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United Likely To Cancel 42 Outstanding A319/320s  
User currently offlinePhilSquares From , joined Dec 1969, posts, RR:
Posted (6 years 2 weeks 5 days ago) and read 11232 times:

Just saw this posted.

www.flightglobal.com/articles/2008/0...ancel-42-outstanding-a319320s.html

58 replies: All unread, showing first 25:
 
User currently offlineLAXintl From United States of America, joined May 2000, 25082 posts, RR: 46
Reply 1, posted (6 years 2 weeks 5 days ago) and read 11210 times:

No surprise, as United has stated on several occasions it is not looking to acquire any more narrow bodies until such time newer generation of models are available replacing todays 320/737NG technology.


From the desert to the sea, to all of Southern California
User currently offlineSxf24 From United States of America, joined Aug 2007, 1260 posts, RR: 0
Reply 2, posted (6 years 2 weeks 5 days ago) and read 11192 times:

They've already written off the deposits (basically saying their lost) with Airbus, which would indicate they do not intend to ever take delivery of those aircraft - or any other Airbus orders.

User currently offlineIkramerica From United States of America, joined May 2005, 21507 posts, RR: 60
Reply 3, posted (6 years 2 weeks 5 days ago) and read 11102 times:



Quoting Sxf24 (Reply 2):
or any other Airbus orders

787+748 order in the future?  Wink



Of all the things to worry about... the Wookie has no pants.
User currently offlineUnited1 From United States of America, joined Oct 2003, 5935 posts, RR: 9
Reply 4, posted (6 years 2 weeks 5 days ago) and read 11048 times:



Quoting Ikramerica (Reply 3):
Quoting Sxf24 (Reply 2):
or any other Airbus orders

787+748 order in the future?

At some point I'm sure they will start ordering widebodies in order to grow the international network, but you probably won't see any new narrow bodies in the fleet until the next generation of 737/320s come out.



Semper Fi - PowerPoint makes us stupid.
User currently offlineEIDAA From Ireland, joined Oct 2006, 828 posts, RR: 16
Reply 5, posted (6 years 2 weeks 5 days ago) and read 11051 times:
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Quoting Sxf24 (Reply 2):
or any other Airbus orders

According to UAL, the deposits on these orders are non transferable, so it does not really rule out future Airbus orders as such, only the 42 current orders.



Most Flown:- G-BUVA (20 Flights), EI-DEB (12 Flights), EI-JFK (11 Flights)
User currently offlineZWZWUnited From United States of America, joined Jun 2008, 197 posts, RR: 0
Reply 6, posted (6 years 2 weeks 5 days ago) and read 10908 times:



Quoting Ikramerica (Reply 3):
787+748 order in the future?

That would be totally awesome!!!  hyper 


I wonder if UA may be looking at the Bombardier C-Series to replace some of their mainline, narrow-body, domestic fleet (esp. 737s now and 319s later). Then they could replace some of their 320s and 757s with 738/9ERs? Will be interesting to see what happens when UA is able to do some fleet renewal!

~Tim  Smile



Drop it like its hott!
User currently offlineIloveboeing From United States of America, joined Oct 2005, 796 posts, RR: 0
Reply 7, posted (6 years 2 weeks 5 days ago) and read 10884 times:

Hmmm.....well, they've had them on deferred delivery for so long that this really isn't a surprise. Maybe they'll be a major customer for the C130...

User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2221 posts, RR: 8
Reply 8, posted (6 years 2 weeks 4 days 23 hours ago) and read 10764 times:



Quoting EIDAA (Reply 5):
Quoting Sxf24 (Reply 2):
or any other Airbus orders

According to UAL, the deposits on these orders are non transferable, so it does not really rule out future Airbus orders as such, only the 42 current orders.

If UA went to Airbus and said "we'd like to replace our 767s with A350s, if you allow the deposits on the A320s to be applied toward our A350 order", Airbus would allow the deposits to be transferred, rather than risk losing the order to Boeing.



