Intl Capacity Cuts and A330

[john john]

That announcement should be forthcoming.

Any information on the new A330 financing?
I have to ask here because the mods shut down the thread
http://www.usaviation.com/forums/index.php?showtopic=45267
http://www.philly.com/inquirer/business/20...obal_seats.html

After slashing domestic seat capacity in the last year, US Airways said yesterday that it was looking to trim international seats and flight frequencies after the summer because of the deteriorating global economy.

The airline plans to trim 4 percent to 6 percent of its capacity - seats and flights - in 2009, on top of last year's reduction of 6 percent to 8 percent in mainline domestic seat capacity.
Yesterday, Kirby said there were "misperceptions" about the labor agreements. An additional 4 percent to 5 percent of capacity can be chopped without violating minimum-fleet-size agreements with unions, he said.
330’s ?????
http://www.iht.com/articles/ap/2009/03/16/...ays-Outlook.php
But they need financing for five A330s. He said they are talking to Airbus about the possibility that it might finance the plane, which the airline needs for its long-haul destinations such as Tel Aviv.
He said leases are expiring on its 10 Boeing 767s, which it uses on international flights. Replacing those with smaller planes would cut international further, if needed, he said.

 

[Richard]

MOD NOTE:

This post was part of another thread but on a different subject. Please keep this discussion on the topic above and do not denigrate to another East/West battle.

Thank you.

 

[nycbusdriver]

Any information on the new A330 financing?...


--------------------


....But they need financing for five A330s. He said they are talking to Airbus about the possibility that it might finance the plane, which the airline needs for its long-haul destinations such as Tel Aviv.
He said leases are expiring on its 10 Boeing 767s, which it uses on international flights. Replacing those with smaller planes would cut international further, if needed, he said.

I can tell you (second hand) what was told to the check airmen at their meeting last week. Of course, it's from the "Training Department," so always take it with a very large grain (cattle salt lick?) of salt.

Airbus will be financing the A330s which have no other financing on deck. That's not surprising, since Airbus needs to keep their assembly lines going, especially for USAirways-specified ships that have already started assembly.

Today's fleet plan projection for the end of 2010 shows 2 767s gone back to lessors. This because the owners feel they can get more money elsewhere than what the near-sighted, tight-fisted brain trust [my characterization, not the Training Department's] in Tempe is willing to pay to continue the lease.

As a side note: I've heard from a few sources that two of our ex-EAL 757s which were returned to their lessors for the same reason ended up being scrapped for beer cans when the owners found no takers for those tired old machines. The engines were removed and the blade came down.

 

[hp_fa]

I wonder why the lessor didn't try to make a deal with US Airways rather than scrap the planes?

 

[nycbusdriver]

I wonder why the lessor didn't try to make a deal with US Airways rather than scrap the planes?

The conjecture is that the lessor decided to cut his losses (by not having to pay for desert storage and pulling out some of the $$$ for the engines and scrap metal.) Also, destroying the airframe kept yet another worn out old bird from a saturated market, thereby bolstering (marginally) any lease rates out there already.

Had the US majors destroyed all their worn out DC-9s, 727s and 737s back in the 1980s and 1990s, rather than get a few measly bucks for them, they would not have fed their own low cost competition which destroyed their yields.

There's a lot to be said for "The Blade" down there in Tuscon.

(I wonder where the airline marketplace would be if all those upstarts had had to pay Boeing, Douglas and Airbus the going rates for a new airliner? Answer: Most would likely have never even incorporated.)

 

[hp_fa]

Maybe I didn't phrase it entirely correctly, so let me use an illustration.

Let's say that those old 757's had a lease rate of $130,000.00 per month and US Airways had no intention of renewing at that rate. Wouldn't it have been smarter for the lessor to turn around and offer something like $75,000.00, or even $60,000.00 per month just to keep the asset performing rather than junk it?

I'll admit to not having any expertise in aircraft leasing, but it sure seems to me that it is better to have an asset performing something for the bottom line rather than being taken off the books entirely.

 

[jimntx]

All things being equal, yes. However, what is the cost to the lessor for "make ready," or Federal, state, and local taxes for having that asset on the books. If it had been getting $130,000/yr, my guess is that the taxing authorities have it appraised at a book value that reflects that level of income. Getting it reappraised at a lower value is not always the easiest or least expensive thing to do.

Also, leasing for a substantially lower rate will do exactly what nycbusdriver said it will do. It will lower the "comps" for the whole leasing industry. I own a small one bedroom condo in Dallas which I have rented out. The market value had been in the $65,000-$70,000 range until this one goofball in the complex decided to sell his for $46,000. Not a desperation sale. He didn't want to have to pay any taxes on the sale (which he wouldn't have anyway because it was his primary residence for over 20 years). Now the comps for the complex and the neighborhood have just been pulled down by almost a third.

Leasing an a/c for substantially below the going rate will result in other airlines putting pressure on their lessors to renegotiate leases at much lower rates.

 

[autofixer]

Wasn't FEDEX and UPS snatching up every 757 coming on the market? Thus, the leasors were dumping LCC in favor of higher rates at cargo carriers. I don't think that is the case anymore. Maybe the leasors are getting a dose of their own medicine.

