Airlines Reconsidering A380 orders: EADS Stock tanks

Major airlines are up in arms regarding yesterdays announcement by Airbus that there would be delays in A380 deliveries. They also are calling into question overall mangement and the economics of the a/c. Boeing had better be paying attention to this and if they screw up the 787 delivery or have sig. delays I would expect the same to happen to them as well.

1) Singapore airlines which Airbus had hoped would be a big A350 customer announced 20 firm orders for the 787-9 and 20 options

2) Emirates said it is reconsidering its order of 45 planes

3) Quantas said it has begun negotiations to get some of its money back on its 12 orders, and Malysian is alos looking at its order for 6

etc. Now much of this is no doubt posturing by the airlines seeking to possible rework deals at the expence of Airbus. Some of the companies mentioned do not expect deliveries for some time and its possible the line will catch up so to speak by the time they were to recive thier orders. However, the Sigapore and Emirates announcements are very signifigant. Both are 800 pound Gorillas in the airline industry. have plenty of cash, good operating margins and the rest of the industry tends to follow its lead.

In other words when they talk Boeing and Airbus listen (Look in the case of the 787. Boeing insisted that they would not do a 787-10 but after alot of pressure from Emirates they are even if it impacts thier 777 line). Emirates I believe is the biggest customer for the A380.

Singapores order for 787's is a big deal and a blow to the A350, noteworth as well is that they did not wait for the soon to be announced formal changes Airbus was making to the A350. If Emirates cuts back its orders for the A380 there may be huge problems at Airbus. EADS lost 26% of its stock value in heavy trading.

Boeing which was up a bit had better deliver the 787 on time or it will be in huge trouble.

Airbus



[edit on 6/14/06 by FredT]

I now count 4 airbus A380 threads on page one of the board


Aye, they are in the brown stuff and no mistake. Mate of mine was keeping a low profile around dubai (emirates) today

As anyone with any knowledge or insight into the world of shares knows -
'the value of shares may go down as well as up'

A 'spot' reaction in a short period of time is no indicator of anything, not if you're being sober and serious about this.

For instance, what was the reaction of Boeing shares when the last corruption case went public, hmmm?

The facts are quite clear now, Airbus are reworking one brand new project, the A350, and some customers, despite asking for those changes, are now involved in a game of playing both ends against the middle to better their deal(s).
Well no biggie, that's what they do given half an opportunity, cry me a river and then wise up to it being a tough life, huh?

(......and maybe the worst will come to the worst, from an Airbus POV, and they will even be enticed to the Boeing 787 - but you can bet such a deal will be for close to nil actual profit for the manufacturer concerned.
That's the nature of such opportunistic-deals.
Sometimes the wiser course is to turn down or ditch such an arrangement, right?)

The other 2 substantive stories are of Airbus and Boeing finding cutting edge tech tough to do in respect of the Airbus A380 and the Boeing 787.
IMO they'll both take a 'squeeze' from customers over the various late and niggly problem 'fines' before things eventually settle.
Is that really such shocking news to anyone?
When was it ever not so right at the leading edge?

Today it's Airbus getting the squeeze but have no fear the wheel will turn and it'll be Boeing having to take it on another day.

But I do suggest the more excitable 'nationalistic football supporter types' just try and calm themselves because, just like Boeing, Airbus is here to stay.

BTW here's a little conspiracy material for those interested.
Now I'm not saying Airbus would intentionally do anything to end up losing any actual orders but a period of stock falling right now might just suit them considering that BAE is set to sell up and leave.
Seems like I'm not the only one this has occurred to.

A furious row erupted last night between the two shareholders in Airbus after BAE Systems accused EADS of deliberately trying to depress the value of the company in order to buy out BAE's 20 per cent stake in the European plane maker on the cheap.

news.independent.co.uk...

Aeroplane manufacturing operates on a very long term basis, looking at things with a very near term perspective is usually not the best approcah IMO.

