Airbus long term survival threatened
Thread Starter
Airbus long term survival threatened
http://afp.google.com/article/ALeqM5...kV8CDej2Zxwp8A
Maybe every other business in the world affected by fluctuating exchange rates will have access to the same opportunity?
What a crock of shiite!
Maybe every other business in the world affected by fluctuating exchange rates will have access to the same opportunity?
What a crock of shiite!
Thread Starter
Getting their foreign exchange rate changes absorbed by the Government.
Its a part of business for any company that trades outwith the confines of its own borders. A natural hazard of business since the day trade started.
What about airlines? Shipbuilders? Car builders? Heavy equipment manufacturers? Any other business you would care to name? Fluctuating exchange rates can affect any business and destroy all profit margins, or deflate individual employees earning if you are working overseas and unprotected from devaluation.
Its a part of business for any company that trades outwith the confines of its own borders. A natural hazard of business since the day trade started.
What about airlines? Shipbuilders? Car builders? Heavy equipment manufacturers? Any other business you would care to name? Fluctuating exchange rates can affect any business and destroy all profit margins, or deflate individual employees earning if you are working overseas and unprotected from devaluation.
Join Date: Jun 2005
Location: World
Posts: 63
Likes: 0
Received 0 Likes
on
0 Posts
If your revenue falls in the medium term by -15% in every year due to the fall of the currency your product is priced in, and your costs are predominantly in the Eurozone, then you have the recipe for some very serious corporate challenges.
This is true for anyone organisation operating under these conditions, not just Airbus.
However:
1. Airbus civil aircraft have no significant revenues outside USD
2. As the USD falls, Boeing aircraft get cheaper reducing Airbus revenue still further
3. Solutions such as outsourcing to dollarzone companies are medium and long term solutions, not short term lifelines
4. The weak USD is not likely to recover in the short term - we believe it is likely to weaken even further in 2008.
5. The USD slide has been happening for some time, but has accelerated dramatically since the first week of August 2007.
6. Airbus' EUR USD hedgeing begins to fall out in early 2008 - their transition will be sudden and painful - or possibly 'beyond the painzone'.
Airbus' turniver in 2006 was EUR26 billion . The USD slide against the EUR just this year simplistically, if unhedged, reduces revenue by around EUR4 billion. At the same time there is a short term revenue shortfall on the A380 and huge (cost) investment in the A350.
However, as noted above Airbus is currently at least partially hedged.
At the end of 2008, Airbus' primarilly unhedged EUR USD full year effect will be seen.
This is true for anyone organisation operating under these conditions, not just Airbus.
However:
1. Airbus civil aircraft have no significant revenues outside USD
2. As the USD falls, Boeing aircraft get cheaper reducing Airbus revenue still further
3. Solutions such as outsourcing to dollarzone companies are medium and long term solutions, not short term lifelines
4. The weak USD is not likely to recover in the short term - we believe it is likely to weaken even further in 2008.
5. The USD slide has been happening for some time, but has accelerated dramatically since the first week of August 2007.
6. Airbus' EUR USD hedgeing begins to fall out in early 2008 - their transition will be sudden and painful - or possibly 'beyond the painzone'.
Airbus' turniver in 2006 was EUR26 billion . The USD slide against the EUR just this year simplistically, if unhedged, reduces revenue by around EUR4 billion. At the same time there is a short term revenue shortfall on the A380 and huge (cost) investment in the A350.
However, as noted above Airbus is currently at least partially hedged.
At the end of 2008, Airbus' primarilly unhedged EUR USD full year effect will be seen.
Last edited by flying brain; 25th Nov 2007 at 19:26.
Join Date: Mar 2000
Location: Arizona USA
Posts: 8,571
Likes: 0
Received 0 Likes
on
0 Posts
Will Airbus be made to pay profits back when the dollar gets stronger? Ho Ho.
The US Dollar is still the currancy of choice.
Them's the facts
Like it or lump it, your (and Airboos's ) choice.
Clearly Airboos lumps it.
Too bad for them.
Play to pay.
Dog Tired
Hmm...yet another opinionated post by 411A.
