Airbus to drop prices on A350XWB

[bits44]

Airbus has announced they will slashing its prices to giveaway levels


http://tinyurl.com/yo867u

At a time when Airbus is in desperate need of profits to finance its losses, this move makes no sense at all, I wonder where the money is going to come from to finance the development of the A350, it really is an act of desperation.

[David747]

At a time when Airbus is in desperate need of profits to finance its losses, this move makes no sense at all, I wonder where the money is going to come from to finance the development of the A350, it really is an act of desperation.

I agree, I don't understand why they would do this, I understand a 30% price discount on the A350, but 50% is way too much. This means that the A350 will most likely be the recipient of launch aid.

[Andries]

This means that the A350 will most likely be the recipient of launch aid.

Great ... here we go again ...

[CX]

At a time when Airbus is in desperate need of profits to finance its losses, this move makes no sense at all, I wonder where the money is going to come from to finance the development of the A350, it really is an act of desperation.

I agree, I don't understand why they would do this, I understand a 30% price discount on the A350, but 50% is way too much. This means that the A350 will most likely be the recipient of launch aid.

They are giving these huge discounts probably only to Emirates, and perhaps other that has original A350 on order... And also the aircraft is not avaiable for another 6-7 years, an airline signing this early might worth another 10% or so discount..

[achace]

List prices dont mean much.

Looking at deliveries of the XWB starting in 2013, my thoughts are that Airbus have taken a hedged position in the capital market that eventually the US dollar will recover, and offered very good US dollar deals rather than Euro deals, assuming at least a 10% de-value of the Euro over the next six years.

They are not complete idiots, and no shareholder would allow to happen what the popular newslines are reporting.

If you take away the A380 fiasco, the enormous discounts to Easyjet and Air Asia have not hurt their bottom line.

I think they know what they are doing.

Cheers
Achace

[boomer535]

They are just trying to get some market share and take some orders away from the 787. I think Boeing did the same thing with the 748I deal with LH. Boeing wanted to take sales away from the A380. I am sure that other Airlines would like the same deal that Emirates might be getting. I wonder how long these discounts will continue if this is true. I also heard that Emirates will get 1 free A350 for each 2 they buy as compensation for the A380 being late. This would be like paying only about 67 million dollars apiece. Hard to believe indeed. I really have to take this news with a grain of salt.

[pijaleu]

They are just trying to get some market share and take some orders away from the 787. I think Boeing did the same thing with the 748I deal with LH. Boeing wanted to take sales away from the A380. I am sure that other Airlines would like the same deal that Emirates might be getting. I wonder how long these discounts will continue if this is true. I also heard that Emirates will get 1 free A350 for each 2 they buy as compensation for the A380 being late. This would be like paying only about 67 million dollars apiece. Hard to believe indeed. I really have to take this news with a grain of salt.

I agree on this one.
My thoughts are that Airbus is losing orders to Boeing and is for the moment willing to do anything to get some orders. And it's no secret that the B787 is doing very well.
Today I also read Airbus is hiring more employees to finish the A380.
If you look at those 2 facts, they are trying to save their bit of the market.
They're taking some risks (and money), but if they do just nothing, the market will be 100% Boeing on the long hole segment.

[David747]

This means that the A350 will most likely be the recipient of launch aid.

Great ... here we go again ...

Here we go again with what????

[bits44]

More info :http://www.theaustralian.news.com.au/st ... 43,00.html

[smokejumper]

Several new articles in today's newspapers (worldwide) state the Airbus is offering discounts of 50% on the A350 in order to overcome Boeing's success with the B787. Discounts from stated list prices are common (generally 30% or so, but 50% indicates that Airbus is fairly desparate to get the A350 underway with some orders).

While Airbus wants to get orders quickly, a question arises. Are these deep discounts (if true) because the A350 is not expected to be competitive performance wise (fuel consumption, maintenance, etc.) with the B787 or is it just to offset the 787's lead.

A deep discount is one strategy to compensate airlines for increased costs (as measured by predicted life-cycle costs) and make the plane competitive while meeting performance guarantees (i.e., prepaid penalties).

There is an old saying, "If you have a good product, you can sell it at a high price; if the product is poorer than the competition, then price is the only sales tool you have".

I beleve that Airbus has rushed the A350 to market before it is fully defined and in a state that is less than the competition's, and is years behind both in delivery times and construction technology. Price has become their biggest sales tool. And... the European taxpayer will end up paying the bill.

[boomer535]

The Austraian article is pretty much a reprint of the one fom the Times. The one piece of new information is that the discount price Boeing sells the 787 is the same as what Airbus is selling either model of the A350 (US$102 Million). It is not clear if this is for the 787-8 or 787-9. Airbus is saying for the same price as the 787 you can get a bigger A350. They are trying to take sales away from the 787 AND the 777.

