BAE selling its stake in Airbus...

And the Airbus drama continues.

I don’t want to be part of the “My civil aircraft company is better than yours” drama, but there is a real battle going on between these two companies. But this particular story is really telling. BAE has had the ability to sell for years, but in light of recent developments in market reactions and trends it opting out now. The 380 is looking to be a curse, not a solution…I wonder if that was part of Boeings plan from the start? Fake left then move right?

www.defenseindustrydaily.com...

Both BAE Systems and EADS have confirmed that BAE has initiated a discussion on the potential disposal of BAE Systems' 20% stake in Airbus." Negotiations were described as being in "the very early stages"; BAE's 20% holding is valued at EUR 3.5 billion ($4.3 billion) in EADS's books, but The Scotsman newspaper noted that analysts expect any sale to be worth GBP 3.0-4.5 billion ($5.2-7.8 billion at current conversion). EADS adds that the initiation of these discussions does not represent an exercise of the put option held by BAE Systems in relation to this stake.

And this as a potential reason:

Bloomberg quotes Andy Lynch, a fund manager in London at Schroder Investment Management: "They have had the right to sell the stake for several years and haven't done it yet..." Which leads to the obvious question: why now?

Most forecasts show positive growth trends for the civil aircraft market. Airbus is the world's biggest civil aircraft manufacturer, outselling US arch-rival Boeing and set to begin deliveries of the mammoth 555-seat A380 double-decker late this year. In fairness, some believe that the A380 super-jumbo is a cardinal strategic mistake in a world of escalating fuel prices and hence rising air travel costs; the A340 faces very stiff competition in Boeing's 777, and A350 design efforts aimed at closing the gap with Boeing's newer 787 Dreamliner offering are still very preliminary. Some analysts quoted by the IHT simply believe that BAE is selling high.

[edit on 11-4-2006 by skippytjc]

It could well be true that BAE foresees troubled times ahead for Airbus, they are much cleverer than me but I don't buy it that the A380 is a mistake, I do buy it that the A350 looks set to be outsold by a large margin by the clearly more adventurous 787, thjis is now quite apparent, but apart from these two aircraft Airbus has so much more going for it as well in the form of the A320 family and their mlitary programmes.

Don't forget that in all the hullabaloo it seems to be conveniently forgotten that last years sales totals actually saw Airbus outsell Boeing overall. You'd think that Airbus sales had imploded going by some of the stuff that gets written.

A decision by BAE to sell off its stake in Airbus cannot really be taken as a sign that the airliner maker is heading for trouble. Unfortunately the UK aircraft industry has a long history of taking short sighted, erroneous decisions and it just might be that this is another one.

Selling off its Airbus stake is not actually a sudden and shocking change in policy for the company, which appears to be how some here are seeing it. It is in fact merely a continuation of a long process which began many years ago by which BAE is moving ever further away from commercial aircraft activity.

The BAe 125 (originally the De Havilland Jet Dragon) is one of, if not THE, most successful business jets of all time, and yet, having successfully reinvented it with the series 800, the entire product line was sold to Raytheon.

Notice here how Raytheon promised to maintain BAE 125 production in the UK but within a couple of years it had moved to the USA, Airbus UK beware!

Also the BAe 146 was the most successful UK jetliner ever produced with almost 400 sold, in terms of UK airliner sales it was second only to the Vickers Viscount and yet, rahter than try and build on this success, maybe with a replacement BAe just killed it off and vacated the segment, Likewise the successful Jestream 31, 41 and 61 range.

As I said, getting out of Airbus is the completion of this strategy (one which I heartily disagree with) so the cheering and handclapping by those looking for Airbus' downfall is extremely premature, even misplaced altogether.

One thing I am sure of is that the idea of any of this being down to some sort of Boeing 'plan' is nothing more than a fanboy's wet dream and shows zero understanding of the historical perspective.

