Tuesday, June 19, 2007

News From Paris UPDATE 1

The Houston Chronicle by way of the Associated Press reports this day that the orders announced by Airbus yesterday are three firm for the A380 from Qatar and signed memoranda of understanding (a document saying 'yeah, we're interested. Send us the junk mail!') with 8 for Emirates and two for Air France. That raises the total for the A380 to 163 firm orders.

The total for the A350 is better, and the Chronicle calls it at 93. As we've noted, the customers announced so far are house customers and you would expect nothing less from them, particularly USAir. And that's not sour grapes, folks. Just the facts. If I'd been lent $250 million by Airbus I'd probably buy their product too.

There's always been something of a tendency at da Festung to jump up MOUs and treat them as 'almost orders', when it's time to grab a few column inches. Thus it is with the USAir order, which is a contingent order to be firmed up some time in the future, hopefully soon.

On the other hand, Boeing tends to be more conservative in these matters for reasons that are more or less obvious-they've already got a hefty book for the B787 and a six year technological head start in what will prove to be a technical revolution that comes around once every fifty years or so, and that is full on, no holds barred, technology forcing monolithic CFRP construction. As we've opined, the B747-8 is like the Kaiser's fleet in being-it doesn't have to win wars or battles or sink ships, all it has to do is be a baleful presence to sow discord and spread fear and alarm in Toulouse.

As for Airbus, all the noise is understandable. If all you've got to sell is lemons, you know without asking that there's going to be a lot of lemonade around, and maybe some lemon meringue pie to go with that lemonade.

There's an interesting commentary in the Seattle Times that quotes Adam Pilarski, an Avitas analyst as saying that because Airbus is already offering performance guarantees for the A350 it doesn't matter to the buyers whether it meets its performance metrics because they're going to get paid anyway. That makes it easy to buy because the risk is low. That's a cautionary tale and Mr. Pilarski is going to be someone to watch as we move forward.

The big news at Paris is always what doesn't happen there, and rampant speculation and scientific wild assed guesses are as thick as fireflies in June here on the prairie. There is one consistent rumor that ILFC is going to announce a substantial order for the B787 sometime soon, perhaps today.

Stay tuned.


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