DL rumored to acquire used A340-600s

[WorldTraveler]

meanwhile, Lufthansa is planning to RETAIN in service its A340-300s to use them to operate LOW COST service to destinations where LH has lost market share to Middle East rivals.

http://www.ch-aviation.com/portal/news/27647-lufthansa-to-reactivate-a340s-for-low-cost-longhaul-ops-in-2015

 

[700UW]

The A340 is a pig of an airplane, that's why it wasn't a good seller and is out of production.

 

[WorldTraveler]

and yet LH which has been one of the most profitable airlines is willing to reactivate ones that were planned to be retired (which means either they were fully paid for or written off) and use them in low cost service.

LH also has operated several versions of the 340 for years so they are well aware of the operating economics of the aircraft as well as the ownership factors.

 

[700UW]

And they also operate the 744 or did and now the 748i,
 
They didnt buy anymore A340 family aircraft, they bought the 748i.

 

[eolesen]

Politically, LH had no choice but to order and operate the A340. Likewise for IB and AF. Fortunately for BA, they weren't forced into either the 330 or 340.

Arguing any of those airlines chose the A340 based on the aircraft's economics is more than just a bit specious...

 

[WorldTraveler]

but there is no indication that they paid less than market rates for them which is all that matters. And if the economics of the 340 were so bad, LH has been more than able to compensate for them based on its profitability and its heavy use of the 340. AF and IB have been less profitable and yet all of the carriers have had the opportunity to remove them from service.

More significantly, they intended to remove them from service but are retaining them and using them in highly competitive markets.

And what they are ordering NEW doesn't change the economics of the existing aircraft in their fleet.

LH is a well-run airline. If the economics didn't work to use a 340 in this effort and at least break even, they wouldn't be trying.

Their move says that the 340 can be effectively used when ownership costs are next to nothing, as they should be with an aircraft that was going to be retired.

 

[FWAAA]

These A340s date back to the Dumbass Airbus era of "4 Engines 4 Longhaul" nonsense.   And Branson,  ever the chief Dumbass,  wholeheartedly embraced the philosophy:
 
http://www.boeing.com/news/frontiers/archive/2002/september/i_ca1.html
 
http://www.seattlepi.com/business/article/Aerospace-Notebook-Boeing-rips-Airbus-ad-that-1092134.php
 
Virgin Atlantic has reported annual losses in four of the last five years flying primarily four-engined planes where most other airlines fly twinjets.   Exactly how profitable has VS been since 2002?   The answer is "not very."  Chasing ignorant chavs in Britain who believe the "four-engines is better crap" hasn't exactly paid off in spades for Beardy.   SQ took a bath on its half of VS and was really lucky that Anderson offered them anything for that 49% share.
 
VS has reported losses because it has not attracted the business travelers across the Altantic as well as AA/BA and the rest.   Additionally, it's paid a huge fuel penalty flying those thirsty A340s, as has Iberia.   LH is a completely different animal.   It flies a lot of high-yielding business travelers and is the dominant airline of one of the world's biggest economies (LH is Germany's BA).   LH and DL have a lot in common.     VS, on the other hand, is a loser, not unlike Iberia.
 
If Delta wants to throw a lifeline to VS by acquiring some of its old loser fuel-inefficient jets, who am I to disagree?    I think Anderson is smarter than that, but others think they know better.   

 

[WorldTraveler]

yes, we know about Virgin's losses and its four engines for the long haul campaign.

The lifeline wouldn't go to Virgin. If the aircraft are available, it is because Virgin and the leasing companies that operate them decided to take Airbus on the offer to cash out based on low resale values.

Virgin has lost money because it tried to be independent well beyond when it was obvious that their essentially point to point int'l operation wasn't viable; BA operates an entirely different type of business model. Virgin, like many other younger airlines including WN, is also paying the price for no longer having a bunch of new hire employees and instead having to pay AVERAGE wages that are like the rest of the legacy carriers based on a more senior employee group.

Perhaps it is precisely because DL and LH both have the premium traffic to justify a less than fuel efficient asset that the deal might make sense. And LH wouldn't be using the 340s on the low cost routes if there were no ownership costs involved.

I am sure Anderson and co. will make whatever decision makes the most sense. The 340 deal if it even happens is clearly a short-term solution particularly in light of the increasing urgency to restructure the Pacific. The 744s increasingly do not work on DL's network. If the 346s can cut trip costs by 30% relative to the 744s, it could buy DL enough time to see how the rest of its new Pacific flights work and begin to wind down the 744s as their HMVs come due, perhaps shifting the 744 to other places on DL's network where it can be done.

BTW, DL led off traffic reporting for April with a 6% RASM increase on 3% more capacity. They noted that all regions were strong except the Pacific where LF was down 1 point on 2% more capacity. OTOH, DL added 24% more capacity to Latin America and managed to pick up 28% more traffic. The Atlantic had flat traffic on 5% less capacity while DL added 3% more domestic capacity and picked up 7% more traffic, again partially due to the Easter shift from March to April.

Every global airline has to continually balance strong and weak areas of their network. For the near future, DL will be working to reduce costs and manage capacity on the Pacific very closely while their biggest growth area appears to be Latin America followed by N. America. Even though DL's domestic system is far larger than their Latin system, the absolute amount of capacity added to each region was about the same.

 

[700UW]

And LH has removed 21 A340s from their fleet.

 

[WorldTraveler]

But are willing to keep some of them at no ownership costs...which is why the economics obviously work as a USED aircraft

 

[700UW]

They already own or lease them, DL doesnt.

And LH just took delivery of their 75th 747, dating back to the original 747-100.

 

[eolesen]

But are willing to keep some of them at no ownership costs...which is why the economics obviously work as a USED aircraft

Nice try, but it's not just the ownership expense... that is only 6% of the equation.

To keep those aircraft flying, LH doesn't have to worry about the startup costs associated with the fleet.

They already have qualified A340 mechanics, tooling, consumables and rotables. The aircraft performance profiles are already on file in their flight planning systems, the aircraft are already on the maintenance program, and their DCS and weight and balance system already have the LOPA and envelope information loaded.

DL has none of that... and that all costs money to develop.

 

[WorldTraveler]

DL Tech Ops already offers services on the A340.

http://www.deltatechops.com/mro-capabilities/view/category/line-maintenance

DL has consistently shown that it uses its fleet complexity/diversity to gain expertise which it then markets as MRO services.

And DL still has one of the lowest maintenance CASMs among US airlines.

 

[700UW]

Doesnt matter if they offer it, do they do it?
 
And if DL flies it, it falls under a different FAR, they have to have a complete line and overhaul agreement with the FAA which DL doesnt have as they dont fly the plane.
 
Fixing a plane at an MRO is totally different then having YOUR OWN maintenance program.
Big difference.
 
DL doesnt stock parts for the A340 nor are their line mechanics trained on it and DL doesnt have a maintenance program for the A340.

 

[WorldTraveler]

DL has people who know what they are doing. If they decide it is worth flying the A340 or any other aircraft, they will have the capabilities to do what they need to do. No one is doubting what is involved in operating a new fleet type as a DL aircraft. Given the number of fleet types DL operates, this certainly won't be their first or last rodeo.

And if they fly the aircraft, the chances are very high that they will also sell the services they do on their own aircraft to other airlines.

Again, DL Tech Ops does provide a certain level of service on the A340 RIGHT NOW - in addition to the total care programs they offer on other Airbus aircraft.