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F9 To Keep A318's, Sell 6 A319's To VTB Leasing  
User currently offlineNZblue From United States of America, joined Jun 2004, 638 posts, RR: 3
Posted (6 years 5 months 1 day 10 hours ago) and read 5671 times:

Just released news from frontierairlines.com:

Frontier Airlines Secures Commitments for Additional Liquidity
Aircraft deals generate approximately $80 million in incremental liquidity

Frontier Airlines today announced that it has entered into a Letter of Intent with VTB Leasing to sell six Airbus A319 aircraft to VTB Leasing for onward lease to Rossiya Airlines. This agreement amends an earlier agreement where VTB Leasing was to purchase two A319 and two A318 aircraft. Under the revised agreement, VTB Leasing will not take delivery of the originally agreed upon two A318 aircraft to be delivered in August and will instead purchase an additional six A319 aircraft in August.


It's an entirely different kind of flying; all together.
48 replies: All unread, showing first 25:
 
User currently offlineFCKC From France, joined Nov 2004, 2348 posts, RR: 4
Reply 1, posted (6 years 5 months 1 day 10 hours ago) and read 5662 times:

Sad , it would have been a new operator for the A318 !

User currently offlineMicstatic From United States of America, joined Jul 2001, 787 posts, RR: 1
Reply 2, posted (6 years 5 months 1 day 10 hours ago) and read 5652 times:

Why on earth would they want to keep the A318's?


S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
User currently offlineLAXintl From United States of America, joined May 2000, 26170 posts, RR: 50
Reply 3, posted (6 years 5 months 1 day 10 hours ago) and read 5653 times:

More fall schedule trims on the way, and likely further staff reductions.


From the desert to the sea, to all of Southern California
User currently offlineJlbmedia From United States of America, joined Jun 2002, 623 posts, RR: 0
Reply 4, posted (6 years 5 months 1 day 10 hours ago) and read 5659 times:
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OK, I'm a little slow on the uptake. Dose that make a total of 8 319s going to VTB?


JLB54061
User currently offlineTheGreatChecko From United States of America, joined Mar 2004, 1130 posts, RR: 2
Reply 5, posted (6 years 5 months 1 day 10 hours ago) and read 5642 times:

So that makes a total of 8 aircraft leaving the fleet. I guess they can make more money selling the A319's and keeping the "short buses." Interesting...


"A pilot's plane she is. She will love you if you deserve it, and try to kill you if you don't...She is the Mighty Q400"
User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 6, posted (6 years 5 months 1 day 10 hours ago) and read 5559 times:
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Quoting FCKC (Reply 1):
Why on earth would they want to keep the A318's?

Just off the top of my head - maybe because they work for them?  Smile

Quoting LAXintl (Reply 3):
More fall schedule trims on the way, and likely further staff reductions.

I see Airtran is in on that act now, big time.

mariner



aeternum nauta
User currently offlineScottB From United States of America, joined Jul 2000, 6828 posts, RR: 32
Reply 7, posted (6 years 5 months 1 day 9 hours ago) and read 5553 times:



Quoting TheGreatChecko (Reply 5):
So that makes a total of 8 aircraft leaving the fleet. I guess they can make more money selling the A319's and keeping the "short buses."

So, in my opinion, it's a mix of good news and bad news. The good (great) news is that $80 million in liquidity generated from selling the A319's is a big shot in the arm, especially with the somewhat worrisome cash number in the monthly operating report for June released earlier today. The bad news is that (again in my opinion) A318's are going to extremely difficult to sell given that there are only about half a dozen airline customers and given unfavorable operating economics compared to the larger family members. And this leaves Frontier with 2 A320's, 5 A319's and 9 A318's in the proverbial piggy bank. They could probably generate another $100 million in liquidity from the A319's & A320's if necessary.

I also think this helps to explain the short-term extension of the aircraft leases that we saw last month; they have used the time to be able to negotiate good terms for selling owned frames while maintaining flexibility for future capacity and avoiding a fire sale (i.e. if they couldn't get good sales terms they could simply drop leases come September).


