An Airbus A380 hits 2 Light Poles at LAX while carrying Fewer Passengers than a Smaller Boeing 777 can Carry

Posted by PITHOCRATES - April 17th, 2014

Week in Review

The Boeing 747 ruled the long-haul routes for decades.  Because of its range.  And its size.  With it being able to carry so many passengers the cost per passenger fell.  Allowing it to offer ticket prices at prices people could afford while still making airlines a decent profit.  Airbus took on the Boeing 747.  And produced the mammoth A380.  A double-decker aircraft that can carry around 555 in three classes.  But this plane is big.  With a wingspan greater than the 747.  Not to mention special boarding requirements to load and unload its two decks.  But this extra large size couldn’t board at any run-of-the-mill 747 gate.  It needed a wider parking place.  Double-decker boarding gates.  As well as wider taxiways (see Korean Air A380 Hits 2 Light Poles At LA Airport by Tami Abdollah, AP, posted 4/17/2014 on Time).

A Korean Air A380 superjumbo jet hit two light poles while taxiing to its gate at a remote end of Los Angeles International Airport with hundreds of passengers aboard.

Airline spokeswoman Penny Pfaelzer says the flight arrived from Seoul Wednesday afternoon with 384 people aboard. She says an airport operations vehicle guided the jet onto a taxiway that wasn’t wide enough…

The A380 is the world’s largest commercial airliner, carrying passengers in a double-deck configuration. It has a wingspan of nearly 262 feet.

The search for Malaysian Airlines Flight 370 is important.  Because Malaysian Airlines Flight 370 was a Boeing 777.  One of the most popular long-range, wide-body aircraft flying today.  So if there is a mechanical defect every airline flying that plane would want to know.

Because of the cost of fuel airlines prefer 2-engine jets over 4-engine jets.  Which is why they like the 777 so much.  The 777-300ER can take 386 passengers in three classes 9,128 miles.  On only 2 engines.  Whereas the Airbus A380 can take 555 passengers in three classes 9,755 miles.  But on 4 engines.  Burning close to twice the fuel a 777 burns.  So the A380 can out fly the 777.  But at much higher fuel costs.  And with greater restrictions.  As the 777 can fit most any gate and taxiway at any airport.  Unlike the A380.  So is that extra passenger capacity worth it?  It is.  As long as you can fill the seats.  In this case, though, the A380 flew the approximately 6,000 miles from South Korea to Los Angeles with only 384 people aboard.  Something the Boeing 777-300ER could have done on half the engines.  And about half the fuel cost.

This is why the Boeing 777 is one of the most popular long-range, wide-body aircraft flying today.  Because it allows airlines to offer tickets at prices the people can afford while allowing the airlines a handsome profit.  And it has an incredible safety record.  Unless Malaysian Flight 370 changes that.  Which is why it is so important to find that plane and determine what happen.  As there are so many of these flying today.

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A Weakening Dollar is giving Boeing a Trade Advantage over Airbus

Posted by PITHOCRATES - June 23rd, 2013

Week in Review

Before you can buy from a foreign country you have to exchange your currency fist.  For example, if you’re in China and want to buy some aircraft from Boeing or Airbus, you have to exchange you currency first.  Exchange Chinese yuan for U.S. dollars.  Or exchange Chinese yuan for euros.

Now if both Boeing and Airbus have a plane that meets all of their needs leaving price as the only consideration, they have two things to consider.  Price, obviously.  And the current exchange rate.  For if the U.S. dollar is weaker compared to the euro they will get more dollars than euros when exchanging their currency.  Giving the Americans a trade advantage.  Because if the dollar is weaker than the euro the Chinese yuan will buy more from Boeing than it will from Airbus.  A situation that actually exists now.  And it concerns Airbus (see Airbus CEO Concerned Over Euro/USD Exchange Rate Affecting Exports by David Pearson posted 6/20/2013 on 4-traders).

Airbus Chief Executive Fabrice Bregier Thursday said he remains concerned about the strength of the euro against the U.S. dollar which could limit the European plane-maker’s export-reliant growth despite strong demand for passenger jets particularly from Asia.

The CEO has previously expressed concern that the euro’s rise against the dollar could force the company to seek extra cost cuts or savings.