[cageyjames]

As i said in another thread, US is going to get the old A350 prices for their new A350XWB order. I'm not so sure that's 50% off, but with such a large order (including the 60+ A320 order) its probably quite a discount.

[DFW]

Even though I responded in another posting why this is a bad idea, I can't say that I blame Airbus. The sales of the 787 is shattering records, and desparate measures need to be taken to counter that. And I agree that the Euro cannot sustain its current value vs. the Dollar. It has to come down eventually, making the discounts less severe.

However, if the 787 vs. 350 competition comes down to a pricing war, Boeing clearly has the advantage. With an order log of 544 planes, they are already at or very close to recouping development and capital costs. At this point, Boeing can offer 50% discounts and still make money if they so choose. Airbus would be bleeding money with 50% discounts.

And is filament wound composite a cheaper way to manufacture? Everyone needs to stop saying "we'll see"!! Filament wound composites are much cheaper to manufacture than aluminum or composites on aluminum. So Boeing has a cost advantage as well.

Boeing has an interesting choice whether they would match Airbus's discounts. Remember, they are more focused on profits than market share.

[boomer535]

This is a little premature but will the Y3 (777 replacement have a Filiment wound barrel fuselage like the 787 and I presume the 737RS? How would Boeing transport the barrel sections? Would they fit in the modified 747's that Boeing uses to transport the 787 sections?

[bits44]

This is a little premature but will the Y3 (777 replacement have a Filiment wound barrel fuselage like the 787 and I presume the 737RS? How would Boeing transport the barrel sections? Would they fit in the modified 747's that Boeing uses to transport the 787 sections?

Without knowing the facts its difficult to forecast that, but many in the manufacturing industry have said the future is in composites, and knowing Boeing they would have allowed for a larger size barrel to fit in the transporters they have now. If the 787 is successful, and there is no reason to believe otherwise, then I would think the day of the aluminum fuselage is over.

[Ruscoe]

Trying to make sense of these huge discounts, brings me to the conclusion, that Emirates will probably go 787 without them.

Firstly we have Emerites saying that the 350 has closed the gap on the 787. Frankly, from an efficiency or cost of production point of view, I don't see how that is possible given the choices Airbus have made for the configuration and construction of the 350.

I think the "gap closing" is what has been mentioned already, in that Airbus are compensating via a lower price for any 350 shortcomings.

Airbus must win this order at any price, if they want the 350 to go ahead, because if they fail to win this order at huge discounts, then the 350 is dead.

Ruscoe

[boomer535]

The design of the A350 has not even been finalized. It isn't even a paper airplane yet. If all goes well Boeing will have the actual 787 in the air in about 4 months. Once the airlines have a chance to see a real airplane in the air there may be another wave of orders. I think that Airbus is trying to get some orders rolling in before the 787 flies to stop a second order frenzy for the 787.

[smokejumper]

The design of the A350 has not even been finalized. It isn't even a paper airplane yet. If all goes well Boeing will have the actual 787 in the air in about 4 months. Once the airlines have a chance to see a real airplane in the air there may be another wave of orders. I think that Airbus is trying to get some orders rolling in before the 787 flies to stop a second order frenzy for the 787.

Agree. Once the 787 is flying and data is coming in (assuming the results are a good as Boeing is projecting), there may well be a spike in orders. There are several airlines that want validation of Boeing's projections prior to comittment. Any orders that Airbus can lock up before the 787 test program commences are off the shelf.

[David747]

The design of the A350 has not even been finalized. It isn't even a paper airplane yet. If all goes well Boeing will have the actual 787 in the air in about 4 months. Once the airlines have a chance to see a real airplane in the air there may be another wave of orders. I think that Airbus is trying to get some orders rolling in before the 787 flies to stop a second order frenzy for the 787.

I would agree that once the 787 is on the air, Boeing will receive more orders, but at the time, all 787 slots are sold out giving Airbus a chance to steal away potential 787 orders with a final design for the A350, which will be available at the same time 787 slots become available again. And if this price story is true, airlines would love to order a plane at 50% discount.

[achace]

With the XWB, it is not a question of what they will build, simply a decision on how they will build it.

I wonder what happens with the wound composite fuselage if a defect is discovered after baking. Is it possible to fix a sub-surface defect, or do they have to scrap it?

Would not be surprised if Airbus went the composite panel direction. As long as they meet their weight guarantees, I suspect a lot of airlines would favour panels because of maintenance.

Airbus costs are lower than Boeing, just look at the 320 series, where customers get more airplane in the physical sense than does a 737 customer for around the same price.

Frankly it astonishes me that Airbus and Boeing have these inflated "list" prices. Probably neither have ever sold a single plane at such a price.

Its a bit like selling vacuum cleaners.

Cheers
Achace