By Bjorn Fehrm
February 15, 2018, ©. Leeham Co in Toulouse: Airbus Group presents better results for 2017 than predicted, despite challenges in several programs. Profit was up 34% on flat revenues. The underlying driver for the strong performance is the A320 program, and with record 2017 orders and backlog, no end is in sight.
Airbus CEO, Tom Enders, says the A320 is “sold out’ until 2023 and the company is working on how to produce 70 per month, to keep up with demand.
The Airbus revenue and net profit were beating guidance at €66.8(66.6)bn (2017 figures followed by 2016 in brackets) and €3.4(2.3)bn respectively. Results, like last year, were cut by one-time charges of €1.3bn for A400M and €0.1bn compliance costs, partly compensated by one-time gains of €0.6bn from selling Defense electronics.
The company ended the year with €13.4(11.1)bn in cash, of which €6bn was generated in 4Q2017.
Airbus expects to deliver 800 aircraft during 2018, of which 600 will be A320 series with two-thirds being A320neos and one-third A320ceos. This is contingent on engine deliveries, see below. The higher deliveries of civil aircraft will increase profits by another 20% compared to 2017.
The guidance does not include the effects of adding the Bombardier CSeries to Airbus aircraft programs. The joint venture talks are going well according to Enders and the confidence of concluding the cooperation agreement in the second half of 2018 is high.
Airbus delivered 182 A320neo aircraft out of a planned 200 during 2017. The balance was filled with A320ceos to a total of 558 A320 deliveries for 2017.
Both neo engine manufacturers had problems during 2017. Pratt & Whitney with the well-known technical problems and CFM with LEAP engine deliveries being late. Despite the troubles with engine deliveries, the A320 program was the undisputed cash engine for the group.
For 2018 the plan is to produce more than 600 A320 aircraft. This is contingent on engines being available. A new problem was detected for the Pratt & Whitney GTF engine last week. About 50 Airbus aircraft are affected by a changed component not performing correctly, causing major engine problems for affected aircraft.
Enders was confident the joint Airbus and Pratt & Whitney team would get on top of this problem as well. How long engine deliveries would be disturbed was too early to tell.
The A330neo is in full flight test with first A330-900 delivery in the summer. The sole A330-800 test aircraft is getting ready for flight test. The program is running at six aircraft per month and will stay at this level until the neo transition is finished. Then the order situation will decide any rate adjustments.
The A350 program has performed better than expected during 2017. Production is running smoothly with traveled work at a record low level, almost on the level of the A330 Final Assembly Line.
Ramp to 10 per month is secured for the end of the year and the program now plans cash positive deliveries beginning end 2019.
Airbus secured a critical order for an additional 20 aircraft from Emirates in January 2018. This secures the program for the next 10 years according to Enders, even without further orders.
Should no additional orders come about, Airbus is prepared to reduce the rate of A380s to six each year. At this level, the program is not profitable but losses are “acceptable” according to Enders. The long-term outlook this gives improves the discussions with existing customers to order more A380 and for new customers, like Chinese airlines, to enter the program says Enders.
Airbus reached a critical agreement with the six customer nations and their procurement agency, OCCAM, on the 5th of February 2018.
The agreement outlines a realistic production and capability roadmap for the A400M. It also limits the customer’s penalties and withholding of payments for delivered aircraft.
By it, Airbus has planning certainty with limits to future losses. The agreement turns the A400M program from an unpredictable liability to an aircraft program which can be fulfilled by Airbus with acceptable consequences.
Airbus could thank to the agreement make a provision for a €1.3bn charge against 2017 results. This shall be the last large write-off for the program, according to Enders.
The production rate was 15 aircraft for 2017, with 11 planned for 2018. Should no new orders be placed, then the program can continue at a rate of eight A400M per year until new orders arrive.
Looks like from 2019 on wards AB could be in a much stronger position, especially if P&W can sort out their engine issues (And hopefully also AB’s management related problems).
By then the CS program under an Airbus flag could also be up and running.
Agree with you.