The aircraft market is a world market.  An aircraft manufacturer’s export sales will be greater than their domestic sales.  So a weak currency benefits them.  Which is why governments like to weaken their currencies.  Especially if they depend on robust export sales.  But the down side to that is that a weaker currency will raise prices everywhere else.  So, yes, exports will grow.  But people will lose purchasing power.  As their money won’t buy as much as it once did.

Because the Chinese yuan will buy more from Boeing than it will from Airbus they have to somehow lower the price of their planes to offset that advantage Boeing has. Which means they will have to find costs they can cut.  Find savings elsewhere.  Or watch Boeing sell more planes.

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GE Engine Failures on Boeing’s Newest Aircraft cause Rapid Response and Fix from GE

Posted by PITHOCRATES - October 6th, 2012

Week in Review

Airbus built the A380 to compete against the Boeing 747.  In fact, there is a great competition between Airbus and Boeing.  Each even claiming that the other’s government is unfairly subsidizing the other company.  Which is a big deal because Boeing is a large part of total US exports.  Airbus has taken a lot of their business, though.  So they are very protective of their remaining market share.  And will take aggressive action whenever a problem arises that can affect their market share or their profits (see NTSB Urges Action After Engine Failures in New Boeing 787, 747 Airliners by Jason Paur posted 9/17/2012 on Wired).

The National Transportation Safety Board is recommending inspections for all new Boeing 787 and 747-8 aircraft with General Electric engines. The NTSB made the recommendation to the Federal Aviation Administration after two of GE’s newest engines experienced failures in the past few months. Three separate incidents all point to a similar cause for the failures in the engines.

“The parties to our investigation – the FAA, GE and Boeing – have taken many important steps and additional efforts are in progress to ensure that the fleet is inspected properly,” NTSB Chairman Deborah A.P. Hersman said in a statement on Friday. “We are issuing this recommendation today because of the potential for multiple engine failures on a single aircraft and the urgent need for the FAA to act immediately…”

According to the NTSB, GE has developed an ultrasonic inspection method for the fan midshaft that can be used while the engine is still on the airplane. All of the GEnx-1B engines used on 787 Dreamliners as well as spare engines have been inspected. All of the GEnx-2B engines on passenger versions of the 747-8 have also been inspected. There are more than 40 General Electric engines on freighter versions of the new jumbo jet that still await engine inspections and are expected to be completed this week.

The engine maker believes it has found the cause of the cracks and has changed the way the shafts are coated during the manufacturing and assembly process…

Did GE respond like this just because of the NTSB?  No.  They have a vested interest in their engines not failing.  For if they have a reputation of providing bad engines their customers will go someplace else.  Or the flying public will refuse to get on any plane with GE engines.  That’s why GE scrambled to fix this problem.  Because hiding it would have been a bigger hit on profitability.  This is the free market in action.  The market demanded fuel efficient and reliable engines.  Which GE delivered.  And when there was a problem GE responded quickly.  To protect the bottom line.  And their biggest customer.  Who could take their business elsewhere if GE costs them any market share.  For they are not the only engine supplier out there.

Boeing’s new 787 Dreamliner can be ordered with either the General Electric or Rolls-Royce engines. Both of the new engines are responsible for a significant portion of the fuel efficiency improvements of the new airplane. And the Rolls-Royce engines haven’t been trouble free. Earlier in the summer the launch customer fo[r] the 787, All Nippon Airways, temporarily grounded its fleet of Dreamliners after premature corrosion was found in the gearboxes of the Rolls Royce Trent 1000 engines.

If this was a government manufacturer you would not have seen such quick action.  Why?  Because if there was a government monopoly for those engines where else could the aircraft manufacturers go?  The NTSB would have grounded all planes.  But there would not have been any urgency in resolving this problem.  As there was no potential for lost profits.  Which there was for GE.  Especially with a competitor in the wings just waiting to take their customers.

Government regulations don’t make aircraft safe.  The fear of losing profits on unsafe planes does.  Which is why people would much rather fly in a Boeing airplane rather than a plane produced under the command economy of the Soviet Union.  For back in the Seventies and Eighties the chances of a plane falling out of the sky were greater with a Soviet-built plane than with a private sector-built Boeing.  It’s the profits earned on safe airplanes that do the most to keep them from falling out of the sky.  Not bloated government bureaucracy.

