The fat lady is about to sing for the A380

[fdcg27]

UAL certainly had the cash on hand, but it was hardly unencumbered.
UAL's current aircraft orders are primarily intended to replace aging equipment, not provide for growth in capacity, as far as I know.
Please correct me if I'm wrong on this.
Also, as I noted above, any aircraft or engine builder is happy to accept orders and deposits for any aircraft that has a long order backlog, since losing those orders merely shortens the backlog for other buyers while the OEM keeps the deposit money.
My point was that aircraft on order is not an indication of the fiscal health of a carrier.
How many aircraft does AA have on order, for example?
Finally, UAL uses 767s and 777s becase it has them, not because they're optimal. They aren't the only US carrier to do this, either.
You are well aware of the number of 757s used across the Atlantic, not because they're optimal, but because the carriers have them and can use them to exploit routes not otherwise served non-stop.
These airplanes don't work all that well in a slot constrained environment.
That's where a 744/748/A380 shines.
I agree that the 787 will allow airlines to bypass hubs and provide point to point service to city pairs where this is not now possible.
It will not be especially useful in slot constrained markets.
While the yield may not always be sufficient to cover the cost of any potential point to point route, there are certainly a number of international routes where it will.
Most passengers will pay a premium for nonstop service point to point, particularly on someone else's dime (employer or client).
Certainly Boeing's order book for the 787 shows the potential uefulness airlines see for it.
For those who won't pay a premium (or those who have employers or clients who won't), there is the A380 and a connection or two along the way.

 

[Astro14]

Originally Posted By: fdcg27
UAL certainly had the cash on hand, but it was hardly unencumbered.
UAL's current aircraft orders are primarily intended to replace aging equipment, not provide for growth in capacity, as far as I know.
Please correct me if I'm wrong on this.
Also, as I noted above, any aircraft or engine builder is happy to accept orders and deposits for any aircraft that has a long order backlog, since losing those orders merely shortens the backlog for other buyers while the OEM keeps the deposit money.
My point was that aircraft on order is not an indication of the fiscal health of a carrier.
How many aircraft does AA have on order, for example?
Finally, UAL uses 767s and 777s becase it has them, not because they're optimal. They aren't the only US carrier to do this, either.
You are well aware of the number of 757s used across the Atlantic, not because they're optimal, but because the carriers have them and can use them to exploit routes not otherwise served non-stop.
These airplanes don't work all that well in a slot constrained environment.
That's where a 744/748/A380 shines.
I agree that the 787 will allow airlines to bypass hubs and provide point to point service to city pairs where this is not now possible.
It will not be especially useful in slot constrained markets.
While the yield may not always be sufficient to cover the cost of any potential point to point route, there are certainly a number of international routes where it will.
Most passengers will pay a premium for nonstop service point to point, particularly on someone else's dime (employer or client).
Certainly Boeing's order book for the 787 shows the potential uefulness airlines see for it.
For those who won't pay a premium (or those who have employers or clients who won't), there is the A380 and a connection or two along the way.


I didn't say unencumbered cash..you did...but the point is that UAL had enough to put down a few deposits on -380s if they wanted. They chose not to. Orders are part of the health of a carrier...you ask a rhetorical question on AA...answer it: how many? Airlines have to keep upgrading equipment to meet changing regulations and operating conditions...so, even a carrier like AA has to have new airplanes coming, or it will die...the MD-80s that it flies are dinosaurs; guzzlers that cost a fortune in fuel and can't meet noise requirements in many airports and can't meet climb, RVSM, or other operational requirements.

While the orders (132) at UAL are intended to replace aging equipment (and meet fuel efficiency requirements and noise/environmental constraints), those 200+ options are the growth...and that's a lot of potential growth if the marketing clowns (sorry, I mean professionals) can expand the markets. Consider, too that the airline is in constant negotiation on those kinds of things...I wouldn't rule out another widebody for future purchase...both the -380 and 748 have been looked at closely (technical and flight operations reps visiting factories)...just like I am very familiar with the Volvo product line for 2012...I've even driven several examples of that line, including V-70, C-70 and XC-60...but I have no orders/options...not yet...my own economic decision that I could change quickly if needed...

But, as a pilot, and as an industry observer, I am not a -380 fan...it's overweight, doesn't perform, needs infrastructure to be built and has operational problems...

As far as premium passengers...that's another story...and UAL is spending over $400 million upgrading its cabins for international flights...I've flown to Europe/Middle East several times in UAL's new product: lie-flat seats/15" screen/new menu in business class (first is better) and it is very competitive with the best out there...far better than Lufthansa, for example...and while Emirates is more luxurious...they can afford to be since they have state support in the form of tax breaks and subsidies on aircraft and infrastructure...while US airlines are among the most highly taxed industries in the US (over 20% of your ticket cost...it's supposed to go into FAA and infrastructure, but instead is used in the general fund).

