bitkahuna

iTrader: (20)

Boeing of course makes commercial airliners and really only has one competitor - Airbus which apparently is owned by a parent company named EADS.

EADS has several large investors including the FRENCH GOVERNMENT (15%), Daimler Chrysler (30% going down to 22.5% now due to events outlined below), French media group Lagardere (15% going down to 7.5% now)

So why is this in Car Chat and why is this bad for Daimler Chrysler? Put simply, Airbus is a huge trouble. They have some excellent commercial planes but they embarked on building a HUGE new commercial airliner, the A380 which can seat something like 550 people I think - yes, it's enormous. And this project is now likely to be 18 months late in release, at best, and airlines have this on order, but some are reconsidering.

Airbus is now looking at ways to make giant cost cuts, and the French unions, so powerful, are not about to play along. The losses will be huge, and this will affect Daimler Chrysler.

Anyway, here's a recent news article...

Airbus parent EADS pounded over A380 delays
By Sonali Paul and Tim Hepher
Wed Oct 4, 6:25 AM ET

The world's airlines were forced to review growth plans and investors hammered the shares of Airbus parent EADS (EAD.PA) on Wednesday after the European planemaker announced more delays to its A380 superjumbo.

With fresh delays of a year, the world's largest airliner is now running two years behind its delivery schedule as engineers struggle to control a jinx in the wiring installation.

EADS shares plunged as much as 11.7 percent and touched 20 euros for the first time since previous wiring snags plunged the company into financial and management turmoil in the summer.

By 1018 GMT, they were down 6.4 percent at 21.15 euros, trimming EADS's market value by over a billion euros.

Debt rating agency Standard & Poor's warned it might cut its rating on EADS on the back of a profit warning and the delays.

"As the delay will disrupt the expansion strategies of a number of major airlines, the group's competitive position on wide-body aircraft could be adversely affected," it said.

Australia's Qantas Airways Ltd. (QAN.AX) said it was reviewing its capacity needs because of the delivery gap.

"How are we going to mount the capacity in the short-term? What does it mean in the long-term? Where do we go from here? It's all part of the review," Qantas executive general manager John Borghetti told Reuters.

And as airlines issued the strongest signals yet that they might cancel orders, investors fretted whether the latest bad news from Europe's rival to Boeing (NYSE:BA - news) would be the last.

EADS is predicting a profit shortfall of 2.8 billion euros over four years on top of 2 billion euros disclosed in June and is embarking on sweeping reforms of its industrial processes spread across 16 plants in France, Germany, Britain and Spain.

The profit warning includes provision for extra penalties to airlines to compensate them for late delivery, but no more.

"This doesn't take into account any cancellations of the A380 which are still weighing on the company," said Ixis Securities analyst Pierre-Antony Vastra.

"The third but maybe not the last," said Societe Generale of the latest set of problems, noting EADS still faced potential charges over a redesign of its crucial A350 model, while there are persistent doubts over its A400M military airlifter.

AIRLINE, UNION ANGER

Virgin Atlantic Airways (VA.UL) and Dubai airline Emirates (EMAIR.UL), the top customer with an order for 43 superjumbos worth $13 billion at list prices, put purchases on review.

Loss-making Malaysian Airline System (MASM.KL) said it was "very disappointed" and called for a clear delivery plan.

Singapore Airlines (SIAL.SI), which is among the airlines with the most to lose in branding because it has the right to fly the headline-grabbing first commercial flight, also hit out.

"The delays are disappointing; all the more so because the flight test and certification program is proceeding well, and the delays are down to production issues," it said.

It will not get an A380 until October 2007 instead of end-2006, which was already 6 months behind the first schedule.

The promised industrial shake-up at EADS, which aims to save two billion euros a year, sent tremors through Airbus's 55,000-strong workforce with unions preparing for a showdown with managers at Airbus headquarters in Toulouse on Wednesday.

Any severe French job cuts would risk political uproar ahead of presidential elections in April and May next year.

