Last Thursday, there were a number of reports (mostly based on a Bloomberg report) that said that American Airlines was in discussions with Airbus to buy 100 A320 class airliners.
As you can imagine, this spurred quite a bit of speculation.
Many have the incorrect idea that AA is contractually committed to buying Boeing only. They are not. There is a gentleman’s agreement that has been followed since the 1990’s that has had AA getting preferred aircraft pricing and early slots in return for remaining an all Boeing customer. There is no financial penalty for walking away from this except what AA might not get in preferred positions and pricing.
And I’m not even sure that exists. The truth is, AA is big enough to get preferred pricing and early slots regardless. They wield enough buying power to make any aircraft manufacturer sit up and pay attention. So it doesn’t hurt for AA to talk to Airbus.
Is the Airbus A320/A321 the right aircraft? Quite possibly. The A321 will do a better job of fitting AA’s requirements for a Boeing 757 replacement compared to the equivalent 737-900ER. It will fit almost all of the missions the 757 is currently serving (except for trans-Atlantic flights) and it will do it with pretty good efficiency compared to what Boeing is offering right now.
Are they serious? Well, I wouldn’t be surprised if this was both a warning shot over the bow to Boeing as well as a serious discussion. American Airlines really does need a better fleet going forward and it cannot afford to wait until 2019/2020 to get started. The 737-800 is a good fit as a MD-80 replacement but not as a 757 replacement. Boeing’s 737-900ER has worked well for Continental but I don’t think it would work too well for American because of range and payload.
American needs better seat mile costs on its routes and it can achieve those because it can fill its aircraft with business passengers. Diversifying between manufacturers isn’t a bad idea anyway as it makes things just a bit more competitive and the airlines probably gains from that.
This may well be the “major network carrier” that Airbus COO John Leahy has spoken of with respect to the A320NEO. If it is and if there is an order, it will be a major blow to Boeing. Not because Airbus invaded the United States (they’ve already done that) but because AA would be regarded as one of Boeing’s most solid customers.
I wouldn’t say this is a done deal but I would say that we now have reason 998 why Boeing should, you know, get with the program.
There have been two passenger airliners that were designed and built for supersonic travel. The Concorde, an Anglo/French adventure and the Tu-144, a Soviet design.
Question: Which airliner did Boeing participate in?
Ryanair has signed a design agreement with COMAC to participate in design discussions on the COMAC 919 airliner. Ryanair has been searching for a way to either A) bully Boeing into offering more 737-800 aircraft for below profitable prices or B) replace their Boeings with a rock bottom priced aircraft.
Is this the path forward? I don’t really think so.
This is Ryanair trying to shoot another shot across Boeing’s bow. The COMAC 919 is highly unlikely to be a competitive airliner even at deep discounts. It would be a far greater threat if Bombardier had a CSeries aircraft planned that fit Ryanair’s needs. They don’t, Airbus won’t play the threat game and Boeing has no interest in selling 737-800s so cheaply that airlines can sell them at a profit.
On the one hand, Airbus COO John Leahy gets to make good on his prediction of 500+ committments to the A320NEO by the Paris Air Show. He even gets to land a traditional Boeing customer (Garuda International) but at the risk of sounding anti-Airbus and pro-Boeing, there is a bit more to this story in my opinion.
First, Garuda is hardly a critical Boeing network carrier. It stings a bit for Boeing but . . . when you have a competitive environment, customers change from time to time. That said, we aren’t hearing about Airbus customers switching to Boeing either.
Second, Airbus landed committments for 500+ aircraft. Not firm orders. Some of these committments are Memorandums of Understanding, some are Letters of Intent and some are orders. Boeing plays a bit more fair in this area in that it doesn’t “count” something as a committment until it is a firm order.
Third, when you look at who these committments come from, it isn’t game changing. They are almost all from existing Airbus customers and from customers in areas where Airbus and France have heavy influence. There is no radical shift in the landscape. If you’re an Airbus customer and you need a single aisle airliner, you’re pretty much going to order the NEO. That’s what has happened so far.
