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Originally posted by bigx01
that's 100% correct boeing is a publiclly traded company so they have to make a profit or no one would want to buy their stock. airbus is a private company so they really dont need to make a profit and more importantly they can actually lose money on planes as long as their owners ( if they happen to be publically traded ) make a profit. which if i was airbus i'd dump planes on the world below actual cost even if it ment taking a loss on them.
sounds like something the sopranos would set up to launder money
Originally posted by MickeyDee
you make that sound as though the A350 is better then the 787, which its not.
Bit bias towards Boeing coz ur American i think...
[edit on 15/2/2005 by MickeyDee]
[edit on 15/2/2005 by MickeyDee]
Originally posted by RichardPrice
But it looks like better data has come to light since I last searched around - Airbus have placed the A350 at $150million USD initial price point (mainly due to the high $ price at the moment). Im not sure exactly what Airbus are up to with this It looks like Airbus are going to compete with the 787 directly on efficiency according to sources, and that initial price point is both open to negotiation and fluctuation in $ price (since Airbus sells in Euros and the dollar has devalued dramatically in recent times)
So far, the dollar's fall has certainly not held Airbus back. During that long currency slide, Airbus has consistently outsold Boeing and risen to become the world's No. 1 airplane-maker.
But beyond 2007, the dollar's plummet will take an increasing toll, eating gradually into Airbus profit margins.
That makes the planned A350 a riskier investment. And it could force Airbus to increase airplane prices, making it harder to sustain the constant undercutting of Boeing.
Luckily for Airbus, because the dollar is standard for many aviation suppliers, more than half of its expenses also are paid in dollars. When it buys aircraft engines, even from Rolls-Royce of Britain, it pays in dollars.
But about 43 percent of its expenses must be paid in euros — labor costs, overhead, taxes, payments to general suppliers, as well as a chunk of the payments to airframe suppliers. With its revenue in one currency that is falling steeply, and a big portion of its costs in another currency that's rising, Airbus has a recipe for lower returns and squeezed margins.
In a research note to clients, Nadol wrote that at an exchange rate lower than 0.80 euros to the dollar, Airbus' earlier cost cuts will be insufficient to maintain its profit margins beyond 2006. Yesterday's exchange rate was 0.75 euros per dollar.
"We are protected until at least 2007," said Airbus spokeswoman Mary Anne Greczyn.
Airbus needs at least $10 billion in hedging coverage per year, depending on how many jets it delivers. After 2007 the amount of coverage Airbus has in place successively decreases, and the locked-in exchange rates rise because those airplanes were ordered as the dollar fell.
By 2009, less than half of Airbus' euro expenses are covered by hedging contracts and the average rate locked in is 0.92 euros per dollar.
As Airbus lands future firm orders for delivery in 2009, it will be hedging at current exchange rates, and that average locked-in rate will fall steeply.
The impact: Airbus' cost of airplane production will correspondingly rise. It's difficult to predict how much, but assuming a continued need for $10 billion a year to cover euro expenses, a slide from the current average locked-in exchange rate of one euro per dollar to an average of 0.85 euros per dollar would cost Airbus $1.5 billion a year.
When Airbus' forthcoming super-jumbo A380 jet launched in 2000, the dollar was riding high. Along with low interest rates that kept down the cost of borrowing, that helped launch the airplane.
Airbus' next development effort, the mid-size A350 that will go head to head with the 7E7, won't have those advantages.
"The A380 seemed to have all the luck," said analyst Pilarski. "The A350 may have the bad luck of a weak dollar and increasing interest rates."
The A380, scheduled to fly next year, is not unscathed, though.
In 2000, Airbus' A380 business case pegged the exchange rate at what then seemed a conservative 0.89 euros per dollar, according to a presentation last summer by Airbus CFO Andreas Sperl.
Sperl estimated that a sustained exchange rate of 0.77 euros per dollar would reduce the rate of return on the A380 investment, originally projected to be 20 percent, by almost 3 percent.
Last year, specifically to counter the effect of the dollar's fall, Airbus introduced a sweeping cost-saving program aimed at cutting $1.5 billion per year in expenses. Now 90 percent implemented, that program isn't enough.
At an EADS investor conference in New York two weeks ago, Airbus announced a new program to cut overhead. The new plan, still formative, envisages saving money in part by reducing outsourcing — the reverse of Boeing's cost-saving ideology.
Airbus hopes that with hedging, cost-cutting and increased market share, it can counteract the dollar's slide.