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Airbus Cooked

Old 7th Dec 2006, 10:43
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Join Date: May 2004
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Airbus Cooked

By Ambrose Evans- Pritchard
The Telegraph, London
Monday, November 27, 2006

http://www.gata.org/node/4538


"..................My hunch is that Airbus will bring matters to a head. I was told by an
Airbus official last year that if the euro exchange rate went above
$1.30 for long, the company was "cooked". He said the chances of this
happening were almost nil.

Well, "nil" may be here. While Airbus has an order backlog of 2,177
aircraft worth $220.3bn, these delivery contracts are in dollars while
costs are in euros. "This is the nub of the problem," said Louis
Gallois, the Airbus chief.

In 2004, the group was shielded by currency hedges at an average rate of
$0.98. This year the rate is $1.12, and the hedges are expiring fast.
Soon Airbus will face the full violence of the spot market. The
aerospace champion is so deeply tied up with Europe's sense of
industrial self-worth that it will not be sacrificed lightly on the
altar of free currency flows. When the French premier vowed to do
whatever it takes to save Airbus"

The Euro is currently trading at around 1.33 USD.
harpic is offline  
Old 7th Dec 2006, 13:41
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Frankly, they are idiots for not entering currency hedges at the same time that the orders had been placed.
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Old 7th Dec 2006, 22:45
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probably the real reason for the a380 delay ........
lamer is offline  
Old 8th Dec 2006, 12:23
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Join Date: Mar 2002
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Originally Posted by Re-Heat View Post
Frankly, they are idiots for not entering currency hedges at the same time that the orders had been placed.
Wouldn't that have affected the order before it was signed?
lomapaseo is offline  

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