User currently offlineMicstatic From United States of America, joined Jul 2001, 787 posts, RR: 1
Reply 8, posted (6 years 5 months 1 day 9 hours ago) and read 5530 times:



Quoting Mariner (Reply 6):
t off the top of my head - maybe because they work for them?

The economics of an A319 would seem to blow away an A318.



S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 9, posted (6 years 5 months 1 day 9 hours ago) and read 5513 times:
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Quoting Micstatic (Reply 8):
The economics of an A319 would seem to blow away an A318.

"would seem"?

Maybe. But this has been discussed at length here, over many years, and Frontier has always seemed very happy with the economics of the A318 - for Frontier.

mariner



aeternum nauta
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5947 posts, RR: 11
Reply 10, posted (6 years 5 months 1 day 9 hours ago) and read 5470 times:

Wait a minute, they just sold six nearly-new Airbus narrowbodies for a price of..... $80 million?
Unless my calculator is hypoglycemic, that's only $13.3 million a piece... for an aircraft that they presumably paid $60 million each for?

Either A319 resale values are worse than my Ford, or they got a great deal on them in the first place, OR (I'm betting and hoping on this one) the $80 isn't the grand total, but a one-time payment of some sort.

Any insight?


User currently offlineLAXintl From United States of America, joined May 2000, 26170 posts, RR: 50
Reply 11, posted (6 years 5 months 1 day 9 hours ago) and read 5460 times:

The A319 is far more re-marketable aircraft then the A318.

Regardless if F9 loves or hates its 318s, I'm sure they are pleased at their success at moving the 8 A319 frames on short notice providing the capital which they can use.

One thing I do wonder about how much more they can tap the remaining non leased birds as I would think most if not all are likely being used as some form of collateral.



From the desert to the sea, to all of Southern California
User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 12, posted (6 years 5 months 1 day 9 hours ago) and read 5464 times:
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Quoting AA737-823 (Reply 10):
Any insight?

If it is $80 million net to Frontier, then - I'm guessing - that is after the outstanding loans on the aircraft are paid back?

Frontier did not own them outright, they still had mortgages, to varying extent.

mariner



aeternum nauta
User currently offlineEnilria From Canada, joined Feb 2008, 7720 posts, RR: 15
Reply 13, posted (6 years 5 months 1 day 9 hours ago) and read 5449 times:



Quoting LAXintl (Reply 11):
The A319 is far more re-marketable aircraft then the A318.

Regardless if F9 loves or hates its 318s, I'm sure they are pleased at their success at moving the 8 A319 frames on short notice providing the capital which they can use.

Exactly, the market for aircraft is softening and the A318 has already been a tough sell. The probably don't feel like they can get enough for the A318s to justify selling them.

In simpler terms, everybody knows the A318 has high operating cost/seat relative to the A319 and the market for the plane reflects that.


User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 14, posted (6 years 5 months 1 day 9 hours ago) and read 5437 times:



Quoting AA737-823 (Reply 10):
Either A319 resale values are worse than my Ford

Maybe if they slapped a "Honda" sticker on the 319's they'd get more bang for the buck.  Wink

Quoting LAXintl (Reply 11):
Regardless if F9 loves or hates its 318s,

Nothing I have heard indicates they are unhappy with the airplanes. They serve a niche...a small one, but a niche nonetheless...for the airline.

Quoting Mariner (Reply 6):

I see Airtran is in on that act now, big time.

Yep. F9 is by no means alone in the route cut category.


User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 15, posted (6 years 5 months 1 day 9 hours ago) and read 5425 times:
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Quoting LAXintl (Reply 11):
The A319 is far more re-marketable aircraft then the A318.

