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DWC
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 2:42 pm

As some good moderation is going on, prefer to repaste this here as it is also relevant to this thread :

keesje wrote:
150 posts without an order.. :stirthepot: :stirthepot:
:rotfl:
Noshow wrote:
150 orders without a post would be better.
:rotfl:

Actually, given the situation, the reasons for this lack of orders are more interesting than actually adding new birds to the backlog.
1. Airbus are in a dire situation : the Sales & Marketing Office has beem dismantled
2. thus all current campains with middlemen have been put on hold or frozen until cleared of any corruption possibility
3. no SMO means who is then initiating new deals ?
4. Enders has taken control of sales & commercial aircrafts, plus must supervize the investigation, how is he having the time to hoard deals ?
5. the A380 is at a crossroads, no matter what the decision, the consequences are far-reaching for both Airbus & EK and one can be sure they will examine every strategic iteration to the minimal detail & if that requires more time, then more time it is, there is no hurry, can be struck next year or after.

Nothing bad will happen to either companies if Dubai's Air Show ends with 0 Airbus deals.
There may be announcements tomorrow but given the situation, I expect Boeing's sales this year to tower Airbus' - mightily.
 
Breathe
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 2:44 pm

BA1210mk2 wrote:
I just saw this on the BBC:

"Talk about overpromising and under delivering.

Before the Dubai Airshow got underway on Sunday, the media was tipped off to expect an announcement that airline Emirates was buying more A380 superjumbo jets from Airbus.

This was not just any multi-billion-dollar order, but a lifeline for an aircraft programme that is fast running out of buyers.

To add to the drama, Emirates was also buying Boeing aircraft and wanted to bring the US company and its arch rival Airbus together for a joint press conference.

That, said a Boeing executive, would have been “a unique event; never happened in my lifetime”.


But five minutes before the press conference began, the Airbus entourage melted away from the room, leaving the Middle East’s largest carrier to unveil just a $15bn order for Boeing aircraft.

What happened? One source says that after an all-night negotiating session to finalise a deal, Emirates presented Airbus with last-minute demands.

“It's hardball stuff,” he says. “Emirates know how urgently Airbus needs to shift some more A380s. They’ve [Emirates] just turned the screw. Boeing will be talking about this moment for years.”

Maybe it would be unique for this Exec. as Airbus and Boeing have shared the floor before...

https://www.youtube.com/watch?v=h9wkB8nVxnQ
 
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DWC
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 3:05 pm

"Les Echos" - again, posted this an hour ago. Article is not interesting but does say :

1. the projected deal was for 36 frames
2. it is EK who stalled the announcement at the last minute
3. Airbus doesn't care much as with current production rate they can wait until the Chinese market takes off again around 2025
4. EK also have the additional incentive to strike a deal fast to avoid their A380s resale value to plummet.
( they are all leased, so why would they care if it is not to keep new leases pricetags as low as possible ? )

https://www.lesechos.fr/industrie-services/air-defense/030865559164-a380-emirates-met-la-pression-sur-airbus-2129692.php

Also, both Brégier & Enders left the show today ( Leahy still in place sweating )
EK slapped Airbus with the unilateral 787 announcement
not positive signs for an A380 order at the show.
Last edited by DWC on Mon Nov 13, 2017 3:15 pm, edited 1 time in total.
 
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william
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 3:10 pm

Breathe wrote:
BA1210mk2 wrote:
I just saw this on the BBC:

"Talk about overpromising and under delivering.

Before the Dubai Airshow got underway on Sunday, the media was tipped off to expect an announcement that airline Emirates was buying more A380 superjumbo jets from Airbus.

This was not just any multi-billion-dollar order, but a lifeline for an aircraft programme that is fast running out of buyers.

To add to the drama, Emirates was also buying Boeing aircraft and wanted to bring the US company and its arch rival Airbus together for a joint press conference.

That, said a Boeing executive, would have been “a unique event; never happened in my lifetime”.


But five minutes before the press conference began, the Airbus entourage melted away from the room, leaving the Middle East’s largest carrier to unveil just a $15bn order for Boeing aircraft.

What happened? One source says that after an all-night negotiating session to finalise a deal, Emirates presented Airbus with last-minute demands.

“It's hardball stuff,” he says. “Emirates know how urgently Airbus needs to shift some more A380s. They’ve [Emirates] just turned the screw. Boeing will be talking about this moment for years.”

Maybe it would be unique for this Exec. as Airbus and Boeing have shared the floor before...

https://www.youtube.com/watch?v=h9wkB8nVxnQ


When AA made its mega fleet replacement order Airbus and Boieng officials were at the press conference.
 
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william
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 3:11 pm

 
texl1649
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 3:14 pm

Revelation wrote:
Taxi645 wrote:
Like I said a few months ago, it's part of negotiations. Because they want to seal the deal now at the airshow everything is in the pressure cooker and more under the magnifying glass right now:

Indeed the airshow adds pressure to close the deal.

The rulers of Dubai would have liked to have had a nice big A380 order to "sex up" the airshow. The fact that they were willing to screw up the optics of their own air show is pretty remarkable to me. It's also pretty remarkable that they were willing to throw Airbus under the bus while doing so.

