Mr. McVitie used to work for Airbus. If anyone should know, its him.
http://www.glgroup.com/News/Airbus-1H09-Ne...e-Up-42724.html



Many suspected that the whalejets were being heavily discounted, but the A350? Udvar-Hazy alluded to the conditions that EADS was agreeing to awhile back to sell the plane. Can one also infer that along with the discounts that "generous" cancellation rights are being conceded as well--especially to the big Arab carriers that virtually own this program?

Aurora, you must have been lazy. Many things are possible is the aviation blogsphere. Mc Vitie saying anything positive on Airbus isn't one of them. A simple google would have learned you. He worked for Airbus for 2 yrs and all of a sudden "left". Thats 12? yrs ago.

Even more remarkable he is one of the few "analysts" that cannot produce even a mildly critical comment on e.g the 787 or any other Boeing program. Pure sales talk however aint a problem. I hope he understands you can't buy credibility. I guess even Boeing chuckles.

Keesje, you don't dispute the numbers. You attack the messenger.

Virtually everyone knows that Airbus made astonishing discounts over the years--witness the Easyjet deal. What is remarkable about this disclosure is that until now, we didn't know the extent.

Here's what he said the 787 delays in April last year.

keesje, you must have been lazy. A simple google would have learned you. I would say your credibility is gone but you never had any to begin with. (chuckles)

BEAUNG congratulations ! You have indeed found a Mc Vitie Quote that is not positive on Boeing !!

About your credibility, I do not know / nor am I going to do a search on e.g. your 787 expectations during recent times. Maybe you can judge yourself?

70% discounts on the whalejet put it below USD$100 million for the likes of EK, SQ, QF, BA, AF, LH. There has been talk about bargain basement pricing for years. No wonder Airbus stopped making break even figures public for this program. What's the overall costs now? USD $25 billion? Given the razor thin margins derived on outrageously discounted sales, break even is unlikely. I wouldn't want to talk about it either.

Unbelievable that they'd want to go down the same road with the A350 XW whatever.

Of course, what is the over riding concern for the company? Jobs? Profit margins are likely a secondary cosideration anyway.

Anyone who thinks or wants to suggest "strategic" discounts are used by Airbus only needs a reality check.

Anyone know what Lufthansa paid for their 747-8Is ? Or Ryanair for their 737? Or NWA for their 787? Air Canada 777/787 ?

I don't & nobody here knows. I heard NWA would have to pay 10 yrs after EIS..

AC was ~bankrupt when they placed the mega deal & the US Government (Im Ex) financed it.

Useally when threads like these comes up, someone asks for prove / links / references.

Then it becomes quiet very quickly.. Your attempt to add some weight (McVitie worked for Airbus) is absolutly uncredible.

Often he starts yelling at Airbus. I advised him to have e.g. his wife have a look at his pieces first.

Based on the contract pricing information I have been made privy to, for the most part McVitie is overstating the discount rates - at least historically.

Also, we need to be sure that McVitie is not using current Airbus list prices when calculating discounts on the A380 launch orders. The A380's list has risen scores of millions of dollars so if you take QF's contract price and divide it by today's list compared to the list when they placed the order, the "discount percentage" will be much higher.

I do know that QF didn't pay under $100 million. BA got a screaming deal, but since it includes engines and interiors, I can't break out just the frame price. And even there, it is not 70% off.

As to the A350XWB, we need to remember that airlines seem convinced they have to own CFRP planes. So it's more Boeing and Airbus competing to get the airline to buy THEIR CFRP plane, rather then discounting to get an airline to buy A CFRP plane. In at least a few RFPs, Airbus has offered the A350-800XWB for the same price as the 787-8 and the A350-900XWB for the same price as the 787-9.

The lowest A350XWB contract price I have seen is still less than the 68% that McVitie claims and that that deal included significant high-margin ancillaries as well as additional orders at a very low discount, bringing the discount rate of the entire order into much more "normal" levels that other A350XWB deals were booked at.

Could you translate that into English please?

From the Wall Street Journal:

In relation to the US Airways deal, Airbus provided money to the airline to prevent them cancelling their order (as per the SEC filing last year).



You'd be surprised Stitch - VERY surprised at how close it is to that figure.

Well I know Rolls helped seal the deal by lowering the price for the Trent 900 (not that BA considered Engine Alliance power, but to counter the combined Boeing+GE package on the 747-8 RFP) so, yeah, this is one case where I could believe a price close to $100 million a frame and a 70% discount off list.

But, even if Airbus did sell BA their initial frames at $100 million, when you add in possible future sales (which won't be that cheap, based on what I've seen a few others pay for their option conversions) and the ancillaries plus the additional leverage it now gives Airbus to try and get BA to choose the A350XWB as their 777 replacement instead of the 787, one should not necessarily just take away that this is Airbus "dumping planes".

Not correct - I know what two of those four paid.

The 737 deal with Ryanair was a pure giveaway. Under the circumstances Boeing was under at the time, I'll forgive them for it ONLY if they don't repeat such a deal with the Devil Ryanair again.

Thanks, Stitch. In the main, this is a highly creditable post which brings some sensibility to the discussion.



There is no way QF paid anywhere near $100 million per A380-800 frame - but I bet you that Alan Joyce and Geoff Dixon surely wish they had been able to.

There are a couple of other points to consider here, in the overall discussion. Perhaps, McVitie is also including / deducting the subsequent delivery delay compensation payments that some carriers received, in order to make his assessment ? In that case, we would be referring to actual (post) acquisition cost, rather than final 'contract / delivery' price. And, in some cases, these payments were substantial.