All of that said, Boeing is in danger of becoming a bit too secretive of its plans. It’s clear that major Boeing customers want to see something on the table. Moreover, I suspect that they would like to be let in on the discussions about what an airline *wants* in a new single aisle airliner / 737 replacement / 737 re-engine. If I were a Boeing customer, I would imagine that my attitude towards Boeing at this point would be quite similar to SWA’s CEO Gary Kelly’s. In a word: terse.
With the announcement made on the A350-1000 (which would appear to more or less bring that aircraft into competitive range of the 777-300ER but not exceed its capability), it’s time for Boeing to bet again. They have a firm handle on the 787-9 development and I think they’ll find it within themselves to repeat that on the 787-10. (Although one does wonder if they’re considering enough range / payload for the 787-10 given that airlines clearly enjoy the performance of late model 777-200ER/LR aircraft.
Boeing can’t afford to dither around much longer. It’s time for a decision and enough time has passed to make that decision. If they’re confident they can make a new airliner that is 20%+ better, make the bet and get going on it.
Spirit Airlines has announced that it will begin flying between Dallas and Chicago (DFW to ORD) on August 18th. Right now, I see 2 frequencies each way between the cities and they’re pretty convenient times.
This is smart on the part of Spirit because they’re striking at American Airlines as a function of performing this service at DFW to ORD and they’re competing with SWA on value. Both AA and SWA have far more frequencies but the typical Spirit customer can be bled off from both companies for different reasons.
This might spur a price competition between the 3 airlines but I kind of doubt it. Spirit has many downsides too. Everything is a fee on this airline and some of those fees are pretty expensive. The seating is *not* even as comfortable as American Airlines (and I consider AA to be pretty uncomfortable.) The frequencies aren’t enought o compete for any business traffic but, then, Spirit isn’t after the business traveler anyway.
I’m glad to see them enter into the market. However, I’ll also say that it is highly unlikely that I would ever use them myself.
American Airlines has ordered a 6th 777-300ER now and indicates more may be on the horizon. One does have to wonder about the piecemeal orders they’ve made so far. Why not order in blocks rather than an aircraft every few months?
Analysts aren’t so high on these purchases believing that it raises AA’s cash burn. AA counters that the economics are excellent and will allow American to earn more and that’s probably true.
It’s a good aircraft and most airlines are migrating from -200s to -300s because if you can fill the aircraft, you do make more profit. American has a number of routes that could benefit both across the Pacific and Atlantic oceans as well as potentially to South America. It may well be a better way to grow capacity as well.
But I think analysts (and me as well) are wondering just when American is going to address other problems that are causing high cash burns. That would be the failure to come to an agreement on new labor contracts with their staff that would permit the airline to get on with focusing on profitable operation of the airline.
Lufthansa had to divert an A340 and an A330 had to divert to Calgary, Canada on the same day last week. The A340 for a possible indicated hydraulic problem and the A330 because of a possible problem with a backup power supply.
Still another flight had to divert to Goose Bay, Labrador after a warning of smoke in the cabin last week as well.
Are there problems with Lufthansa’s Airbus aircraft? No, these things do happen and the more flights you have the more often it happens. It’s unusual to have three incidents like this in quick succession but not unheard of.
Just weeks ago, Alaska Airlines went paperless in their cockpit with respect to their flight manuals by issuing iPads to their pilots. They also expect to replace their flight charts by adding those to the iPads as well.
Now American Airlines is moving a step forward with that by testing iPads to replace pilots charts. All of this is being done under the FAA’s Electronic Flight Bag program and it’s good for everyone involved.
The move saves airlines big money on paying for paper chart updates and saves big weight on the aircraft because each pilot carries as much as 30lbs of paper in manuals and charts. Multiply that by the number of pilots on board and it really can save fuel costs too.
