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How Will Ch11 Affect NW's 18 Firm 787's?  
User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Posted (8 years 10 months 3 weeks 1 day 18 hours ago) and read 6617 times:

NW is the North American launch customer for the 787 with 18 firm and 50 options. I was just reading the NW monthly magazine from a few months back and the into from Steenland was talking about the 787 and how it was going to be a perfect fit for NW's Asian route structure. I would only have to imagine that NW upper management knew that Ch11 was a distinct possibility so what happens now with the order?

Is there a potential that the entire order is scrapped?

Is there not a good chance that NW can emerge from Ch11 before August of 2008 and take delivery of their first 787 as otherwise scheduled?

NW really needs the 787 as it's Asian routes are actually quite profitable and with the addition of the 787 would only become more so. I fret to think that Boeing might lose 18 firm 787 and NW doesn't retain the PR of being the North American launch customer for the 787.

Quote:
The order includes firm purchases of 18 787-8s worth, approximately $2.2 billion at list prices, plus options and purchase rights for 50 additional Dreamliners. Six airplanes will be delivered each year during 2008, 2009, and 2010. With its initial delivery in August 2008, Northwest will be the first North American carrier operating the 787.



46 replies: All unread, showing first 25:
 
User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9160 posts, RR: 15
Reply 1, posted (8 years 10 months 3 weeks 1 day 16 hours ago) and read 6507 times:

Hope not. And I hope the DC9s, DC10s, B 747-200s etc will stay for a while....

User currently offlineDutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 57
Reply 2, posted (8 years 10 months 3 weeks 1 day 15 hours ago) and read 6437 times:

NW will have the option to cancel (reject)the agreement to purchase the 787s...cancelling contracts is one of the provisions of bankruptcy. If NW wants to go ahead with the 787s, it will re-affirm the contract....time will tell.

Its very early to say what will happen here, but it is important to note that NW now has the option of getting out of its committment to Boeing for the 787s (and to Airbus for any aircraft that it may have on order with that manufacturer).

Example, CO had orders for the A330/A340 at one time, those orders were cancelled during CO's bankruptcy proceeding in the early 1990s.


User currently offlineUadc8contrail From United States of America, joined Sep 2003, 1782 posts, RR: 9
Reply 3, posted (8 years 10 months 3 weeks 1 day 14 hours ago) and read 6362 times:

air ryan,
if nwa put some cash up front for the delivery slots then there could be a issue...i doubt doug threw any $$$$ in for the order.....if they did then nwa is gonna balk at any invoice being thrown at them,,then this could be a great opportunity for ual or even aa to get on board and grab those delivery slots that nwa will not exercise.....the perfect storm is starting to form.....summer of hell was a walk in grant park compared to what is going to happen at nwa and delta



bus driver.......move that bus:)
User currently offlineOHLHD From Finland, joined Dec 2004, 3962 posts, RR: 25
Reply 4, posted (8 years 10 months 3 weeks 1 day 14 hours ago) and read 6312 times:

Is NW allowed under Ch. 11 protection to take delivery of new aircraft, or generally are airlines allowed to make/take orders?

Wasn´t the delivery of the AC A345 postponed as long as thy were under Ch.11?


User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 5, posted (8 years 10 months 3 weeks 1 day 13 hours ago) and read 6260 times:

I think NWA got a razor sharp deal on the 787, Boeing wanted NWA bad & NWA / Boeing will do the utmost the keep the deal alive. NWA don't have the kind of depths DL has.

User currently offlineShenzhen From United States of America, joined Jun 2003, 1710 posts, RR: 2
Reply 6, posted (8 years 10 months 3 weeks 1 day 13 hours ago) and read 6240 times:

NW could probably get out of the contract, but doubt they would see thier deposit refunded, unless Boeing were being nice.

cheers


User currently offlineLemonsoda From Switzerland, joined Aug 2005, 11 posts, RR: 0
Reply 7, posted (8 years 10 months 3 weeks 1 day 12 hours ago) and read 6191 times:

The following information is drawn and condensed from an article in the FT (2005-09-14) regarding the Chapter 11 filings of Delta and NWA:

Northwest, advised by the Seabury Group, will rely on its cash balance of $1.4bn as of September 14 to see it through the process. It is seeking more concessions from its three unions, with analysts estimating that these need to be raised to an annual $1.4bn to restore profitability.