At the end, the guys being heavily criticised in the comments have a huge cash pile and makes the quietest and most sought after seat in the business.
Look at passenger comments, comparing an A380 economy seat to any other modern jet.
The picture looks suspiciously like Hamburg weather, and the hangar in the background quite like Halle 14 in Finkenwerder. The engine-less aircraft is also an indicator, that the A321 indeed takes off from XFW to no-one-knows-where.
You must be mistaken, from the caption it is clearly the new A3221LR. It was developed in the special Hamburg hornchenwerken to look suspiciously like the A321 but have the range, capacity and efficiency of a Mooted NMA without the ****shit. Total world domination beckons mwah ha ha ha haaaaa
Yah, but it was not CDG for sure. I just deleted the caption, now the A321xx is flying somewhere 🙂
A321LR maiden flight.
various links, forex:
The real “Hamburg hornchenwerken” name is
TempoWerk : https://en.wikipedia.org/wiki/Tempo_%28company%29 ;-))
Thanks, the Tempo Matador could be of good use on the farm.
All their products are neo’d or new (and a380 wrapped in cotton wool), so they have a good few years ahead of them.
Time to further enhance the a350, prep for it’s extension, and plan their NSA (which should also address the NWA).
C-series (and their folks) can mop up the lower end and help on the NSA – best of c-series meets best of a320/321/322.
Too true, it is a bit difficult to see much of a need for engineers into the future, their product line is to some extent complete. If I were running the show I would be following the Boeing route of focusing on the one variable directly within your control. Cost reduction must be the name of the game.
As I see it Airbus have been strong on automation in comparison but less good on integration. For example each process is a beautifully choreographed and more highly automated process than Boeing but the link from one process to the next involves much moving of frames around final assembly which Boeing have reduced by having a moving production line for the core elements of the process.
To be truly efficient needs a step change of philosophy and acceptance that the A320 has a sufficient production rate to better take advantage of newer, more efficient production techniques. Just like Boeing are doing but from a slightly different starting position.
Also the aircraft industry as a whole has to eliminate supply chain issues. This can be done by being more realistic on timeframes for development (eg engines) or having a greater awareness of potential supply chain failure
Once you have new model Aircrafts out the door it requires tons of engineers to improve, cost&weight reduction and sustain it to make it successful.
Just the old A330ceo could need lots of engineers just to reduce empty weight and improve durability for domestic USA/China flying as an interim MoM Aircraft and raise the bar for the Boeing 797.
The A350-900ULR might need another workover for the Qantas sunset offer that might be standard A321neo in the future.
The A322 will swallow lots of engineers and its carryover to the A321neo will fill offices with engineers and draftsmen.
I still won’t get Airbus product strategy since Enders took over.
He had the finger on the trigger for a bunch of new products and din’t go for any.
An A380neo? No, some minor changes mainly in the interior and winglets and call ist A380+.
Another A350 stretch to compete with B777-9x? No, rather loose the huge Emirates order.
Imo, another A350K stretch to about 80m should be a very dangerous threat and a highly efficient aircraft.
I can’t see any regional version of A330(neo) or A350, though rumors have been heared.
NMA isn’t adressed by another A321 stretch.
I heared Airbus had already layed of engineers, due to lack of new products.
A35k is flying, A321neo is flying, A330neo is flying.
Any new product, Airbus?
It’s pretty clear that a barrier to an A380 neo is capacity and willingness at RR. They’ve been extremely busy with other engine programs…
There is a question as to whether it would genuinely be worth RR’s while to do an engine. One feels that all it will take is some enthusiastic positivity from a few customers, Airbus and RR and a neo would happen. After all some of their newer engines (for A350 for example) aren’t so very far from what’s needed.
I’m not so sure. RR is going for advanced and ultrafan, but there’s not yet a plane for it.
Somehow have a feeling Airbus waits to get at least a newer generation of engines on the A380neo than B777x has.
That’s quite likely now, I think. A few years ago something based on XWB would have had a good service life before Ultrafan or Advance came along. Now with all the delays it could be worth waiting.