Depending on how you count sales (Airbust methods being a more optimistic than Boeing’s) Airbust is 100+ A380 from breakeven. From what I’ve read it’s not likely they’ll sell them anytime soon. We’re in a market where fuel costs are not getting smaller and anything with more than two engines won’t be viable.

Anytime you build something as large and complex as an airliner, you’re making a large and risky guess as to future market conditions. For whatever reason, it’s becoming more and more apparent that Airbust guess wrongly.

Given that Airbust is, in large measure, a make-work program for 35 hour a week, 6 weeks vacation, do-nothing, euro lay-abouts, don’t look for market conditions to effect Airbust decisions anytime soon.

no need for this post now.

[edit on 11-4-2006 by waynos]

Mod Edit: Please stay on topic, if you want a politcal discussion, PTS may be your best venue


[edit on 4/11/06 by FredT]

Er, where have I said ANY of those things? Please show me. Maybe you missed my post only yesterday in defence of the AMERICAN F-22? Mayvbe you missed my praising of the 787? Maybe you missed my thoughts on the YF-24? Yet you feel somehow justified in following a post of mine with an anti Euroipean diatribe? I don't get it?

If you are thinking up insults just because you read them somewhere else by somebody else then maybe you need to grow up a bit? Skippy is American, why ruin his thread? (Which I have now also done and I apologise).

While you have not said those things (I never said you did), one my find such things posted all over this joint with nary an edit.

Originally posted by ElTiante
We’re in a market where fuel costs are not getting smaller and anything with more than two engines won’t be viable.

What on earth brings you to that conclusion?

Do you know why manufacturers choose 3 or 4 engines?

Originally posted by ElTiante
You can call Bush a nazi or Hitler

Just as an off shoot (I might get into a little bother here, but it might be worth it for education)



Who said this: "Our democracy is under attack; if we are to wage war on these foreign infiltrators, certain civil rights must be suspended"


I'll post the answer up tomorrow.

While you have not said those things (I never said you did)

Really? How about;

know, I know, as long as you’re bashing America it’s all good. You can call Bush a nazi or Hitler, you can call Americans stupid, fat, ugly, bloodthirsty, baby-killers, warmongers or any other invective

Maybe not what you meant but definitely what you said.

Besides I believe all such comments are out of order and need removing, so please vent your spleen on somebody else, thank you.





[edit on 11-4-2006 by waynos]

Right, in an attempt to get back on target, this is my reply to Skippy's initial post;

t could well be true that BAE foresees troubled times ahead for Airbus, they are much cleverer than me but I don't buy it that the A380 is a mistake, I do buy it that the A350 looks set to be outsold by a large margin by the clearly more adventurous 787, thjis is now quite apparent, but apart from these two aircraft Airbus has so much more going for it as well in the form of the A320 family and their mlitary programmes.

Don't forget that in all the hullabaloo it seems to be conveniently forgotten that last years sales totals actually saw Airbus outsell Boeing overall. You'd think that Airbus sales had imploded going by some of the stuff that gets written.

A decision by BAE to sell off its stake in Airbus cannot really be taken as a sign that the airliner maker is heading for trouble. Unfortunately the UK aircraft industry has a long history of taking short sighted, erroneous decisions and it just might be that this is another one.

Selling off its Airbus stake is not actually a sudden and shocking change in policy for the company, which appears to be how some here are seeing it. It is in fact merely a continuation of a long process which began many years ago by which BAE is moving ever further away from commercial aircraft activity.

The BAe 125 (originally the De Havilland Jet Dragon) is one of, if not THE, most successful business jets of all time, and yet, having successfully reinvented it with the series 800, the entire product line was sold to Raytheon.

Notice here how Raytheon promised to maintain BAE 125 production in the UK but within a couple of years it had moved to the USA, Airbus UK beware!

Also the BAe 146 was the most successful UK jetliner ever produced with almost 400 sold, in terms of UK airliner sales it was second only to the Vickers Viscount and yet, rahter than try and build on this success, maybe with a replacement BAe just killed it off and vacated the segment, Likewise the successful Jestream 31, 41 and 61 range.