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China to Punish Airbus and EU Airlines if the European Union Proceeds with their Emission Trading System

Posted by PITHOCRATES - September 16th, 2012

Week in Review

Fighting global warming is one thing.  But hurting aircraft sales is another.  Which will happen if the EU goes ahead with their Emission Trading System.  So Airbus is begging the EU not to ruin the aviation industry (see Airbus ministers seek EU CO2 plan delay: Hintze by Maria Sheahan and Victoria Bryan posted 9/14/2012 on Reuters).

Aerospace officials of the European countries where Airbus (EAD.PA) makes its planes will push for a suspension of the European Union’s Emission Trading System (ETS) for airlines to avert retaliation from China, an official said on Tuesday…

Michael Fallon, new business minister in Britain, said at the ILA Berlin Air Show on Tuesday: “Airbus has left us with no doubt that the threat of retaliatory action is a clear and present danger to its order list.”

There is harsh opposition to the ETS from European air travel companies and countries outside the EU such as the United States, Australia and Brazil that have said they want a global agreement to curb carbon emissions rather than a European law that extends to non-EU companies.

Which is a nice way of saying they should scrap the whole ETS.  But if they said that the environmentalists would say they hate the planet.  That they’re global warming deniers.  And that they, of course, hate children.   So by saying we should have a global system instead of just a European one sounds like they believe in global warming.  While at the same time knowing there will never be a global system because the world can’t agree on anything.  And that China is not going to fall for any of this nonsense.  Because they play hardball.

China has threatened retaliation – including impounding European aircraft – if the European Union punishes Chinese airlines for not complying with its emissions trading scheme (ETS), intended to curb pollution.

The dispute between China and the EU froze deals worth up to $14 billion, though China signed an agreement with Germany for 50 Airbus planes worth over $4 billion during Chancellor Angela Merkel’s visit to Beijing last month.

If the dispute is not resolved, Airbus will have to cut its production target for the A330 “pretty soon”, Airbus Chief Executive Fabrice Bregier said late on Monday.

Cancel billion dollar orders AND impound European aircraft?  That’s right.  The Chinese don’t take crap from anyone.  Especially from a bunch of whiny global warming alarmists.  Airlines everywhere are thanking China (behind closed doors, of course) for playing the heavy here.  So they can act like they really want to do what is right for the planet.  Without losing billions in business.

The airline industry has said the ETS distorts competition, forcing European carriers to pay more simply because of the fact they are based in the EU.

“We feel we are being discriminated against,” Hintze said. “We demand a global solution from an industrial policy point of view because we could otherwise put ourselves at a disadvantage in major markets…”

Airbus sales chief John Leahy suggested at a separate news conference on Tuesday that one possible solution could be that all airlines around the world pay a tax to ICAO for carbon emissions, regardless of where they are based.

The ETS is nothing but a way to generate revenue for a cash-strapped European Union.  For what will they do with the money they raise from their ETS?  Pretty much anything they want.  And one of the things they most desperately want is to close their budget deficits.  And the EU thought they had a real winner in the ETS.  Collect money from EU members.  And collect money from non-EU members.  Effectively transferring some EU costs onto nations outside of the EU.  It was perfect.  Except for one thing.  It required other countries to voluntarily pick up the tab for some EU spending.  And some are choosing not to no matter how worthy the cause.

A global carbon tax payable to the ICAO?  The United Nations’ International Civil Aviation Organization?  And what, pray tell, will the UN do with that money?  Spend it on grants to green manufacturers to see if they can make jet fuel out of sea weed?  The aircraft manufacturers are doing everything they can to reduce jet fuel consumption because a plane that burns less fuel is a plane that sells better.  They don’t need a grant to do that.  Planes are carrying and burning less fuel per passenger mile than they ever have.  And they still have an incentive to reduce that even more.  Without any grants from the UN to improve fuel efficiency.