If that’s what they did fit, the neo would be a very competitive aircraft!
This was NOT the commentary on RR when Emirates signed on. IIRC, the reason they went with RR over EA was the “willingness of RR to do a re- engine”, commitment to improve fuel economy and blah blah blah.
Now, its “RR doesn’t see a business case” (I wonder who else said that! cough cough EA cough cough), “too busy” and whatever other excuse that covers up the fact that Emirates got sold a bill of goods on the RR tender.
What type of engineering skills does Airbus need when they are stretching aircraft?
Because I do not see anything else happening, not until Boeing makes a move for an all new airplane.
Timing is a decisive factor:
– Why doing a 321 stretch now? It only competes against the own 321. To preempt and reduce the business chance of the NMA, the 321neoLR was just right, and a stretch should be done after you know what the NMA can do.
Better go for a 320 1/2 first.
– 35K: better wait how good the 777-X really is and then, after B has spent all that money come up with a cheap derivative that is nr 1 in its class.
– 380: Airbus has a monopoly here. At the moment, there is simply no need for such big planes, not for the 380 and neither for a 380neo. so it would be a waste. Better wait for 10 years and you maybe have the demand, maybe have even better engines and you know if a 388 can compete against the 779 or if you have to go straight for the 389neo.
What he had to do he did well: Make the 330neo attractive vs the 787, get a smooth production uptake of the 350, make the 320 nr 1 in its class, stabilize the 380 and 400M.
You have certainly a better view on Mr. Enders than most of the guys working at Airbus.
They are dooming him, not many think he was a great CEO
Not good is always a question of what would be worse, but I agree, that he did not decide himself not to make his biggest mistake, but Merkel, by keeping him from merging with BAE Systems and I say that even though I am not a Merkel fan.
And that being said, did your Airbus guys like Forgeard better?
Can’t really comment on this situation but in general, a good CEO is seldom a popular CEO.
Pretty sure not, as this was the time of French-German war at Airbus.
How to judge a CEO that didn’t go for any strategic decision?
Usually comapnies that shut down R&D suffer a few years later.
Airbus lacks new products.
With a stretched A35k you can bully Boeing into another stretch of the B777x.
I’m sure a close to 80m A350 would be a great aircraft with huge markets especially in Asia.
Replace all the B77W and B744.
I can not understand how they didn’t go for and hope the will develop it soon.
Though not a francophone Bregier as a tech based guy always appeared more constructive/effective ( or I just get him better) .
Mil guy gone political back office gone manager ( Major Tom , look at his vita ) was imu more of a political appointee. you need those. But he is too much of a (commerce)neoliberal hack for my liking. the historic specialness of Airbus is exactly what distances it from Boeing ( style, products ) . No need to try to be like Boeing and swing from quarterly to quarterly. ( I stand counter to Mr Hamilton and Tom Enders here )
( Germany had a range of backoffice types moving up front. ( just a selection of the good the bad the ugly: Genschman’s sidekick Kinkel ( a bust ) , Bonzenkanzler Schröder: Steinmeier, Bundestag support researcher Enders. … )
Enders days are finite after the civil war with the French and it look like he wanted to build up the company cash.
I agree that an A350-1000 stretch to 80m would eventaully sell, it needs a custom designed wing to be competetive as SQ determined when they selected the 777-9 even though much heavier than the “warmed over ” Airbus proposal.
The A380neo also needs a custom designed wing to become popular instead of just new winglets and other cheaper modifications.
The A322 also needs a new carbon wing but all of these projects of ordering new wing designs from Filton and toolings in the UK for new wing production has been stopped by Enders.
He paid for tweeks of the A350 wing and the ULR mods for the SQ A350ULR and now the Qantas mods but that’s it.
A new CEO might see more clearly what high tech customers are willing to pay for and Airbus can profitably provide it.
Airbus has actually a golden opportunity with an 350-1000 stretch (aka -2000/-8000).
Stretch by 7 frames (4.46m), total length 78.24m, in medium density layout this will have seating for around 400-410 pax.
The opportunity, don’t try to make it a very long range aircraft, give it exceptional seat mile cost.