Quoting AirRyan (Thread starter):
Is there not a good chance that NW can emerge from Ch11 before August of 2008 and take delivery of their first 787 as otherwise scheduled?

NW really needs the 787 as it's Asian routes are actually quite profitable and with the addition of the 787 would only become more so. I fret to think that Boeing might lose 18 firm 787 and NW doesn't retain the PR of being the North American launch customer for the 787.

If Northwest can be set on a sound financial basis over the next year, it seems to me that its business model will require those new aircraft.

Some airlines will bleed off the overcapacity present in the American market, and it will not be JetBlue or SouthWest. I wonder what the position of non-bankruptcy-protected but teetering companies will look like.


User currently offlineLemonsoda From Switzerland, joined Aug 2005, 11 posts, RR: 0
Reply 8, posted (8 years 10 months 3 weeks 1 day 10 hours ago) and read 6062 times:

The Seattle PI posted an article that directly addresses the questions raised in this thread and quotes Richard Aboulafia - he thinks there is little risk of Northwest's oders being cancelled, but puts this into a less heartening wider perspective.

http://seattlepi.nwsource.com/business/240736_boeingimpact15.html

For a more general appreciation of American airlines' woes, see

http://www.economist.com/agenda/displayStory.cfm?story_id=4399993


User currently offlineWhiteHatter From , joined Dec 1969, posts, RR:
Reply 9, posted (8 years 10 months 3 weeks 1 day 10 hours ago) and read 6026 times:

I doubt the order will be cancelled unless the unthinkable happens and NW is liquidated. Aircraft in this context are a raw material which the company requires to continue trading and not a luxury item, like company car purchases for executives.

As long as the deal does not have any parts which the court finds objectionable then it will be regarded as an essential part of the ongoing NW business. Certainly the engine contract will be in its favour as the Rolls Royce contracts favour financial stability, which the judge will presumably regard as essential.

The only issue will be how NW has chosen to finance the purchase, not whether they need the aircraft. Presumably there are financing partners who have been kept well aware of the ongoing situation.


User currently offlineBigGSFO From United States of America, joined Jun 2005, 2915 posts, RR: 6
Reply 10, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5862 times:

Does anybody know if the financing terms for these ordered aircraft will change given the poor credit rating now that NW is in bankruptcy? I am sure the interest rate could increase considerably but I do not know if it is fixed at the time of ordering.

User currently offlineNYC777 From United States of America, joined Jun 2004, 5737 posts, RR: 47
Reply 11, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5848 times:

NW order backlog with Airbus is much larger than with Boeing so I think it would be Airbus who would be worried rather than Boeing. Boeing can easily sell the NW 787 delivery slots w/o a problem so they are not worried.


That which does not kill me makes me stronger.
User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 12, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5799 times:

Quoting NYC777 (Reply 11):
NW order backlog with Airbus is much larger than with Boeing so I think it would be Airbus who would be worried rather than Boeing. Boeing can easily sell the NW 787 delivery slots w/o a problem so they are not worried.

And somebody HAD to turn a sensible business discussion about the effects of Ch.11 bankrputcy into an A. v B. affair......

Shame on you - so you think Boeing wouldn't be worried by losing one of only two US majors (and lets forget that silly Primaris order) that have ordered the 787 then??

Bearting in mind that NW are currently taking delivery of their Airbuses, there would no doubt be some stiff penalties on NW should they stop or pull out of the deal. The order for FUTURE delivery of the 787 is a whole different question.



Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlineAviatorTJ From United States of America, joined Jul 2003, 1838 posts, RR: 7
Reply 13, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5736 times:

Anyone think this will allow NW to cancel the remaining A32x that they have tried to defer for so long?

