Should AA order more 738s or wait for 737 replacement?

[BoeingBoy]

I'll give you the point about trans-Atlantic/Pacific requiring more diversity. But as far as I know WN gave up the backwards compatible years ago - they only had it for a few years. So a WN crew can fly a 733 one day and a 737/8 the next. And while Airbus does make a big deal out of it's cockpit commonality, they don't have single type ratings for their entire range of airplanes. Shaving 2-3 days off a month long training curriculum isn't a huge savings. There's a lot more involved in training pilots for a different type than just knowing where the switches are. So having the minimum number of fleet types is a lot cheaper than having a hodge-podge so the capacity matches demand on each route every day. The WN/FL merger will be the first time WN has had more than one fleet type so it'll be interesting to see how that works out. It was the "complexity lowers cost" that I was disagreeing with.

Jim

 

[eolesen]

The WN/FL merger will be the first time WN has had more than one fleet type so it'll be interesting to see how that works out. It was the "complexity lowers cost" that I was disagreeing with.

Technically, it's the second time. WN subleased three PE 727s back in the early 80's. Muse/Transtar was kept as a separate operation and never integrated.

It might improve revenues, but I've never seen a real example of "complexity lowers cost" in 25 years of looking at this stuff...

 

[WorldTraveler]

My statement was not that complexity lowers costs - other than direct operating costs of a fleet which is not the right choice for a whole set of routes (the 777 vs 333 on 10 hr routes) aspect but that increased complexity allows greater revenue generating potential.

AA could maintain its present fleet and network but it is clear that other carriers are willing to inject complexity in order to go after additional revenue - and their strategies are working.

Anyone who has worked in network analysis/mgmt or who has done any kind of route analysis has seen the results of putting the wrong aircraft on a route. There are times when you don't have any other choices and you have no choice but to eliminate the route. But the post 9/11 period is a very good example of how airlines were able to meet the reduced demand and keep their networks intact by putting RJs on routes that were once flown by mainline aircraft. Carriers that didn't have larger or more capable RJs or a smaller jet had no choice but to reduce frequencies to less than marketable levels or exit the market.

Revenues couldn't be increased but having an aircraft with the right cost structure allowed markets to be retained.

You can argue that the increased cost of fleet complexity can't be measured but it sure can be if you are flying the wrong aircraft on a flight or if you lose revenue because you don't have the right aircraft and have to exit the market.

You might recall that when AA started DME, they had to use a 777 because AA's 763s didn't have the right avionics to use in Russian airspace... way too much airplane at way too much cost. DL and UA both had 767s - which AA ultimately put in the market - but DL and UA were better able to match cost and capacity to demand and stay in the market.

 

[aapitbull]

OK - I'll back off that.

That's what I was told by a mekanik that, evidently, didn't quite get the picture.

My bad.

I was not attempting to make you back off, if the company was putting MD 80's back in service I would like to know about it. I was just saying I could see no evidence of it, as you are welll aware AA often says one thing and does another, case in point is if you look at the dock plan for 2012 there are alot of MD 80.s getting lease return checks but the company plans currently show no retiremants for 2012 both cannot be true so one would have to think this means more 737 then currently ordered or the company plans on shrinking by another 20 or 30 airplanes.

I make it my business to not only listen to their B.S. but watch them closely please post anything you hear or see then we can run down the truth!

 

[lpbrian]

Also missing the mainstream is that Boeing just built a new 767 line, even though the 787 is supposed to be a 767 replacement product....

Not everyone wants to go to the next-gen product right away.

I'm starting to wonder why AA didn't try to go the route that DL is going -- they're snapping up the world's current supply of MD90's left and right, for considerably less than what a new 738 fetches...

Long Beach sewer pipes? Crandall never did understand that Douglas builds an inferior product, As does Airbus, Fokker, etc.....

 

[Veritas]

...case in point is if you look at the dock plan for 2012 there are alot of MD 80.s getting lease return checks but the company plans currently show no retiremants for 2012 both cannot be true...

Why? Don't they have leased planes in storage in the desert? When those are returned to the lessors, they have to undergo return checks.

 

[MCI transplant]

Long Beach sewer pipes? Crandall never did understand that Douglas builds an inferior product, As does Airbus, Fokker, etc.....

<_< ----Do'es that include the DC-10?

