Perhaps LCC should reconsider AC A340's for some 777's...

[delta777]

Here are some excerpts from their CEO in the '06 annual report...


"Beginning in March, we will begin replacing our 10 A340-300s and some of our oldest Boeing 767s with a combination of Boeing 777-300ER and 777-200LR twin-engine aircraft. The 777s have a lower cost per available seat-mile than both of our four-engine A340 models – up to 26 per cent lower – and can fly further with a full payload. Two engines versus four mean better fuel efficiency and less maintenance expense. When substituting a 349-seat 777-300ER for an A340-300 we gain 63 seats and several tonnes of freight capacity. Our 777s will have the same Executive First suite with a lie-flat bed being installed throughout the widebody fleet. Every passenger in the economy cabin will have the same personal in-seat video system being installed fleet-wide – and we intend to charge for premium content. The 777-300ER is destined for our busiest, most profitable markets like London, Frankfurt and Tokyo where we can sell the extra seats and cargo space and charge top dollar for the suites. The 270-seat 777-200LR will take over very long distance routes like Toronto-Hong Kong and do it at a 12 per cent lower seat-mile cost. And the best is yet to come: the Boeing 787s being delivered from 2010 on will be 30 per cent more cost-effective to operate than the 218-seat 767s they replace."

Here's the direct link...

http://www.aircanada.com/en/about/investor...nts/2006_ar.pdf

 

[FlyUs]

Sounds better than the A340s'. 777s are probably harder to find on short notice.

 

[Flying Titan]

The 777s are more efficient than the A340s, but you haven't considered acquisition costs. Late-model 777s are very hard to find and the few that are available are very expensive. These A340s are quite young and - at least according to some of the news reports that are out there - can be purchased for less than half of the cost that AC paid for them. The difference may be more than $100M per aircraft. Add in the fleet commonality with US' current A330s, and all of a sudden those A340s seem to look like a pretty smart buy.

 

[USPHLElite]

The 777s are more efficient than the A340s, but you haven't considered acquisition costs. Late-model 777s are very hard to find and the few that are available are very expensive. These A340s are quite young and - at least according to some of the news reports that are out there - can be purchased for less than half of the cost that AC paid for them. The difference may be more than $100M per aircraft. Add in the fleet commonality with US' current A330s, and all of a sudden those A340s seem to look like a pretty smart buy.

But if they thought ahead wouldn't the longterm investment for the 77 be worth it?

 

[FWAAA]

The 777s are more efficient than the A340s, but you haven't considered acquisition costs. Late-model 777s are very hard to find and the few that are available are very expensive. These A340s are quite young and - at least according to some of the news reports that are out there - can be purchased for less than half of the cost that AC paid for them. The difference may be more than $100M per aircraft. Add in the fleet commonality with US' current A330s, and all of a sudden those A340s seem to look like a pretty smart buy.

Maybe so, but in my vision, what you don't spend on acquisition costs, you're gonna give back at the fuel pump.

Airplanes' fuel consumption dwarf their lease payments. A 777-200ER holds (and can burn) upwards of 50,000 gallons USA-Asia. Every day. Do the math. Better fuel efficiency helps cover those lease payments.

It's not like the late 1970s with auto fuel economy. I had friends who thought their fuel efficient VW Rabbit would pay for itself in reduced fuel consumption. Only problem was, they'd have to drive it millions of miles at high fuel prices to make up the difference from my low-mile, late model gas hog (which I bought from some Honda Civic-purchasing dork who thought spending thousands more for a new car made financial sense). What I didn't spend on car payments more than covered my gas bill (and other bills)

Not so with jet airplanes. In one year, that 777 will burn (at today's prices) approximately 25% of its acquisition cost in fuel. A340s getting worse fuel economy than that may not make any sense at all.

 

[Flying Titan]

It all comes down to the math...both are good aircraft for the flights US seeks to operate.

Buying new - or used at comprable prices - the B777 is the hands-down winner. If US could purchase the planes new and could get them right away, the 777 is the obvious choice.

That's not the case here. There are some late-model used A340s available at what appear to be very attractive prices.

If the A340 burns an extra $10k of fuel per trip -- 365 days a year, then it costs an extra $3.65M per year to operate. If US saves $100M on the purchase price of this A340 vs. the cost of a new or almost-new B777, then it saves approx $5M per year in ownership costs (spread out over 20 years), plus associated interest. Under this scenario, the A340 is the clear winner.

This also doesn't factor in the modest savings achieved by fleet commonality with the A330s that US already has...which is another plus for the A340s.

