A350, A320 Replacement Likely Delayed by Declining Dollar

[Matt Molnar]

Airbus's currency exchange troubles could multiply (http://www.iht.com/articles/2007/11/23/business/airbus.php)
By Nicola Clark
Published: November 23, 2007

PARIS: The steady decline of the dollar against the euro could force Airbus to slash its spending on future aircraft programs and technologies, company officials said Friday, a prospect that could push back development of a successor plane to the highly profitable A320 by several years.

"It seems clear that the narrow-body program is going to be pushed off to the side," said Nick Cunningham, an aerospace industry analyst at Evolution Securities in London, referring to the European plane maker's plans to build a new, more fuel-efficient single-aisle jet to replace the A320. He estimated that the new plane, originally expected to enter service by about 2013, might be postponed "to 2017 or later."

Thomas Enders, the Airbus chief executive, signaled the prospect of steep cuts to the R&D budget Thursday in a speech to German union representatives in Hamburg. In a discourse peppered with uncharacteristically forceful language, the normally low-key Enders said a further weakening of the dollar could have a "life-threatening" effect on the plane maker. He said the company had already "crossed the pain threshold." Read More... (http://www.iht.com/articles/2007/11/23/business/airbus.php)

[PhilDernerJr]

Pardon me if I'm not understanding this completely, but with the exception of European planes costing more when airlines in the US want to purchase them, how is the declining dollar affecting Airbus?

With all the problems that Airbus has had, the mistakes they've made and flat out human error...they want to imply that their problems and the threat to their entire company is at the fault of the American economy?

[Midnight Mike]

Pardon me if I'm not understanding this completely, but with the exception of European planes costing more when airlines in the US want to purchase them, how is the declining dollar affecting Airbus?

With all the problems that Airbus has had, the mistakes they've made and flat out human error...they want to imply that their problems and the threat to their entire company is at the fault of the American economy?

Airbus prices aircraft in the US dollar, when Airbus makes a sale, they then have to convert that sale into Euro. So, the stronger the US Dollar becomes, Airbus makes less profit......

[adam613]

Airbus prices aircraft in the US dollar, when Airbus makes a sale, they then have to convert that sale into Euro. So, the stronger the US Dollar becomes, Airbus makes less profit......

...which is exactly the opposite of what's going on here. They are delaying the A350 due to the weak dollar...

[T-Bird76]

Mike I think you mean the opposite. Right now the Dollar isn't worth as much as the Euro so when it gets converted into Euro's the revenue on the sale isn't as worth as much as it should be. Its good for the customers but not good for Airbus right now. Airbus is also a bit stretched right now on capital, the A380 cost a mint and the A350 isn't going to be cheap to develop. Launching another airliner right now would be some feat for them.

[Midnight Mike]

Mike I think you mean the opposite. Right now the Dollar isn't worth as much as the Euro so when it gets converted into Euro's the revenue on the sale isn't as worth as much as it should be. Its good for the customers but not good for Airbus right now. Airbus is also a bit stretched right now on capital, the A380 cost a mint and the A350 isn't going to be cheap to develop. Launching another airliner right now would be some feat for them.

Thanks Tommy, that was a typo :shock: , I went to say weaker dollar.......

As you said, the A380 fiasco has drained Airbus of capital, to add to that, the delay to the A400 program, & of course, Airbus changed the A350 program about 4 times....

Each error cost Airbus money downline, would imagine right now the Airbus accounting department must be pulling their hair out of their head :mrgreen: