QUOTE AND NEWS
Financial Times  Aug 24  Comment 
Possible move comes after European aerospace group loses $2bn helicopter contract to rival
Reuters  Aug 21  Comment 
Poland's opposition party head, leading the opinion polls to become the next prime minister, said on Friday the government's decision to award a $3 billion contract to...
newratings.com  Aug 19  Comment 
SCHIPHOL-RIJK (dpa-AFX) - Allegiant Travel Company (ALGT) announced an agreement to purchase its 50th Airbus aircraft, an A320, from Airbus Financial Services. By the end of 2015, the company's in service Airbus fleet will number...
Benzinga  Aug 18  Comment 
Woodward, Inc. (NASDAQ: WWD) today announced that it signed an agreement with Aircelle (Safran) to supply hardware for the TRAS (Thrust Reverser Actuation System) for the Airbus A330neo jetliner. Woodward will design, develop, and manufacture a...
Forbes  Aug 18  Comment 
Airbus has started production on a new wing for the A350-1000, considered to be the next generation of the new wide-body airliners in the A350-XWB family. The wing, 32 meters long and six meters wide, morphs in flight changing shape for...
Clusterstock  Aug 17  Comment 
By Tommy Wilkes and Siva Govindasamy NEW DELHI/SINGAPORE (Reuters) - Indian budget airline IndiGo has finalised the purchase of 250 A320neo aircraft, Airbus said on Monday, handing the European company its biggest-ever order by number of planes...
Reuters  Aug 14  Comment 
China Eastern , the country's No.2 airline by market value, plans to acquire 15 Airbus jets for about $3.6 billion to meet booming demand for air travel.
Wall Street Journal  Aug 12  Comment 
European Space Agency kicked off development of Europe’s newest space rocket with the award of a $2.65 billion contract to Airbus and Safran.




 
TOP CONTRIBUTORS

The European Aeronautic Defence and Space Company (EADS.PA) is the dominant aerospace company in Europe today. Its largest subsidiary, Airbus S.A.S., is an aircraft manufacturing company based out of several European nations, with the majority of its operations in France, Germany and Spain. The majority of EADS's profits arise from Airbus' operations.

Airbus and its primary competitor Boeing control most of the commercial airplane industry. Recently, Airbus has faced a barrage of difficulties stemming from delays with both the A380 and A350. These delays could cost Airbus more than $4B in the form of penalties, higher production costs and order cancellations. As a result of these delays Airbus is also significantly behind Boeing in terms of its current production cycle. It may be years before they can launch a new model that can effectively compete with Boeing's latest aircraft. In a positive development for EADS, the company beat 1Q08 sales and earnings forecasts on the strength of strong sales across all major divisions other than Airbus.

So true. Honesty and everything recgoniezd.

Trends and Forces

Future of Aviation: Hub and Spoke vs. Point to Point

In investing such a great deal of its resources towards the development of the A380, Airbus has made a bet on the growth of the Hub and Spoke model of transport. If this model takes hold in the future, it will bode well for the A380 as it can cater to high-density routes. If a point-to-point model of transport takes hold, the existance of extremely high volume routes will be minimized thereby lowering the demand for the A380.

Fuel Costs

Airplane fuel costs account for a large part of airline operating costs. Fuel prices move in tandem with oil prices, their primary determinant. When fuel costs rise airlines have two choices: pass on higher fuel costs to passengers, decreasing consumer demand for travel, or absorbing costs direct order fewer aircraft. Rising fuel costs can also lead to greater demand for more fuel efficient aircraft.ly .

That's ralely thinking at a high level

Aviation Sector Demand

Demand for Airbus Aircraft is determined by the success comercial airlines, which is in turn related to the fortunes of the individual airline and the state of the Aviation industry as a whole. The Aviation industry is extremely cyclical in nature, with downturns resulting from freak occurrences such as terrorist attacks. In taking orders for Aircraft, Airbus takes a risk that orders may be later cancelled. Generally, when airlines place orders, they pay between 3-5 percent of the total costs on order, and the next 20% in installments over the next year or two, while the final 75% is paid upon delivery. This backlog represents a potentially high risk in the event of a recession or large default.

International Demand

The commercial aircraft industry currently lies at a turning point in the dynamics of international aircraft demand. Traditionally emerging markets have accounted for less than 5% of commercial aircraft demand but over the course of the next twenty years, 1 in 5 aircraft deliveries will be to emerging markets. With traffic growth rates of 10% a year, markets like India and China will be crucial to the successes of Airbus.

Aircraft Fleet Growth in India and China
Country Passenger Fleet Size in 2005 Passenger Fleet Size in 2025 Freighter Fleet Size in 2005 Freighter Fleet Size in 2025
India 190 959 8 134
China 758 26666 33 409

This trend continues to the rest of the emerging world in Eastern Europe, Latin America, the CIS, and Africa. Traffic Growth rates in the developed world will average 4-5% compared to 8-10% for the emerging world.

Competition

Airbus and Boeing dominate the manufacturing of commercial aircraft. Currently Airbus has 48% of future orders in terms of value and 51% percent of orders in terms of total aircraft. Airbus dominates in the category of narrow-body aircraft orders with its workhorse A320. Boeing dominates in the more lucrative category of small/medium wide-body orders.

References

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