Quote: "The US Dollar is still the currancy of choice."
Maybe he meant 'currency' but we'll let that go.
Perhaps 411A has no concept of what is going on in China and the effect the Renminvi/Dollar/Euro rates are having.
How about India?
Face it: the US Dollar is being dumped by major ex-holders. The fact it is becoming less useful is hurting proper producers who contracted in the now-failing US currency. Airbus is one, agreed; no need to gloat about it. Should we gloat about GM or Ford?
What is the Fed doing? Nothing. Chinese? Nothing. Why should they, when European producers suffer?
Sorry, 411A; you and very many of your, once great, producers are history.
For proof, look at the cars on your roads: BMW; Mercedes; Toyota; Mazda; Honda; ... I rest my case.
Quote: "The US Dollar is still the currancy of choice."
Maybe he meant 'currency' but we'll let that go.
Perhaps 411A has no concept of what is going on in China and the effect the Renminvi/Dollar/Euro rates are having.
How about India?
Face it: the US Dollar is being dumped by major ex-holders. The fact it is becoming less useful is hurting proper producers who contracted in the now-failing US currency. Airbus is one, agreed; no need to gloat about it. Should we gloat about GM or Ford?
What is the Fed doing? Nothing. Chinese? Nothing. Why should they, when European producers suffer?
Sorry, 411A; you and very many of your, once great, producers are history.
For proof, look at the cars on your roads: BMW; Mercedes; Toyota; Mazda; Honda; ... I rest my case.
Join Date: Feb 2005
Location: flyover country USA
Age: 82
Posts: 4,579
Likes: 0
Received 0 Likes
on
0 Posts
Can't track the source right now - but isn't China getting a piece of the A320-family action? That would tend to mitigate the pain, at least at the corporate level.
Join Date: Feb 2007
Location: i don't know
Posts: 320
Likes: 0
Received 0 Likes
on
0 Posts
Nobody forces Airbus to sell in USD. They can state their price in Euros and if their product is as good as they pretend, they'll sell it.
It has been said before, Porsche and BMW make some wonderful cars, produced in the EU and sold worldwide, and they make nice profits. Fiat was lost in the Italian undebrush until they made a fine product facing asian dumping competition and now they're top again.
Instead of blaming the greenback and letting it's employees brunt the burden, Airbus has to get it's act together:
- The 340-500/600 line is a fuel guzzler, admitted by AB. They refraimed from upgrading these birds (no engineering capacity), but compensate new customers, so more loss than profit and very little orders.
- The A380 might be a success in the distant future. Actually it flies with a huge deficit due to engineering flaws (cables) and still with way too few orders .
- The A350 is only on the drawing board. Before it will make one dollar/euro profit in the even more distant future, the world currency circus might look completely different.
The A320 line works fine, unfortunately in the low profit bracket, and the only really profitable bird for AB and the airlines, the A330, can no longer be sold in sufficient numbers to compensate the loss makers.
The whining of the Airbus executives is just a pathetic cry for subsidies to the EU, as thousands of other businesses who sell worldwide could do.
It has been said before, Porsche and BMW make some wonderful cars, produced in the EU and sold worldwide, and they make nice profits. Fiat was lost in the Italian undebrush until they made a fine product facing asian dumping competition and now they're top again.
Instead of blaming the greenback and letting it's employees brunt the burden, Airbus has to get it's act together:
- The 340-500/600 line is a fuel guzzler, admitted by AB. They refraimed from upgrading these birds (no engineering capacity), but compensate new customers, so more loss than profit and very little orders.
- The A380 might be a success in the distant future. Actually it flies with a huge deficit due to engineering flaws (cables) and still with way too few orders .
- The A350 is only on the drawing board. Before it will make one dollar/euro profit in the even more distant future, the world currency circus might look completely different.
The A320 line works fine, unfortunately in the low profit bracket, and the only really profitable bird for AB and the airlines, the A330, can no longer be sold in sufficient numbers to compensate the loss makers.
The whining of the Airbus executives is just a pathetic cry for subsidies to the EU, as thousands of other businesses who sell worldwide could do.