 

[aapitbull]

Why? Don't they have leased planes in storage in the desert? When those are returned to the lessors, they have to undergo return checks.

Yes; there are a few leased planes in the desert but their tail numbers do not match the lease returns currently on the dock plan, the vast majority of planes on the dock plan for 2012 are currently flying for AA. now it is possible that they send a plane back to the lessor and remove one from the desert to replace it but that would mean a return to service check that is not currently on the dock plan.

So in this case there are pieces missing from the puzzle.

 

[BoeingBoy]

You can argue that the increased cost of fleet complexity can't be measured but it sure can be if you are flying the wrong aircraft on a flight or if you lose revenue because you don't have the right aircraft and have to exit the market.

Taken to extremes, going too far either way has it's costs. Having a fleet from 100 to 350 seat aircraft in 5-10 seat increments is more costly than necessary. But it hard to be much of an international carrier if you only have one fleet type irregardless of whether it's 150 seats or 350 seats. So the goal should be to have enough variety of fleet types but not so much variety that the cost of multiple fleet types is greater than the revenue you can bring in because of that variety.

It looks like most network carriers are settling on one type for 150-200 seats, another for 250-300, and another for 350-400. Of course, updating fleets results in 2 types offering roughly the same capacity range.

Like I said earlier, it was your statement that complexity lowers cost. To a point it does since there's no single aircraft type that covers the capacity and range that a network carrier needs. But it's hard to argue that WN, for example, has needed lots of fleet types - they've been profitable for 30+ years straight which is something any network carrier would give their first born to say.

Jim

 

[WorldTraveler]

E,
to be honest, your statement about the quality of products buiilt by Airbus, Fokker, and McD-D is disturbing in light of the fact that more than half of the world's large aircraft fleet (certrainly what has been delivered over the past couple years) is NOT Boeing.
I am all for Boeing as much as any American but it is very naive to think that other manufacturers don't build decent products.
Perhaps it has escaped your mind that the 737 has had spectacular fuselage failures (the convertible look doesn't work so well on jet airplanes). Yes, the DC10 dropped an engine and an uncontained engine failure took down another one while some D9s have been flying almost as long as you have been roaming terra firma (perhaps longer).
Perhaps part of AA's dislike for other types is that AA has tried to use them without success - in some cases such as the F100 because AA's costs just didn't work for a 100 seat airplane (other network carriers have removed 100 seaters as well) or for maintenance issues -the FAA said that AA was at fault at least in part because of their maintenance procedures on the D10 engine and M80 wiring issues and AA pilot training and/or response was partly at fault in the A300 accident. So, iis it possible that AA's dislike for some fleet types is related to AA's use of the aircraft?
AA can hold onto its loyalty to Boeing but that loyalty might be costly in terms of being willing to consider other fleet types.

Jim,
I think it made it clear several times in this thread that I understand the there are higher overall costs associated with fleet complexity... . I indeed said that complexity can lower the costs associated with each segment but I also said that the increased complexity does come at higher costs but also provides the opportunity to go after more revenue.
But again, let's focus on the facts of AA's use of AA's 772s rather than trying to argue about principles that are highly subject to context - in the same way I used them before.
According to data submitted to the DOT, AA's 772s are operated on the shortest average stage lengths (4500 miles) compared to CO (5900) and DL (6900) (UA operates its 772s on average on shorter stage lengths but remember that UA has a subfleet of 772As used on domestic routes and the DOT groups the 772A/ER/LR into the same category. AA also operates the 772 for fewer block hours than any other US operator does for its 777s or even the 763ERs. I will acknowledge that AA's large S. American route system drives that lower usage or AA's 77s and 76s but it might also be further evidence that the 777 is more airplane than AA needs for most of its routes - based on weight but also the higher acquisition costs of the 777 relative to the 333. More than 3/4s of AA's int'l flights that are operated by the 772ER could be operated by 333s. Given that the 764 can operate the same 3/4 of routes that the 333 could also operate - although w/ smaller payload - the argument about fleet complexity gets even thinner since the 764 is very largely in common - or can be - with the 763 and 777 which AA both already operate.

Let me make it clear that I don't expect for one minute that AA will decide to go out and buy the 764 or 333. They have made their decision to buy the 789 and that plane will work well - IF they can get the pilots to agree to a new contract that will allow AA to acquire it.