[edit on 14-6-2006 by sminkeypinkey]

Thats an interesting angle Id have to say. But why put your (lets face it) flagship product at risk and alienate your customers? Im not saying that they would not do it, but Airbus has sunk huge amounts into the A380 (in both EU tax dollars and corporate profits) why put it at risk?

I could bring up the fact that since the launch aid does not have to be repayed untill profitability then perhaps it is a business move to stick it to BAE :p

[edit on 6/14/06 by FredT]

Today it's Airbus getting the squeeze but have no fear the wheel will turn and it'll be Boeing having to take it on another day.

I appreciate your zeal for Airbus, however allow me to point out Airbus did not think out its location of the assembly plants as they should have.

Massive parts have to be transported through towns at night meaning a fire in a town could and more then likely from time to time will delay delivery of an essential part thus delaying delivers. You could get the very same delay if there was a major auto accident.

Further many of the huge parts are at the mercy of the weather. Parts have to be shipped on waterways/rivers where clearance is very limited under bridges. Again one or two rain storms can halt deliveries for days if not weeks since shipping can only take place during low tides where as I understand it they only have very little clearance at that time. Now add a higher water level due to rains can only mean one thing again parts will be unable to make it on time thus causing a delay each time which pushes each order delivery back even further.

Both of the above are examples of poor planing as I see it and any delay in scheduled delivers can only make customers even madder at Airbus then they currently are. I think Singapore's change alone can also spell out more trouble for them because it is obvious they are not happy over the delays. Then factor in how the Arab Emirates feel on the subject and again you have a picture with possible disaster written all over it.

Seal it all off with unexpected delays due to poor design and assembly problems on both the A350 and A380 that could spell out major disasters for Airbus.



[edit on 6/14/2006 by shots]

A couple of things come to mind (and couldn't we have done this in one of the existing threads on this subject?);

1 Have SIA actually ordered the 787 or have they just said that they will? If its the former then that is indeed a real blow as they were one of the airlines asking for the 'A370' revamp, they surely cannot have evaluated it properly yet? Maybe they just got tired of waiting. If the latter then it might just be more squeeze tactics (for both manufacturers). ie if they go back to Boeing and said "we were all set to buy the 787 but Airbus has just come in with an incredibly good offer....".

2 Shots, I was under the impression that several Boeings, not just the 787, are also assembled from componenets built in separate locations. If this is the case, how is the Airbus situation different?

I also don't see any evidence of 'poor design'? where do you get that from?

Originally posted by waynos
1 Have SIA actually ordered the 787 or have they just said that they will?

They actually ordered the planes and placed options on others.

2 Shots, I was under the impression that several Boeings, not just the 787, are also assembled from componenets built in separate locations. If this is the case, how is the Airbus situation different?

Yes they do, however they are not large major components those are all built on site. As I understand it Boeing increased the size of the 747 plant to build the large pieces. (Information used was shown in recent History Channel program on the building of the A380-)

I also don't see any evidence of 'poor design'? where do you get that from?

Airbus has announced a second delay in A380 deliveries because of bottlenecks with wiring harnesses, the big bundles of wires that control entertaining systems, food preparation, lights, air conditioning and basic airplane systems.
Source

I really have to chuckle about your remark that you do not see any evidence of poor design since it was your post that made me aware of the A350 problems

Airbus creates all-new A350



Hope that answers your questions



[edit on 6/15/2006 by shots]

Thanks for the reply shots I'm afraid it does really answer any of my points though.

SIA has *announced it would buy 20 787's* This is my point of query, orders are usually announced when they have been signed, not that they are going to be. This is the thing that made me wonder if this is a tactical announcement by SIA. Of course it may well be a done deal and it is my interprepation that is skew whiff, but I think until it is announced that the ink is on the paper it might still be up for grabs.