This is definitely time to get out the popcorn and wait to see how it ends. Will EK back down on their demand, or will Airbus make a decade long commitment to produce the A380?

STC's statement suggests they aren't going to be backing down even if that means no deal at the air show. Airbus has been silent so far.


Agreed. The challenge is, it's really the EK380, not the A380. If EK won't commit to 10 years at 12 a year, basically you have to ask why. My suspicion is that optics are still everything for EK. There's not a lot of 'prestige' left in the A380, vs. having the world's largest mega twin fleet, and moving to the "next big thing" which will be the 777-10X, with, basically, superior economics and equivalent suite prestige.
 
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speedbored
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 3:47 pm

What I've been hearing on the rumour mill is that this order was as good as a done deal - EK have agreed to order enough aircraft to keep the line going for roughly the next 10 years, at the new low rate, and Airbus have agreed to supply those aircraft at an agreed price and schedule. Almost everything was in place for an announcement at the show.

But, at the last minute, EK's owners asked for some far more hefty than usual penalty clauses to be inserted, to compensate EK if Airbus do decide to close the line down before all of EK's aircraft have been delivered.

It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.
 
bigjku
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:09 pm

bigjku wrote:
mjoelnir wrote:
racercoup wrote:

Over the last (5) years Airbus has generated about 2 Billion dollars in "Free Cash Flow" FCF is the cash left after funding operations and is the key source of funding for R&D, production ramp-ups etc. In the same (5) years Boeing has generated 32 Billion FCF. Airbus may be gambling, but it's sitting at the Big Boy's table with $25 dollar chips. This A30 program has become a bottomless pit and is no doubt costing progress in other areas, but no one in upper management has the backbone to end it. Christ Airbus was not even able to leverage the A380 to win the A350/787 battle. So much for Leahy being a strong sales negotiator.

This whole EK situation is a major embarrassment for Airbus. They lose money keeping EK supplied with new A380's while Boeing sells EK profitable models. wow


You do know that you calculate free cash flow, from cash flow and to calculating cash flow you start with profits. If you skew profits by using program for cost accounting, you skew cash flow and skew free cash flow. So you can not compare Boeing's numbers with Airbus numbers without calculating the effect of the nearly 30 billion black hole at Boeing, resulting from deferred cost and unamortized tooling and other non-recurring cost.


Umm...what?


To explain now that I have time. Yes you start with net income for this metric. But one component of it is change in inventory. Inventories going up (which is where Boeing has this supposed “black hole” is a drag on cash flow as calculated.

First we should look at how Free Cash Flow is calculated. I am using Morningstar which is nice as it’s pretty clean to look at. Here is Boeing and Airbus for past 5 years which is as far back as it goes for free.

http://financials.morningstar.com/cash- ... ture=en-US

http://financials.morningstar.com/cash- ... ture=en-US

You can see where the change in inventory is reflected directly in the cash flow calculation. If you increase inventory by putting deferred production cost there it comes out of the cash flow line.

Looking back to the period where the cost piled up the fastest we can see the impact the 787 has on cash flow. Airbus given here as well.

http://financials.morningstar.com/ratios/r.html?t=BA

http://financials.morningstar.com/ratio ... ture=en-US

The effect of doing this is pretty clear. In fact it does exactly what the objective of program accounting is. It smooths out the statement of net income. It doesn’t have an effect on free cash flow because deferred cost create a change in inventory which drives down that number.

So the statement by the poster who says Boeing generates far more money with which to invest in things is very true. Over 10 years through 2016 its about $47.3 billion to $12.49 billion. That is why this metric is so important to investors as it’s kind of a bottom line measure. Over 10 years Boeing is More than twice as efficient creating cash to do things with. And of that $12.49 billion $10.8 billion was by the end of 2011.

The issue has been Airbus having a unsteady performance recently over he last 5 years or so. From 2012 to 2016 it drove free cash flow of $1.59 billion. Boeing drove $33.1 billion. The gap is getting worse as in 2017 Airbus has negative free cash of $4.2 billion thru 9 months and Boeing has a positive number of $9 billion.

That is really the biggest thing for Airbus to overcome and what would see their stock take off the most. If they can start to efficiently drive revenue into cash they should be almost self financing. Hell thats why many investors were big on them going into 2017 after the Boeing run up. The expectation is at some point they will generate cash in large amounts. It just keeps not happening and people are noticing.

https://www.fool.com/investing/2017/11/ ... again.aspx
 
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:13 pm

speedbored wrote:
It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.


I think there is more to it. in retrospect the fly strip seems to have been carefully prepared for Airbus to step on.
Murphy is an optimist
 
bigjku
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:27 pm

WIederling wrote:
speedbored wrote:
It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.


I think there is more to it. in retrospect the fly strip seems to have been carefully prepared for Airbus to step on.


I am very curious what the ask specifically was from EK. How does one guarantee something like this if the objective is simply to ensure the line is running for 10-years?

Do you just ageee to a cash payment if you stop?

