DL rumored to acquire used A340-600s

[WorldTraveler]

If the purpose is to replace the 747-400, then I'd love for DL to replace the 744 with 747-8I.  But probably not going to happen ... ... ...

 no it won't because the point it to REDUCE capacity, not add it.
 

And DL just spent millions redoing all the 744s interiors.

and the pay off will come in 5 years. the cabin cost $10M or less compared to 10-15X that amount for new aircraft.

the 744s also will be up for heavy maintenance about the time the 5 year mark after the cabin interiors.

 

[Kev3188]

In the "marketplace of ideas," this one isn't exactly flying off the shelves...

 

[WorldTraveler]

it doesn't have to meet approval with the internet peanut gallery, most of whom have consistently demonstrated they little to nothing about what it takes to actually make money in the world.

The marketplace of ideas on internet chat land seems to be populated with a whole lot of Airbus and Boeing salesman along with bankers and finance companies that like shiny, new, and debt.

It shouldn't be a great surprise that some people prosper because they choose to live contrary to conventional wisdom.

 

[Kev3188]

Just makin' an observation...

 

[WorldTraveler]

I get it.... but how many supporters did DL find for the refinery and yet DL had the lowest fuel costs of the industry in the most recent quarter?

how many internet chat fans said DL should set up a domestic feed operation at SEA and yet they have done that?

btw, nice job of cross marketing. 🙂

 

[FrugalFlyerv2.0]

it doesn't have to meet approval with the internet peanut gallery, most of whom have consistently demonstrated they little to nothing about what it takes to actually make money in the world.
 

 
Is it me or does a a comment like this cement WT as the most pretentious SOB/poster on here?

 

[WorldTraveler]

I'm not running in any contest one way or another.

If something is right or not and someone calls it is the measure of whether someone knows what they are talking about it or not.

there are people like meto who have contributed to this discussion who know exactly the issues at stake and what the planes in question can do. He said he doesn't like the idea but he also acknowledges that he isn't paid to make those kind of decisions.

I said from the beginning that this was a rumor but the numbers do work based on the supposed offer and it does match what DL has done with other aircraft transactions like the M90s, 717s, and even the L1011s a couple decades ago.

DL didn't keep the Eastern L10s for long but they got them cheap and used them as cheap domestic capacity in the period when DL had the highest profit margin among US airlines in the late 90s.

a couple years later and they were all gone.

you can't do that with brand new 773ERs; Boeing just won't offer a discount that low.

 

[700UW]

And that refinery hasn't turned a profit yet.

 

[WorldTraveler]

on an operational basis, no.

But anyone who even remotely understands the airline or refinery business knows that there is far more jet fuel on the market which has helped DL even if it has also helped competitors.

But the fact that DL had a considerably lower fuel price than either B6 or UA, the other two largest airlines in the NE, clearly raises the question if DL's fuel price advantage is a lot deeper than a lot of people understand.

DL isn't going to say what price it is getting its jet fuel for at its NYC airports and can't legally take credit for forcing down the cost of jet fuel to the benefit of more than $500M per year by spending a fraction of that on operational losses at the refinery.

besides, why would DL want to tout that it is running a profitable refinery? so that it ticks off the petroleum companies that it has to partner with in order to make DL's fuel strategy work? so that its competitors then decide it is worth it for them to find a refinery as well?

DL will use its fuel strategy to its benefit and without providing enough details for anyone to know what is happening ... and when the industry has shifted enough in DL's favor, someone might figure out enough of what DL has done to see how they did it.

for now, DL has a fuel cost advantage relative to its peers that is far larger than what it is losing on the operational costs of the refinery.

 

[700UW]

A company is in business to make money, not lose it.
 
Guess you never heard of that concept.

 

[WorldTraveler]

what?

that is precisely why this proposal is potentially in play.

DL would spend less money acquiring an asset that would cost less to operate than 744s and might possibly provide some cheap short term additional capacity not unlike what DL did with the Eastern L10s; the 717s and M90s are actually different types of transactions because they were designed to provide long-term lift.

If this deal takes place, it is primarily to provide a short-term solution to the 744 replacement issue.

DL's goal, as anyone who understands them at all knows, is to spend the least amount of money to make the most.

that is maximizing profitability if it ever existed.

 

[robbedagain]

dl would be better off flying the 744 rather than the 346    until the replacement comes   but even if dl were to get the 346s that fuel cost savings would not be soo good as it is now   esp with fuel prices as high as they are now  and who knows if itll go even higher

 

[WorldTraveler]

robbed,
I don't get real excited about the rumor OTHER than the potential additional short term capacity might provide for accelerated int'l growth because there are 346s readily available.

If the 744s are due for overhauls within the next five years, it is very likely they will get parked at that point.

most other carriers have or will remove their 744s from their fleets; if Japan was booming, it might make sense to keep them going but DL is going to reduce connecting capacity thru NRT and downsize aircraft to retain only as much of the local market as it needs to serve in order to be profitable and still the dominant airline between the US and Japan (and DL's fare advantage comes from its dominant service position which is why those who think DL will cancel routes instead of downgrade to lower cost equipment don't understand the situation).

I'm not even sure an aircraft the size of the 346 makes sense; but I am sure there are routes which are ready for upgrades but for which the 744 is too big and too costly of an aircraft.

remember that if fuel prices go up, a lot of routes won't work, regardless of the aircraft that operate them.

the whole reason for having some cheap int'l capacity is that those planes can be easily parked with little risk. If you are paying $750,000/month or more for a 777, 787, or 350, it costs you a lot of money to not fly aircraft.

The M80s are now the "flex" capacity in DL's domestic fleet since the DC9s are gone. If the economy goes south, the M80s can be parked because they are largely no-cost aircraft.

If the 346s come, it will be because DL has a maintenance holiday on them and they are cheap enough that DL can grow now and get rid of them at little cost, ordering newer aircraft when the industry is more stable.

With UA struggling, it is far from certain how the int'l market esp. will look in a few years.

 

[robbedagain]

well speaking of japan  NH flies 777s to the us from jp   not sure what JL operates other than the 787 to BOS   as for the 744  DL will probably operate them similar fashion to the DC-9   but I personally cant see them getting another 4 engine plane esp if the fuel prices do go up    and even if they do Id imagine they park the 744s faster than 5 yrs

 

[WorldTraveler]

again, I agree with meto. I'd rather see new and shiny but there are people who have the numbers and know whether the 346 deal makes sense and if it doesn't what is next on the list.

DL will likely do something that involves used aircraft somewhere in the large widebody category just because there are deals out there.

It is hard to know where on the continuum between cheap to acquire and fuel efficiency the deal will land but it is doubtful that DL will completely go for all new aircraft as long as there are good deals on used aircraft available

of course this whole thing could also be an attempt by DL to get Boeing to aggressively reduce its prices.

Boeing will look really bad if DL builds a hub at SEA and then operates it largely with Airbus aircraft which DL is buying new, regardless of what this deal does.

Boeing had better prove the value of its products esp. in light of DL's complaints about the Import Export Bank or it might be a long time before DL orders a new Boeing widebody again.

why should it be so hard to realize that the same Delta that is aggressively competitive with other airlines isn't going to be just as aggressive in seeking out deals with suppliers?

it might take another aircraft purchase to prove it, but DL is not using the playbook that has governed the airline industry esp. in the US for decades.