I think Boeing has lost it

[yavoon]

Originally posted by paiktis22
but airbus is winning

it makes u happy that a fat bloated inefficient airline subsidized massively since its inception over 30 years ago has just recently infused w/ ever growing amounts of "loans" surpassed boeing in sales?

[yavoon]

Originally posted by DanS


I don't believe this to be the case. Further, I wouldn't want the gov't to save Boeing, even if it had the unfortunate chance to do so.

thats moronic. yes lets let the inefficient bloated france have complete control so instead of subsidies they can merely overprice their product to gain back the cost of their ineptness.

that'd cost the US economy more than floating boeing ever would.

[Mazarin]

Originally posted by yavoon
the magnitude of the giving is in vast discrepancy.

unless u think boeing got 4 billion recently?

It wasn't given...it was loaned.:P Boeing has been claiming that subsidies for Airbus have been too high -but it has never been able to prove its claims.

[yavoon]

Originally posted by Mazarin

It wasn't given...it was loaned.:P Boeing has been claiming that subsidies for Airbus have been too high -but it has never been able to prove its claims.

"prove that the subsidies were too high"

is that like proving that something is too cheap?

and like I said, loans are often rolled over or forgiven. this is nothing new of course. just the recent jumbo jet and the size of the subsidy are new.

[Spiffor]

Originally posted by yavoon
like I said the loans are often forgiven and/or rolled over.

What about facts? So far, you've said "airbus is subsidized entirely by the gov't".
The figure to back your assertion is a 4bil€ loan to Airbus.
Since Airbus had a turnout 5 times superior to that loan, and in only one year, I fail to see how "entirely subsidized" it is.

[Spiffor]

And please explain us what makes Airbus "inefficient". Besides, I fail to see how this inefficient bloated French company could ever overprice its products: after all, it seems it's very easy to outcompete Airbus once the French government stops to pay all its bills

[yavoon]

Originally posted by Spiffor

What about facts? So far, you've said "airbus is subsidized entirely by the gov't".
The figure to back your assertion is a 4bil€ loan to Airbus.
Since Airbus had a turnout 5 times superior to that loan, and in only one year, I fail to see how "entirely subsidized" it is.

ur comparing a net loan to gross projected sales? yah ok. gw sparky. ur on firm financial footing there.

[Colon™]

Dan or TCO, could you tell which background the current CEO of Boeing has? Engineering? Something else?

[Spiffor]

Originally posted by yavoon
ur comparing a net loan to gross projected sales?

No, I am exposing your nonsense when you say "airbus is subsidized entirely by the gov't".

Airbus gets much, much more money from sales than from the gov't. For an "entirely subsidized" company, I find it a little strange

More accurately, you could say Airbus is being helped by the European govs. That would be true. Just as true as the US gov is helping Boeing, albeit with the more indirect way of pressuring potential Airbus buyers.

[yavoon]

Originally posted by Spiffor

No, I am exposing your nonsense when you say "airbus is subsidized entirely by the gov't".

Airbus gets much, much more money from sales than from the gov't. For an "entirely subsidized" company, I find it a little strange

More accurately, you could say Airbus is being helped by the European govs. That would be true. Just as true as the US gov is helping Boeing, albeit with the more indirect way of pressuring potential Airbus buyers.

u mean 50% of the gross revenue of airbus is not given to them by the gov't? I sure as hell hope so. that would be beyond ridiculous. unfortunately u have an issue w/ scale.

Airbus could not exist w/o the gov't support. u keep trying to imply that boeing is basically the same thing as airbus cuz they both receive "government benefits." which is just as ludicrous as saying construction workers are compensated as well as doctors cuz they "both receive a paycheck." yet u continue to harp the point like one actually exists.

[Colon™]

And regarding the point whether it makes economic sense or not to develop a superjumbo, as far as I'm concerned it's irrelevant. Boeing was told it wasn't wise to develop the 707, because there wasn't market for it and yet they did. They were told there wasn't a market for the jumbo and they developed it anyway. It's quite ironic Boeing is now telling Airbus there's no market to build the superjumbo while they themselves often completely disregarded such advice in the past.

I don't want to know about their cash flow or market projections, I want to know why they've gotten so chickenshit.