As countries around the world are suffering through economic problems the last thing they need is a new tax.  If anything they need a tax cut.  So the ETS should be the last thing we should be doing.  The earth will get by just fine without it.  In fact, it might even do better.  For the rise in global temperatures interestingly correspond to the time we began to fight global warming.  Back in the days when industry, trains and home furnaces belched coal smoke, soot and ash into the air we didn’t have a global warming problem.  Our cities were covered with coal smoke, soot and ash but the temperatures were just fine.  Perhaps a little more of the same would reverse this warming trend.  Say, encouraging our airplanes to burn a dirtier fuel so they put more emissions into the atmosphere that can block those warming rays from reaching the earth’s surface.  It works with volcanoes.  Perhaps it’ll work with manmade emissions, too.

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Airbus proposing Measures to Reduce the Aviation Carbon Footprint that may make Flying more Dangerous

Posted by PITHOCRATES - September 9th, 2012

Week in Review

Airplanes are very complex machines.  They fly at speeds 3-4 times the speeds they land and take off at.  Which requires leading edge slats and trailing edge flaps to curve the wing more at low speed to increase lift.  While flattening it out more at high speeds to reduce drag.  When landing pilots put the engines into reverse thrust to help slow the plane down.  So they even use fuel to slow down.

And speaking of fuel it’s expensive.  Airlines carry as little of it as possible in their airplanes to reduce weight which reduces costs.  Sometimes bad weather forces planes to go to an alternate airport.  Sometimes there are strong headwinds.  Sometimes they fly into Heathrow and have to circle for a half hour or so to land.  Because they only have two runways.  Compounding this problem planes are getting lighter and engines are getting more efficient.  Allowing airlines to carry even less fuel.  So it is not uncommon for a pilot to declare a fuel emergency because of unexpected additional flying time.

When flying in the air highways air traffic controllers keep airplanes separated by large distances.  To keep them from running into each other.  The more distance the better so they can take evasive actions to avoid bad weather cells.  Or allow a plane some leeway in case they have a system malfunction (like plugged pitot tubes feeding false air speed and altimeter readings into the autopilot) that takes the plane off course.  Or in case a plane flies into some clear air turbulence (CAT) and it drops out of the sky 1,000 feet or so.  Or rises 1,000 feet or so.  Two things that allow a plane to recover from unplanned events like these are empty skies around you and altitude.

Aviation has come a long way.  And Boeing and Airbus are making some incredible airplanes.  So they know a thing or two about flying an airplane.  And it shows in their planes.  Which makes it hard to take them seriously when they talk about ways to reduce their carbon footprint by making flying more risky (see Airbus To Present Measures To Reduce Industry’s Environmental Footprint by Jens Flottau posted 9/6/2012 on Aviation Week).

Airbus on Sept. 6 will unveil five measures it says will make the aviation industry environmentally sustainable by 2050 despite projected growth for global air transport…

Airbus also foresees a new method for takeoff, with renewably powered propelled acceleration allowing aircraft to climb steeper and reach cruise altitude faster. This in turn would allow airports to build shorter runways and minimize land use.

Once in cruise, aircraft should be able to self-organize and select the most efficient routes, says Airbus. On dense routes, aircraft could fly in formation, like birds, to take advantage of drag reduction opportunities.

In Airbus’ vision, aircraft will descend without using engine power or air brakes and would be able to decelerate quicker and to a lower final approach speed enabling them to use shorter runways…

Fuel is a key component of Airbus’ proposal, and the manufacturer says the use of biofuels hydrogen, electricity and solar energy will be required to reduce the industry’s environmental footprint.

You simply can’t build shorter runways.  Because planes aren’t perfect.  Sometimes things happen.  If we had shorter runways what would happen to a plane landing with damaged leading edge slats or trailing edge flaps?  And they have to land at a higher speed than normal because they can’t curve the wing to create more lift at lower speeds?  And what if a plane’s thrust reversers failed to deploy?  This is why we have long runways.  To give planes with problems a better chance to land safely.

Flying commercial jets in formation?  Not a good idea.  One of the most dangerous things to do in the Air Force is aerial refueling.  Where two large planes get real close to each other.  If they bump into each other they could cause some damage.  Even cause them to crash.  Flying in formation would be exhausting for a pilot.  Or they could entrust their formation flying to an autopilot.  But if they hit some CAT and get thrown around in that airspace they could get thrown into each other.  Even while flying on autopilot.  Planes also make their own turbulence.  Which is why there are larger distances between the big planes (i.e., the heavies) and the small ones.  So the small ones don’t get flipped over by some spiraling wingtip vortex turbulence off the heavy in front of it.