Will have a range of ~6500-7000Nm with same wing, engines, etc. Reduced MTOW to ~311T for additional drag, with extra pax and OEW that is ~14T less fuel, ~2.15 hours less flying than the 316T MTOW 35K?
100 KLb XWB-EP’s will put MTOW back to ~316T and range to just over 7000Nm? This covers most likely >90% of today’s 773ER missions.
Is this not what they proposed to SQ who decided that the heavy 777-9 was a better buy with its new carbon wing and GE9X engines?
I feel Airbus must bite the bullet and spend money on a new fully optimized wing for the A350-2000 that the A350-1000LR can get as well to really beat the 777-9 in the market as both the 777-9 and A350-1000 sales will take off.
Some argue that the A350-1000 wing modified from the A350-900 is good enough and it probably is for the A350-1000 that will just replace todays 777-300ER’s but if customers want more seats and range from the biggest twin available they go for the 777-9 until Airbus offers a 12-15% better A350-2000. That is not impossible to do as they have a great A350-1000 fuselage to start from.
“I feel Airbus must bite the bullet and spend money on a new fully optimized wing..”
Is this the replacement for the 757 lament?
Airbus must do a new ( most expensive item) WING before they can ever compete with Boeing?
Airbus major issue imho is
“business as practiced in the US: full spectrum warfare” 🙂
Personally I see an A350-2000 as an 787-10 like development of the 35K for shorter high density routes with the emphasis on seat mile cost.
With theoretical XWB100 engines and MTOW of 316T an 4.45m (7 panel) stretched 35K with 400-410 pax will most likely still have a range of around 7000Nm that could serve >90% of the 77W and 779 routes. Development cost will be relatively low an offer very good economics to airlines.
I can for example see more need for a new smaller wing for the 350 family that could be used on a shorter range version of the 359 (78J competition) that could also be used later on an 350-“700” (280 seats) with range around 8000Nm to compete with the 789 and serve as 330 replacement aircraft.
This is potentially a much bigger market than that for VLA’s.
Isn’t it startling how such a small order for A380s can transform a product from the axe to one which has a 10 year future as a minimum!!
Its one thing to extend the 380’s life, but will RR be prepared to build these engines still in 10 years time at this rate?
yes, because they will also build another 400-500 every 10 years for the 380s in use and having their engines replaced by new ones every 7-10 years…
No utterly bad news from the T7000’s yet after initial delay. Maybe of use on future 380’s and as retrofit?
Pretty simple, really. The EK order for 20 additional frames — and with deliveries commencing in 2020 — A380 production is guaranteed at 6 frames per year through 2026. The 18 options are for 2027, 2028 and 2029.
Airbus has now 61 EK A380s on firm order that are yet to be delivered:
EK A380 projected deliveries 2018 – 2026:
Hence, it’s easy to see that without the additional 20 EK A380s, production would not have been able to be sustained at a minimum rate of 6 per year (i.e. EK had 142 A380s on firm order at the beginning of the year).
Now, 20 years after the EIS of the A380-800 would IMJ seem to be the right moment to EIS a massively improved next generation A380 (i.e. something much more than just a “neo”). That’s about the same time period as between the 747-100 and 747-400. With production now guaranteed through 2026, it’s not too difficult to understand why Aboulafia & Co. are not happy. I would not be too surprised if what they truly fear is a truly game-changing VLA coming online a decade hence — and what such an aircraft could do the Boeing company.
I can do the sums, my comment was more about the sentiment changing to the programme. We have had a year of doom and gloom which has flipped to a relatively positive message
Same happened with the 747F. Boeing was even more difficult position than Airbus with the 380 as they were producing some 747Fs for their own account to be leased out. But now some real orders have appeared as they expected would happen
The timing of the 747F orders right after the A380 orders migt not be a conicidence but the US goverment making sure the 747-8 survives after the A380 got rescued.
Of course you can do the sums. My comment was merely made to expand upon the crux of your argument. 🙂
I am abnormally tetchy, apologies
Nice spin on the A380 and A400M fiascoes.