[yavoon]

Originally posted by Colon
And regarding the point whether it makes economic sense or not to develop a superjumbo, as far as I'm concerned it's irrelevant. Boeing was told it wasn't wise to develop the 707, because there wasn't market for it and yet they did. They were told there wasn't a market for the jumbo and they developed it anyway. It's quite ironic Boeing is now telling Airbus there's no market to build the superjumbo while they themselves often completely disregarded such advice in the past.

I don't want to know about their cash flow or market projections, I want to know why they've gotten so chickenshit.

its hard to have balls when going up against a company that can receive such heavy subsidies. it cost ~11 billion to develop the superjumbo. if both boeing and airbus decided to do it, airbus has a 4 billion headstart. plus airbus would be able to work out deals(as they have in the past) to sell planes at negative margins.

and also the superjumbo is not a success yet. I think it will be. but if boeing is right, it is not at this juncture that we would know it.

[Spiffor]

Originally posted by yavoon
u mean 50% of the gross revenue of airbus is not given to them by the gov't? I sure as hell hope so. that would be beyond ridiculous. unfortunately u have an issue w/ scale.

Well, I thought "entirely" meant "100%". Silly me. Anyway, if I understand correctly, the actual monetary gain from these net loans is the interest rate, that Airbus is supposed not to pay (and I'm not even sure of that, as I don't know precisely what "net loans" mean in English).
Let's see, 2% of 4 bil means that Airbus gets directly subsidized by... 80 mil € a year . Gosh, what an immense input of money for such a small company. Airbus would obviously have no chance to survive nor to compete without such an incredible subsidy.

Airbus could not exist w/o the gov't support.

Wrong. Airbus could not have existed without the gov't support. It was a protected business for decades, back when Boeing was the absolute ruler of the skies.
But now, the money flows through Airbus, and the subsidies merely help the company being more bold in its R&D. Airbus would probably be not as successful in the near future as it is now if we stopped subsidizing it, but it's a definitely viable company, that has definitely enough qualities to worry Boeing for many years to come.

[yavoon]

Originally posted by Spiffor

Well, I thought "entirely" meant "100%". Silly me. Anyway, if I understand correctly, the actual monetary gain from these net loans is the interest rate, that Airbus is supposed not to pay (and I'm not even sure of that, as I don't know precisely what "net loans" mean in English).
Let's see, 2% of 4 bil means that Airbus gets directly subsidized by... 80 mil € a year . Gosh, what an immense input of money for such a small company. Airbus would obviously have no chance to survive nor to compete without such an incredible subsidy.

no. and here we go.

the advantage of a gov't 4 billion loan to someone like airbus is quite vast.

one its flexible, it can be paid off if profitable, rolled over or sometimes forgiven.

two its attainable. not everyone will loan u 4 billion. now I'm not familiar w/ how easy it is to acquire a 4 billion dollar loan, but my guess is not very.

three. u wont go down cause of it. a 4 billion dollar private loan means if u dont pay u lose the company. foreclosure seizure of assets. a 4 billion dollar loan from france to airbus carries zero such risk.

a no risk loan to cover a lil over a third of a new planes development. not much of an advantage? and that doesn't even consider the prior 30 years of subsidies they have received.

[yavoon]

just for a taste of how gov't run airbus is.

1/02/04
Reuters Spain withholds A380 funds as seeks more work Friday January 2, 8:54 am ET MADRID, Jan 2 (Reuters) - Spain has withheld some funding from Airbus' A380 superjumbo project as it negotiates for a larger share of the work in the project, Science and Technology Minister Juan Costa said on Friday. "We believe that part of the (A380) industrial plan is not being fulfilled and because of that we have withheld substantial funds this year," Costa told a news conference. "We have decided not to pay them until there is a clear agreement over the participation of the Spanish...

they are still negotiating which country should get how many jobs. note: not which country would be most efficient or profitable. but politically, which country should get them.

[Spiffor]

You argue Airbus needs 11 billion to develop the superjumbo. So, if we boil down to it, the flabbergasting, shocking subsidies that only allow Airbus to exist end up being an ease of the burden of 1/4 of the development costs of one model.
Airbus invented three models this year. Admittedly, they are less revolutionary than the SuperJumbo, and probably required less than 11 billion.

But if I understand correctly, you're arguing that a company enjoying safe credit for 1/4 of a R&D project, i.e. a company that only relies on itself for all production processes and all other R&D, and which will have to end up paying the loan, is doomed to die if this 4bil loan doesn't exist?