Solar energy?  Really?  How?  It’s not going to propel a jumbo jet.  And if they think they’re going to save on engine emissions by using solar panels on the wings to produce electricity for the cabin lights and electronics I don’t think that will work.  The emissions from the electrical load on those engines may be negligible compared to emissions they make producing thrust for flight.  And if they add more weight (solar panels) that will only take more fuel for flight.  Which will release more emissions.  Finally, a lot of planes fly at night.  When there is no sunshine.  What then?

Trying to reduce a plane’s carbon footprint will only make flying more dangerous.  It’s one thing to throw money away building solar panels and windmills on the ground.  For that’s just ripping the people off.  But applying this nonsense to aviation may end up killing people.  It’s hard to believe that Airbus is serious with these suggestions.  One wonders if they’re just proposing this to get those proposing that carbon trading scheme to back off as it will increase the cost of flying.  Which will reduce the number of people flying.  And reduce the number of planes Airbus can sell.  Perhaps by dangling this green future of aviation they may buy some time before the carbon trading scheme kills the aviation industry.

Fighting nonsense with nonsense.  It’s just as good an explanation as any.

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The NLRB nay not allow Boeing to build a plant in the Nonunion South but Airbus Can

Posted by PITHOCRATES - June 30th, 2012

Week in Review

Airbus is opening an assembly plant in the U.S.  Why?  Because they can make planes cheaper in America than they can in Europe (see Reports: Airbus to open plant in Alabama by Nancy Trejos posted 6/28/2012 on USA Today).

In taking the plunge into the United States, Airbus is betting that American airlines, many of which have large fleets of aging jets, will be enticed to consider an A320 that was “made in America” over Boeing’s competing 737. By assembling the planes with nonunion American workers, and in using dollars, Airbus also stands to reduce production costs.

It’s the high wages and benefits of European unions.  The high taxes that fund their social democracies.  And the depreciated dollar.  Add them all up and what you get is an economic advantage building airplanes in the nonunion south.

Boeing wanted to build a plant in the south to manufacture their new Dreamliner.  But the National Labor Relations Board (NLRB) told Boeing they couldn’t.  They said they had to build those planes with union labor.  Lucky for Airbus that they have the freedom to build in the nonunion south.  Where they will build planes cheaper than Boeing can. 

Pity Boeing didn’t have that same freedom in this country.     

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Airbus spends €263 Million to Keep the A380 Safe because Capitalism makes Safe Airplanes

Posted by PITHOCRATES - May 19th, 2012

Week in Review

Free market capitalism is a beautiful thing.  It’s like a dog having puppies.  You don’t have to do anything but stand back and let it happen (see Airbus Earnings Hit By A380 Wing Cracks by Robert Wall posted 5/15/2012 on Aviation Week).

Airbus is taking another €158 million charge linked to the costs associated with wing component cracking on its A380s.

 That comes on top of a €105 million charge taken in March against 2011 results because of the same problem. “This final retrofit fix is more complex than initially anticipated in March; therefore, the group updated the cost for the retrofit solution leading to an additional charge of € 158 million in the first quarter,” Airbus parent EADS says in releasing its latest results…

Qatar Airways, for instance, has said it will only take A380s once the final fix is installed on its aircraft — the first handover to the Middle East carrier is due next year.

The fix also has hit A380 delivery plans. Airbus has temporarily slowed A380 production, but the impact of that move is not expected to be seen until 2013.

Airbus has a vested interest to make sure their planes are safe.  For an unsafe airplane is very difficult to sell.  Earlier reports stated that these cracks did not affect the safety of these aircraft.  But they have still hurt sales.  And slowed their production. 

Airbus has spent to date some €263 million ($335.85 million) to fix this problem.  Which is quite a sum considering one A380 has reportedly sold for $234 million.  So their spending the money to do what’s necessary to fix this problem.  Spending more than the cost of one A380 so far.  And the reason why they’re doing this is in part to the airworthiness directive issued by the European Aviation Safety Agency grounding A380s.   For you can’t sell an airplane that’s not allowed to fly.  But a customer not taking any more deliveries until the final fix is installed on its aircraft is also a very big incentive.  Because Boeing is out there with their 747.  And Airbus will do whatever necessary to make sure their customers don’t cancel those A380 orders and replace them with 747 orders.