The wording seems strange to me.
 
texl1649
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:33 pm

This board loves to critizize Boeing over accounting practices, including carrying paper losses forward many years, and using cash flow to buy back shares, but it seems it's Airbus shareholders who probably wish they had at least a portion of Boeing's cash flow generating capacity.
 
Egerton
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:47 pm

If I were a senior person in Airbus management, or if I were a member of the Airbus Board of Directors, then in both cases I would be seriously displeased by recent A380 events.

When negotiating, it is best to remember that to make a deal, it has to benefit both sides. It takes two to tango. I think it likely that the offender in this case is the top national leader in that state. Insulting your partner in public can only be done once. I would now be questioning if Emirates are a firm with whom I wish to do business. I would be minded to go home to Toulouse, throw the Emirates paperwork into File 13, and spend my time doing useful work with people who can be relied upon.
 
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:48 pm

WIederling wrote:
speedbored wrote:
It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.


I think there is more to it. in retrospect the fly strip seems to have been carefully prepared for Airbus to step on.


Hi, can you please elaborate on what you mean? Do you think EK set a trap for Airbus? What would be the purpose behind that? Do you think EK is not sincere when they (seemingly) express interest in buying additional A380s? Thanks for your insight. -ir
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Buffalomatt1027
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:53 pm

IslandRob wrote:
WIederling wrote:
speedbored wrote:
It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.


I think there is more to it. in retrospect the fly strip seems to have been carefully prepared for Airbus to step on.


Hi, can you please elaborate on what you mean? Do you think EK set a trap for Airbus? What would be the purpose behind that? Do you think EK is not sincere when they (seemingly) express interest in buying additional A380s? Thanks for your insight. -ir


Emirates wants an A380 NEO.... remember when this plan was originally designed. It was mainly designed in the 90s and using old technology. So i can see Emirates holding a big order over Airbus' head to try and get them to commit long term to the A380 and create a NEO version.

The problem: 777X is coming out and besides Emirates, new A380 orders arent coming in. So is Airbus going to just keep the A380 going just for Emirates? I highly doubt that.
 
Jayafe
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 4:56 pm

texl1649 wrote:
This board loves to critizize Boeing over accounting practices, including carrying paper losses forward many years, and using cash flow to buy back shares, but it seems it's Airbus shareholders who probably wish they had at least a portion of Boeing's cash flow generating capacity.


And what that has biased opinon to do with the topic?
 
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Polot
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Mon Nov 13, 2017 5:00 pm

Egerton wrote:
When negotiating, it is best to remember that to make a deal, it has to benefit both sides. It takes two to tango. I think it likely that the offender in this case is the top national leader in that state. Insulting your partner in public can only be done once. I would now be questioning if Emirates are a firm with whom I wish to do business. I would be minded to go home to Toulouse, throw the Emirates paperwork into File 13, and spend my time doing useful work with people who can be relied upon.

Except right now that firm is the only one who is ordering new A380s. So your choices are 1) severely discount and lose tons of money to get other airlines to order the plane (not really benefiting Airbus...), 2) deal with EK, or 3) stand up and announce that the pride of Airbus/Europe is ending production after ~15 years and only ~300 orders.

Airbus is stuck between a rock and a hard place, they have no leverage when it comes to the A380 program right now.
Last edited by Polot on Mon Nov 13, 2017 5:01 pm, edited 1 time in total.
 
N212R
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:00 pm

DWC wrote:
Yes, EPIRATES are playing a dangerous game, an impression I got from STC's statement yesterday, so very undiplomatic.


Did you suppose a silver tea service and a fancy french tri-color sash would impress the Emirs?
 
N212R
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:23 pm

Egerton wrote:
When negotiating, it is best to remember that to make a deal, it has to benefit both sides. It takes two to tango. I think it likely that the offender in this case is the top national leader in that state. Insulting your partner in public can only be done once. I would now be questioning if Emirates are a firm with whom I wish to do business. I would be minded to go home to Toulouse, throw the Emirates paperwork into File 13, and spend my time doing useful work with people who can be relied upon.


You can pack your toys up and go home OR you dance with the partner that brought you. I say pistols at ten paces! Let's end this masquerade in the only civilized way possible. :biggrin:
 
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DWC
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:26 pm

N212R wrote:
DWC wrote:
Yes, EPIRATES are playing a dangerous game, an impression I got from STC's statement yesterday, so very undiplomatic.


Did you suppose a silver tea service and a fancy french tri-color sash would impress the Emirs?

Irrelevant.
Airbus & EK had been negociating for months & decided on a common announcement ( + one with Boeing in parallel ).
Within 10' of the A380 deal announcement, EK stabbed Airbus in the back & played it solo.
 
Arion640
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:37 pm

A.Like i said before, it won't take much for EK to keep the line open if frame cost is at breakeven.

B. I also don't see the rush to hammer this deal out. There's plenty of time. It's possible we may see an 11th hour annoucement.