A level playing field would be nice...

 

[azsynthetic]

Originally Posted By: fdcg27

My point was that aircraft on order is not an indication of the fiscal health of a carrier.
How many aircraft does AA have on order, for example?


Aircraft order is indeed an indication of the fiscal health future of a carrier. AA aircrafts are financed by Boeing, Airbus and leasing companies. Do you think AA can get financing if they will be gone in a couple of years? Have you ever lease a car with bad or no credit history? AA got firmed financing for 460 aircrafts plus 100 option.

Even though AA is in bankruptcy court to reorganize, they do have almost $5 billion cash in hand right now.

http://www.star-telegram.com/2012/08/27/4209968/amr-records-second-consecutive.html

 

[SEMI_287]

I'm going to miss the MD-80, wish I got the chance to fly one.

 

[fdcg27]

You apparently either didn't read or didn't understand my post.
Both Boeing and Airbus are quite willing to accept speculative orders for aircraft, since the order book is deep enough for the models AA ordered to absorb any walkaways. The delivery rate of the single aisle Airbus and Boeing aircraft is such that a loss of even a seemingly large order costs either airframe builder nothing, since no costs will be incurred until the ordered aircarft are actually scheduled for production and parts to build those frames are actually ordered from the subs.
So, no, the fact that Boeing and Airbus will accept orders from a troubled carrier really has nothing to do with that carrier's fiscal health.

 

[fdcg27]

Originally Posted By: SEMI_287
I'm going to miss the MD-80, wish I got the chance to fly one.

Fear not.
Delta will be operating this type for years to come.
Delta is now flying many versions of this aircraft, from the DC-9 50s it inherited from Northwest, various MD-80 models, the MD-90, and soon the MD-95, aka Boeing 717, which will come from Airtran via Southwest, since most of Airtran's fleet of eighty-eight 717s are on twenty year leases from Boeing, and Southwest needed to find a sublease home for these aircraft, since they have no desire to operate them.
The type will also remain in American's fleet for some years, since it will take time to replace the large number of these aircraft that they have.

 

[Astro14]

Originally Posted By: fdcg27
You apparently either didn't read or didn't understand my post.
Both Boeing and Airbus are quite willing to accept speculative orders for aircraft, since the order book is deep enough for the models AA ordered to absorb any walkaways. The delivery rate of the single aisle Airbus and Boeing aircraft is such that a loss of even a seemingly large order costs either airframe builder nothing, since no costs will be incurred until the ordered aircarft are actually scheduled for production and parts to build those frames are actually ordered from the subs.
So, no, the fact that Boeing and Airbus will accept orders from a troubled carrier really has nothing to do with that carrier's fiscal health.


I do read your posts, but I do not agree with your positions on the airline industry.

You're missing several considerations in this overly simplistic view; first, the orders for aircraft were in prior to AA's bankruptcy filing, second, no new orders can be placed now that they are in bankruptcy, the fiduciary would not allow it while the restructuring is going on because the finances of AA are not yet defined, so the obligation to buy would be imprudent, third, you can cancel orders, but that costs $$ as well (what is more likely to happen, since many aircraft are back-ordered, is not a walk-away, but a transfer/sale of the order to another carrier, similar to the sale of landing slots and gate leases, both of which are in consideration during AA's Chapter 11 process) and finally, while AA is troubled, there are many companies to which it owes $$ that want to see it survive. Big lenders, like GE capital, and suppliers, like P&W and yes, Boeing and Airbus, will extend them the financing needed to restructure and survive. They would rather get payments on the loans than get the aircraft back or get pennies on the dollar as creditors. As secured creditors, they would be best positioned in the bankruptcy, but they still would be far from whole if AA was forced into liquidation. The viability of AA as a company is why they were able to get Debtor in Possession (DIP) financing. Otherwise, they would have been forced into a Chapter 7 liquidation.

Simply put: Orders are more firm than you make them out to be. The "speculative orders", as you call them, are known as options...and were previously discussed. Boeing and Airbus are not accepting orders from AA as you claim. Finally, the carrier's fiscal health is not as simple as you make it out to be.

 

[Astro14]

Originally Posted By: fdcg27
Originally Posted By: SEMI_287
I'm going to miss the MD-80, wish I got the chance to fly one.