Seaholm Maples are #1!
User currently offlineUnited1 From United States of America, joined Oct 2003, 5935 posts, RR: 9
Reply 9, posted (6 years 2 weeks 4 days 23 hours ago) and read 10708 times:



Quoting WA707atMSP (Reply 8):
Airbus would allow the deposits to be transferred, rather than risk losing the order to Boeing.

There is always some room for negotiation when UA canceled the one 777-200ER that they had on order back in BK, UA and Boeing negotiated a deal to allow the deposit to be used for spare parts.



Semper Fi - PowerPoint makes us stupid.
User currently offlineEIDAA From Ireland, joined Oct 2006, 828 posts, RR: 16
Reply 10, posted (6 years 2 weeks 4 days 23 hours ago) and read 10548 times:
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Quoting WA707atMSP (Reply 8):
If UA went to Airbus and said "we'd like to replace our 767s with A350s, if you allow the deposits on the A320s to be applied toward our A350 order", Airbus would allow the deposits to be transferred, rather than risk losing the order to Boeing.

Of course Airbus would do what they felt was necessary and acceptable to avoid losing an order like that to Boeing and if that meant working out an agreement on the deposits previously handed over, then so be it.

I was merely pointing out that a disclosure from UA that they are not likely to take delivery of narrowbody aircraft that have previously been pushed out anyway, does not preclude them from buying Airbus aircraft in the future as Sxf24 suggested above.

Let's face it, UA is disposing in the region of 100 narrowbodies in the next 18 months and is not really in the position to take new aircraft right now. For these orders to fall away is not really a surprise and they were just stating to the SEC that per the purchase agreement the deposits are non transferable. I personally don't see that as ruling out anything other than the delivery of the 42 aircraft.



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User currently offlineUA76Heavy From United States of America, joined Apr 2007, 181 posts, RR: 0
Reply 11, posted (6 years 2 weeks 4 days 22 hours ago) and read 10243 times:



Quoting WA707atMSP (Reply 8):
If UA went to Airbus and said "we'd like to replace our 767s with A350s, if you allow the deposits on the A320s to be applied toward our A350 order", Airbus would allow the deposits to be transferred, rather than risk losing the order to Boeing.

Certainly! "Nontransferrable" means UA cannot sell the positions to another company. If UA were to salvage its deposit, it would have to apply it toward another Airbus order.


User currently offlineScottB From United States of America, joined Jul 2000, 6745 posts, RR: 32
Reply 12, posted (6 years 2 weeks 4 days 22 hours ago) and read 10221 times:



Quoting EIDAA (Reply 10):
Let's face it, UA is disposing in the region of 100 narrowbodies in the next 18 months and is not really in the position to take new aircraft right now. For these orders to fall away is not really a surprise and they were just stating to the SEC that per the purchase agreement the deposits are non transferable. I personally don't see that as ruling out anything other than the delivery of the 42 aircraft.

They're not just stating that the deposits are non-transferable; they're stating that they now are writing off the entire value of the deposits and capitalized interest on the balance sheet. They're impairing the asset because apparently they won't be able to use it for future aircraft purchases.

What's a bit remarkable about this is the fact that United probably will need to start retiring its oldest 757's and A320's in about 5 years, as the former reach 25 years and the latter reach 20 years (it seems most 20-year-old A320's are being stored or scrapped at this point, assuming the info in the thread about AF's first A320-200 being scrapped is correct). But they have nothing currently on order, aside from the 42 frames mentioned in this thread, as a replacement, so that is very curious unless the plan is simply to continue to shrink the airline.


User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 13, posted (6 years 2 weeks 4 days 22 hours ago) and read 10221 times:



Quoting LAXintl (Reply 1):
No surprise, as United has stated on several occasions it is not looking to acquire any more narrow bodies until such time newer generation of models are available replacing todays 320/737NG technology.