And I like it because it’s time to use technology like this more. Are the iPads the right tool? Why not? They are fairly robust, long lived in battery life and much easier to carry. But if the iPad proves not to be quite robust enough, Panasonic makes a fully ruggedized tablet PC now and if it is good enough for the military, it’s certainly good enough for a pilot.
There are 4 “oldest” airlines still in existence today. Two of these should be fairly well known for being such. One may be a bit of a stumper for many and one is surely a surprise for almost all.
Question: Can you name (without any research) the 4 oldest airlines in existence today?
The Detroit News is writing about a man who was tossed off a Delta Connection flight after using a swear word when referring to how long it was taking to close overhead bins. Mind you, he wasn’t swearing *at* the flight attendant. He made the comment to a travel companion and was overhead. Specifically, he said:
“What’s taking so fucking long to close the overhead compartments?” *
The plane taxied to the runway but then returned to the gate where the passenger was removed for being “disruptive”. He was accomodated on a later flight and received an apology.
And this points out just how powerful a flight attendant can be. And how silly.
In general, it’s far more appropriate and polite to refrain from using the word “fuck” in public. It is also very common to hear it and not just in Brooklyn. Just because you overhear someone using the word, even in reference to your activity, doesn’t mean that it rises to disruptive. In fact, on a recent trip between Dallas and Chicago, I can say that that word was used a few times in a conversation between two passengers in front of me commenting on our delay due to a hold because of weather.
Are we going to return to our departure airport and remove those two women for saying “I’m fucking tired of being on an airplane.”?
My message to Delta and other airlines: Tell your flight attendants to grow up and start discerning what a real disruption and/or threat is.
* It’s my blog and I can use the real word if I wish. You are presumably adults reading this and you are presumed to be capable of identifying that the use of the word “fuck” isn’t prurient. **
** If you had to look up the word “prurient”, please stop reading my blog.
Virgin America has announced a deal with CFM to supply the CFM Leap56 engine for its Airbus A320NEO orders. This is a nice launch for CFM and stands in contrast with order A320NEO orders that have listed Pratt PW1100G as their choice of engine.
What’s the Leap56 advantage? It’s hard to say. It’s possible that the Pratt & Whitney engine may have more future potential but right now it also has a lot of risk associated with it. It’s a geared turbo fan that Pratt has really been working on for more than two decades in one form another. It’s a design that many see risky given its complexity. If it does turn out to be a robust engine with good lifecycle costs, it may well be the leader going forward.
But right now the CFM Leap56 offers the same performance with great reliability and reduced risk for the owner. There have been a number of predictions that the Leap56 will be the sale leader in A320NEO sales over the long term. Right now, we’re a long way away from seeing a sales leader in that aircraft category.
Airtran has had Skywest flying 6 routes for it out of Milwaukee and one of Southwest’s first moves is to dissolve that codeshare and start flying routes on its own. New routes will include flights to Des Moines, Akron-Canton and St. Louis.
As you can imagine, SWA pilots are thrilled. This goes to a central principle with Southwest, namely flying its own routes and flying routes that are profitable on their own.
I’ve found no information on what equipment will be used but my guess is that we’ll see 717s and 737-500s re-deployed as Southwest rationalizes services out of cities that both SWA and Airtran serve. The best candidate for those new routes are 717s as they have the right capacity and they’re all in reach with a 717.
The merger will allow SWA to find those new routes that many cities have been clamoring for. For the first time, Southwest has real depth when it comes to finding the route aircraft for the right route. Look for more routes developing both in the Rust Belt, Midwest and the South as time goes by. All three areas are places where SWA has had good luck and with the route overlap that exists in focus cities such as Milwaukee and Baltimore as well as in Florida, I think we’ll see a number of new routes and re-deployments of aircraft as time goes by.