 

[nycbusdriver]

Leasing an a/c for substantially below the going rate will result in other airlines putting pressure on their lessors to renegotiate leases at much lower rates.

BINGO!

Leasing an a/c for substantially below the going rate will result in other airlines putting pressure on their lessors (INCLUDING THE ONE THAT SCRAPPED THE USAIRWAYS 757s) to renegotiate leases at much lower rates.

 

[PHL]

... the end of 2010 shows 2 767s gone back to lessors. This because the owners feel they can get more money elsewhere than what the near-sighted, tight-fisted brain trust [my characterization, not the Training Department's] in Tempe is willing to pay to continue the lease.

Weren't most the US 762s delivered in the 1980's? I know a few were inherited with the PI merger, but how many were delivered new from 1990 onward? There were a total of 12 at one point, right? One was an insurance write off after a ground run up incident. Was the other returned to a lessor?

I ask this because I wonder what kind of market would be out there for them, given their age and cycles.

 

[BoeingBoy]

Half and half. 5 were delivered in the late 80's and 5 were delivered in 90-93 according to AirFleets.net. Cycles are probably relatively low since most of their use has been TA where cycles don't accrue as fast, while the other U.S. network carriers have used the 767 for more domestic service than PI/US. I'd be surprised if the oldest had much over 20,000 cycles. MTOW is a problem - they all have a MTOW about 40K lbs less than the max for the type IIRC. I don't know how much that's just a paperwork fix or if mods would be required.

Jim

 

[ClueByFour]

(I wonder where the airline marketplace would be if all those upstarts had had to pay Boeing, Douglas and Airbus the going rates for a new airliner? Answer: Most would likely have never even incorporated.)

Maybe back when, but B6 has bought a vast majority (if not all) new metal. It's wishful thinking that these kinds of games would keep competition out, and exactly the mindset that allows the creative thinkers to thrive at the expense of the legacy carriers.

 

[Poug Darker]

Rumor control has heard that DP has made the trip to Tolouse (SP?) to finagle 15 more 330-200s.
AB financed, of course. Doesn't mesh with over-the-pond cap cuts, but we only think short-term, and the delivery timeframe for these would probably be further out than the immediate future.

 

[700UW]

Could be replacement planes for the 767s, and Doug would not need to go to Toulose, AB has several US based offices, two main ones in MIA and near IAD.

Airbus North America headquarters is just outside Washington, D.C., in Herndon, Virginia. The facility employs some 140 people in sales, marketing, and communications for Airbus customers in the U.S. and Canada. This facility also serves as headquarters for Airbus North America Customer Services. The employees here reflect the diversity in nationality that is so commonplace at Airbus worldwide, offering North American customers daily interaction with a company that offers a true global perspective.

Nearby in Ashburn, Virginia, another 75 employees keep the 24-hour Airbus Spares Center humming, shipping aircraft parts, tools and sections to customers in the Americas. This facility is one of three Airbus Spares facilities in the world.


Airbus opened its first design and engineering center outside of Europe in 2002 - in Wichita, Kansas. At Airbus North America Engineering, some 210 engineers are focused on the A340 and A380. The facility doubled its size and tripled its workforce in its first two years of operations. In terms of population percentage, more people work in the aviation and aerospace industries in Wichita than in any city in the world, so Airbus expanding to this locale was a natural fit..


The southernmost U.S. facility is Airbus Training Center in Miami, Florida. The $50 million custom-built complex, one of three Airbus training facilities worldwide, houses 110 staff members dedicated to training more than 3,000 air crew each year in a range of full-flight simulators, trainers and computer-based training programs. Most all the trainees are based in the Americas.


Airbus North America has a Safety and Technical Affairs office in Washington D.C., convenient to the headquarters of the Federal Aviation Administration and National Transportation Safety Board. This ten-person office specializes in daily interaction with these federal agencies relative to regulatory issues, continuing to build the positive relationships between Airbus and U.S. government organizations. This facility is also home base for Airbus North America’s government relations staff, allowing easy exchange of information between the manufacturer and U.S. elected representatives.


Construction was completed in early 2007 on the newest Airbus facility in the U.S. – Airbus North America Engineering in Mobile, Alabama. This facility is responsible for various interior elements of Airbus’ newest aircraft, the A350XWB, including design and engineering work on the cabin, crew rest, lavatories and galleys. At full capacity, the office will employ 150 engineers. Should EADS, an Airbus parent company, receive an order to modernize the U.S. Air Force’s tanker fleet with the Northrop Grumman KC-30, this facility could expand into a larger-scale industrial site related to that aircraft.

 

[PHLfa88]

Rumor control has heard that DP has made the trip to Tolouse (SP?) to finagle 15 more 330-200s.
AB financed, of course. Doesn't mesh with over-the-pond cap cuts, but we only think short-term, and the delivery timeframe for these would probably be further out than the immediate future.

That is correct! Scott Kirby was on my flight on Sat and Doug parker arrived on Monday.