Wednesday, October 26, 2016

The Effect Of Airbus' Cash Squeeze On Their Autonomous Flying Taxi Project Is Probably Nil

Following up on this morning's "Planes, Trains and (self-driving) Automobiles"/

Back in August we posted "Airbus Reveals Ambitious Plan for Autonomous Flying Taxis" with the comment:
"Your move, Uber."
Now I'm starting to wish I hadn't pulled Mr. Kalanick's teat quite so hard.

From Bloomberg Gadfly:
Tesla Motors Inc. gets a lot of flak for burning through prodigious amounts of investors' cash. But you don't have to be doing something revolutionary to do that. Look at Airbus.

The plane-maker's net cash fell by almost half to 5.6 billion euros ($6.1 billion) at the end of September from 10 billion euros at the end of 2015. The decline is partly due to production problems ranging from engines not being ready to missing toilets. Airbus's free cash-flow, before M&A and customer financing, was a negative 4.2 billion euros compared with a mere negative 1.6 billion euros a year earlier. Ultimately, a company's ability to generate cash should be a concern, so should we be worried?No, not really. Most of the cash flow shrinkage relates to a big increase in working capital. Inventories jumped to 33.5 billion euros at the end of September from 29 billion euros at the end of 2015.

This Cash is on Fire 
Airbus' net cash pile shrank by more than 40 percent in the first nine months of this year
Launching new aircraft always consumes cash, but at Airbus there are too many nearly-but-not-quite-finished airplanes sitting on the tarmac awaiting engines (A320neos) and cabin equipment (A350s). Airbus won't get the money until they're delivered to customers.

Awaiting Liftoff 
Airbus has a working capital problem due to supply chain troubles

These problems, while vexing, look solvable. Airbus said teething troubles with a Pratt & Whitney engine were "largely over," although it conceded it will get some of that machinery more slowly than it would like....MORE
What kind of analysis is this? They haven't even mentioned the autonomous flying taxis.
I want my autonomous flying taxi.

Here's Airbus' Future of Urban Mobility page:

And here's the latest on the taxis from Autoblog, Oct. 23:

Airbus wants to build a self-flying taxi called Vahana

Apparently, Vahana is a Sanskrit word that "denotes the being, typically an animal or mythical entity, a particular Hindu deity is said to use as a vehicle." Put more simply, Vahana is a vehicle fit for a god. Or, if you're A3 (that's A Cubed), a Silicon Valley-based subsidiary of Airbus, Vahana is the name of a fully electric autonomous vehicle. And not just any autonomous vehicle – this is airborne travel. As you'd expect from Airbus, Vahana travels in the sky, not on roads.

A3 hopes to have a full-size prototype ready to fly by the end of 2017, and an actual demonstrator is scheduled to follow by 2020. "Full automation also enables us to make our aircraft as small and light as possible, and will significantly reduce manufacturing costs," according to company CEO Rodin Lyasoff. To what end? "Beyond developing the vehicle itself, we're seeking to move key technology categories forward, foster development of the regulatory regime for the certification and operation of automated aircraft, and to otherwise nurture an ecosystem that will help enable the vertical cities of the future," says Lyasoff.

And what about safety? Not to worry. Vahana only has room for a single passenger, and there's an onboard "ballistic parachute that works even at low altitudes." Still, building a self-flying vehicle is bound to be rife with challenges. There are regulatory hurdles galore, not to mention what we're sure is going to be a very high cost of entry. We'll see how it goes....MORE (video)