If push came to shove, then I imagine Airbus Finance would step in. They hold the paper on several of them.

mariner



aeternum nauta
User currently offlineEnilria From Canada, joined Feb 2008, 7720 posts, RR: 15
Reply 16, posted (6 years 5 months 1 day 9 hours ago) and read 5344 times:



Quoting Mariner (Reply 15):

If push came to shove, then I imagine Airbus Finance would step in. They hold the paper on several of them.

Actually I was right, it says specifically in the docket filing that the buyer didn't want the A318s.

the Buyer s desire to acquire additional aircraft from Frontier and its preference for the Airbus A319-111 model of aircraft, especially given the technical challenges associated with certifying Airbus A318-111 aircraft

Don't know if there are really any technical challenges, but that may be an out the buyer had in the original deal that allowed them to switch to A319s.


User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 17, posted (6 years 5 months 1 day 9 hours ago) and read 5317 times:
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Quoting Enilria (Reply 16):
Actually I was right, it says specifically in the docket filing that the buyer didn't want the A318s.

Huh?

Your quoted text says they had a "preference" for the A319's. It doesn't say they didn't want the A318 - which they had agreed to buy.

They simply preferred the A319.  confused 

mariner



aeternum nauta
User currently offlineMultimark From Canada, joined Jul 2006, 797 posts, RR: 0
Reply 18, posted (6 years 5 months 1 day 9 hours ago) and read 5314 times:

Death rattle, I'd say.

User currently offlineEnilria From Canada, joined Feb 2008, 7720 posts, RR: 15
Reply 19, posted (6 years 5 months 1 day 8 hours ago) and read 5263 times:

It does appear they get $67 million net from the sale.

The amount of indebtedness that is secured by the mortgages to be discharged using the proceeds of the purchase price is approximately $97,700,000, which will result in net cash proceeds to the estate of approximately $67,300,000.

The Perseus document implies they may sell two more A319s.

Upon the sale of any Subject Asset (excluding Subject
Assets consisting of (x) spare parts and (y) up to eight (8) A-319 aircraft), Borrowers
shall prepay an aggregate principal amount of Loans equal to (A) if such Subject Asset is
an A319 or A320 aircraft, 50% of the greater of (y) Net Cash Proceeds of such Subject
Asset and (z) the Orderly Liquidation Value of such Subject Asset; and (B) if such
Subject Asset is an A318 aircraft, 50% of the Net Cash Proceeds of such Subject Asset.


User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 20, posted (6 years 5 months 1 day 8 hours ago) and read 5217 times:
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Quoting TheGreatChecko (Reply 5):
So that makes a total of 8 aircraft leaving the fleet.

I thought it was to be a total of 11.

Or did I read that wrongly?

mariner



aeternum nauta
User currently offlineEnilria From Canada, joined Feb 2008, 7720 posts, RR: 15
Reply 21, posted (6 years 5 months 1 day 8 hours ago) and read 5207 times:



Quoting Mariner (Reply 17):
They simply preferred the A319.

Talk about splitting hairs...


User currently offlineJgrant From United States of America, joined Apr 2008, 8 posts, RR: 0
Reply 22, posted (6 years 5 months 1 day 8 hours ago) and read 5201 times:

Are the fall schedules already reflecting the reduction of 8 aircraft or will additional cuts be necessary? Given same route, full 318 or 319 with same number of passengers, long haul or short haul... Where does the 318 work best? I don't see any particular route with the exception of DEN-SEA where F9 uses the 318 the most. Quite a mix of relatively short and longer hauls for utilization of the 318 in their schedules.

User currently offlineMariner From New Zealand, joined Nov 2001, 25707 posts, RR: 85
Reply 23, posted (6 years 5 months 1 day 8 hours ago) and read 5179 times:
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Quoting Enilria (Reply 21):
Talk about splitting hairs..

They had agreed to take the aircraft.

