Wednesday, June 11, 2014

Does Airbus Have Nerves Of CFRP

Judging by the mood of Airbus, after today's striking announcement that Emirates will not need the service of 70 A350's, it has thrown many unanswered questions to the fore-front. Many an executive may eye the window from ten stories up at a Toulouse office. Its not that Airbus just erased 16 Billion off the books in one fell swoop, but it highlights the exigency of the A330 NEO program over the dead or dying A350-800. Now Airbus is wondering if it has the nerve of metal or laminated plastic.  The choices are few with the back drop of advanced Boeing Technology on both the 787 and 777X coming forth in numbers.

Two Questions are on the table with a third thought floating the room.

Why doesn't the A350-800 take off where customers have abandon this ship or not boarded on it in the first place?

How Come An A330 NEO isn't a good stop gap airplane that will buy time for Airbus until they get it right?

That technological mountain that Boeing built is awfully tall, and look at those beautiful Boeing wings and associated technology.

Airbus has stayed the course as long as they can, by dressing its pigs in advance technology trimmings for its family aircraft. It has has put on plastic panels, made an approachable attempt against Boeing windows. Even provided a Boeing like light show on the interior. But it just just doesn't have that "It Factor", the 787 has, and the Boeing is showing up everyday with its 150 or so flying examples. Airbus didn't even bother with core technology like Boeing did, and even bought barrels of hydraulic fluid for the entire A350 family. How come people didn't like the A350-800?  A perplexing question, the A330 NEO team asked. Now they are thinking of a do-over for its customers with the A330 NEO proposition. (Simile alert) Its like going to the grand ball in a 1990's suit when every body is wearing the newest 787 Tux at the ball (flowers not included).

Airbus has indeed had an Epic week. It was found out, by Emirates no less, who is now dating Boeing with wide body orders and issued an  Airbus break-up with them on XWB types. The ripple effect will be felt by other airline suitors who now question its own portfolios with Airbus. If Boeing keeps cranking out 10-12 a month 787's, and they will, along with pushing the 777X sooner rather than later. Maybe the A350 isn't all that, as Airbus has dressed its pig to the nines while wearing old school styles in a modern setting.

An Epic week indeed. Nothing better than a slug of new Airbus orders for John Leahy as mentioned in his reaction. "We now have production slots open on the A350 assembly and we can serve customers faster." The problem now is its order book when there is a lull aviation orders this month as Airlines are examining and consolidating purchase strategy. Emirates is not the only company doing this type of evaluations. All Aviation companies continuously do this analysis 24/7. Emirates is the first to break in dramatic fashion in 2014. Back in the heady days of the initial 787 order book, Boeing had customers retract orders, as they went back and analyzed financial strength supporting a 787 order. Qantas had to retract on its 787 order and a few other airlines had to regroup, thus stacking up a number of cancellations for Boeing for its 787. Since then, that has not been a problem for Boeing. It has kept growing its order book for the 787. When Leahy stated Boeing had more cancellations than the 70 he just experienced with Airbus, he was correct in-a-way. Boeing has achieved over 1050 787's orders since the beginning of the 787 program and order book adjustments occured when financial minds said, "we need to pull back and reconsider what a big 787 order will do to our finances in a down market" during 2008-2010 period. Airbus is about 30 % behind Boeing with A350 orders comparing Boeing's 787 order book. Looking at the financial quality of airlines who cancelled for either Airbus or Boeing is important. Emirates prints money and Qantas has its cup out asking for money most months. Leahy fails to footnote publically the situation properly, as he usually does when making bold statements. The airlines know and they smile when it happens. Its part of Leahy's salesmanship. The Emirate deal dismissal is a crusher for Airbus! A Qantas/Boeing cancellation was felt, but Boeing recovered with many more 787 orders from others, even in a recession.

This Emirates cancellation will have a large ripple effect on the world of aviation. It will effect decisions Airbus is about to make towards its A330 NEO idea. Old technology will be harder for Airbus to sell its customers, as the A350 lost to the 777X project and the 787 tag alongs. You could say Airbus has finally been exposed. Others will certainly reexamine that exposure from its own order book. You are not the biggest passenger airline company in the world, because of carelessness, Emirates knows this and others have taken note, Boeing is better at these WB aircraft models it has and Boeing doesn't build a super giant airplane, so be it it for the Airbus' A380.

The late time tells me Airbus won't go for a CRFP hail Mary Pass in a A350-800 renovation, but will go all in for full metal jacket in a losing war with the A330 NEO.