AIRBUS RECALCULATES ITS SUPERJUMBO MATH
Airbus A380 Program Needs 420 Sales To Break Even: EADS

PARIS, Oct 19, 2006 (AFP) - Delays to the Airbus A380 superjumbo jet program mean that it will now have to sell 420 planes to break even compared with a previous estimate of 270, the parent group EADS said Thursday.

The plane has an average catalogue price of EUR 244 million and 159 firm orders have been received so far from 16 airlines.

That is a 155% increase in breakeven, and a huge hit to profitability. After breakeven each order becomes enormously profitable. Sales are projected to reach a maximum 880 orders by 2025. The original breakeven left 70% of sales as the most profitable production. The revised breakeven leaves only 48% of sales to the most profitable production.

But that is not just money, Airbus production is sized to deliver forty-five A380s a year. If Airbus were at full production that would put the original breakeven 6 years off and the revised breakeven 9⅓ years off. But Airbus isn't at full production and doesn't expect to be till 2010. Airbus will deliver only a single plane next year and, possibly, an additional 39 planes tops between 2008-2010, which pushes breakeven out another 3 years, which is an additional 6+ years before the A380 becomes profitable over the original breakeven.

All of this will take place amid the do-or-die crisis administration of a company makeover involving meddling governments, internecine management, and hostile unions -- all sure to go smoothly. The restructuring plan created by the 100-day CEO Christian Streiff, who despite adamant denials from Airbus did indeed resign, will be implemented by brand new CEO Louis Gallois.

NEW AIRBUS CHIEF TO STICK WITH OLD CHIEF'S RESCUE PLAN

PARIS October 10, 2006 (AFP) - Speaking Tuesday to Europe 1 radio, Gallois said that a rescue plan called "Power8" would be implemented quickly, but that detailed preparations would require "several months of work".

... Morgan Stanley analyst Eric Chaney commented in a research note that the plan, on which the future of the company depended, "has a name...but it does not have much substance".

The crisis was largely the result of "excessive political interference" he told AFP Tuesday.

Although governments might now have a short-term role to play, "to secure the long-term sustainability of this company, governments will progressively have to move out. [Otherwise] the very future of the company could be jeopardised."

The crisis posed a broader threat to European economies in that the aerospace sector helped drive "innovation and productivity for the economy" overall.

Airbus makes planes at two sites in Germany and France under an industrial model that protects jobs but adds to costs and complexity.

PFFT (What is this?): Possible planes sometime soon ½ | Rayonnement français 0