Fear not.
Delta will be operating this type for years to come.
Delta is now flying many versions of this aircraft, from the DC-9 50s it inherited from Northwest, various MD-80 models, the MD-90, and soon the MD-95, aka Boeing 717, which will come from Airtran via Southwest, since most of Airtran's fleet of eighty-eight 717s are on twenty year leases from Boeing, and Southwest needed to find a sublease home for these aircraft, since they have no desire to operate them.
The type will also remain in American's fleet for some years, since it will take time to replace the large number of these aircraft that they have.


The DAL DC-9 -50s are being rapidly replaced. They will be gone by next year. Since the future fleet of AA is unknown, I would not be so certain that they will be around for long with AA. Frequently, capacity reductions are part of a Chapter 11, and AA would likely park many of its MD-80 fleet as part of that reduction, accelerating the type being replaced with Airbus and Boeing single-aisle aircraft already on order.

 

[fdcg27]

I know that Delta is retiring the DC-9s, but they will have the MD-80s for some years, and the MD-90s and 717s for a number of years, and these are all very similar aircraft, although the 90s and 95s do use a more modern engine.
WRT AA, I suppose that will depend upon what plans US has for it, since it appears that AA will come under the control of US Air. I doubt that US will want to give up the markets AA has built, so I suspect that the Mad Dogs will be around for a while, although this is only my speculation.

 

[fdcg27]

First off, I wasn't replying to you, but rather to another member.
Given that, I accept that you disagree with me, and I respect your opinion as someone working as flight crew for a major.
AA's losses on operations were well known way before their federal filing, and if every reader of the Wall Street Journal knew of AA's precarious financial position prior to the filing, I'm pretty sure that the airframe and engine makers knew of it as well.
Orders by themselves mean nothing until the airframe maker actually begins to incur costs related to those orders.
This doesn't happen until a given ordered aircraft actually gets a real line number and is scheduled for production, with long lead supplier parts being ordered for it.
Prior to that, the airframe and engine builders have no cost in the order, and are therefore willing to take orders that have no more than an even chance of being produced and delivered.
Also, there has been speculative leasing of aircraft in hot demand, since these aircraft are so easily placed with no loss in the event that the entity to which they are leased fails.
A recent example involves Airbus and a startup in Columbus, OH.
I think you know what I'm writing about here.

 

[azsynthetic]

Originally Posted By: fdcg27

Orders by themselves mean nothing until the airframe maker actually begins to incur costs related to those orders.


More proof that you do not know what you are talking about. We are one of the main subcontractor to Boeing and Airbus for the FC/FMS on many aircrafts. The orders that Boeing or Airbus get directly effect the cost of each shipset delivered. This is negotiated at the aircraft introduction and we are being paid at the rate based on the current confirmed orders. Long lead time is over five years for EMD phase and we are paid for those five years without any delivery. What we get is based on the number of aircraft orders. Get it?

Confirmed orders require a non-refundable deposits. Option for more aircrafts does not. Option orders have a time limit that require a deposit to convert to firmed orders. No deposit at time of limit expiration means no order.

 

[Astro14]

fdgc27 - I'll summarize what I believe to be the kernel of dissention: that aircraft orders do not indicate the viability of an airplane, in this case the A-380.

But in my experience, those orders are a strong indicator, and the indicators for the A-380 are far less positive than for other airplanes in current production.

As AZsynthetic has pointed out (and echoed my understanding with greater detail than I have), orders are long lead (several years), and have financial penalties for cancellation. Orders are a contract, in other words. Companies don't enter into contracts unless they're certain of their need and ability to fulfill the contract. Options are the tool by which aircraft orders are increased should a company wish to hedge its bets for future needs.

Certainly, as with other expensive capital equipment, there is a speculative aspect to the market. One of the biggest buyers of aircraft in the world is International Lease Finance Corp. (ILFC, I think I have the acronym right...Steven Udvar-Hazy's company). They pressured Airbus into re-working the A-350 to be a better competitor to the 787. They are a good enough customer that Airbus listened and the A-350XWB is the result. ILFC (along with FedEx and others) made big news by canceling their A380 orders. That's significant: they paid cash to NOT get the airplane. I would pay to get out of a deal only if I thought that deal was really bad...and that is the estimation of several companies on the A380. Now, we all know that ILFC and FedEx likely used their team of lawyers to take advantage of the delivery delays to break the contracts. But we also know that lawyers have to be paid...they're a cost as well...so the companies still paid to get out of the orders.

So, back to the crux of my argument: while the A-380 may offer a cost advantage to existing production aircraft on a CASM basis, the low order book (and canceled orders) reflect the essential fact that: companies that could buy it are choosing not to obligate themselves with contracts on it because the airplane itself does not offer a clear advantage when the factors of infrastructure costs, route capacity, delivery delays, production problems and operational issues are factored into the purchase decision.