Prime Minister Dominique de Villepin waded in to a row over maintenance job cuts at sister firm Sogerma in the summer and unemployment of 9 percent is a chronic sore in French politics.

"We've had enough now," said Xavier Petrachi, a CGT union official at Airbus in Toulouse. "This plan is just to satisfy the shareholders, who are getting out anyway and abandoning the staff. So we are calling on the governments to step in."

The French government owns 15 percent of EADS. DaimlerChrysler, the German car firm, and French media group Lagardere are reducing their stakes by 7.5 percentage points each to 22.5 percent and 7.5 percent respectively.

Daimler said it would review its own profit forecasts in light of the EADS problems.

French Finance Minister Thierry Breton said late on Tuesday he stood by EADS and called its recovery plan "credible."

(Additional reporting by Nicolas Fichot, Mark Bendeich, Sebastian Tong, Juliette Rouillon)

http://news.yahoo.com/s/nm/20061004/...port_eads_dc_7

doug_999

Well the fact is, only Airbus has an airplane this big. The new 747-800 "can" seat up to 500 - but not in a full three class configuration like the A380. So while airlines can threaten and moan, the fact is, they will probably glady take the airplane as soon as they can get it - to add sugar to the mix, they are going to get them discounted as well (these delays mean Airbus has to chop the price).

Still back to the original post, none of this is good for their stock - nor DCXs

Lil4X

Airbus may have fallen into the same trap that several other French national industies have, too deep pockets. I worked on the development of a large oilfield electric drilling system (1200 hp+). Our first competitor was a French company that decided to power their unit hydraulically. Leave it to the French for developing something totally impractical, but elegant from an engineering standpoint. They threw money at it for years, never needing to turn a profit.

For 60 years "power swivels" used hydraulic motors to turn the workover string on service rigs to clean out existing oil and gas wells. The French missed the fact that drilling the well required orders of magnitude more power and load capacity. While the little service units were pretty successful, they weren't heavily stressed and they only had to operate for a few hours a week. A wheelbarrow is a great tool for transporting a few shovelfuls of dirt, but if it is scaled up to haul 40 yards, it will open whole new areas of hurt on you.

Pumping a hundred GPM of hydraulic fluid at nearly 2000 psi meant a huge horsepower loss, a lot of heat, and when seals failed in the motor working high overhead, (about every three or four days), it produced a spray of hydraulic oil that would have impressed Steven Spielberg. We used to tell our customers that at least it kept you from having to paint or lubricate anything for fifty yards in any direction. That function was automatic with their product.

The problem was that they saw an elegant solution that outran the problem. 4" hoses pressured with oil to 2000 psi have all the flexibility of a 12" I-beam. It’s an unfortunate fact that things that go 'round and 'round at high speed under high pressure and heavy loads have difficulty maintaining their sealing properties. Hydraulics push things extremely well, but turning them at the outer edges of the performance envelope of speed and torque is another matter. Mazda had a similar experience with the Wankel, a great idea, but a long way from practical in its intended application. It would be nice if pigs could fly too; but they don't. Strapping wings on them and sticking a rocket motor in a convenient orifice isn't going to turn them into aviators, either.

Airbus has gotten themselves into the same fix - after the success of the A320, they began scaling up. What works very nicely for a regional jet may not scale up to intercontinental proportions well. I type reasonably well, but my piano teacher wrote me off as a dead loss in my teens. Just because you have a particular skill doesn't mean it applies to all venues. Ask my family. The French are reluctant in the extreme to accept second place - to continue to build a fine regional jet that sells well against the competition from Boeing.

It's going to cost them. They did a good job with the A320, but failed to realize that the A380 was a WHOLE lot more than just a bigger blueprint. Developmental problems plague them, and probably will for some time to come. DC needs to cut and run - before the stampede begins. It looks like they are edging their way toward the door . . .

r4z0r3ck

isn't boeing in trouble also? i don't know about the commercial airliners but i do know the privitized planes (ie. fighter planes, jets etc) division is going to lay off a lot in a year or 2.