This is what Richard Aboulafia had to say about the A380 in his January Letter:
Permit me to summarize what just happened: Outgoing Airbus executives (a redundant term, since most are leaving) managed to put off the inevitable horror of an A380 line shutdown. In doing so, they saddled the company and its incoming management with ten years of crushing overhead. They’re stuck with colossal empty cathedrals serving merely to deliver six heavily discounted jets per year (at most). Only upside: I get another decade of foolishness to criticize.
Proving local spin with a commentary from the Uber Spinner in the industry? Hilarious Mr. Shaw!
You can do better than that!
Lucky them: The closed the 747 line already long ago …. oh, didn t they?
It’s funny, mr Aboulafia is normally so balanced about the A380 but here he seems to really want to put the boot in….
If I had to make the decision on the A380 I would keep it in spite of a small amount of red ink p.a. The ‘crushing overhead’ is mostly fixed and historic. Rare though it is for Mr Aboulafia to reach into hyperbole I think he is doing so for dramatic effect, I bet deep deep down he doesn’t want it to go. If Airbus do not have a compelling need for the space then they might as well keep it chugging on.
It keeps the B777x honest in any competition
It is a frame that could be developed in the future if needed
It is still the jewel in aviation with passengers and airlines for which there is no comparator
The upside potential is certainly higher than the downside loss but is also correspondingly less likely. Classic expected value analysis
Mr Aboulafia makes a good part of his living complaining about the A380 to most US readers happiness. He is right that the big Twins make it uncompetetive on many routes and it is an old design by now as it was started as a B747-400 response and on 63% of routes it intended to fly it got crushed by the 777-300ER economics and range. As more Airports actually make space and gates/lounges for it pax will not get into a 747 or 777 if they have the option.
If Airbus has the resorces and the owners don’t demand huge stock dividends and stock buy backs the time is right now to give it a new wing and the T7000ALPS Engine with T900 fan diameter or whatever Mr Clark and Hazy agrees on.
Congrats to Airbus on their numbers. The A32X is an incredible profit machine for them.
That being said, by my rough calculations, profit margins are between 6%-7% . That’s a bit on the low side. I haven’t checked their profit margins the past few years however I remember their profit margins always being on the “soft side”.
I am open to giving them the benefit of doubt given their A32X deliveries situation and given the fact the A350 will be cash-flow positive from next year.
I suspect the profit margin on the A32x will grow a fair bit as engine problems are overcome.
Pedantically the margin will be barely affected but the overall profit will increase on delivery and realisation. If Airbus has one fundamental weakness it is the consistently low margin as compared to Boeing.
As I understand it Enders was focusing on making Airbus operate more like an entity and less like separate national fiefdoms. The low returns will have to be be the underlying focus of the new CEO and may lead to quite a lot of pain.
crisp Apples and overripe Bananas.
IFRS bookkeeping vs GAAP _+_ program accounting.
Just from using GAAP with its strange valuation your numbers will look much better. Add the costmetics from the bow wave of deferred cost….
( Guess why the US pushed a lot on hard IFRS rules globally but never changed their own bookkeeping away from GAAP though the need is seen. )
One of the questions for me what is the future and right way forward with the 32X-family and when to introduce the A32NSA.
And the decision is all about wing/s, can see 3 options;
1) Tweaks to current wing,
2) New 36m wing,
3) New CAT-D wing for an A322 with 4500Nm range.
1) Good to EIS of NSA in 2030,
2) Use on 320+, 321+ and 321LR and compete with Boeing NSA for 3-5 years (Its like half an NSA). A320 and 321 to continue as is until NSA and first NSA’s to be developed.
3) Only if introduced as an NSA to compete with the smaller NMA, EIS same time as NMA?
Option 1 most likely what will happen?
Last words, Airbus should not compromize the 32X range at the expense of chasing the NMA, making the Goose that lays the Golden eggs even better should be first priority.
What can compete with the NMA is another NMA, AB needs replacing the 330’s at some stage so they in better position to build something between the 797 and 787.