It is quite rare - in my experience - that an airline takes aircraft they "didn't want", which was your interpretation.

mariner



aeternum nauta
User currently offlineEnilria From Canada, joined Feb 2008, 7720 posts, RR: 15
Reply 24, posted (6 years 5 months 1 day 8 hours ago) and read 5178 times:



Quoting Jgrant (Reply 22):
Are the fall schedules already reflecting the reduction of 8 aircraft or will additional cuts be necessary? Given same route, full 318 or 319 with same number of passengers, long haul or short haul... Where does the 318 work best? I don't see any particular route with the exception of DEN-SEA where F9 uses the 318 the most. Quite a mix of relatively short and longer hauls for utilization of the 318 in their schedules.

It's only six for now. Perseus has approved the sale of two others, but no deal is public. From looking at OAG it is my opinion that they need to drop two more aircraft from the schedule to sell six. I could be wrong.


25 AirFrnt : The A318s work very well for F9, because F9 is hubbed in DEN. Hint: think about the A318's specification, in particular MTOW, range and Denver. This
26 EXAAUADL : I suspect they are getting rid of the A319s cuz there is no after market for the A318s
27 Enilria : To your point, here is another snippet from the filing. This indicates that Frontier offered additional commissions on the sale of A318s. The commiss
28 Mariner : For the simple and obvious reason that - I think - almost everyone agrees. That there is less market for the A318's. That doesn't mean there is no ma
29 Enilria : I'm sure they did. Do you believe the "technical challenges" comment made by Frontier? If you do not, do you know the real reason?
30 Mariner : They said it. I take it at face value. mariner
31 Post contains links Mariner : That's correct. The original 2 x A319's and an additional 6 x A319's, for a total of 8 x A319's: http://www.prnewswire.com/cgi-bin/st...story/07-29-2
32 TheGreatChecko : Which brings me to the next question, wasn't F9 parking 7 aircraft in September, not including the four they had already sold?? So that's 11 airframes
33 Mariner : I thought it was eleven, too. But I don't know if we have seen the end of it. Nor would a couple of sale/leasebacks surprise me. Whatever it takes. m
34 TheGreatChecko : True... I just want one or two more Q's yesterday, hehe. Checko
35 TheGreatChecko : So it sounds like there might be some more sale/ leasebacks in the mix for F9. No external source for that news yet and no specifics, unfortunately. H
36 Enilria : I went through the OAG a little more closely for September. There were a couple of markets that switched to Lynx and caused my initial count to be of
37 AirFrnt : No. F9 won't have trouble moving leases on the 319s and 320s. The 318s work just fine in DEN.
38 ScottB : They are indeed currently flying sixty Airbus aircraft, but that already reflects a reduction of two from 62, with two having been delivered to VTB.
39 Post contains links Mariner : According to headline on this article, they are selling 47 x 319's to VTB: http://www.redorbit.com/news/busines...s_to_sell_47_a319s_to_vtb_leasing/
40 ScottB : And the moral of the story is...never believe everything you read on the Internet
41 Post contains links Mariner : Ain't that the the truth. But this headline in the RMN seems right: http://www.rockymountainnews.com/new...ropped-when-frontier-got-its-loan/ RMN: "J
42 Post contains links Enilria : So if you are right about those two planes having already left the property, then it would appear the 8 A319 aircraft mentioned in the Perseus agreem
43 Post contains images Mariner : Where does it suggest they are regretting it? A statement of fact is not an expression of regret. I thought the article was obvious to the point of b
44 Dfanucci : Oh. My. God. Are you for real? And just what does that article say? That the owners plan to get involved if things don't go how they want? I would ho
45 Enilria : I find it interesting that the author of both articles, Chris Walsh, is revered for one article (pro) and attacked for another article (con) a few da
46 MaverickM11 : Plus their resale value is not good
47 Mariner : I don't think either of the articles are particularly "pro" Frontier. Or - this week - particularly "con". Mr. Walsh is a writer (and a good one) for
48 Dfanucci : Enilria, Honestly, how old are you, 12? If you are in fact in your 20's, you must be in the very low 20's. I honestly get the feeling you are an angr
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