Concorde. Worth it?

[I Am Ugly]

In the long run have they made BA/Air France a fair profit?

I recall hearing Concorde was a commercial flop, for the makers perhaps, but where they a good buy for the airlines?

[Unwell_Raptor]

They had to be a good buy for BA, since they were virtually given them free.

Depending how you do the accounts the beautiful bird has made a good profit, or a huge loss, or anything in between.

[I Am Ugly]

If BA were given them so cheap, from which accounting angle could they have made a huge loss?

[niknak]

No doubt about it - the aircraft has been a hugely profitable operation for both airlines.
As Raptor posted, B.A were bailed out by the taxpayer shortly after the fleet was purchased. After that moment in time, the aircraft has operated at a very high profit margin, with an average of 90% load factors.
In the same vein, it's an open secret that Air France have always been propped up by one of the French governments, and their fleet operated in a similar fashion.
The aircraft makers may have made a "paper loss" on the venture, but again, it was so heavily subsidised with deals and murky counter deals, it's difficult to quantify any actual profits or otherwise.
All said, it appears that the European taxpayer carried the cost of development and initial operation, and B.A and Air France board members and shareholders have subsequently seen the benefit.

[GlueBall]

Looking at it from a different angle; a one way ticket costs $4000.
The potential revenue generation of one roundtrip in one airplane is $800,000. That's a lot of cash for 7 hours flying!

[Unwell_Raptor]

"If BA were given them so cheap, from which accounting angle could they have made a huge loss?"

That's accountancy for you. Fly the bird from A to B you make money. Factor in marketing costs, and airline overhead, and you make a lot less. Factor in the development costs (paid by the taxpayer) and the initial losses (remember Bahrain, Singapore, etc)., then add 30 years' compound interest, and the aeroplane has probably ended up in the red.

Arthur Daley was a born accountant - the price is all according.



;)

[cirrus01]

Concorde operations have always been subject to dubious accounting.........We can't have the flagship obviously leaking money in a similar fashion to its ability to leak fuel.:o

One figure that may be of intrest....... No. of Engineering manhours per flying hour......

Locheed Galaxy (perhaps the militarys most un-reliable a/c ) 22
BA 747 Between 9 and 11
BA Concorde 42 yes thats right forty two !

[Wino]

Another problem with the concorde is that it is a yield raider.

While BA may make some money on a concorde fare. That same ticket in first ona a 747/777 (a similar ticket price) makes BA a shed load of money.

But what happens is that concord tends to pull people out of first class on the 747s thereby stealing yeild on the LHR-JFK route. It might be argued that the publicity increases interest in BA on other routes but over the atlantic it is probably hurting BA's total bottom line even if it is a profitable service.

Indeed though there were other market forces at work, BA was profitable while concord was on the ground, and when it took the the air things got worse.

Cheers
Wino

[WOK]

I would bring your attention to the provision made in the 2001 co. accounts for the LACK of SSC operations.....Plus the fact that the advertising budget doesn't run to a fraction of the cost of getting the fleet flying again. Blatant clues, or what?

[Llademos]

My understanding is that Concorde helps the bottom line for BA both as a symbol and revenue raiser.

For a big co (PWC etc) their top 10 or so people will want to fly Concorde; as a result everyone else will also fly BA on business - the Halo effect. Give up Concorde, and BA becomes just another airline to choose from.