I thought A380 production was already lowered to 6 a year. At what rate is A380 production currently?
Can someone tell me if it would be realistic to create a twin engined A380?
I’ve read many times about the A380 (wing and landing gear) being designed with a stretch -900 or -1000 in mind. Which comes with a weight penalty to the A380-800.
Note, I didn’t come up with this idea myself, I’m not claiming bragging rights, think I read it on another forum.
Ideas for a twin engined A380:
Reduce MTOW by 100 to 125 t (220.000 to 275.000 lb) coming from a combination of less fuel, lighter wing, lighter engines (the new engine would weigh more, but it would need only 2 instead of 4).
New composite wing, less wing area, higher aspect ratio.
Currently 2 x 70.000 lbf per wing, if not RR, GE should be able to make a GE9X that has the required power for a twin engined A380 (GE90 goes to 115.000 lbf).
Lower fuel burn should allow a big reduction in max fuel with a limited reduction in range. No need to make a plane only Qantas buys to fly Sydney to London, it just has to be really efficient at London to New York, Dubai to Western Europe and Dubai to Southeast Asia.
Is it realistic on a technical level? And how efficient would it be?
How much would it cost to develope?
A 450 metric tonne MTOW A380-derived twin would require two 135,000 lbs of thrust engines. Should be doable a decade hence. Such a beast would IMJ blow the competition out of the water.
To develop a 135 000 lb thrust Engine with only one application for a very political sensitive product is very risky and expensive even thougt its core Engine would be used as the biggest aeroderivative stationary powerplant and has its marine application.
Maybe if Airbus could make it so light that it can be classified with the same separation as the A350 it could fit better into the Airport flow.
The questions become how much can they sell it for and the qty AF, LH, BA, SQ, Qantas, Cathay, JAL, ANA, CS, ALF and a few US Airlines will order. My bet is that is has to sell for $300M/ea to find buyers and that is maybe too little to get a positive return on as the development cost will maybe cross $20bn, that is 60 Aircrafts worth and a profit margin of 10% gives at least 600 Aircrafts before program breakeven not adding financial costs.
Where do you get the $20 billion from? An A380-derived twin would IMJ not exceed the 777X development costs.
In fact, a 135,000 lbs of thrust engine should be less risky than the GE9X engine that also has only one application. Whereas the over-weight 777X is competing with smaller twins (i.e. not only the A350-1000) — while being highly vulnerable to either a 80m long A350-2000, or an all new 10 abreast large twin family from Airbus, using engines that would be from a generation beyond the GE9X — an A380-derived VLA twin-family would hold a virtually unchallenged monopoly on the long-haul high-capacity aircraft market until 2050, or so.
The $20bn is for new wing, pylon, nacelle, modified wingbox, landing gears, stretch to 80m length, latest avionics, revised structures by going to Al-Li and certification costs for it all including normal systems upgrades. Just the engines will cost $7-10bn to develop, the huge nacelles with thrust reversers will be of another level of cost as well. I like the A380 comfort and quiteness but airline operations is like trucking self loading cargo with some luxury up front. Airbus must have done this design excersise and have the total cost number somewhere in their PLM system.
A twin A380 a no-no for me, you want to be a pilot with 600 pax lives in your hands with one engine that failed and facing bad weather and a tier 2 strip.
Somewhere a line between economy/airline greed an safety needs to be drawn.
The A340-600 was a very good aircraft, it just had out dated fuel gazzling engines. This is now old school but an 4 engined A350-1000+ with super efficient engines is what could be needed.
The MTOW of the 346 is 380T, that of the 777-9 is 352T, makes you think?! (and it didn’t need folding wing tips to fly).
Has anyone tried to work out the fuel saving of a quad that can go “strait” to destination instead of ETOPs limitations of a twin?
You seem to be talking about a twin engined A380 around 550 t (which would need engines far more powerful than currently in production for airliners), with equal or more range and more seats that current A380. Making it with that many seats will make it even more niche (harder to fill).
