needed in a combat location when you leave 5000 miles away. That’s why local delivery works.
Get the stuff to the central logistic base, then put in the toiler paper, lotions etc along with those odds and ends like shells, bullets and food.
So Airbus takes care of the tech problems (that would make it a KC46 program) but they’re are no penalties for late delivery.
The engines were supposed to be commercial procurement and PW would certainly have produced a fine one with few if any problems.
As the Governments stuck their fingers into that one, they should own it.
I would not blame Airbus for just saying, we quit.
We had a Hangar like that they started up here.
The found a failure on welding standard (keeping in mind the way they did it that it probably was just fine, more a nit noid, overall the steel was Russian class solid)
So, they started to fix the welds and then one day quit.
It turned out it was far cheaper to drop it and give up the bond than fix it.
Being a mechanic, its when I get this kind of data my head perks up and its, wow.
So, the gearbox only is good for 1000 hours at best?
In my world, the gear box outlasts the engine by many orders of magnitude.
What kind of a cruddy gearbox needs to be replaced at 1000 hours? 650 is worse only in that it is worse, neither one is good.
The Centurion Diesel engine foundered on its gearbox overhaul costs and that was every 300 hours.