C. Whoever is doing the negotiating doesn't have the power to say if the line will be kept open or not.

D. The 777-10X is a paper plane. It's not twin deck and no 777 will ever have the same prestige and status as the A380. A fully twin deck airplane and the largest in the world. Thats why Emirates fly it and need it, Emirates is unqiue because it's entire business model is based around this one airliner. It's easy for non av geeks to confuse an A330/A350/767/777 but you'll never miss an A380. Many on here see it as a whale, but the marketing power behind it is huge and I find in the UK, heaps of people use Emirates because of the A380.
319 320 321 346 388 733 744 752 753 763 772 77E 773 77W 788 E175 E195 F70 DH8C DH8D AT75
 
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Slug71
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:40 pm

texl1649 wrote:
There's not a lot of 'prestige' left in the A380, vs. having the world's largest mega twin fleet, and moving to the "next big thing" which will be the 777-10X, with, basically, superior economics and equivalent suite prestige.


Except that the 777X has a LOWER exit limit than the 77W and the same MTOW. So a 777-10X will likely not seat much more, if any, than a 777-9X considering there would be added weight from the stretch. A further stretch to a -10X may also have tail-strike difficulties. So I wouldn't hold your breath for a 777-10X.
 
CRHoward
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:51 pm

Having selected the 787-10 over the a350-9, EK has gained leverage over RR for the new engine option on the a380. If EK had selected the a350, RR would have gotten the engine order but having selected the 787, RR and GE will have to compete for it. EK changed from EA to RR for the last a380 engine order and they didn't get a firm commitment to the neo. Maybe this time they will. Time is on EK's side and this may take a couple years. I really don't expect an order til the next Dubai air show when the a380neo is launched.
 
lowbank
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 5:52 pm

speedbored wrote:
What I've been hearing on the rumour mill is that this order was as good as a done deal - EK have agreed to order enough aircraft to keep the line going for roughly the next 10 years, at the new low rate, and Airbus have agreed to supply those aircraft at an agreed price and schedule. Almost everything was in place for an announcement at the show.

But, at the last minute, EK's owners asked for some far more hefty than usual penalty clauses to be inserted, to compensate EK if Airbus do decide to close the line down before all of EK's aircraft have been delivered.

It sounds like the delay is simply down to Airbus needing time to consider the possible consequences of agreeing to such a hefty financial commitment.

All just rumours though.


EK really do like their severe compensation deals.
Every days a school day.
 
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DWC
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Re:

Mon Nov 13, 2017 5:57 pm

Polot wrote:
Airbus is stuck between a rock and a hard place, they have no leverage when it comes to the A380 program right now.

They actually have 3. EK business model itself, replacing A380s with 777x will only do part of the job & will need additionnal frames, thus additional slots & pilots, to say nothing of the loss of prestige & glamour in premium : to most people, the 777 is just one of those big planes. I also know they are betting on China, I have no idea how serious would be the Chinese to order the frame, plussed or neo-ed, but if they do & start using it, EK had better be first to cement their positionning & market share ( there are reasons why all UAE bilaterals are severely restricted by China )
 
lowbank
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 6:00 pm

CRHoward wrote:
Having selected the 787-10 over the a350-9, EK has gained leverage over RR for the new engine option on the a380. If EK had selected the a350, RR would have gotten the engine order but having selected the 787, RR and GE will have to compete for it. EK changed from EA to RR for the last a380 engine order and they didn't get a firm commitment to the neo. Maybe this time they will. Time is on EK's side and this may take a couple years. I really don't expect an order til the next Dubai air show when the a380neo is launched.


If EK want a NEO, they will have to fund it
Every days a school day.
 
2175301
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 6:57 pm

As a person who has some experience and knowledge of contract negotiations... My opinion is that while it is obvious that EK is applying pressure on Airbus; that such things and such last minute pressures are common in large negotiations.

No one is playing unfair here or violating some rules of negotiation; especially given Mr. Ender's recent statement of maintaining production for 10 years. EK just wants that in writing... (or something similar - perhaps the final number may be 8 years, perhaps 12 years... depends on the terms of the guarantee).

Anyone with any experience with contracts and deals knows all to well the actual value of "verbal statements" vs "written in the contract statements." The reality is that extremely few companies will stand behind verbal statements if it's going to cost them anything other than trivial money or inconvenience. EK has a legitimate need to know that Airbus will not leave them high and dry by ending production early and not producing all the frames they order.

Have a great day,
 
sekant
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 7:18 pm

2175301 wrote:
As a person who has some experience and knowledge of contract negotiations... My opinion is that while it is obvious that EK is applying pressure on Airbus; that such things and such last minute pressures are common in large negotiations.

No one is playing unfair here or violating some rules of negotiation; especially given Mr. Ender's recent statement of maintaining production for 10 years. EK just wants that in writing... (or something similar - perhaps the final number may be 8 years, perhaps 12 years... depends on the terms of the guarantee).

Anyone with any experience with contracts and deals knows all to well the actual value of "verbal statements" vs "written in the contract statements." The reality is that extremely few companies will stand behind verbal statements if it's going to cost them anything other than trivial money or inconvenience. EK has a legitimate need to know that Airbus will not leave them high and dry by ending production early and not producing all the frames they order.

