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To: zipper

Break-even never has to be a concern at Airbust. Its a socialist job creation program that builds airplanes on the side.
Here is how it works:

Depending on how much tax-payer money each country provides (Spain, France, UK, and Germany) for the planes development costs heavily dictates how many jobs are handed out for the planes manufacturing and assembly. (example: The UK donated a big chunk towards the R&D costs for the A380 so it got the manufacturing of wings at its UK factory)
Then when planes are delivered (remember that Airbust doesn't get paid until each plane is delivered), a portion of that revenue is supposedly paid back to the governments who put up the original subsides. This system also means a lot of politics is involved in the running of the company. Governments will have alot of say in matters like job cuts, pay, benefits, pensions, where what gets built, etc...

This is the complete opposite of how Boeing operates were they are not provided any subsides by the US government to fund the R&D for its commercial aircraft division. Boeing has to count on delivering planes to break even / generate profit on its development investment.

Airbusts economic model only works when you have a successful plane with a steady flow of orders and the planes are being delivered to customers on time and on budget. But when you end up with something like the A380, that means its questionable if the governments that put up the money for its development will ever recoup their investment and now . Your talking about billions of dollars down the drain where Airbust is now saying they will have to sell over 400 A380's just to break even, but we all know that number is going to be a lot higher.


30 posted on 03/01/2007 7:55:05 PM PST by Proud_USA_Republican (We're going to take things away from you on behalf of the common good. - Hillary Clinton)
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To: Proud_USA_Republican

The sad thing is, if a company like McDonnell Douglas bets big and loses, the company busts and people move on. But when France or Germany bets big and loses, they don't go bust, because they can just keep tapping the taxpayer to cover any loss. So lessons are never learned, and disfunctional organizations are allowed to create mayhem, over and over again.

If you think the A380 is a CF, just wait until the A350XWB gets close to launch...


35 posted on 03/02/2007 4:37:56 AM PST by gridlock (Isn't it peculiar that matter what the problem, the government's solution is always "more taxes".)
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