Well, I’ve been on the road for a couple of days so maybe I’m missing something, but I am struggling to understand all the commentary on Airbus’ new China order. Truly we are in the proverbial interesting times when you can sell 160 aircraft, including 50 widebodies, and the general consensus is that you’ve really screwed up this time. This Bloomberg piece in the Seattle Times pretty much sums up the situation.I appreciate that all is not well at Airbus, but the gloom-meisters do really seem to have gone over the top this time. Zafar Khan of SG Securities, London plumbs hitherto unmined depths of pessimism. I quote: “Even if they were selling these planes at list price, given where the dollar is, are they able to make any real profit?” Khan, you will not be surprised to learn, rates EADS a ‘sell’.
My cheery chum Richard Aboulafia, who I suspect has never seen toast land jammy side up and won’t believe it can happen until he does, has fractionally less apocalyptic views than Khan. Just. The Sage of Fairfax reckons that Airbus and Boeing are ultimately headed for 50/50 in China – which I suspect is correct, largely on political grounds – but thinks Airbus is doing it the expensive way by assembling aircraft in-country.
Well, Airbus already admitted that Chinese built narrowbodies (four a year in 2011 by the way) will be costlier to produce than the Toulouse output, for now at least. But the 50 A330s will be done the tried and trusted Airbus way and I think they’ll be making a buck on those.
Incidentally, I don’t think anyone knows where 40 of the 50 A330s are going, but I wonder if it is the realisation of the heavy hint from John Leahy at the Asian Aerospace show when he said that the sudden resurgence of A330 sales…has been driven by increased use of the aircraft to provide more capacity on regional routes. He believes that the same phenomenon will eventually emerge on Chinese domestic routes as the country’s airlines use larger aircraft to overcome infrastructure constraints.