Re: Airbus A3XX---vapor plane?

From: (Roger Chung-Wee)
Organization: Concord World Travel
Date:         29 Feb 96 01:24:24 
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rna@gsb-birr.Stanford.EDU (Robert Ashcroft), in article "Airbus
A3XX---vapor plane?" on 27 Feb 96 23:00:25 , wrote:

>There have been recent newsreports about Airbus trying to launch a
>competitor to the 747 at a cost of up to some $14 billion (figure
>from a French govt minister, reported in Feb 12 issue of AvWeek).

>Stated reason is that Airbus is getting beaten in megadeals because
>Boeing has a 747 and Airbus doesn't.

>Weird thing about this, however, is that the recent megadeals have
>little to do with the 747, but are rather centered on the 777, for
>which Airbus has two competitors in the A330/A340.

>There's no question that Boeing makes a lot of its money from the 747,
>but that doesn't change the fact that the recent megadeals have little
>to do with the 747.  Pointing at the 747 as the reason for Airbus's
>recent troubles is disingenuous at best---the real problem is that the
>777 is giving the A330/340 a tough time.

Is part of Airbus's problem the fact that Boeing is in a position to
offer an unmatched product range?  Boeing can be very competitive
price-wise with Airbus but charge megabucks for its 747.

>(Aside: where would Airbus build such a thing?  Could it fit in the
>Toulouse facility?  If this thing goes forward, watch for one hell of
>a fight over the issue of who gets final assembly of Europe's largest
>plane.  Think the French (already insecure about German power) could
>stand to see the Germans do it, or might the Brits claim that it was
>their turn to do a final assembly?  Oh, the political problems that this
>would cause would be classic, since the final assembly site would then
>be thought of as "the" Airbus site.  And a lot more stuff would have to
>be built on site.  How do you transport gigantic wings from England,
>anyway?  I wouldn't be surprised that any such site might straddle
>the France-Germany border, giving them both boasting rights).

I read a report recently that BAe is thinking of upping its stake in
Airbus from 20% to at least 30% as it's doing well out of supplying
wings (whereas DASA and Aerospatiale are losing money).  To do this,
DASA and Aerospatiale will have to give up equally from their holding,
which is 37.9% each, as the consortium rules are that they must both
have equal shares.

If this did happen, then one can certainly envisage BAe not wanting to
export its wings any more.

>The problem, of course, it that it's unclear whether even the EU govts
>can afford the costs of the A3XX program, given their fiscal problems.
>Hence, presumably, the frantic search for other outfits willing to
>invest capital in the project (Russians, Chinese, you name it).

>Airbus's own figure of $8 billion suggests that the obvious strategy
>of low-balling the program costs (taking lessons from NASA, I guess).
>Once you've spent $8 billion, of course, who would cavil at spending
>another $6 billion to finish the program?

Actually, I might, if it means raising my taxes to help pay for this

In any case, it might not be $14bn.  John Leahy, head of Airbus Sales
and Marketing, reckons $8bn, although Manfred Bischoff, DASA's
chairman, says it could be as high as $12bn.  If the A3XX will be,
say, a 600-seater aircraft, then $14bn translates to a cost of over
$23m per seat - surely way too high.  On the other hand, $8bn means
$13.3m per seat, a figure which I understand to much more in line with
building a new aircraft.

Roger Chung-Wee <>
Concord World Travel,
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Tel: +44(0)181-342 8400  Fax: +44(0)181-348 0822
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