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The Escalating Woes at Airbus (Schadenfreud)
Business Week ^ | MARCH 30, 2006 | Carol Matlack

Posted on 03/31/2006 10:56:19 AM PST by SW6906

Just when things were going so well for the European plane maker, two major customers demand costly redesigns. The likely winner: Boeing

Airbus, struggling to gain altitude against a couple of archrival Boeing's (BA) hot-selling models, has hit two major patches of turbulence in the past few days.

On Mar. 28, the European planemaker's biggest customer, the International Lease Finance Corp., a Los Angeles-based subsidiary of American International Group (AIG), called for a top-to-bottom redesign of the A350, the plane Airbus plans to launch as a rival to Boeing's 787 Dreamliner.

FUEL FACTOR. Then, on Mar. 30, Airbus acknowledged that Dubai-based airline Emirates, the biggest buyer of its A340 widebody plane, has delayed a $4 billion order for 20 of the aircraft because it wants them redesigned to match the fuel efficiency of Boeing's competing 777 model.

This adds up to a big embarrassment for Airbus. But even more important, these public rebukes by two key customers are likely to cause severe problems for Airbus's financial-planning and marketing efforts.

...

Even before the criticism by Udvar-Hazy, Airbus was struggling to match Boeing's sales success with the 787. Since putting the A350 on the market in December, 2004, Airbus has logged 100 firm orders -- including an order for nine planes signed on Mar. 30, 2006, by Finnair. That compared with 291 orders booked by Boeing for the 787 since May, 2004.

Moreover, it's unclear how Airbus would finance R&D for a more-expensive A350 without loans from European governments. Airbus has used such loans in the past to pay for up to one-third the cost of developing new planes such as the doubledecker A380. But now the U.S. has complained to the World Trade Organization that the loans amount to unfair subsidies.

Much more at the link......

(Excerpt) Read more at businessweek.com ...


TOPICS: Business/Economy; US: Washington
KEYWORDS: airbus; airbust; boeing
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If Boeing can succeed in keeping Airbus from getting low or zero interest "loans" that don't have to be paid back if the product doesn't break even, Airbus is in BIG trouble. They can't afford to do this without subsidies.......
1 posted on 03/31/2006 10:56:20 AM PST by SW6906
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To: Paleo Conservative

Ping!


2 posted on 03/31/2006 10:56:48 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: phantomworker; safisoft

Ping!


3 posted on 03/31/2006 10:57:29 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: COEXERJ145

ping!


4 posted on 03/31/2006 10:58:11 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: SW6906

Subsidies are against WTO rules, no?.......


5 posted on 03/31/2006 11:00:48 AM PST by Red Badger (I must not fear.Fear is the mind-killer.Fear is the little-death that brings total obliteration.....)
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To: Proud_USA_Republican

Ping!


6 posted on 03/31/2006 11:01:41 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: SW6906; safisoft

Thanks for the ping. I just love these articles. ;)


7 posted on 03/31/2006 11:05:11 AM PST by phantomworker (You are what you think you are......Qu’est que c’est)
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To: Red Badger
The whole argument lies in the definition of the word "subsidies". My understanding is that Boeing's position is that low or zero interest government "loans" that don't have to be paid back if the product is unsuccessful are clearly subsidies. Airbus tries to cloud the issue with defense contract work that Boeing does and the resulting technology development being used in commercial aircraft is a subsidy. Problem is, Airbus (through EADS) does the exact same thing!! Also, the tax breaks and other stuff Boeing gets from WA state are the same as the tax breaks and road building and canal dredging Airbus got from the Euros.

The only thing I can see that Airbus gets and Boeing does not is the access to below-market "loans".

8 posted on 03/31/2006 11:05:44 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: SW6906

That's "Schadenfreude" -- you pronounce the "e" at the end.


9 posted on 03/31/2006 11:06:47 AM PST by antiRepublicrat
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To: SW6906

This is gonna send the Aribust defenders into a tailspin.


10 posted on 03/31/2006 11:07:33 AM PST by AxelPaulsenJr (More people died in Ted Kennedy's car than hunting with Dick Cheney.)
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To: Red Badger
Subsidies are against WTO rules, no?.......

They just have to redefine the money so it's not a subsidy.

11 posted on 03/31/2006 11:07:55 AM PST by antiRepublicrat
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To: Red Badger

Depends.


12 posted on 03/31/2006 11:08:17 AM PST by 1rudeboy
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To: antiRepublicrat

Kinda like campaign contributions......


13 posted on 03/31/2006 11:09:14 AM PST by Red Badger (I must not fear.Fear is the mind-killer.Fear is the little-death that brings total obliteration.....)
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To: AxelPaulsenJr

Airbust defenders on this site?!?

I havent seen that....


14 posted on 03/31/2006 11:17:24 AM PST by CitadelArmyJag ("Tolerance is the virtue of the man with no convictions" G. K. Chesterton)
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To: SW6906

THIS WILL MAKE YOU LAUGH - - NEWS FLASHBACK 11/22/04 - Subject A350 launch decision.

``It's Airbus's job to make life harder for Boeing and an A350 launch will do just that,'' said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia-based consulting company. ``The 7E7 (787) business case is not sewn up yet.''


15 posted on 03/31/2006 11:20:15 AM PST by NavyCanDo
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To: Red Badger; phantomworker; safisoft; Paleo Conservative; Proud_USA_Republican
More schadenfreude:

Testing times - Airbus and Boeing (Airbus has a small problem)

16 posted on 03/31/2006 11:20:40 AM PST by SW6906 (5 things you can't have too much of: sex, money, firewood, guns and ammunition.)
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To: SW6906

bump


17 posted on 03/31/2006 11:25:50 AM PST by VOA
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To: CitadelArmyJag
"Airbust defenders on this site?!?"

Prolly find lots of them over at DU!

18 posted on 03/31/2006 11:27:27 AM PST by Redbob
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To: SW6906

A380 flop
Herkules flop
Tiger flop
Eurofighter flop
Galileo flop

Yet they just have an endless supply of cash. Hmmmmmmm must be nice. And of course they will have massive investment into an accelerated development of the A350.

What will the Europeans do? Deny the fact that EADS is heavily subsidiesed, make counter accusations, keep moving on.


19 posted on 03/31/2006 11:31:40 AM PST by Red6
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To: CitadelArmyJag

You must not come on these Airbus threads much.


20 posted on 03/31/2006 11:34:30 AM PST by AxelPaulsenJr (More people died in Ted Kennedy's car than hunting with Dick Cheney.)
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