 

[BuffaloJoe]

If the A340 burns an extra $10k of fuel per trip -- 365 days a year, then it costs an extra $3.65M per year to operate. If US saves $100M on the purchase price of this A340 vs. the cost of a new or almost-new B777, then it saves approx $5M per year in ownership costs (spread out over 20 years), plus associated interest. Under this scenario, the A340 is the clear winner.

This also doesn't factor in the modest savings achieved by fleet commonality with the A330s that US already has...which is another plus for the A340s.

Actually it would be $7.3M per Year. You need to do the Roundtrip. But still cheaper. If keep the planes 13-15 years or longer is when you want to ditch them. At the longest.

 

[insp89]

ETOPS is another reason that U is considering the A340,
and I believe the aircraft from Air Canada are powered by the CFM engines.

 

[700UW]

777s are ETOPS from the Factory, the A340 is a four engine airplane and does not follow the ETOPS regs as the two engine airplane does.

 

[insp89]

777s are ETOPS from the Factory, the A340 is a four engine airplane and does not follow the ETOPS regs as the two engine airplane does.

Thank you 700, Thats my point.
Since the 340 has 4 engines, U does not have to be concerned about the stricter ETOPS regulations

 

[zethya]

It all comes down to the math...both are good aircraft for the flights US seeks to operate....
That's not the case here. There are some late-model used A340s available at what appear to be very attractive prices.

If the A340 burns an extra $10k of fuel per trip -- 365 days a year, then it costs an extra $3.65M per year to operate. If US saves $100M on the purchase price of this A340 vs. the cost of a new or almost-new B777, then it saves approx $5M per year in ownership costs (spread out over 20 years), plus associated interest. Under this scenario, the A340 is the clear winner.....

If US actually negotiates a deal which accomplishes what you state, I agree. In fact it really must be the scenario to make this a viable acquisition. I'd bet Airbus is going to financially support any deals for it's used aircraft by US, from any lessor.

In reply to the main topic (Article):

1. The AC CEO is attempting to justify the purchase of 777-300s to his shareholders. What would anyone expect him to say?
2. Many of the AC 340-300s are over 10 years old.The AC 340-500s are about 4 years old.
3. He is comparing an aircraft which AC has no experience (any 777) with one that it has significant experience (A340-300). Basically he is "projecting" the savings based on applying paper specs. to existing/planned AC routes.
Not saying the 777 is not a more efficient aircraft - it is. It's just that that I believe the article has a fairly high degree of "fluff" associated with it.

 

[BoeingBoy]

1. The AC CEO is attempting to justify the purchase of 777-300s to his shareholders. What would anyone expect him to say?
2. Many of the AC 340-300s are over 10 years old.The AC 340-500s are about 4 years old.
3. He is comparing an aircraft which AC has no experience (any 777) with one that it has significant experience (A340-300). Basically he is "projecting" the savings based on applying paper specs. to existing/planned AC routes.
Not saying the 777 is not a more efficient aircraft - it is. It's just that that I believe the article has a fairly high degree of "fluff" associated with it.

1. The 777 (and 787) order was announced in Nov 2005, so I don't think there's any attempt "to justify the purchase of the 777-300's to his shareholders".

2. Only 4 of AC's 10 A343's are over 10 years old, and 2 of those are just barely over. To be fair, though, 4 more will reach the 10 year mark this year. However, if that's too old to lease for 5-7 years till the 350/787/777 can be procured, maybe we should get rid of some of those A320's that are approaching 18 years old, those 737's which are over 16 years old, the 757's that are up to 22 years old, or the 767's that are at least 14 years old.

3. While AC has no previous experience with the 777, there is plenty of "paper specs" publicly available from airlines that have operated the plane for a number of years in long-haul ops to make some pretty good estimates. Certainly much better estimates than just "fluf".

Jim

 

[algflyr]

It may not be all about acqusition costs verses fuel economy. I think if the long term plan is airbus and not boeing, the 340 makes sense as a stop gap measure in the short term. If AAA were to get 777's, the training costs must be added in. That's a BIG expense. If we can get a few 340's, which are a common type with the 330, there is basically no additional training needed.

 

[phasersonstun2]

Thank you 700, Thats my point.
Since the 340 has 4 engines, U does not have to be concerned about the stricter ETOPS regulations

True... A-340's have a 240 min. exempt automatically.

 

[BoeingBoy]

This isn't really the place for something on A320 series production, but there didn't seem to be any reason to start a new thread.....

An Aviation Week Article says that A320 series delivery slots are sold out thru 2008 and 2009 slots are "scarce". Airbus is looking at increasing the production rate from the current 32/month to 40 or more per month, but that won't really come on line till 2009. Looks like this "impending" announcement of a Boeing/Airbus narrowbody order better happen soon or it'll be a few years till any start arriving.

Jim