Now, while BA might well have received a 'screaming' deal (I have no doubt that such a view is entirely correct), it did not benefit from the delivery delay compensation payments ~ so, as a further enticement, Airbus may well have built some 'soft' additional 'consideration' into their buy price - in order for them to be competitive with the acquisition costs of EK, QF and SQ. Of course, this is 'speculation' on my behalf - but BA are known 'hard' negotiators. And in this instance, there was a lot at stake - for both parties.

However, the biggest problem here .. is that McVitie's recollections / summations are based on historic knowledge that is some 12 years old. Much has changed at both Airbus and Boeing (including public, industry and Government oversight and scrutiny in the wake of scandals at both) in that time .. and I wonder how hardly relevant his comments are to current day negotiations .. apart from anything other than an historical (and a somewhat hysterical) marker ?

Many have suggested the 748's raison d'etre is to sabotage the 380. Perhaps they have it backwards. Or maybe there is a mutual suicide pact.

Huh?

McVitie left Airbus before the A380 went on sale and long, long before there was even an A350 Version 1. He isn't "recollecting"; he apparently has access.

If his formal 'access' is 12 years old, at best, and his A350 comments are cloaked as speculation (that is conveniently not stated), then perhaps his access isn't that great, IMO.

Or alternatively, he still has sources within Airbus or at the airlines and prospective buyers.

The problem is that there is such a paucity of information on the actual selling prices in the public domain that makes this impossible to verify w/o inside information. As for Mr. McVitie, the man makes his living with his advice. For him to have published these numbers w/o reliable backup would be reckless in the extreme. Why would he jeopardize his livelihood in this manner? It would be professional suicide if he was not 100% sure--especially given the forum he published the article! Perhaps EADS will publicly rebut these figures?

Well if the numbers are close to correct, there will be some upset folks at some airlines that did not get those discounts. If the numbers are correct or close to correct it will be difficult for Airbus to fib about it because clearly the airlines know what they are paying.

Airbus set aside €1 billion in 2006 (US$1.26 billion) in late 2006 to handle A380 compensation claims.

QF's initial compensation was A$104 million (US$77 million) for their initial 12. They received another A$100 million or so later on which they used to fund the additional eight options they bought. SQ also applied compensation payments towards their second tranche of A380 orders. TG's initial (2007) compensation was the same, though they took theirs as discounts on their A330 order (SQ also received very attractive lease rates on A333s to hold them over until their A350XWBs arrive).




I refuse to believe Boeing launched the 747-8 Intercontinental just to try and beat down A380 sales. I mean at that point, why didn't they launch the 767-400ERX to "sabotage" A330-200 sales? Or the 747-X (Stretch)?

I think the 747-8 program was a mix of panic at the prospects of the A380-800 family and as a reflection that the 777 Freighter program knifed the 747-400 freighter in the kidneys by offering solid volume and payload lift vis-a-vis the 747-400 with better operating economics. The 747-8F comfortably eclipses the 777F's payload and volume and the new engines and other technologies greatly improves the efficiency. It's why I think it was such a hit with cargo operators at launch.




I am sure the airlines play each other off as much as possible, but both Airbus and Boeing are not exactly at the mercy of their customers. An A330-200 and a 767-400ER cover the same market, but one is clearly better than the other. It's the same with the 777-300ER and A340-600. Airlines willing to commit to massive orders are going to get better deals than airlines that are not and Boeing and Airbus are willing to tell even important customers like BA and SQ "no" if the deal they offer is just not economically viable over the life of the deal.

Mr. McVitie worked for Airbus 9 months 14 yrs ago.

In his own words:
http://www.glgroup.com/News/Insider-Tradin...rbus-41965.html

Is this good enough for you?

.. and in the above quote, it would be almost as easy .. and truthful .. to substitute the name Boeing (for Airbus) - if McVitie was being genuinely objective.

If we're gonna talk about 12-15 years of history, it's hard to ignore arrogance, supply chain f*ck ups, the Darlene Druyen affair, management scandals, revolving Presidential doors etc etc over at the Chicago headquarters.

I'm not suggesting that either manufacturer is better / worse than it's competitor .. but merely that McVitie's lack of objectivity clearly shows a preponderance to slagging off Airbus.

An outright shame, when 'personal agendas' come to bear on your everyday 'work' ?

Revolving doors? Pot meet kettle?

As said in my post above, I'm not suggesting one is better / worse than the other, Aurora.

So, in my mind, the comparison still stands firm - and 'objectivity' from McVitie is "questionable", at best.

No different than the bulk of the posters on this web site.

What are your thoughts on Aboulafia?

No correlation I know, but he too has been oft-accused of being a Boeing stooge and other such phrases

Richard has often strong sympathy for Boeing & it shows. But he doesn't seem angry and is humerous, not insulting and explains if he changes his views. Check out his latest blog: http://www.richardaboulafia.com/shownote.asp?id=295 A totally different perception.

To answer your question Saj .. my view is that, over the past 12-18 months, Richard Aboulafia's posts and comments have become more moderated, balanced and rational - less of the previous 'fanboy' syndrome. He seems quite happy to compliment both manufacturers occassionally (when deserved) and seems equally at home in criticising both, when they make industry news-worthy moves which deserve commentary. 'Balanced' is 'balanced', in my opinion.

On the other hand, McVitie seems to exhibit a pure, 'tunnel-vision', mission-attitude towards Airbus / EADS, which is not reflected in his views on other manufacturers. For me (and many others), that approach simply destroys his credibility as an 'analyst' or commentator. Whatever McVitie thinks (or whatever 'flaws' Airbus may actually have), .. Airbus is an entirely creditable major industry player. Not some backwater, 'opportunist' wanna-be garage trying desperately to "gain a break" - as he seems to delight in portraying them.