[Adam Smith]

We've been through this before...

If Airbus gets tax breaks or government loans (which would be at a lower rate than Airbus could get in the market, since governments have less risk), then Airbus is not paying the market price for its inputs, and is therefore being subsidized.

If the US military pays Boeing to do R&D for a technology which also turns out to have commercial application, then the military and commercial applications are said to be joint products of the R&D. Once the technology is developed either application can use it. The commercial application is NOT being subsidized because there is no economically or logically defensible way to assign the costs of R&D to either product. I.e., there is no way of determining how much of the development cost each buyer "should" pay.

[yavoon]

Originally posted by Spiffor
You argue Airbus needs 11 billion to develop the superjumbo. So, if we boil down to it, the flabbergasting, shocking subsidies that only allow Airbus to exist end up being an ease of the burden of 1/4 of the development costs of one model.
Airbus invented three models this year. Admittedly, they are less revolutionary than the SuperJumbo, and probably required less than 11 billion.

But if I understand correctly, you're arguing that a company enjoying safe credit for 1/4 of a R&D project, i.e. a company that only relies on itself for all production processes and all other R&D, and which will have to end up paying the loan, is doomed to die if this 4bil loan doesn't exist?

u act like the 4 billion is the only help airbus gets. or has ever gotten. its just not the case. 4 billion is an EXAMPLE. not an entirity.

[Spiffor]

Originally posted by yavoon
u act like the 4 billion is the only help airbus gets.

Does it get other help at the moment we are speaking?

or has ever gotten.

I don't. Airbus was a protected industry for a very long time, and it's still protected to a slight extent. I'm not trying to deny it. Heck, I even think it is a good thing, and I'd love to see Airbus as the first EU-nationalized company. I'd love to see it "entirely subsidized" as you put it, and to see all its profits going in the EU's treasury.

However, I am merely opposing the opinion that today's Airbus would have no chance to compete, and even no chance to survive, if such subsidies were stopped.

Indeed, Airbus would perform less well should the subsidies stop. But to think it would simply die completely ignores the serious industrial, scientific and commercial base the company relies on. Airbus is a viable company, subsidies or not.

[yavoon]

[QUOTE] Originally posted by Spiffor

Originally posted by yavoon
u act like the 4 billion is the only help airbus gets.[/q] Does it get other help at the moment we are speaking?

Quote:

or has ever gotten.

I don't. Airbus was a protected industry for a very long time, and it's still protected to a slight extent. I'm not trying to deny it. Heck, I even think it is a good thing, and I'd love to see Airbus as the first EU-nationalized company. I'd love to see it "entirely subsidized" as you put it, and to see all its profits going in the EU's treasury.

However, I am merely opposing the opinion that today's Airbus would have no chance to compete, and even no chance to survive, if such subsidies were stopped.

Indeed, Airbus would perform less well should the subsidies stop. But to think it would simply die completely ignores the serious industrial, scientific and commercial base the company relies on. Airbus is a viable company, subsidies or not.

I think now that it has its orders for the A380 its financial status is in good. so in that u r correct. before then I would disagree.

[Spiffor]

Finally I read an answer from yavoon that doesn't make me want to smah my head on a wall

[DanS]

thats moronic. yes lets let the inefficient bloated france have complete control so instead of subsidies they can merely overprice their product to gain back the cost of their ineptness.

that'd cost the US economy more than floating boeing ever would.

Boeing would sell its assets to somebody who could make a go of it, despite Airbus subsidies. If Boeing goes out of business entirely and Airbus tries to recoup the subsidies by charging unwarranted higher prices, then I expect that it then would be worthwhile for an American company to resurect the Boeing brand.

[yavoon]

Originally posted by DanS


Boeing would sell its assets to somebody who could make a go of it, despite Airbus subsidies. If Boeing goes out of business entirely and Airbus tries to recoup the subsidies by charging unwarranted higher prices, then I expect that it then would be worthwhile for an American company to resurect the Boeing brand.

ressurect? u can't keep a company on ice. and buying the boeing "name" hardly does you any good.

and just to play out the hypothetical. what are u going to say to potential investors. "yah we could make lotsa money if airbus does absolutely nothing to counter us."

[DanS]

ressurect? u can't keep a company on ice. and buying the boeing "name" hardly does you any good.

and just to play out the hypothetical. what are u going to say to potential investors. "yah we could make lotsa money if airbus does absolutely nothing to counter us."