 

[azsynthetic]

Well, it seems like I called this 2.5 years ago.

http://www.independent.co.uk/news/busine...ed-9919512.html

 

[Astro14]

You and me both....

 

[L_Sludger]

Can't say that I'm crying, but I'm sure some folks in Toulouse aren't happy.
The A380 was self-defeating because, like the Concorde, it didn't have many places it could go.

In good news, if EADS closes the A380 line, the balance of the orders should head to Everett, WA for a boost to the 779X and 748 books.

 

[Mr Nice]

Who will buy the 747-8 when they will most likely want the 777-X ?

 

[L_Sludger]

Originally Posted By: LT4 Vette
Who will buy the 747-8 when they will most likely want the 777-X ?


They are both fantastic platforms. Might be the longest-haul guys who need to go wherever the ETOPS rating of the 778-9X is insufficient.

 

[SEMI_287]

Originally Posted By: Astro14
Originally Posted By: fdcg27
Originally Posted By: SEMI_287
I'm going to miss the MD-80, wish I got the chance to fly one.

Fear not.
Delta will be operating this type for years to come.
Delta is now flying many versions of this aircraft, from the DC-9 50s it inherited from Northwest, various MD-80 models, the MD-90, and soon the MD-95, aka Boeing 717, which will come from Airtran via Southwest, since most of Airtran's fleet of eighty-eight 717s are on twenty year leases from Boeing, and Southwest needed to find a sublease home for these aircraft, since they have no desire to operate them.
The type will also remain in American's fleet for some years, since it will take time to replace the large number of these aircraft that they have.


The DAL DC-9 -50s are being rapidly replaced. They will be gone by next year. Since the future fleet of AA is unknown, I would not be so certain that they will be around for long with AA. Frequently, capacity reductions are part of a Chapter 11, and AA would likely park many of its MD-80 fleet as part of that reduction, accelerating the type being replaced with Airbus and Boeing single-aisle aircraft already on order.


I'm sure the old thirsty and noisy JT8D has a lot to do with that. Not to mention old air frames and high maintenance.

 

[fdcg27]

Right!!!
Airbus is actually going to close a line for which all of the costs are sunk with so many of the type yet to be delivered?
Aside from the fact that it would be a cold day in hades before the fastest growing airline now operating would order another Airbus aircraft of any kind, Airbus would be leaving a lot of money on the table while gaining nothing.
The A380 has been a stunning success as compared to the 747-8.
You were wrong about that, incidentally.
The 747-8 has gone nowhere, which saddens me as both someone who enjoys variety in selecting flights and as a Boeing shareholder.
There are so many routes on which an A380 would make sense, although so many major airlines, especially those based in this country, are unwilling to make a significant financial commitment.
Fleets of little twins with a few big ones thrown in?
Sure.
Fleets of derivatives of an ancient Douglas design bought on the cheap?
Sure.
Fleets of an aircraft with the lowest CASM in the industry?
Too big an airplane!
The same can be said of the 747-8, another aircraft that would be less costly on a CASM basis than most of the twins that fly in its place.
We all fly routes on a regular basis where an A380 or 747-8 would make great economic sense.
We recently flew to San Juan on vacation, as we've done at least once each cold season for the past six years.
Both Delta and US Air (Or American, if you want to call it that) could each easily keep a couple of A380s busy flying ATL, CLT and PHL to SJU rotations alone.
They instead have a bunch of closely timed flights using various smaller types including the 757, A330, A320 and A321.
The cruise, vacation and VFR traffic flying to SJU doesn't give a hoot about frequency and for most Asian and trans-Atlantic flights, frequency doen't matter either, since departure times are relatively fixed.
The demand isn't there to profitably fill an A380 or even a 747-8?
Anyone who's flown anywhere in the past few years knows that this is not the case for many routes.
Planes are packed and load factors are at historic highs.
The stretched 777 derivative now in development may well ring the death knoll of the A380 as well as the already badly wounded 747-8, but for airlines that really need the capacity, the A380 is the only game in town.
Of course, the only such airline currently operating is probably Emirates.
Funny how they own most of the future A380 delivery positions.
Unless Airbus is willing to kiss Emirates goodbye as a customer for at least the next decade, A380 deliveries will continue and a neo version will likely be required and developed.

 

[azsynthetic]

The 747-8 will survive because it is currently configured for both passengers and freighters, the A380 is not. Many freight terminals are not setup for the A380. The 747-8F is and will be in the future the largest freighter from Boeing. The 777F in any variation is still less capable than a 747-8F.