As I said, getting out of Airbus is the completion of this strategy (one which I heartily disagree with) so the cheering and handclapping by those looking for Airbus' downfall is extremely premature, even misplaced altogether.

One thing I am sure of is that the idea of any of this being down to some sort of Boeing 'plan' is nothing more than a fanboy's wet dream and shows zero understanding of the historical perspective.

Originally posted by ElTiante
Depending on how you count sales (Airbust methods being a more optimistic than Boeing’s) Airbust is 100+ A380 from breakeven. From what I’ve read it’s not likely they’ll sell them anytime soon.

Not you again...

The sales are comparable to the start of the 747. The customers are yet hesitant because the AIRPORTS have yet to decide on how to adapt - which they WILL. Since the run- and taxiways that are optimized for the 747 will work for the A380, too, this airport adaption will be even less problematic than back then.

Also, the methods are not different. They are commonly used by industry and media alike.

We’re in a market where fuel costs are not getting smaller and anything with more than two engines won’t be viable.

Simplistic argument. Yes, a 100 ton aircraft should be more efficient with 2 than with 4 engines. But ONE four-engined aircraft that carries the same amount of passengers or payload than 2 two-engined ones WILL be cheaper to operate. Also, fuel efficiency is not the only cost factor (though it is obviously YOUR only argument).

One of the biggest problems for the large airlines, which are also the major ones connecting the large airports, is the limited amount of slots at airports. Slots are expensive, slots are rare and the more efficient you an operate your slots, the more cost-efficient your PLANES are. When you have a route with a large passenger demand, you obviously can save slots - or in turn employ more flights which will in the end be more profitable.

Anytime you build something as large and complex as an airliner, you’re making a large and risky guess as to future market conditions. For whatever reason, it’s becoming more and more apparent that Airbust guess wrongly.

Its more like Boeing, contrary to a general development that has been evident for DECADES, finally managed to produce a real hit. How else could Airbus have become that big in the first place? Dont forget that Boeing has dumped millions upon millions on recently failed projects - this 787 was the proverbial last straw they could cling to, else they would undoubtably have lost the race.

I do not doubt that the 787 is the right plane at the right time (though the "efficiency" figures that the boeing marketing guys shed out are on the verve of being fabricated) - it is however utter short-sightedness to reduce the whole airplane and travel market on just this ONE segment.

Given that Airbust is, in large measure, a make-work program for 35 hour a week, 6 weeks vacation, do-nothing, euro lay-abouts, don’t look for market conditions to effect Airbust decisions anytime soon.

You are free to have your opinion. But when that opinion is based on surrealistic nationality-biased generalizations, it isnt worth the time reading. Airbus is not responsible for the french labor laws - as well as it is not a purely French. And still the FACT that stands is that Airbus took more than 50% of the market share within less than 30 years - without offering cheaper-to-buy planes.

But its not worth argueing this point with you as long as you dont look up the history, the business position and the shareholders of EADS.

As Waynos has said already, BAe have been moving out of the civil jet market for some time. They have also been looking to expand their defence portfolio in the US, selling, or more importantly, forcing EADS to buy these shares back does two things:

- Gives BAe enough money to take over a pretty major player in the US defence market, there has been talk of General Dynamics and Northrop... or was it Northrop (I can't remember)

- Forces EADS [a competitor to BAe dont forget] on the back foot as they have to drain R&D budgets etc to pay off the Airbus shares.


Of course there could be other migating circumstances that we do not know of, but considering: news.bbc.co.uk...

Profits at defence and aerospace group BAE Systems have risen, helped by strong orders for Airbus planes.

and

BAE said orders for Airbus planes, the commercial plane maker in which it owns a 20% stake, had been "substantially ahead of plan".

It would seem more likely that those migating circumstances would have more to do with defence contracts [maybe they know something we don't re Iran who knows] than it has to do with a poor performance from Airbus.