It’s been said before.  Competition makes everything better.  It’s what makes free market capitalism the best system in the world.  And why aircraft built in capitalistic countries are the safest aircrafts in the world.  Because safe airplanes are easier to sell than unsafe airplanes.  And selling airplanes drive profits.  So when your system is based on profits it’s also based on safety.  Because safety drivess profits.  Unlike in the old Soviet Union. 

When they suffered the loss of a state-manufactured aircraft their greatest concern was embarrassment.  Looking inferior to the West.  Their people had no choice but to get on those same airplanes.  Because their state airline had no choice but to use the state-manufactured airplanes.  And the only incentive the state-manufacturer had to spend money on fixing problems was when the costs of those fixes proved to be less than the cost of lost airplanes.  And they would never spend more than the cost of one aircraft to fix a problem that hasn’t caused the loss of a single aircraft.

Airbus has a lot riding on the A380.  It was a very expensive airplane to bring to market.  It has to be a safe airplane to cover their investment costs.  So they will choose to spend what it takes to ensure its safety.  Because that’s what corporations do under capitalism.

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All Airbus A380s to be inspected for Cracks in Wing Brackets

Posted by PITHOCRATES - February 11th, 2012

Week in Review

All Airbus A380s to be inspected for cracks in wing brackets.  They’re not load-bearing but they’re important nonetheless.  These brackets attach the skin of the wing to the wing structural support.  A failure of one of these brackets is not likely to cause a wing to fall off.  But if the surface of the wing peels off it could cause some trouble from severe buffeting to a stall of the wing.  Apparently something Airbus does not believe is likely to happen.  It may be nothing as Airbus sent out a repair kit but didn’t ground the plane.  This may be just ‘erring on the side of caution’.  If one can really say that in aviation (see Safety check ordered for all Airbus A380 jets by The Associated Press posted 2/8/2012 on CBS News).

Europe’s air safety authority [EASA] ordered checks Wednesday on the entire global fleet of Airbus A380 superjumbo jets for cracks on parts inside the wings — extending a previous order for nearly a third of the planes to be inspected…

“These brackets are located on wing ribs which are not main load bearing structure, and, thus, the safe operation of the aircraft is not affected,” Airbus said in a statement. “Nearly 4,000 such brackets are used on the A380 to join the wing-skin to the ribs. Only a handful of brackets per aircraft have been found to have been affected.”

Still, EASA in its directive said that “this condition, if not detected and corrected, could potentially affect the structural integrity of the airplane.”

And here’s why Airbus is probably being honest and doing the right thing.  And probably would have even without the EASA stepping in.

Shares in Airbus parent company EADS were down 1.3 percent at euro26.61 ($35.00) in Wednesday afternoon trading.

If there is a problem and Airbus tries to hide it they have bigger problems on their hands.  For if a plane falls out of the sky because they tried to hide something they’ll be more than a 1.3% drop in the stock price.  For nothing will destroy the profitability of an aircraft manufacturer than an unsafe aircraft.  A state-owned company has no such pressure.  Because they don’t answer to stockholders.  Or have to make a profit.  Airbus does.  So hopefully this is a minor issue to resolve.  And the A380 will continue to fly safely.

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Airbus says Cracks found on A380 are not Serious

Posted by PITHOCRATES - January 21st, 2012

Week in Review

There are few things more dangerous to an airplane than cracks.  Whether in the fuselage.  Or on a wing.  Some horrific accidents were caused by small hairline stress fractures that grew under the stresses and loads of flying.  The greatest loss of life in a single aircraft accident was a 747 flying out of Haneda.  Japan Airlines Flight 123.

On a previous landing the pilot stuck the tail on the runway, requiring repairs on the rear pressure bulkhead.  But they did these repairs incorrectly.  They used a single row of rivets instead of a double row.  As the plane took off and landed the plane pressurized and depressurized putting great stress on that repaired bulkhead.  The metal fatigue produced hairline cracks.  And then on August 12, 1985 after the plane gained altitude and pressurized the rear pressure bulkhead failed and blew out causing an explosive decompression.  The force was so great it tore the tailfin from the plane and took out all four hydraulic control systems.  The plane was uncontrollable.  And crashed killing 520 of the 524 aboard.