The whole point of twin engined new wing is to get lighter, and reduce fuel burn with the amount of seats based on the current A380 or A380 plus/+.
Aimed at 6-13 hour flights, not 10-17 hour flights.
And really shines in seat mile efficiency, not at flying the longfest routes (airlines can buy a A350 ULR or B777-8 for that).
Do you mean actual sale prices around $300 million?
That’s higher than what A380s currently sell for.
I find Airbus’ development costs hard to predict. The A380 at huge expense, program costs range from €15 billion (according to Airbus) to €25 billion (according to others).
Yet the A350 program costs are around €11 billion and not running over budget.
And the A330 and A340 combined cost less than €4 billion (program costs of $3,5 billion in 2001 dollars).
If we assume the A350 numbers would apply, we’re looking at whatever Airbus spend on the wings of the A350 to get an idea of what a twin engined A380 program would cost.
The complete lack of imagination and energy regarding the A380 suggests that AB is in fat and happy mode shelling out A32X by the dozen and living of 50 years of BA SA laziness.
The A380 has its issues but a dynamic, confident and flexible company would be able to sort out these issues without breaking into a sweat.
The fact that it can’t suggests that AB is struggling.
Airbus is waiting for the disparity between Boeing’s created P2P and anti A380 meme combo and real world conditions to open up, gain energy and kill the meme.
Sitting on their hauches:
Afaics the A340 based laminar flow demonstrator is no longer about basic laminar flow research but about how to industrialize laminar flow wings.
The fact it wont ‘build’ an upgrade is because there is no evidence the customers want to pay for it.
You should look up the A380 Plus as offered by Airbus to see what they are capable of instead of assuming ‘stuff’
The engine of course requires one or both of the suppliers to do the same – find some customers
@Fat Bloke on Tour
“The fact that it can’t suggests that AB is struggling.”
The issue here is when to time a next generation A380. With production secured for another 10 years, Airbus won’t be forced to do a radical A380 makeover prematurely.
OK — lets have a look at the story so far.
Go large — literally — after a protracted period of soul searching, introspection and navel gazing before going all in with flagship model that is going to define the company and change the world.
Few issues along the way but it makes it into the air.
Promise a range of aircraft but scale back to one after investing a lot of time and effort making the base engineering flexible with a lot of growth potential.
Worry about a lack of sales, argue amongst yourselves in public and give the headline writers plenty of ammunition. Fall out with your largest customer and gradually thrift back any new changes you want to offer.
Put the programme on life support.
Start discussing the funeral with all concerned.
Phone up an old flame who handily brings their own barrel when it comes to signing a large contract with very little detail on show.
Put the plant on slow motion to the point of being comatose to the extent that it might struggle to support itself on a cash basis.
Extend the — pre — mourning period out to 10 years.
Hope that something or someone will turn up.
Claim that the programme is merely sleeping.
Now if all this a measured plan that will deliver growth then it is a vibe that I am not getting.
@Fat Bloke on Tour
The fact of the matter is that John Leahy was playing a high-stakes game of chicken by threatening to shut down A380 production unless Emirates placed an order. A week later Emirates blinked.
That is the issue in one.
EK is not the future of the A380.
The rest of the market / the rest of the world is.
Make it all about the real customer — the passenger.
They love it.
In its day the B747 was aspirational.
AB has not been able to generate the same level of hype.
From what there is it is weak and half hearted.
The rest of the world is much more willing to cheer on others having success with something than (US)Americans.
Americans in their exceptionality trend towards sour grapes and endless bashing of anything not American.
Add that inventions tend to be homesteaded in the US.
If you watch any of the Discovery and what not series produced in the US and peddled worldwide one would think that without the US everybody on this globe would still see thigh bones as the peak of technology. With is a pantently false presentation.
Excuse my rant but this is very often the background to the difference in appearance.
fat bloke, surely you remember the recent 12 months Boeing took to ‘decide’ on the new undercarriage for its well received 737-10. 12 months for something that should take 1 month. of course the real reason was it was racking up orders in this time.