Regarding Airbus 'getting it wrong' with the A380 and its four engines (not forgetting the separate argument that Boeing 'fooled' them into building it).

This viewpoint seems blissfully unaware that the Boeing 747-8 was recently launched to compete with the A380 is many of its target markets.

Originally posted by Lonestar24
I do not doubt that the 787 is the right plane at the right time (though the "efficiency" figures that the boeing marketing guys shed out are on the verve of being fabricated) - it is however utter short-sightedness to reduce the whole airplane and travel market on just this ONE segment.

I would really hope for Boeing's sake they are not fabricated!

One look at what the MD-11 did for McDonnell Douglas, they made performance promises they couldn't meet and it bankrupted the company as they had to pay money back to the airlines.

An aircraft is not "sold as seen" like a car auction!

Originally posted by Lonestar24
[

Given that Airbust is, in large measure, a make-work program for 35 hour a week, 6 weeks vacation, do-nothing, euro lay-abouts, don’t look for market conditions to effect Airbust decisions anytime soon.

You are free to have your opinion. But when that opinion is based on surrealistic nationality-biased generalizations, it isnt worth the time reading. Airbus is not responsible for the french labor laws - as well as it is not a purely French. And still the FACT that stands is that Airbus took more than 50% of the market share within less than 30 years - without offering cheaper-to-buy planes.

But its not worth argueing this point with you as long as you dont look up the history, the business position and the shareholders of EADS.

Here you go:



Lay-abouts too harsh? Ok, how about do-a-lot-less-than-Americans?

[edit on 11-4-2006 by ElTiante]

A very sad day has dawned. Eltiante has become the first person EVER to go on ignore for me

Even at the heights of my past arguments with some of the the guys on here I always recognized that their viewpoints had merit and were worth reading, however vehemently I disagreed with them, thats what debate is about (anyone recognise themselves? ).

However, pointless and off topic trolling for the sake of it is a waste of my time and effort so I have regrettably called 'enough'.

I was always determined I would never do this so 'el-tainted', maybe you can feel proud of yourself?

Originally posted by ElTiante
Here you go:

Lay-abouts to harsh? Ok, how about do-a-lot-less-than-Americans?

Thats a very tenuous link...

There are quite a few different reasons for the GDPs being significantly different, not least of which is the petrol dollar.


Go do some proper research on a topic kid and don't post crap with no understanding of the reasons behind it.

[edit on 11-4-2006 by kilcoo316]

Okay: Im going to ask one time and nicely: PLEASE stay on topic. If you wish to debate the merits of the BAE's divestiture etc please do so, however, if you want to turn this into a political shouting match please take it up IN PTS or NOT at all. There are numerous threads already devoted to that very issue so kindly do not derail this one.

THanks
FredT

Originally posted by kilcoo316

Just as an off shoot (I might get into a little bother here, but it might be worth it for education)

Who said this: "Our democracy is under attack; if we are to wage war on these foreign infiltrators, certain civil rights must be suspended"

I'll post the answer up tomorrow.

Uhm, I hope Fred T lets me post my answer without giving me a swift kick in the.. uhh... you know wheres for it



First of all a quote from no less than Teddy Roosevelt:

"To announce that there must be no criticism of the president, or that we are to stand by the president, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public."


and 2nd, an expanded version of that quote I put up yesterday.

"These are troubled times, the Constitution could not anticipate them. A national monument has been destroyed and our democracy is under attack. If we are to wage war on these foreign infiltrators certain civil rights must be suspended."


Sounds familiar huh? Well, those are the words of Adolf Hitler in 1933 after the Reichstag fire.


I'm not telling you (US citizens) GW Bush is evil, I'm not telling you how to run your country, I'm only hoping some of you take this on board, and listen (and watch) alot more objectively to what your president says (and does), and if you are uncertain whether it is a route your country should be going down, its not unpatriotic to do that - in fact, its the opposite.