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Posted on 06/21/2006 6:39:09 AM PDT by Paleo Conservative
THE most galling experience for any company is to miss out on boom market conditions because of production failures. That is what is happening to Airbus.
Globally, air travel is expanding at twice the rate of economic growth.
This ought to be a dream scenario for the launch of the A380, the world's biggest civil airliner capable of carrying 550 long-haul passengers.
Yet last week the shares of Airbus parent company EADS crashed by a third in a single day, ending the week down 25% on news that production delays of up to six months are expected to cost it 2bn euros (£1.37bn) in lost profits over the next four years.
This fall is an exaggerated reaction and a reflection of the folly of measuring this type of long-term business by the likely profits in any one year.
It also reflects the volatility of the French stock market.
EADS shares, which all this year have traded at between 30 euros and 35 euros are now at 20 euros and that values the business at only £7bn.
Given the long-term potential that makes the present now look like the time to jump in and buy.
The main financial reason for caution is that the delays on production of the A380 will upset cash-flow projections.
Less funding will hence be available for developing the crucial next project, the A350 which is being redesigned to see off Boeing's 787 Dreamliner.
But that cash flow problem is moderated by the fact that a third of Airbus development funding comes from state sources and anyway if the project is viable and the management trusted bank finance will always be found.
(Excerpt) Read more at icliverpool.icnetwork.co.uk ...
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Big "Duh" Alert should be attached to this piece.
The Boeing Dreamliner will eat the BIG plane's lunch!
Good post!
I wonder what the ratio is to Boing/Airbus mechanical failures.
I wouldn't be bullish on the propects of any French stocks in the long term but I'm a pessimist I guess.
Yep. Hard to meet quotas and find the glory of high sales with a mandated 35 hour work week......
From what I have observed,I wouldnt fly on AIRBUST on a bet.Their rush to get this flying pig in the air will most certainly lead to shake and bake quality control.As the old adage goes,never buy a new vehicle,usually a new model,until the bugs have been corrected.I would not want to be one of the first passengers to find out!
Do they come with parachutes?!
I saw a recently report on how the frieghter version of the A380 is having all kinds of problems as well.
The factory in Germany where it was supposed to be assembled and do take off and landing tests is in complete disarry. German environmentalists have locked up the construction of the assembly factories in court claiming the factory is built too close to river wetlands.
Airbus is now talking about scraping the whole facility and building it somewhere else.
I'll betcha Aeroflot could stuff 800 people in there:
Thanks for the great message!
My late uncle was an exec VP at Lear and at Grumman years ago. This makes me interested in such developments, but certainly not an expert!
Talk about cramming, in 1991 a El Al Boeing 747 airlifted a record-breaking 1087 passengers.
what a nightmare.
If I were an Ethiopian Jew, I'd rather take my chances flying in an overcrowded El Al 747 than let the jihadis get me.
Tails falling off planes again?
Was that the case?
Yes.
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