Airbus Lost $7.5bn+ Trying to Flog the A350XWB

It's not often I quote this rather scattershot Flight blog because despite its undoubted accuracy at times, it's also capable of some of the least-incisive aerospace thinkng out there. And that's some achievement.

 

But there's a reason to follow the story for this time round.

When Airbus relaunched the A350 for the whateverth time in late 2006, creating the ludicrously-named A350XWB, a sweating, barely coherent  and deeply uncomfortable John Leahy stood in front of an audience of sceptics and as usual blatantly lied, saying all 182 A350 customers would convert to the A350XWB at the new price -- $171m to $215m, a jump of nearly 26%.

 

There was laughter in the auditorium and it didn't take Leahy long to realize just how naïve his remarks were. The first airline to agree under pressure eventually to convert was Finnair, but only after insisting on paying the old price for the new aircraft.  Net result: a $396m loss before the ink was dry on the new contract. Great job, John.

 

Having seen a  precedent established, of course, every other A350 customer was anxious to follow suit, the result being Airbus lost somewhere around $7.5bn in revenue after allowing for outright A350 cancelations. And this from an aircraft that hadn't even been successfully designed yet, despite numerous attempts.

 

So while Boeing writes off just $2.5bn for three test articles with no resale value but plenty of ongoing RDT&E potential, clueless Airbus has already written off $7.5bn+ in lost revenue due to market misreading, incompetent management decisions and poor reading of the industry. Oh and did i mention the A350 program cost had somehow jumped from $5m to $10m (it's $16bn+ now).

 

Cost-accounting? Is that how McDonald's does it 'cos it's news to them in Toulouse, that's for sure?

 

And the difference, of course: The $2.5bn is Boeing's money. The Airbus $7.5bn is launch aid never to be sen again..

 

I wouldn't trust Airbus to  tell me the time of day. This lack of trust extends right through the French judicial system too and the day will soon come when certain current and former overpaid Airbus executives are forced either to pay enormous fines (starting with Leahy) or for those others still clinging on to leave the company in disgrace, like one of their many recent ceos, the the multi-despicable Forgeard.

 

Airbus has delivered 18 A380s in four-and-a-half-years. Boeing has a backlog of 850 787s. Airbus may have to repay its $4bn A380 advances, the 787 is self-financing. Airbus can't build the A350 as it doesn't have the money or the engineering engineering ability and if its cash reserves are forcibly depleted, nationalization is just around the corner. Let's see what the WTO says...

 

Who else but the French government would want a company with all the financial management nous of an Albanian pyramid seller's budgie?