One year later and we still haven’t seen airlines being fined left and right for delays and we still haven’t seen the forecasted crippling effect the three hour rule was predicted to have by airlines.
There have been a number of delays exceeding 3 hours and the FAA continues to investigate these but no fines have resulted so far. At this time, the FAA seems to be approaching this subject carefully with respect to both the public and the airline industry and that’s good.
After a year, I also think that we could change this rule and offer a bit more “cushion” to airlines. 4 hour limits seem more appropriate at this point and why not impose them upon foreign airlines flying international routes into and out of the United States?
The issue of delays appears to be largely solved and no one is being severely impacted by the solution by all appearances. If anything, the rule has had the effect of giving airlines the motivation to plan better and cancel flights that, in the past, should have been cancelled.
With all of that said, I would still maintain that we still need at least another year or so to truly judge its effect on the airline industry.
French parliamentarians went a bit crazy and became furious with Air France’s decision to accept bids from both Boeing and Airbus for 100 mid-sized widebody jets.
Boeing’s 787 and Airbus’ A350 are in the running and Air France officials have said that it is likely to be a split purchase.
France continues to own a stake in Air France and is also one of two major stakeholders in Airbus.
I find this ironic since Air France has found it very economical to use Boeing’s 777-200/300 aircraft and owns 60 at present. The 787 fits nicely into their plans since the transition from a 777 to a 787 is short and easily accomplished. The transition from an A340/330 aircraft to the A350 is sure to be similarly easy.
Politics in the airline world inside France is always nationalistic but this move is just a bit too overt for our taste.
In a deal tentatively agreed upon and subject to Frontier Pilots Association ratifying it, Frontier pilots will get an equity stake in Frontier Airlines.
Parent company, Republic, led by CEO Bryan Bedford, has so far struggled to make Frontier truly work under its business plan. Why? In Frontier’s case, it was based upon lower oil prices (aka lower fuel prices) than exist today.
While Republic’s regional airline business is continuing to do well financially, Frontier’s isn’t. It doesn’t help that it is hubbed in Denver and surrounded by two 800lbs gorillas: United Airlines and Southwest Airlines.
Both United Airlines and Southwest have made it clear that they are there to stay in Denver while Frontier has flailed about attempting to survive. One has to wonder if the Southwest purchase of Frontier wouldn’t have been a better deal both for employees of Frontier as well as investors.
In hindsight, Southwest’s “loss” in the bid for Frontier now looks like a far better choice and its admirable they walked away. Now they’ve filled spots in their route map that were “must haves” and get to integrate a fleet and flight crew that more closely matches their own.
It’s notable that Frontier is struggling in its two focus cities of Milwaukee and Denver. Frontier is bracketed with Southwest and United in Denver and bracketed with Southwest and Airtran in Milwaukee.
In addition, Frontier lost the man largely reseponsible for producing profits at Frontier: Sean Menke. Menke has just agreed to go to work for Pinnacle Airlines, a competitor of Republic.
Is Frontier over? No. Can it survive in the long term? Only if it breaks out of being in entrenched battles for its cities. So far, Frontier has mainly concentrated on building new routes to lesser cities that connect back to its Denver hub and Kansas City focus city. It needs more coverage across the United States and there are few cities that are ripe targets for Frontier’s entrance at this point.
In addition, starting new routes is mostly only possible with Republic’s E170/190 jets as it has no more A319 jets on order and only one more A320 jet due this year. Additional A320s are to be delivered starting in 2015.
Republic Airways does have Bombardier’s CS300 on order (40 orders and 40 options) but those aircraft aren’t due until 2014 officially and they are likely to be as much as 2 years late.
One has to question whether or not a stake in Frontier has that much value over the next several years. In the past, airlines could survive for years and still bleed money. Today, airlines have to manage their cash very closely and Frontier isn’t generating enough positive cash flow to have a very optimistic future. It’s possible that Republic could keep the company afloat but only with further concessions from labor and I think that is unlikely.