Have a great day,


As a person with significant negotiation experience, I fundamentally disagree. You will start negotiations with your maximalist Position and gradually negotiate away differences with the other party, with potentially leaving the most difficult issues to be dealt at the very end, some time to be addressed by moving up the hierarchy. Coming up with new and far-reaching requirements at the very end of the process is not something you ever do, unless you realise that you in fact do not want the deal to go trough and need to torpedo it. At least, this is how the other party will take it, it will be seen as not negotiating in good faith.
 
fsabo
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 7:22 pm

sekant wrote:
As a person with significant negotiation experience, I fundamentally disagree. You will start negotiations with your maximalist Position and gradually negotiate away differences with the other party, with potentially leaving the most difficult issues to be dealt at the very end, some time to be addressed by moving up the hierarchy. Coming up with new and far-reaching requirements at the very end of the process is not something you ever do, unless you realise that you in fact do not want the deal to go trough and need to torpedo it. At least, this is how the other party will take it, it will be seen as not negotiating in good faith.


I agree. I think Emirates wilfully torpedoed it. Perhaps there is a pro/anti A380 struggle inside emirates itself. The fact that Enders and Brégier left today I think speaks volumes.
 
Bricktop
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 7:47 pm

Egerton wrote:
If I were a senior person in Airbus management, or if I were a member of the Airbus Board of Directors, then in both cases I would be seriously displeased by recent A380 events.

When negotiating, it is best to remember that to make a deal, it has to benefit both sides. It takes two to tango. I think it likely that the offender in this case is the top national leader in that state. Insulting your partner in public can only be done once. I would now be questioning if Emirates are a firm with whom I wish to do business. I would be minded to go home to Toulouse, throw the Emirates paperwork into File 13, and spend my time doing useful work with people who can be relied upon.

Then Airbus will have to close up the A380 line, take a big write-off and smoke the valuations of existing airframes. Fortunately, they are big boys playing at the big boy table and will end up with a deal for more A380s to keep the ball in the air until version 2 is feasible. I don't see this as the end of the road: Rather it's merely a speed bump.
 
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speedbored
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:00 pm

I can't help wondering whether this (and maybe the 787 order) might be tied up, in some way, with the Qatar diplomatic crisis. The differing responses to the crisis by the USA and EU could go some way towards explaining much of what has happened recently.

Maybe the Emir or Crown Prince made the A380 order conditional on some sort of sanctions on QR.

No specific evidence to support any of this, just conjecture.
 
fsabo
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:06 pm

speedbored wrote:
I can't help wondering whether this (and maybe the 787 order) might be tied up, in some way, with the Qatar diplomatic crisis. The differing responses to the crisis by the USA and EU could go some way towards explaining much of what has happened recently.

Maybe the Emir or Crown Prince made the A380 order conditional on some sort of sanctions on QR.

No specific evidence to support any of this, just conjecture.


Perhaps. I don't buy the "10 years production guarantee" as being the main sticking point; it doesn't make sense. I think it is something else.
 
Eyad89
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:07 pm

speedbored wrote:
I can't help wondering whether this (and maybe the 787 order) might be tied up, in some way, with the Qatar diplomatic crisis. The differing responses to the crisis by the USA and EU could go some way towards explaining much of what has happened recently.

Maybe the Emir or Crown Prince made the A380 order conditional on some sort of sanctions on QR.

No specific evidence to support any of this, just conjecture.


Well, during the early days of the crisis, I remember Macron siding clearly with Qatar. That didn’t get Airbus more orders from them.
Last edited by Eyad89 on Mon Nov 13, 2017 8:08 pm, edited 1 time in total.
 
bigjku
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:07 pm

speedbored wrote:
I can't help wondering whether this (and maybe the 787 order) might be tied up, in some way, with the Qatar diplomatic crisis. The differing responses to the crisis by the USA and EU could go some way towards explaining much of what has happened recently.

Maybe the Emir or Crown Prince made the A380 order conditional on some sort of sanctions on QR.

No specific evidence to support any of this, just conjecture.


I think people are overcomplicating things. No one wants to buy a quarter billion dollar asset that is going to zero within 10 years. It’s hard to finance or make a capital case for such things. The bosses at EK are asking for some sort of guarantee they won’t be left holding the bag because it doesn’t fit their business model.

If it were Delta buying, who loves old stuff, the price would just come down and they would fly it for 112 years. That isn’t what EK does.

There isn’t a vast conspiracy theory I don’t think. For the A380 to be viable for EK they have to be able to finance them largely on the terms they got on the first pile of them. Absent a strong secondary market they have to ask Airbus to fill that role somehow.
 
fsabo
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:16 pm

bigjku wrote:
speedbored wrote:
I can't help wondering whether this (and maybe the 787 order) might be tied up, in some way, with the Qatar diplomatic crisis. The differing responses to the crisis by the USA and EU could go some way towards explaining much of what has happened recently.

Maybe the Emir or Crown Prince made the A380 order conditional on some sort of sanctions on QR.

No specific evidence to support any of this, just conjecture.


I think people are overcomplicating things. No one wants to buy a quarter billion dollar asset that is going to zero within 10 years. It’s hard to finance or make a capital case for such things. The bosses at EK are asking for some sort of guarantee they won’t be left holding the bag because it doesn’t fit their business model.