User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 14, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5736 times:

Quoting Keesje (Reply 5):
I think NWA got a razor sharp deal on the 787, Boeing wanted NWA bad & NWA / Boeing will do the utmost the keep the deal alive. NWA don't have the kind of depths DL has.

I too think they got a great deal being the NA launch cutomer with 18 firm - and NW probably wants those 787's more than Boeing does, if that's possible. Hopefully any BK legal preceedings will see that as well.

Quoting Lemonsoda (Reply 7):
If Northwest can be set on a sound financial basis over the next year, it seems to me that its business model will require those new aircraft.

Exactly - the 787 would be a big money make for NW and their value is really invaluable to the future success of NW.

Quoting WhiteHatter (Reply 9):
As long as the deal does not have any parts which the court finds objectionable then it will be regarded as an essential part of the ongoing NW business.

I hope that is the case, because the 787 is litterally ideal for NW's Asian routes and the A330's are good money makers to their European routes as well. Perhpas NW might still replace their 747 classics with 747ADV's but that will likely be after they get their DC-9 replacement plan (E-190/5) set up. If NW could only take their 787's I'd be happy, let alone all of the aforementioned.

Quoting Cornish (Reply 12):
And somebody HAD to turn a sensible business discussion about the effects of Ch.11 bankrputcy into an A. v B. affair......

Shame on you - so you think Boeing wouldn't be worried by losing one of only two US majors (and lets forget that silly Primaris order) that have ordered the 787 then??

Bearting in mind that NW are currently taking delivery of their Airbuses, there would no doubt be some stiff penalties on NW should they stop or pull out of the deal. The order for FUTURE delivery of the 787 is a whole different question.

We're referrring to the last remaing A330's, correct? NW needs them as much as they need the new 787's as they are replacing the DC10's which take a lot more money to operate. Steenland said in his 787 addressment article that by the end of this decade with the 787's (and inferring the final deliveries of all the A330) will give NW an average age of it's heavy fleet of like 7.5 years. Big money comes with the heavies!


User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7542 posts, RR: 28
Reply 15, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5735 times:

The 787 and A330 orders should both be safe, as these aircraft will be part of NW's restructed business plan. These aircraft are a cost-effective replacement than what they currently operate. They are needed to build and maintain their international network. NW should/has been able to make the case to their creditors and the financial markets that these aircraft are a wise investment. They have the numbers to back it up. When an A330 has somewhere in the range of a 10-20% reduction in operating costs over a DC-10, its hard to argue with that.

Cancelling both these orders would only worsen their financial position. These aircraft will reduce operating costs.

The only orders that could be potentially deffered would be for any outstanding A319/A320 aircraft.


User currently offlineSlider From United States of America, joined Feb 2004, 6787 posts, RR: 34
Reply 16, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5709 times:

Quoting AirRyan (Thread starter):
NW is the North American launch customer for the 787 with 18 firm and 50 options.

Just a minor point of information- CO is the North American launch customer.

http://www.boeing.com/news/releases/2004/q4/nr_041229g.html


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 17, posted (8 years 10 months 3 weeks 1 day 8 hours ago) and read 5698 times:

Quoting Slider (Reply 16):
Just a minor point of information- CO is the North American launch customer.

Technically I believe Primaris was first - although it remains to be seen if we ever see that order ever turn ito real metal.

But CO was the first US Major to order it



Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlineSlider From United States of America, joined Feb 2004, 6787 posts, RR: 34
Reply 18, posted (8 years 10 months 3 weeks 1 day 7 hours ago) and read 5674 times:

Quoting Cornish (Reply 17):
But CO was the first US Major to order it

Thank you - I knew that and intentionally disregarded Primaris...CO was the first REAL, non-paper North Am. airline to order it.  Smile


User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 19, posted (8 years 10 months 3 weeks 1 day 7 hours ago) and read 5641 times:

I just looked up on Airbus' website:

http://www.airbus.com/en/airbusfor/analysts/

They report that NW still has 9 A320's left on order and 23 A330's which will give them a total of 40! I didn't realize NW had ordered that many A330's but I agree with what has been said earlier, they are a crucial part of the companies longterm financial success with the revenue-generating international routes.

