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Airbus to Customers: Your $200 Million Plane Is Not a Lemon
By Carol Matlack December 02, 2013
Two years after ending production of its A340 jet, Airbus is scrambling to persuade customers who bought the $200 million aircraft that they aren’t stuck with a gas-guzzling lemon.
Airbus (EAD:FP) marketing executives have scheduled a Dec. 4 meeting in London with representatives of airlines and leasing companies that purchased the A340. The goal, according to analysts briefed on the event, is to reassure customers they can still resell or lease their A340s, even though the plane was discontinued in part because it can’t match the fuel efficiency of two-engine models that are increasingly popular among airlines.
An Airbus spokeswoman confirmed that the company will hold an A340 marketing event in London this week but said she did not have additional details.
More than customer relations is at stake here. Airbus sold many A340s with so-called asset-value guarantees, in which it pledged to compensate buyers if the plane’s resale value fell below a specified level. Analyst Douglas S. Harned of Bernstein Research estimates that 40 percent of the 119 A340-500 and A340-600 models now in service have asset-value guarantees of $60 million to $70 million.
“Based on discussions with airlines, lessors, and appraisers, we doubt these airplanes can be sold for even $20 million today,” Harned writes in a research note published Dec. 2. “Cash exposure from the asset-value guarantees could be in the $1 billion to $2 billion range.”
http://www.businessweek.com/articles...is-not-a-lemon
By Carol Matlack December 02, 2013
Two years after ending production of its A340 jet, Airbus is scrambling to persuade customers who bought the $200 million aircraft that they aren’t stuck with a gas-guzzling lemon.
Airbus (EAD:FP) marketing executives have scheduled a Dec. 4 meeting in London with representatives of airlines and leasing companies that purchased the A340. The goal, according to analysts briefed on the event, is to reassure customers they can still resell or lease their A340s, even though the plane was discontinued in part because it can’t match the fuel efficiency of two-engine models that are increasingly popular among airlines.
An Airbus spokeswoman confirmed that the company will hold an A340 marketing event in London this week but said she did not have additional details.
More than customer relations is at stake here. Airbus sold many A340s with so-called asset-value guarantees, in which it pledged to compensate buyers if the plane’s resale value fell below a specified level. Analyst Douglas S. Harned of Bernstein Research estimates that 40 percent of the 119 A340-500 and A340-600 models now in service have asset-value guarantees of $60 million to $70 million.
“Based on discussions with airlines, lessors, and appraisers, we doubt these airplanes can be sold for even $20 million today,” Harned writes in a research note published Dec. 2. “Cash exposure from the asset-value guarantees could be in the $1 billion to $2 billion range.”
http://www.businessweek.com/articles...is-not-a-lemon
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