Regarding Boeing assembly, your claim that no major items are transported is not correct, 20% of the 777 is brought in from Japan and this will rise to 35% on the 787, there are also fairly major structures on the 737 (such as the fin) that are made in China. I also beleive that 737 fuselages are transported for final assembly from the site where they are built. Surely any transportation delays that might affect Airbus might also affect Boeing, you cant tell an airline that "the fin has been delayed but we''ll fit it later". Therefore the view that this is a flaw in Airbus' set up and affects Airbus alone must be wrong.

Also, there is nothing in my post that suggests poor design, only poor decision making at management level. Can you point out something that is specifically the fault of 'poor design' rather than simply the routine effects of introducing new technology (the same as Boeings problems with the 787 fuselage test sections, are they poor design?).

Originally posted by waynos
SIA has *announced it would buy 20 787's* This is my point of query, orders are usually announced when they have been signed, not that they are going to be. This is the thing that made me wonder if this is a tactical announcement by SIA.

Actually Waynos, I have to agree the wording is a bit off on it. And Boeings website has a press release that is not thier usual when a company comits to firm orders either.

Originally posted by waynos

Regarding Boeing assembly, your claim that no major items are transported is not correct, 20% of the 777 is brought in from Japan and this will rise to 35% on the 787, there are also fairly major structures on the 737 (such as the fin) that are made in China. I also beleive that 737 fuselages are transported for final assembly from the site where they are built. Surely any transportation delays that might affect Airbus might also affect Boeing, you cant tell an airline that "the fin has been delayed but we''ll fit it later". Therefore the view that this is a flaw in Airbus' set up and affects Airbus alone must be wrong.

I think you misunderstood my statement. What I said was the large components were built on site. That in no way means that other major components are not built elsewhere it strictly relates to the size of the components.

Here are some examples of the type of problems they face in France

PDF File See page two

images.businessweek.com...
(Check out the links to see all the other ships used)

Kindly note it clearly states the roads have to be closed several nites a month, hardly what I would call good planing.

Also, there is nothing in my post that suggests poor design, only poor decision making at management level. Can you point out something that is specifically the fault of 'poor design' rather than simply the routine effects of introducing new technology (the same as Boeings problems with the 787 fuselage test sections, are they poor design?).

If there is nothing that suggests poor design why then do they use the term new design to achive better fuel ecconomy? (that is just one example), yet a very important one because it concerned buyers of the aircraft.

Citing internal company documents, the report said Airbus calculates that the new design would burn 20 percent less fuel per passenger than the Boeing plane.
Source

As for the Boeing fuselage test sections, Boeing made it very clear they had anticipated possible problems and built in a time factor to correct the problems if they were correct.

That is/was not the case with the A350 though in that case they went back to the drawing board and did a major redisgn or so aticles state.





As for the A380 I would say the size of the wiring bunbles a lone speak volumes when it comes to the design. Had they been designed right one would expect them to fit right, but that is not the case is it? That too me is a result of poor design. I mean any fool knows you cannot get 30 gallons in a 20 gallon container

I think this claim that Airbus shares have 'tanked' is a tad much, given the facts.

I refer people to Reuters business pages and the year's share growth graph here -
today.reuters.com...

The situation is that shares have been dipping since april after strong growth from last june.
Shares have now dropped back where they were last june/july.

A fall yes, a sharp fall even yes, but hardly 'tanked'.

(BTW Shots it isn't "zeal", it's just keeping a calm and reasonable perspective and an eye on the facts.)

It's also worth bearing in mind that the 747 almost broke Boeing at the time of it's development and birth; you can't exactly make the same claims about the A380 (or A350 for that batter).

[edit on 15-6-2006 by sminkeypinkey]

But nevertheless shots, Boeing are still reliant on transporting components. Regarding size, don't the 787 wings come from Japan? I would imagine they are pretty large.

Poor design; I think you are reading into this what you wish. After all;

If there is nothing that suggests poor design why then do they use the term new design to achive better fuel ecconomy?