If it were Delta buying, who loves old stuff, the price would just come down and they would fly it for 112 years. That isn’t what EK does.

There isn’t a vast conspiracy theory I don’t think. For the A380 to be viable for EK they have to be able to finance them largely on the terms they got on the first pile of them. Absent a strong secondary market they have to ask Airbus to fill that role somehow.


I think this 10 year guarantee doesn't make sense. If EK keeps buying the A380 the line will remain open; that much is obvious. So why the guarantee?

It is a nice trap. EK gets 10 year guarantee. EK can then try to order A380s for a ridiculously low price. Airbus then takes a huge loss on those frames. Or airbus refuses but has no other customers. Yet, they cannot shut down the line. Catch 22.
 
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Revelation
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:20 pm

DWC wrote:
"Les Echos" - again, posted this an hour ago. Article is not interesting but does say :

1. the projected deal was for 36 frames
2. it is EK who stalled the announcement at the last minute
3. Airbus doesn't care much as with current production rate they can wait until the Chinese market takes off again around 2025
4. EK also have the additional incentive to strike a deal fast to avoid their A380s resale value to plummet.
( they are all leased, so why would they care if it is not to keep new leases pricetags as low as possible ? )

https://www.lesechos.fr/industrie-services/air-defense/030865559164-a380-emirates-met-la-pression-sur-airbus-2129692.php

Also, both Brégier & Enders left the show today ( Leahy still in place sweating )
EK slapped Airbus with the unilateral 787 announcement
not positive signs for an A380 order at the show.

Seems to be posturing to me. I think if the Chinese will want A380s in 2025 they would be buying more now. Airbus waits for Chinese A380 orders the same way a.net waited for 747-8i orders two years ago.
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Those who believe otherwise are consumed by an ideology
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CRHoward
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:35 pm

It's only 2017. The current backlog along with a production rate of 8 per year takes production into 2023. There was no reason the deal had to be this year. John Leahy will have to retire without this sale, or maybe he will postpone his retirement until he can close this last great sale.
 
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DWC
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:38 pm

Revelation wrote:
Seems to be posturing to me. I think if the Chinese will want A380s in 2025 they would be buying more now. Airbus waits for Chinese A380 orders the same way a.net waited for 747-8i orders two years ago.

I don't read the Chinese press so I don't have a view from their side.
But the situation is clearly different : the 747-8i had the world as a market.
China's expansion is massive, you know how aviation is correlated with GNP growth, China is to take over the USA as the word's first aviation market, major cities are getting slot-restricted, air pollution is terrible & the hundreds of NBs aren't helping ( man, I was in Beijing not long ago & the sky was all grey, they even had at one place a gigantic LCD TV some 10m long or more broadcasting a fiery sunset ). So the A380 stands to reason just like JL used its domestic 747s. China is advancing fast with high-speed trains but only on some trunk routes. Cheap second-hand frames would serve these high-cycle domestic & regional routes well.
Another reason if they are smart is that they can claim some of the Kangaroo Route, CZ is trying hard to establish the "Canton route" & MU has great pretentions as well. Because of China political & economic clout, expect them to want to capture some of the DXB LH traffic, after all they are massively building the New Silk Roads in just about every way. The A380 was built with Asia in mind, particularly China, AB messed with the 2008 deliveries for the OG, so lost the CA order to the 748i - a costly blunder.
In any case chinese airlines are mushrooming everywhere & starting LH flights from the oddest places, expect these & C3 LH routes to mature & require soon big WBs.
Last edited by DWC on Mon Nov 13, 2017 8:44 pm, edited 3 times in total.
 
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Faro
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:39 pm

IMHO it's not the hypothesised Chinese demand of 2025 that may secure a longer lease of life for the A380...but serious limits on runway capacity at certain major world airports like LHR, AMS and the like...whenever that may come...


Faro
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Polot
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 8:48 pm

fsabo wrote:
I think this 10 year guarantee doesn't make sense. If EK keeps buying the A380 the line will remain open; that much is obvious. So why the guarantee?

It is a nice trap. EK gets 10 year guarantee. EK can then try to order A380s for a ridiculously low price. Airbus then takes a huge loss on those frames. Or airbus refuses but has no other customers. Yet, they cannot shut down the line. Catch 22.


Because Airbus is likely making little if any money on the production of the frames. EK doesn't want new management coming to Airbus in 5 years, run some numbers, and determine it would be be more cost effective to just cancel EK's orders and shut down the line then fulfill them. It is an extremely remote possibility, but it is always smart to protect yourself (by making Airbus's cancellation penalties huge, so it is never cost effective to shut down the line as long as EK has outstanding orders for the plane).

At the same time EK is likely pushing for extremely favorable cancellation rights on their end because who knows what the competitive landscape will look in 10 years.
 
