Airbus selling for Fire Sale Prices

Advisor · Post by **Advisor** » 25 Dec 2004, 13:15

Hmn. Nice research Bits44. Thanks for keeping us posted and yes glued to this topic.

bits44 · Post by **bits44** » 27 Dec 2004, 22:57

More bad news for the Euro and really bad for Airbus?
http://quote.bloomberg.com/apps/news?pi ... news_index

DC7-C · Post by **DC7-C** » 28 Dec 2004, 01:17

bits44 wrote:More bad news for the Euro and really bad for Airbus?
http://quote.bloomberg.com/apps/news?pi ... news_index

I don't think the the rise of the Euro or the Yen will shrink the US trade deficit by much.
First of all, the biggest deficit problem comes from China, where the Chinese currency is tied to the US dollar.
Second: If you remember during the early 1970s, 1 USD was worth 350 yen and everybody thought that the trade deficit will disappear if the dollar value shrank. In 1989, 1 USD was worth approx. 90 yen, yet the deficit with Japan continued to mushroom.
Third: Boeing got caught napping between 1995--the year they finished the 777--and 2003, they were still milking their 1960s & 1970s (more or less) great innovations. They did not start any truly new project, while Airbus was all over the place streamlining their products and being innovative. To the best of my recollection, in 1996, Airbus got less than 80 orders, while Boeing got over 500.

Best regards

bits44 · Post by **bits44** » 28 Dec 2004, 05:33

DC7-C wrote:
bits44 wrote:More bad news for the Euro and really bad for Airbus?
http://quote.bloomberg.com/apps/news?pi ... news_index

I don't think the the rise of the Euro or the Yen will shrink the US trade deficit by much.
First of all, the biggest deficit problem comes from China, where the Chinese currency is tied to the US dollar.
Second: If you remember during the early 1970s, 1 USD was worth 350 yen and everybody thought that the trade deficit will disappear if the dollar value shrank. In 1989, 1 USD was worth approx. 90 yen, yet the deficit with Japan continued to mushroom.
Third: Boeing got caught napping between 1995--the year they finished the 777--and 2003, they were still milking their 1960s & 1970s (more or less) great innovations. They did not start any truly new project, while Airbus was all over the place streamlining their products and being innovative. To the best of my recollection, in 1996, Airbus got less than 80 orders, while Boeing got over 500.

Best regards

I just wanted to clarify the point I was trying to make regarding the currency situation, as I said earlier on in the forum Aircraft are bought and sold in U.S. Dollars, and that holds true for Airlines purchasing from Airbus as well as Boeing, or Bombardier and Embraer. The problem that Airbus now faces is the devaluation of the U.S. dollar, aircraft that list for 60 million U.S. Dollars were sold by Airbus for 30 million dollars, and now the U.S. dollar has fallen by 30 percent over the last year, and continues to fall.

That means Airbus has lost 30 percent on the sale, while having to pay production and development costs in Euros which is increasing, in fact they do not have sufficient cash flow to pay for A350 development and production, and will have to borrow to pay for it. If one reads the articles posted from the Financial news sources, you will see what I mean.

This post was not about trade deficits, or the U.S. vs the E.U that I will leave to the W.T.O. to hash out.

My concern is strictly monetary, I own shares in both Airbus and Boeing, and I want to see them both succeed, but the Actions taken at Airbus, and all the turmoil concerning the leadership of that company is very disconcerning, Boeing has been very patient with Airbus in their pricing and have lost many large orders because they refused to get into a price cutting war, but that is about to change drastically I understand.

You can only kick the dog so many times, and then he will turn around and bite you.

KT

Cheers

DC7-C · Post by **DC7-C** » 28 Dec 2004, 06:37

bits44 wrote:More bad news for the Euro and really bad for Airbus?
My concern is strictly monetary, I own shares in both Airbus and Boeing, and I want to see them both succeed, but the Actions taken at Airbus, and all the turmoil concerning the leadership of that company is very disconcerning, Boeing has been very patient with Airbus in their pricing and have lost many large orders because they refused to get into a price cutting war, but that is about to change drastically I understand.

I agree with you. A relative of mine is working as a lawyer for a government-owned middle eastern airline, he told me about how Airbus is dumping the planes as if there was no tommorrow. In addition, the German & French governments are winking at that middle eastern government of new loans in non-aviation related areas if they buy Airbus planes.

Advisor · Post by **Advisor** » 28 Dec 2004, 10:23

Airbus is dumping or is it getting a lot of orders, is the question to be asked!

bits44 · Post by **bits44** » 28 Dec 2004, 17:44

Advisor wrote:Airbus is dumping or is it getting a lot of orders, is the question to be asked!

This is the kind of news Airbus does not need to hear.

http://www.newratings.com/new2/beta/article_595404.html

SicilianFalcon · Post by **SicilianFalcon** » 28 Dec 2004, 18:00

Oh the drama

bits44 · Post by **bits44** » 03 Jan 2005, 12:37

Advisor wrote:Airbus is dumping or is it getting a lot of orders, is the question to be asked!

More fuel for the fire!

http://www.etaiwannews.com/Opinion/2005 ... 718183.htm

Advisor · Post by **Advisor** » 03 Jan 2005, 12:51

Egad where will this lead to....I think enough muck has been thrown.

The question : Is this a quest for survival of the fittest or are we harbinging the bottom line of profits.