Maybe in your business , engineers run the show, most successful companies rely on major customers to set the new development based on the options presented by engineers
The fact of the matter was Leahy practically sold them at cost to keep the white elephant alive! They need Emirates much more than Emirates needs the 380 especially since the 380 is being squeezed from below by the 777x and the 350 stretch.
Emirates was in the driver’s seat on this deal!
Some comments on the AB numbers.
The gross margin looks pretty thin.
Doesn’t seem to be much producer pricing power on the go.
The multiple customers seem to be working AB very close to a cost plus pricing model.
Might be one reason why they are trying to squeeze their supply chain.
Also the R+D number looks low in the context of Big Auto.
However that is a much more dynamic and tech led sector.
Not sure where the investment is captured — does Big Aero use supplier owned tooling?
Also not sure how the sales are structured?
Do you sell slots in the production line at a particular time to a particular price or do are the prices calculated at the time of order and you pay that price when you receive the aircraft?
Big order delivered over a number of years — pay one price for all?
Or do you pay a number of different prices depending on when the aircraft are delivered?
Aircraft delivered in 2017 to very low margin 2012 timescale orders and pricing
Whatever the detail the net margin looks a bit thin for an industry that is nearing a cyclical peak. Unless there is a lag in the pricing and things should get better as the later hopefully higher margin sales / prices work their way through the system..
BA moving from 12 to 14 B787’s per month.
Are they selling these extra units to airlines who are desperate and will pay a premium for them?
Or are they charging bargain bucket rates based on marginal costs to stop short lead sales going to AB and the A330NEO?
“Are they selling these extra units to airlines who are desperate and will pay a premium for them?”
Blog by Xavier shew 52% discounts in 2017.
IMU Boeing ratchets up 787 output to fend of A330NEO sales with low price and reasonable timeframe availability.
Numbers. A350 is still in loss mode (but ramping up perfectly.) GAAP+PA would not show this. IFRS does.
It is a principal fault ( and imho shows incompetence ) to compare AB IFRS numbers with BA GAAP+PA reports without adjusting for the difference.
See Qatar’s 35K now scheduled for delivery 20 Feb.
Also interesting is that all 3 A350-1000 test aircraft still busy with test flights.
Qatar 1st A35K change of ownership happened in December afaik.
Qatar issue not Airbus. i.e delivered but not collected.
Damn good question re pricing. Unfortunately this is unlikely to be answered any time soon. The strategy of the B787 appears to be to churn max numbers out to generate cash, to increase the sweating of fixed assets, to push the programme down the learning curve and to ensure as far as possible that any potential sales can be catered for to marginalise the A330neo.
The one big concern is whether there really is scope for so many aircraft. The number of TA aircraft delivered in the last 5 year’s is unprecedented and book to bill overall for the industry is weakening dramatically. In my view it is only a matter of time before this affects the B787 programme.
This would suggest substantial softening of pricing for the B787 going forward, especially given the A330neo (Or ceo) is a low cost alternative lurking in the shadows.
Wonder how many airlines and passengers are happy with the 787’s? Haven’t read a lot of positive reports.
“Wonder how many airlines and passengers are happy with the 787’s?”
Logic would suggest that if airlines worldwide collectively are NOT “happy with the 787”, its delivery+backlog volume would NOT remain consistently larger than any other widebody types for sale in the mkt today. This is especially apparent when the Airbus alternatives t0 787, in the form of 330Neo and 359, are readily available for sale in the same marketplace.
If U hv a basic understanding of how the airline/commercial aerospace industry function, U would already knew whether pax are happy with the 787(or any other type) has nothing to do with the sales success/failure of the 787(or any other type).
But by the same token, do U also “Wonder how many airlines and passengers are happy with the” 350?
I bet U are not wondering about that since airlines and pax being happy with any Airbus product is a given fm your often biased perspective.
“Haven’t read a lot of positive reports”
1. “Reports” by whom?
2. Are the reports done objectively and free of subjective bias(e.g. better or worse than an alternative if such alternative exists at all)?
3. Are the reports really about an aircraft type or about a cabin config/set-up chosen by specific operator(s)?