So cracks on an airplane are very serious.  And now they found some cracks on the largest commercial jet in service today.  The Airbus A380 (see More cracks found in Airbus A380 wings by Tim Hepher posted 1/19/2012 on Reuters).

Airbus said the cracks were found on a number of “non-critical” brackets inside the wings of two aircraft during routine two-year inspections, after similar flaws showed up in five aircraft in early January.

It said the cracks did not prevent the A380 flying safely, but the Australian engineering body which handles routine servicing and engine checks on the superjumbos operated by Qantas Airways (QAN.AX) said Airbus’s reaction was concerning.

“They (Airbus) have described these as tiny cracks, but every crack starts off as a tiny crack and they can grow very quickly ,” said Stephen Purvinas, Federal Secretary of the Australian Licensed Aircraft Engineers Association.

“I would be worried that Airbus aren’t taking seriously the ever increasing number of cracks being found in the wings of their A380 aircraft .

Now nothing will hurt the sales of an airplane more than a reputation for not being safe.  So if the aircraft was unsafe the manufacturer would normally not try to hide that.  They would instead try to fix the problem as quickly as possible.  This is the miracle of capitalism.  If you produce an inferior product you won’t sell it.  If Boeing had a problem on their 747 they would do everything within their power to fix the problem before something bad could happen.  As would Airbus.  However, Airbus isn’t your run of the mill capitalistic manufacturer.  They are heavily subsidized by their governments.  In what is more state capitalism than free market capitalism.  So Airbus will do the right thing.  Unless pressured by their governments not to.  For political reasons.  Such as maintaining A380 sales to boost their collective ailing economies.

Let’s hope that the governments involved are letting Airbus manage this issue.  They will do the right thing.  For no one in the aircraft community wants any plane to be unsafe.

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Economic Recovery Requires less Keynesian Spending and more Cutting the Cost of Employment

Posted by PITHOCRATES - September 26th, 2011

The Structural Defect in Keynesian Economics is that Sustained Inflation Creates Asset Bubbles that Must Burst

More bad news for the housing market.  And the American economy (see New-home sales fell in August for 4th month by Derek Kravitz posted 9/26/2011 on the Associated Press).

Sales of new homes fell to a six-month low in August. The fourth straight monthly decline during the peak buying season suggests the housing market is years away from a recovery…

New-homes sales are on pace for the worst year since the government began keeping records a half century ago…

Last year was also the fifth straight year that sales have fallen. It followed five straight years of record highs, when housing was booming.

The housing market is bad.  There’s no denying that.  And this affects everyone.  Not just homeowners.  Because where the housing market goes the economy follows.

While new homes represent less than one-fifth of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Jobs and taxes.  Both of which the government is having trouble generating these days.  That’s why they are desperately trying to stimulate the housing market with all that easy monetary policy.  Getting interest rates to their lowest in years.  If not of all time.  Because new houses equals jobs.  And tax revenue.  Especially when housing values increase over time.

Home prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s. It took 19 years for prices to fully recover after the Depression.

But not so much when they don’t.

Worse than the Great Depression.  Now there’s something you don’t hear every day.

One of the missions of the Federal Reserve was to prevent another Great Depression.  In particular, preventing a devastating deflationary spiral.  Such as we’re seeing in home prices now.  Looks like they’ve failed.  Or rather, Keynesian Economics has failed.

The problem is the dependence on Keynesian Economics.  Which uses monetary policy to maintain economic growth.  By having permanent but ‘sustainable’ inflation.  But the structural defect in this model is that sustained inflation creates asset bubbles.  As people bid up the prices of these assets.  Like houses prior to the subprime mortgage crisis.  And when these bubbles burst these asset prices have to fall back to market levels.  Like house prices are doing right now.  And apparently will do for another 19 years.  Give or take.

It is the High Cost of Labor that is Hurting the Advanced Economies

Manufacturing has been better than the housing market.  But it’s not looking too promising right now (see U.S. manufacturing slowdown: 4 cities at most risk posted 9/26/2011 on CNN Money).