The answer is quite simply because the original A350 was based on the A330, the airlines have made it clear that this is not what they expect and so an all new design is now proposed. Surely you aren't saying that the A330 is a poor design? After all it has been a highly successful aircraft over the last decade or so. This is what I meant by a poor decision rather than a poor design.

Originally posted by waynos
But nevertheless shots, Boeing are still reliant on transporting components. Regarding size, don't the 787 wings come from Japan? I would imagine they are pretty large.

Poor design; I think you are reading into this what you wish. After all;

Sure they are but they are much smaller then the A380 wings which makes them easier to ship. Did you even bother to check out the information I furnished? I doubt it. Had you done so you could have clearly seen what Boeing has to ship is much smaller so there is no comparison.

And no I am not reading anything into the design flaws they speak for themselves since many of the part components do not fit.

The rest of their problems as I furnished supporting evidence again speaks for itself. The roads are too narrow making shipping hard and then you also have the problem with water levels which at times prevents the components from making the delivery schedule.

That would not have happened if they had thought out the design of the factory and where it was located. Granted the design and location of the plant may not be directly related to aircraft design, but they most certainly play a huge roll in the delivery of the aircraft on time and those factors also should have been taken into account when designing the aircraft and facility.

Shots, there was an excellent programme on Channel 4 las year about all of this, it actually showed you the componenets for the first A380 being transported and followed them right through from manufacture to assembly and first flight so I do know what is involved. I just think you are over egging the degree to which it is a 'problem'.

Of course 787 wings are smaller than A380 ones, that is a given. But it does not mean that transporting them is a doddle.

I would be interested to see something more about where many of the part componenets do not fit?

[edit on 15-6-2006 by waynos]

Originally posted by waynos
Shots, there was an excellent programme on Channel 4 las year about all of this,

Yes I know. I can only assume you missed my poste where I stated I saw it on History channel???

I would be interested to see something more about where many of the part componenets do not fit?

I just think you are over egging the degree to which it is a 'problem'.

Fine be my guest, google news will give you tons of examples using KW airbus problems. I am not egging the degree as you put it that would be the media.

Pick and Choose at your will, they all add up to production delays, components/ wiring harness and various others that state they do not fit. There is also one or two that make mention of wheel well/landing problems but those I think are rumours.

Oh and let us not forget some conpiracy theories state that this is part of a plan.

A conspiracy, or something more horrid? Dated today no less

Then lets put the icing on the cake where a French manager or management sold off their shares of stock before they released the latest productions delays

Airbus A380 Delays to Be Probed

Yes I did miss that, sorry.

I've read of this 'conspiracy theory' that EADS is doing it on purpose. To me that is just barking mad, I really don't see it being true.

In case I didn't make it clear earlier, I'm not trying to say that there are no problems, clearly there are, I just think their effect is being exaggerated. Developing new aircraft ALWAYS brings problems and delays, it has always been so and Airbus and Boeing are no different in this respect.

Originally posted by waynos
In case I didn't make it clear earlier, I'm not trying to say that there are no problems, clearly there are, I just think their effect is being exaggerated. Developing new aircraft ALWAYS brings problems and delays, it has always been so and Airbus and Boeing are no different in this respect.

This is not about what you or I think about the matter, the bottom line is what the buyers think and in this case they are not happy, that is the bottom line.

And yes there are unexpected problems with new aircraft, but too the best of my knowledge none have ever extended delivery this long, unless of course the delay was due to a strike.

Personally I think 'Airbus' did not plan this out as they should have.

Originally posted by shots
And yes there are unexpected problems with new aircraft, but too the best of my knowledge none have ever extended delivery this long, unless of course the delay was due to a strike.

- Well then the 747 program must be news to you because it was plagued by very lengthy delays and severe problems.

That's what happens, to everyone, when you truely 'push the envelope'.

