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Subject:
Airbus Shuffle
PowerPointRanger
12/24/2006 1:11:16 PM
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Airbus is ending the year with proud abouncements of 17 new A380 orders (9 for SA, 8 for Quantas).
Not so fast.
These orders were already on the books as options. Airlines love placing orders with options. An option is basically reserving a production slot without committing to a purchase. This gives the purchaser a lot of flexibility. If business is good, they complete the purchase. If business is bad they can sell the option and make a little profit on the deal. Airlines like the concept for the same reason, even if the customer doesn't buy the options, someone probably will (to get first in line on a delivery).
So if you look at 2006, the total number of aircraft (orders+options) actually went down from 235 to 215.
There were five transactions. FedEx cancelled an order for 10 freighters with an option for 10. The rest were just shuffling chairs on the deck. Emirates and ILFC shifted a total of 7 aircraft from feighters to passenger models. Quantas and SA made 17 options into firm orders (even as SA is threatening to cancel).
Does this help Airbus? In theory. The firm orders is worth the full price while the option is worth just a tolken amount--BUT that's cash on delivery. Production delays have meant Airbus losing penalty cash for each delayed order (not for options). This raises the stakes for Airbus. More firm orders means more money for deliveries or more penalties for delays. Until Airbus can get production on track, those firm orders just increase the pressure.
"http://en.wikipedia.org/wiki/A380"
And this at a time when Airbus is essentially building their airplanes by hand.
"http://www.ohio.com/mld/ohio/business/16305726.htm?source=rss&channel=ohio_business"
So those new orders could end up being just more new penalties. |
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