U.S. manufacturing has been one of the rare bright spots in an otherwise annoyingly slow economic recovery…

But expectations of slower growth could threaten the rebound and cities that have gained from it. The ongoing European debt crisis and efforts to curb worries over inflation in China have analysts predicting lower demand for everything from American-made electronics to machinery.

U.S. manufacturing grew 6% during the economic recovery after declining 13% following the financial crisis in 2007. IHS Global Insight economist Tom Runiewicz says the industry has grown 4.5% so far this year. While that’s still robust growth, he expects manufacturing growth to slow to 2.9% next year.

The American consumer may not have been buying but consumers in other countries were.  A good example of American exports is the delivery of the first Boeing 787 to ANA.  And Boeing’s 747-8, too.   Though the largest U.S. exporter, Boeing won’t be able to fix the economy alone.  Especially when they’re competing against Airbus.

It is the high cost of labor that is hurting the advanced economies.  The Europeans subsidize some of their industries to make up for this economic disadvantage.  Boeing charges Airbus with getting subsidies that lets them compete unfairly.  And Airbus, of course, accuses Boeing of the same.   To help gain a competitive edge over Airbus, Boeing wanted to expand production in South Carolina.  A right to work state.  Which the Obama administration has opposed.  In support of their union donors.

The lesson of the Boeing-Airbus rivalry is this.  They’d be able to sell more planes if they could cut their labor costs.

Listening to the Private Sector turned around the German Economy and is why they can Bail Out the Euro

Germany’s high cost of labor was crippling her economy.  BMW and Mercedes-Benz built plants in America to escape their high cost of labor.  But things are different in Germany these days.  In fact, the country is so rich that the hopes of saving the Euro common currency falls on the German economy.  The only European economy rich enough to save the Euro.  So how did they make this turnaround?  Through reforms (see Getting People Back to Work by Matt Mitchell posted 9/26/2011 on Mercatus Center at George Mason University).

Germany’s unemployment rate is only 6.2 percent today. This is pretty remarkable given the severity of the recent recession, the slow growth of Germany’s trade partners (including the U.S.) and the unfolding fiscal crisis in the Eurozone.

NPR’s Caitlin Kenney attributes Germany’s relative success to a number of reforms adopted a decade ago. Kenney reports:

To figure out how Germany got where it is today, you need to go back 10 years. In 2002, Germany looked a lot like the United States does now, they had no economic growth and their unemployment rate was 8.7 percent and climbing. The country needed help, so the top man in Germany at the time, Gerhard Schroder, the German chancellor, made in an emergency call to a trusted friend.

So who did he turn to?  A government bureaucrat?  Or someone from the private sector?

The friend was Peter Hartz, a former HR director whom Schroder knew from his VW days. Schroder put Hartz in charge of a commission, the mission of which was to find a way to make Germany’s labor market more flexible. The Hartz commission made it easier to hire someone for a low-paying, temporary job, a so-called “mini job”:

A mini-job isn’t that great of a deal for workers. In these jobs, they can work as many hours as the employer wants them to, but the maximum they can earn is 400 Euros per month. On the plus side, they get to keep it all. They don’t pay any taxes on the money. And they do still get some government assistance.

He went to the private sector.  To get advice of how to create jobs in the private sector.  And he listened to what they said.  The cost of labor and regulatory costs were crippling job creation.

Generous unemployment insurance and regulations that add to the cost of employment tend to make for a static, unhealthy labor market. Though designed to make life better for workers, these policies may do them more harm than good.

Listening to the private sector turned around the German economy.  Made it the dynamo it is today.  And it is why that the German economy is the only economy that can bail out the Euro.

Economic Recovery Requires New Jobs

The economy still looks like it’s going to get worse before it gets better.  Whereas the Germans are doing so well that they may single-handedly bailout the Eurozone from their sovereign debt crisis.  And a lot of Americans are saying that should be us.  Not the bailing out the Eurozone part.  But having the ability to do that.

And that could have been us.  And should have been.  Like it used to be.  When America led the world in creating jobs.  So what happened?  The same thing that had happened in Germany.  The cost of employment grew.  And as it grew new job creation declined.

Economic recovery requires new jobs.  The Germans understood that.  And they did something about it.  So should we.  And the sooner we do the sooner we will see that economic recovery.

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