Quoting Slider (Reply 16):
Quoting AirRyan (Thread starter):
NW is the North American launch customer for the 787 with 18 firm and 50 options.

Just a minor point of information- CO is the North American launch customer.

http://www.boeing.com/news/releases/....html

While technically NW was slightly behind CO and Primaris, they ordered significantly more than they did and Boeing will be delivering the first 787 to a North American carrier at NW. They are all part of the 787 launch team but Northwest is now generally regarded as the North American luanch customer because they will be taking delivery of the 787 first, in August 2008 and I think NW will long be emerged from BK by then.

Quote:
Among the most recent customers is Northwest Airlines. The Eagan, Minn.–based airline and Boeing said last month that Northwest would order up to 68 Dreamliners. With its initial delivery in August 2008, Northwest will be the first North American carrier operating the 787.


Northwest's order caught the attention of aerospace industry observers.

Quote:
"Any order from an airline like Northwest is very important to the [787] program," said Craig Fraser, an aerospace analyst with Fitch Ratings, in an Associated Press report. "The fact that a U.S. airline would be placing an order in this environment indicates that the plane will add value to the company's operations." Also, in a St. Paul (Minn.) Pioneer Press article, J.B. Groh, an analyst with investment firm D.A. Davidson, said of the 787: "That plane has fantastic momentum. It's a revolutionary new design."

http://www.boeing.com/news/frontiers/archive/2005/june/cover.html

[Edited 2005-09-15 17:12:54]

User currently offlineA5XX From Canada, joined Apr 2005, 245 posts, RR: 0
Reply 20, posted (8 years 10 months 3 weeks 1 day 6 hours ago) and read 5559 times:

Quoting OHLHD (Reply 4):
Wasn´t the delivery of the AC A345 postponed as long as thy were under Ch.11?

There is no such thing as CH 11 in Canada. Bankruptcy laws in Canada, are totally different than the bankruptcy laws in the U.S.

Yves.



we are the boeing... resistance is futile...You will be assimilated
User currently offlineEha From France, joined May 2005, 211 posts, RR: 0
Reply 21, posted (8 years 10 months 3 weeks 1 day 6 hours ago) and read 5509 times:

Quoting AirRyan (Reply 14):
I hope that is the case, because the 787 is litterally ideal for NW's Asian routes and the A330's are good money makers to their European routes as well. Perhpas NW might still replace their 747 classics with 747ADV's but that will likely be after they get their DC-9 replacement plan (E-190/5) set up. If NW could only take their 787's I'd be happy, let alone all of the aforementioned.

They still have 9 A319/A320 on order, 23 A330s.
They also have options for 76 A319/320.

One plan could be to firm up A319/A320 options to continue phasing out DC-9 models (still about 140 operated), use A330/787 to phase out their 747 fleet and reshape their international routes.

To give a sign where NW would go, it is worth to mention that none of their Airbus are in storage right now, while 52 of their oldest A/C are.

E.


User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 22, posted (8 years 10 months 3 weeks 1 day 6 hours ago) and read 5482 times:

Quoting Eha (Reply 21):
One plan could be to firm up A319/A320 options to continue phasing out DC-9 models (still about 140 operated), use A330/787 to phase out their 747 fleet and reshape their international routes.

I could see the 787/A330 fleets replacing the DC-10 and perhaps the 742's but I think NW is quite happy with their 16 744's.

Once they emerge from BK they may even buy 747ADV's to replace them but I don't see them getting rid of the 744's for something other than a modern 747. NW loves the publicity/status of operating a 744.

Also, NW Cargo ops is I believe turning a profit while still using the 742F's and so an upgrade to at least 744F like UPS just did if not 747F-ADV's may be in line as well, but again will most likely have to come after BK.