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Heavierthanair
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:05 pm

G'day

sekant wrote:

As a person with significant negotiation experience, I fundamentally disagree. You will start negotiations with your maximalist Position and gradually negotiate away differences with the other party, with potentially leaving the most difficult issues to be dealt at the very end, some time to be addressed by moving up the hierarchy. Coming up with new and far-reaching requirements at the very end of the process is not something you ever do, unless you realise that you in fact do not want the deal to go trough and need to torpedo it. At least, this is how the other party will take it, it will be seen as not negotiating in good faith.


I fully agree, clearly Airbus has been royally screwed by Emirates trying to change terms minutes prior to the scheduled formal order announcement. Nothing wrong with applying pressure during negotiations to get the best possible deal, performance and financial guarantees or having verbal statements being confirmed in writing. But trying to get last minute changes of this magnitude in full view of the public and their competition is just not the way business is done in the civilized world. Clearly with most Airbus brass having left the scene there will be no order during the show, likely we will see a cooling-off period for some time with no news from either side. But neither Emirates nor Airbus can really afford to stop doing business with each other. Emirates does not want to rely on a single supplier and dearly pay for that privilege, Airbus cannot ignore Emirates potential business. Scars will remain that's for sure, but then again - business is business :crazy:

Cheers

Peter
"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe." (Albert Einstein, 1879 - 1955)
 
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:20 pm

Polot wrote:
EK doesn't want new management coming to Airbus in 5 years, run some numbers, and determine it would be be more cost effective to just cancel EK's orders and shut down the line then fulfill them. It is an extremely remote possibility, but it is always smart to protect yourself (by making Airbus's cancellation penalties huge, so it is never cost effective to shut down the line as long as EK has outstanding orders for the plane).

It makes me wonder if Ender's statement at the 100th A380 ceremony saying the A380 would be in production for ten more years was an own goal.

It made it easy for EK to insist that Enders back up his statement with a written commitment.
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Those who believe otherwise are consumed by an ideology
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travelhound
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:25 pm

KarelXWB wrote:
Revelation wrote:
travelhound wrote:
Yes, there are 52 outstanding orders for the A380, but 22 of those aircraft are already built or currently in the assembly halls being built.

AvWeek pointed out last week that there are open slots in 2019 and 2020 that Airbus must make some decisions on by the end of this year due to the long parts lead time.


That number is simply incorrect, there are some 12 A380s at different stages of assembly. Certainly not 22.


As per the abcdlist A380 production website

http://www.abcdlist.nl/a380f/a380f.html

Emirates - 113 built, parts produced, 100 delivered
QATAR - 10 built, 8 delivered
Singapore - 5 built, 0 delivered.

(113+10+5)-(100+8+0)=30
 
parapente
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:35 pm

Only a month or so ago Leahy stated publicly that he was NOT going to the show.Indeed he even talked about negotiating tricks (in a general way not specific -although he did make a reference to airshow deals) I think it was in Flight mag.
Only a deal like this would have made him change his mind.Its all very odd....
 
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HighBypass
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:38 pm

According to one inside rumor, Emirates leadership became annoyed at Airbus pushing the deal through early, unauthorized media releases, something Washington in the states refers to as "softening the ground". A profound lack of a secondary market for the A380 has also become part of the current impasse according to the same source.

There has been a lot of talk regarding economics and accounting in this thread. Speaking of accounting methods, Airbus will no longer be able to show fake revenue in their accounting of aircraft sales due to a new rule that seeks to standardize corporate accounting practices.

Currently, the Toulouse, France-based airframer reports revenue by posting aircraft sales figures based on list prices and not the actual negotiated price - no kidding! They will be forced to report revenue based on reality by January 2018.
 
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Matt6461
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 9:49 pm

Amiga500 wrote:
Spares are a significant source of profit, so even if Airbus make a marginal loss on sale of the original frame, they can easily make that back and more over the next 10-15 years of service.


Lower demand = lower price and quanity; lower quantity = higher production cost.
Folks who raise this spares rationale assume that basic economic dynamics won't make spares production as unprofitable as frame production.
Why? Everything that makes the A380 harder to sell and produce for a profit also applies to its spare parts.
What's more, we can expect a good share of the in-service fleet to be scavenged for spares, flooding the market and further depressing prices.

At best it's speculative that future spares sales will be profitable, at worst it's folly. Businesses shouldn't take losses in year 0 for small speculative gains in year 15.
 
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Matt6461
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 10:04 pm

bigjku wrote:
The gap is getting worse as in 2017 Airbus has negative free cash of $4.2 billion thru 9 months and Boeing has a positive number of $9 billion.


Thanks for this post. Warning: some posters will never allow themselves to understand what deferred production means. They seem to believe there is some person named "deferred production" to whom $25bn is owed on 787 program, that this will come out of free cash flow, and will never understand otherwise. TBH they don't have mental categories for FCF, profit, inventory, just have an unshakeable, incoherent belief that Boeing is cheating.

One caveat for the A v. B comparison is that in recent years Boeing has turned a corner on the 787, which is now printing cash, and still has decent 777 FCF. Airbus will soon turn a corner on A350 and A320 production while Boeing's 777 FCF will decline for a few years at least.
 
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Slug71
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 10:45 pm

Matt6461 wrote:
Amiga500 wrote:
Spares are a significant source of profit, so even if Airbus make a marginal loss on sale of the original frame, they can easily make that back and more over the next 10-15 years of service.