But I am pointing out that increased complexity can indeed result in overall lower SEGMENT costs - and in the case of the way AA uses the 772 now, it could result in lower overall costs.
Of course part of the equation is that AA really would like to use the 777s on more longhaul international flights - they have already said that - but can't because of their labor cost problems - or at least that they refuse to significantly grow the company until they get labor agreements that they believe are suitable.

So, for now, that leaves them ordering 738s only at a rate large enough to avoid a huge replacement cycle of M80s in 5 years when hopefully they can begin buying new bodies and use them closer to the way those planes are intended to be used.

 

[jimntx]

...if you look at the dock plan for 2012 there are alot of MD 80.s getting lease return checks but the company plans currently show no retiremants for 2012 both cannot be true so one would have to think this means more 737 then currently ordered or the company plans on shrinking by another 20 or 30 airplanes

I'm just asking because I don't know...why could both not be true? A lease return (rented a/c) could be a separate event from a retirement (of an owned a/c), could it not?

 

[777 fixer]

Also missing the mainstream is that Boeing just built a new 767 line, even though the 787 is supposed to be a 767 replacement product....

Not everyone wants to go to the next-gen product right away.

I'm starting to wonder why AA didn't try to go the route that DL is going -- they're snapping up the world's current supply of MD90's left and right, for considerably less than what a new 738 fetches...

I believe that new production line is in the event of them winning the USAF tanker contract.

Delta is able to snap up all those MD-90's because no one wants them anymore. At one time Douglas made a good product. Then along came McDonnel and then all of the sudden the name of the game was to go the cheapest route possible. That's how you got lemons like the MD-90 and MD-11.

 

[WorldTraveler]

tell me what is a "lemon" about the M11 and the M90 - and while you are at it why the M8i0 is/is not a lemon (since some here think that McD-D can't build decent airplanes).
And, if these were lemons, why did AA mgmt order them?

 

[Frank Szabo]

tell me what is a "lemon" about the M11 and the M90 - and while you are at it why the M8i0 is/is not a lemon (since some here think that McD-D can't build decent airplanes).
And, if these were lemons, why did AA mgmt order them?

This is only an opinion, but after the "cartwheeling" (DC-10) incident at O'Hare due to the lack of hydraulic "fuses" in the lines (as Boeing used), I believe AMR was given "exceptional" pricing on MDC gear (namely MD-80s, MD-83s) rather than Douglas facing a lawsuit that would have ended the company's being on the spot. The 80s were so cheap, there was no contest.

As an opinion (again), the MD-80 structure is such that had Aloha been using one on the flight where the 737 became a convertible, all hands would have been lost instead of (regretably) only one f/a. The aircraft would have folded in half and gone in the drink.

The MD-90 had funky engines - V 2500 - should have been the CFM-56 or something else not as tempermental.

The MD-11 never could get the "gas milage" of the sales pitches.

Airbus products' structures are too rigid - ie, they are nothing but a structural crack generator.

 

[WorldTraveler]

In the absence of any other info, I can accept your theory about M80 pricing as at least a possibility. But you also have to consider what the options were compared to the M80 at the time... I think the M80 fared reasonably well on its own merits....
but I still don't know what is wrong w/ the M80 other than McD-D pushed it onto AA to avoid a big financial penalty - in your opinion.
Refresh my memory but have there ever been any in-flight structual failures (of the 737 convertible on the fly type) in a DC9/M80/90? If anything, my impression was that McD-D's airframes are very flexible and that is why they last as long as they do..... not sure if that will hold true for the M80/90.....
BTW, I have heard of wing cracks in AA's M80s... is that common?

M11 range - you bet.... it never delivered what it was supposed to do - and the M11 was a commercial failure and marked the end of McD-D as a jetmaker - along w/ the failure of the MD95/717.

M90 - funky engines? you do realize that it is essentially the same engine as one of the options on the 320... Not sure what is funky about it but the M90 gets fuel economy better than the 738 on a trip basis because the M90 is lighter. What is the problem w/ the M90 is it doesn't have a whole lot more range - has wings that are too small for long distance flying - and it had electrical problems early on.... but apparently DL at least sees those issues as manageable and the reduced price relative to new aircraft makes it an economical option.

Airbus' rigid structures.... possible... but what is it that sends the 320s to the grave early? and again, I am no engineer but I have heard of more than one case of fuselage cracks involving Boeings.....do you have any stats to show me that A is really worse in that regard than B?