atomic_fungus (atomic_fungus) wrote,
atomic_fungus
atomic_fungus

#450: Airbus gets a bunch of orders at the Paris Air Show

It was "dead tree media" where I saw the story--I think it was the Southtown Economist which is really only suitable for wrapping fish--but there has to be an AP story somewhere. I'm just too lazy to go looking for a link.

Airbus is in trouble. The A380 is two years late and the A350 won't go into production until 2013. Because of the problems with the A380, they're hemorrhaging money and having to lay off people--which is really something for the high-taxation, high-unemployment socialist economies of France and Germany. (There have been protests, of course, particularly in France.) It takes an enormous about of bureaucratic effort to lay people off in those countries, so most employers staff only for lean times as it is; having to lay off workforce means serious trouble.

Meanwhile, Boeing is perking along merrily.

Airbus is touting this year's Paris Air show, however, as a big plus for the company: they have received a record number of orders--295 is the number I remember offhand--for new aircraft, totaling some close-to-eleven-figures amount of dollars.

Sitting there and reading the article, I protested, "But you guys can't even start building the thing [the A350] before 2013!" I later realized that the article doesn't specify which aircraft were ordered--it was probably all sorts--nor does it explain what delivery dates are expected. It did mention that Airbus will cite a "letter of intent" as a "sale": "American Airlines intends to buy an A350" coming from the right person is enough for Airbus to pop the cork on the champagne bottle.

The people who rightfully want there to be competition in the aircraft market purposefully try to support Airbus. I don't happen to like Airbus for a panoply of reasons but Boeing needs competition, particularly since the company bought just about every other competing company. Still, Airbus should only announce confirmed, "we signed the paperwork" types of orders. In a few years some of those "record numbers" of orders are going to shake out, and in the end some fraction of them will actually put money into Airbus' bank accounts. In the short term it makes Airbus look like it's beating Boeing, but industry insiders know--and are not afraid to speak--the truth.

Regardless, Airbus is not going to go out of business. In the worst case, the governments of France and Germany will not allow it to, like the US did with Chrysler in the early 1980s. It represents too much employment and tax revenue--so their bungles with the A380 and the A350 won't be fatal. Ultimately this will be good for the people who buy large aircraft, if not-so-good for taxpayers in Germany and France...but Airbus going out of business would be bad for just about everyone in Europe, one way or another, and for airlines, which would then have to buy aircraft from Boeing.

And, come to think of it, it would be bad for Boeing, too--because Boeing would then be facing antitrust suits and probably be forced to split up...which, most likely, would end up being bad for the American economy. The profound loss of jobs in Europe in the wake of a collapse of Airbus would actually be bad for us, by itself, since the things we export to Europe wouldn't be in as much demand.

(Eee, imagine Boeing buying Airbus...the company did that with every American manufacturer of commercial jets that fell before it. Then there would be a bunch of antitrust lawsuits, here and in Europe.)

Ultimately I think much of Airbus' announcement regarding their "record" orders was merely PR, an attempt to offset the negative news about the A380 and A350. It's not wrong or bad or even misleading, but I don't think they're poised to pound Boeing in the ground, either. Considering the relative strengths of each company, even if every order is a "hard" one, Airbus is still #2.
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