You can keep Boeing's assets on ice. Jumbo jet designs locked up in a vault at Lockheed-Martin, for instance.

Regarding investor response to a pitch for a new aircraft design, remember that Airbus likely would not price to its competition unless it were a significant rival. There should be ample profitable room for a new design. After all, that's what Airbus found to be the case with Boeing.

[DanS]

And regarding the point whether it makes economic sense or not to develop a superjumbo, as far as I'm concerned it's irrelevant. Boeing was told it wasn't wise to develop the 707, because there wasn't market for it and yet they did. They were told there wasn't a market for the jumbo and they developed it anyway. It's quite ironic Boeing is now telling Airbus there's no market to build the superjumbo while they themselves often completely disregarded such advice in the past.

I don't want to know about their cash flow or market projections, I want to know why they've gotten so chickenshit.

Well, to be fair, they're following their own prescriptions. They canned their own superjumbo.

As for making business decisions in the absence of a market, don't you think it's rather like playing Russian Roulette? Just because you did it last time and were successful doesn't mean you should do it this time.

Anyway, they are taking risks, just in a different area. The new 7E7 doesn't have any orders yet. But the risk is assumed to be smaller, considering that it targets discount carriers, a proven and growing market.

[TCO]

Originally posted by BeBro
One could say the ridiculous prices some US companies (incl. Boeing) get for defense tech stuff are like subsidaries as well....AFAIk there was trouble ´bout it more than once in the congress.....

But Boeing still makes decisions on things like the Jumbo on the basis of that SBU earning a profit. The "subsidies" in defense (btw, anybody remember the layoffs and bankruptcies of defense companies 10 years ago) are not tied to civilian business. You have some companies which operate defense primarily. Others which operate as conglomerates. I work for one. The SBUs are very seperate.

Oh...and government contracts are not all cake either. They can be a pain in the ass. And sometimes the govt spends so much money on making sure they don't get ripped off that they do. And the minority crap...that can be a real pain in the ass. Add in the need to open your books and don't be surprised that government contracts sometimes cost more than expected. Oh...and the government does stuff like quadrupling orders during a war, requrieing you to dump other business, not allowing you to raise price (although at capacity), and when a war ends, they will cancel orders. That is all fine. Just realize that vendors who take that risk expect compensation. Some people just won't play that way...

[TCO]

Originally posted by Colon
Dan or TCO, could you tell which background the current CEO of Boeing has? Engineering? Something else?

Did you check the website? Or the SEC filings? There are usually bios.

I actually have someone I know with knowledge of corp strategy and situation at Boeing. Have not talked with him about them recently and am hesitant to do so. and even more hesitant to post stuff on this board.

[TCO]

Originally posted by Colon
And regarding the point whether it makes economic sense or not to develop a superjumbo, as far as I'm concerned it's irrelevant. Boeing was told it wasn't wise to develop the 707, because there wasn't market for it and yet they did. They were told there wasn't a market for the jumbo and they developed it anyway. It's quite ironic Boeing is now telling Airbus there's no market to build the superjumbo while they themselves often completely disregarded such advice in the past.

I don't want to know about their cash flow or market projections, I want to know why they've gotten so chickenshit.

Sometimes it makes sense to make a product that does not have a market. And sometimes not. Time will tell if they were smart or chickenshit. Regarding the superjumbo, the competitors have been dancing around on it for at least 10 years.

[TCO]

I don't know that the recent scandals and such had anything to do with the decision not to do the superjumbo. I think it has more to do with conservatism (perhaps smart perhaps chickenshit) from the poor business in aircraft over the past few years.

[TCO]

Originally posted by Adam Smith
We've been through this before...

If Airbus gets tax breaks or government loans (which would be at a lower rate than Airbus could get in the market, since governments have less risk), then Airbus is not paying the market price for its inputs, and is therefore being subsidized.

If the US military pays Boeing to do R&D for a technology which also turns out to have commercial application, then the military and commercial applications are said to be joint products of the R&D. Once the technology is developed either application can use it. The commercial application is NOT being subsidized because there is no economically or logically defensible way to assign the costs of R&D to either product. I.e., there is no way of determining how much of the development cost each buyer "should" pay.

Also if the government contract is competetive bid, then the value of the R/D will allow a lower bid. (this is dependant on a competetive market).