User currently offlineGARPD From UK - Scotland, joined Aug 2005, 2631 posts, RR: 4
Reply 23, posted (8 years 10 months 3 weeks 1 day 6 hours ago) and read 5466 times:

Quoting Keesje (Reply 5):
I think NWA got a razor sharp deal on the 787, Boeing wanted NWA bad & NWA / Boeing will do the utmost the keep the deal alive. NWA don't have the kind of depths DL has.

You make it sound like Boeing was and still is desperate.

According to my NW Captain friend, it was NW who did the dealing for the 787. They were truely unimpressed with the A350 at that stage.

Now, I cannot verify this, but Bob is not one to lie.



arpdesign.wordpress.com
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 24, posted (8 years 10 months 3 weeks 1 day 6 hours ago) and read 5375 times:

Quoting AirRyan (Reply 19):
I didn't realize NW had ordered that many A330's but I agree with what has been said earlier, they are a crucial part of the companies longterm financial success with the revenue-generating international routes.

I love NW's A330's..they are beautiful! That being said, with the potential of the 787's coming on board, I wonder if they are going to cancel some or part of their A330's and keep the smaller A319/A320 order..


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"Up the Irons!"
25 AirRyan : I should have articulated myself better, my intent was certainly not to make it sound like Boeing is/was despirate! We all know how any company would
26 Derik737 : According to my NW Management friend, it was Boeing who provided the 787 financing and multiple years of deferred payments (8 years is what he told m
27 Post contains images AirRyan : Wow, I think I could take five or ten 787's and start a new charter/starup airline and make money in 8 years enough to being making the payments! I h
28 DAYflyer : Don't pass out Keesje, but for the 3rd time this year I agree with everything you said here.
29 GARPD : That certainly is interesting. My friend was unable to tell me anything so specific. He is adomant though that NW was doing the "begging" so to speak
30 PHXinterrupted : I think NW got an even better deal on their A330s.
31 GARPD : Paid/Paying $60-70m per plane I'm told. Of course, completely un verified, but as it's likely no one here has any verified and correct info... I thou
32 WhiteHatter : NW will have a trump card to play on the new aircraft coming on stream. Whether they are Airbus or Boeing. What they have to present to the court is t
33 AirFrnt : In this case, NW has almost certainly put a deposit down on these planes. Even if the contract were rejcted, Boeing would be under little pressure to
34 Keesje : Now this is not the kind of info folks like PHX & Garp want to hear, please. However it fits in my experience you have to come up with a real sharp o
35 Post contains links M27 : Why then is Boeing not listed as one of the top 10 creditors if they are to provide financing? http://yahoo.reuters.com/financeQuot...05-09-14_23-09-
36 Post contains images Derik737 : Probably because since the airplane hasn't been delivered (it hasn't been built), there is no actual financing yet. Like I said in my first post, my
37 M27 : Derik: I understand what you are saying, and this well may be so: but if it is,how can it be said that Boeing is financing it? Maybe they just guaran
38 AirRyan : I'm sure that is what it is - no need to pay for something that is 3 years away.
39 OHLHD : Thx for the info. Did not know that. How about my first question guys, is NW allowed under protection to take delivery of new aircrafts?
40 KULatICT : heck, perhaps Airbus might pull a HP/US deal by providing an exit financing & throw in a few A350 to NW?
41 Post contains images Glideslope : Hey, just like B6 and Airbus!!!
42 Derik737 : Exactly. The financing is most likely pre-arranged. Now, I am not sure what NW had to put down for deposits (and would have to continue as delivery g
43 Centrair : To me I think NW needs the A320, A330 and the 787. A320s are critical for replacing many DC9s, espcially for the routes connecting large domestic mark
44 Udo : Your jokes used to better in former times. Regards Udo
45 Udo : Considering the fact that the B777 didn't really match NW's transatlantic operation profile your "thought" is quite adventurous. Regards Udo
46 A330323X : I seem to think that buying new aircraft while under bankruptcy protection is quite difficult; leasing them I believe is rather easier, but still not
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