Lower demand = lower price and quanity; lower quantity = higher production cost.
Folks who raise this spares rationale assume that basic economic dynamics won't make spares production as unprofitable as frame production.
Why? Everything that makes the A380 harder to sell and produce for a profit also applies to its spare parts.
What's more, we can expect a good share of the in-service fleet to be scavenged for spares, flooding the market and further depressing prices.

At best it's speculative that future spares sales will be profitable, at worst it's folly. Businesses shouldn't take losses in year 0 for small speculative gains in year 15.


That can be remedied if you increase the amount of work given to suppliers by using them for other aircraft types. Airbus could possibly put the A380 on a diet and source redesigned (composite) parts from A350 suppliers. Like the new A350 door frames. There may also be brackets and other things that could be compatible with both. Reducing the weight would also help with the cargo deficiency and be a lot cheaper than redesigning the wing. Switching to the T7000 should offer similar benefits by commonality with A330NEO, 787, and A350 fleets. Even if the engine is only 2% more efficient, it's commonality is a big plus. Add that to the winglets and then it's 6% excluding the reduction in weight.
 
CFRPwingALbody
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 10:58 pm

I find one thing very strange. If it is true that Emirates leases all their plains for their first 12 years of service live, how on earth can they convince lessors to finance this?
An airplane is designed for a 20-30year service live, right? After 12 year a plane most likely needs a mayor check/overhull. I could imagine that after 12years of use the cabin interior is worn out, and needs replacement. This most likely coincides with a mayor check (C or D). But after this there is a lot of flying time left in the plane.
Emirates want's a young fleet, thus they want to replace their birds after the first 12 years of use.
But I can not imagine that they have written off all the plane value (payed enough rent to the lessor so it has a good return on it's plane investment), so it can be scraped. (The early batch with the wrong wiring are a exception.)
I can't imagine a lessor financing replacement planes for Emirates at acceptabele lease rates. While their first family has to be placed into the dessert, because no airline dares to use the A380 the second half of it's service life. Why doesn't Emirates gets forced to replace the interior and extend the lease on their A380's?
I think one key issue with the A380 is the secondary market, airlines must be found that dare to take the 12year old planes and use them until end of plane live. I wouldn't be surprised if Emirates has to abandon it's 12year use plan.
 
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Slug71
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 11:09 pm

CFRPwingALbody wrote:
I find one thing very strange. If it is true that Emirates leases all their plains for their first 12 years of service live, how on earth can they convince lessors to finance this?
An airplane is designed for a 20-30year service live, right? After 12 year a plane most likely needs a mayor check/overhull. I could imagine that after 12years of use the cabin interior is worn out, and needs replacement. This most likely coincides with a mayor check (C or D). But after this there is a lot of flying time left in the plane.
Emirates want's a young fleet, thus they want to replace their birds after the first 12 years of use.
But I can not imagine that they have written off all the plane value (payed enough rent to the lessor so it has a good return on it's plane investment), so it can be scraped. (The early batch with the wrong wiring are a exception.)
I can't imagine a lessor financing replacement planes for Emirates at acceptabele lease rates. While their first family has to be placed into the dessert, because no airline dares to use the A380 the second half of it's service life. Why doesn't Emirates gets forced to replace the interior and extend the lease on their A380's?
I think one key issue with the A380 is the secondary market, airlines must be found that dare to take the 12year old planes and use them until end of plane live. I wouldn't be surprised if Emirates has to abandon it's 12year use plan.


Malaysia's ex CEO recently said that the A380 can probably get 50 years of them. Cabins are replaced anyway.
 
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DWC
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Re: Airbus Working With Emirates on New Order for Flagship A380

Mon Nov 13, 2017 11:51 pm

HighBypass wrote:
Currently, the Toulouse, France-based airframer reports revenue by posting aircraft sales figures based on list prices and not the actual negotiated price - no kidding! They will be forced to report revenue based on reality by January 2018.

Nonsense.
Other than it is perfecly illegal & contrary to elementary accounting rules, it would balloon their corporate taxes. :rotfl:
And Airbus is the most visible company in France, no way that would go unnoticed.
Now if you are talking of what they say to the press, that is different but fiscally irrelevant.

travelhound wrote:
KarelXWB wrote:
That number is simply incorrect, there are some 12 A380s at different stages of assembly. Certainly not 22.

Emirates - 113 built, parts produced, 100 delivered
QATAR - 10 built, 8 delivered
Singapore - 5 built, 0 delivered.
(113+10+5)-(100+8+0)=30

In my world that is 20 :rotfl:

Slug71 wrote:
Malaysia's ex CEO recently said that the A380 can probably get 50 years of them. Cabins are replaced anyway.

SQ own their last 19s & are slated to keep them for 20+ years
https://centreforaviation.com/insights/analysis/singapore-airlines-a380-seat-density-increase-new-cabin-products-to-improve-fleet-profitability-381490
Last edited by DWC on Tue Nov 14, 2017 12:02 am, edited 2 times in total.

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