Thursday, December 24, 2009

New Heavy Lifter Takes A Bow.

Almost completely overlooked in the to-do over the 787 and its revolutionary first flight/proof of concept was an equally important first flight-at least to the people whose jobs are on the line- and that was of the Airbus A400M military cargo lifter. The first flight occurred December 11 of this year from Seville.

It's rare enough when something that's so new the paint isn't dry gets airborne with propellers these days-and what propellers they are.

In addition, the A400M's Europrop engine installation is a clean sheet of paper design that's got enough power to haul the goods.

Now. You know that I have a major weakness for big muscular props, and I consider the Convair 580 to be the finest aircraft ever made anywhere. But this is light years ahead of the 580.

All this may be moot, however, as cost overruns and delays have put the program at a substantial risk of cancellation.

It seems that Airbus agreed to a fixed cost contract (something we don't do anymore here in the bumptious rude frontier republic that is the United States because we clearly don't know anything), and when the development budget spiraled out of control that left Airbus holding the bag and under a threat to have the countries that ordered it eat their lunch for them.

It reminds me of a case I worked on a number of years ago. A guy out west of here operated a custom feedlot. Here's how the deal worked. You sign a contract, he acquires the cattle, feeds them to market weight at a fixed cost, merchandises them and you split the profits.

All of that was wonderful-until, in 1996, corn, which had been selling at about average prices of $2.50 a bushel spiked to $3.90 a bushel. The end result was that the feedlot owner simply stopped buying feed and by the time people woke up, he had disappeared into the nether world of the Poky feedlot in Garden City, Kansas, knowing a lot more about the perils of fixed price contracting when you have no way of meaningfully predicting the cost of inputs going forward.

Upwards of 900 cattle died in the winter of 1996-1997 in his feedlot.

Images courtesy of and property of Airbus, Reuters.


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