The first flight took place on February 9, 1969, a little past the target date of December 17, 1968, but still in time to meet the commitment to Trippe of a mid-December 1969 delivery for the first production plane.

Flight tests between February and December revealed several problems, the most significant with the engines, which were underpowered for the increase in weight and size that had occurred since earlier designs.

The engine problem hadn't been solved by the time the plane entered service in January 1970, and airlines experienced one delay after another because of engine troubles.

At one point early in 1970, Boeing had some 30 planes parked at its plant that could not be delivered until Pratt & Whitney had corrected the deficiencies of its JT-9D engine.

It took a year before the engine problems were solved. In the meantime, too little money was coming in, the country was experiencing an economic recession, and new orders were drying up. The company almost went broke.

www.centennialofflight.gov...

Originally posted by sminkeypinkey
Well then the 747 program must be news to you because it was plagued by very lengthy delays and severe problems.

Yes that is news to me. I did however note that the first delivery when the plane entered service was only off by approximately one month. It had been scheduled to enter service in December of 69 but entered in Jan of 70.

Other airlines followed just a few months later so even though there were problems the plane was still in service and obviously considered airworthy.

On January 15, 1970, First Lady Pat Nixon officially christened a Pan Am Boeing 747 at Washington Dulles International Airport in the presence of Pan Am chairman Najeeb Halaby. Red, white, and blue water was sprayed on the aircraft, rather than breaking a bottle of champagne. The first commercial flight involving the Boeing 747 took place on January 21, 1970 operated by Pan Am between New York's John F. Kennedy International Airport and London Heathrow Airport. Pan Am added 747 service to London from Boston, Washington, and other cities during the spring and summer of 1970. Overnight, a new standard of air travel had been created and other airlines rushed to bring their own 747 jets into service. TWA, Japan Airlines, Lufthansa, BOAC, and Northwest Orient would be among the first carriers to offer 747 service on long-haul flights. American Airlines initiated 747 service between New York and Los Angeles by the summer of 1970.



Source

[edit on 6/15/2006 by shots]

[edit on 6/15/2006 by shots]

This is not about what you or I think about the matter, the bottom line is what the buyers think and in this case they are not happy, that is the bottom line.

Well quite, we are just blowing hot air at each other whewn all's said and done

Regarding the point about 'what the buyers think' however, you would think that Airbus is facing a mass customer revolt from the reports wouldn't you, but is it really the case? Yes the very vociferous complaints of Qatar Airways and Emirates are being widely reported, even thought in both cases their complaints smack of two facedness having pressed Airbus to make the very changes to the A350 that they are now squealing so loudly about because it will take longer to develop, like duh!

Not nearly so widely reported however is the other side of the coin, represented here by Finnair and US Airways, who are ambivalent towards the changes and have both said that they would be happy to recieve the A350 as first proposed, but 'if Airbus takes a little longer and redesigns it we know we will be getting an even better airplane'.

It is also worthwhile examining Qatar and Emirates rather outlandish claim that the delay to the Airbus effectively leaves them without a viable aircraft between 2010 and 2012. The 787 is already sold out to 2012 so what choice do they have? After all, the existing fleets of A330/340 and 767/777 are not sudden;ly going to become inoperable in 2010 are they? Just look at how many A300, A310, 737-300, MD-80 et al are still operating today despite their being technologically eclipsed by the current generation of airliners. Of course they would rather do without the delay, but it isn't the catastrophe it is being painted as.

The louder Airbus customers and potential customers squeal, the more music it is to Boeing ears of course, but talk of disaster and impending doom for Airbus is extremely premature.

a final point about the 'cabin width' argument; I noticer that the cabin size of the A350 in regard to 787 is now regarded as a crucial factor, a deal breaker. Odd then that cabin width was not nearly so vital with the 737 being narrower than the A320 and the 767 being narrower than all Airbus wide bodies from A300 to A340? Just an observation.