I find that story really hard to swallow. Both Airbus and Boeing have said repeatedly that they have no plans to produce a successor to their current narrow bodies, that the technology available presently does not warrant any and that any successor is 10-15 years in the future.

http://www.aviationweek.com/aw/gener...hannel=awst&id=news/aw051908p2.xml

United has said specifically it plans to rely on its existing fleet until 2015 or 2016 at which point the fleet will be 20 years old average. It also has too much debt, low profit margins and is trying to sell anything it can to raise money.

http://www.aviationweek.com/aw/gener...hannel=awst&id=news/aw051908p2.xml

United's story is starting to resemble those of TWA, Pan Am and Eastern in the 1980's.


User currently offlineUnited_Fan From United States of America, joined Nov 2000, 7483 posts, RR: 7
Reply 14, posted (6 years 2 weeks 4 days 22 hours ago) and read 10112 times:

Must be nice to pi$$ away $90 Mill in deposits...this does not bode well for United's future....


'Empathy was yesterday...Today, you're wasting my Mother-F'ing time' - Heat.
User currently offline9252fly From Canada, joined Sep 2005, 1391 posts, RR: 0
Reply 15, posted (6 years 2 weeks 4 days 21 hours ago) and read 9996 times:

Maybe I've watched too many episodes of the X-Files,but I still think that UA is setting itself up for a merger with CO late next year. There's no doubt in my mind that the merger has only been put off and a major code-share will take place in the interim. If one considers the combined narrow body fleet and tries to gaze into the future,this write-off may have it's merits.

User currently offlineAvek00 From United States of America, joined Oct 2004, 4368 posts, RR: 19
Reply 16, posted (6 years 2 weeks 4 days 21 hours ago) and read 9848 times:



Quoting 9252fly (Reply 15):
There's no doubt in my mind that the merger has only been put off and a major code-share will take place in the interim.

...and there's no doubt in my mind that the CO Board of Directors is dead-set against a merger anytime soon, as evidenced by their unanimous vote against seeking a merger with a United Airlines then valued at next to nothing.



Live life to the fullest.
User currently offline9252fly From Canada, joined Sep 2005, 1391 posts, RR: 0
Reply 17, posted (6 years 2 weeks 4 days 21 hours ago) and read 9790 times:



Quoting Avek00 (Reply 16):
...and there's no doubt in my mind that the CO Board of Directors is dead-set against a merger anytime soon, as evidenced by their unanimous vote against seeking a merger with a United Airlines then valued at next to nothing.

Agreed. Conceptually,it's still a good idea and I stand by my prediction that they will still do the merger once UA cleans up their financial situation(is that possible?).


User currently offlineWilliam From United States of America, joined Jun 1999, 1262 posts, RR: 0
Reply 18, posted (6 years 2 weeks 4 days 20 hours ago) and read 9753 times:

Once UA has finished grounding those 100 planes,taking out excess capacity then it will look better to CO. By that time I expect an out and out buyout and not merger.

User currently offlineVC10DC10 From United States of America, joined Apr 2006, 1036 posts, RR: 3
Reply 19, posted (6 years 2 weeks 4 days 20 hours ago) and read 9688 times:

I'm still puzzled why UA has written off this asset. Under what terms would a supplier (in this case equipment manufacturer Airbus) not refund such an enormous deposit, at least in part? I know the accountants at my employer would have heart attacks if this happened to them.

User currently offlineVS11 From United States of America, joined Jul 2001, 1111 posts, RR: 0
Reply 20, posted (6 years 2 weeks 4 days 20 hours ago) and read 9617 times:

Just because they are going to write off the deposit now does not mean that they would not be able to "convert" it into spare parts or some future order with Airbus. They have taken a conservative approach accounting-wise.

User currently offline9252fly From Canada, joined Sep 2005, 1391 posts, RR: 0
Reply 21, posted (6 years 2 weeks 4 days 20 hours ago) and read 9615 times:



Quoting William (Reply 18):
Once UA has finished grounding those 100 planes,taking out excess capacity then it will look better to CO. By that time I expect an out and out buyout and not merger

That's exactly what I was thinking and your right,it's likely to be a buyout rather than a merger. Earlier reports indicated teams from both airlines worked on the project in meticulous detail and the CO team presented it to their own board only to have it shot down due to UA financial position,otherwise it would have been a go.


User currently offlineUnited1 From United States of America, joined Oct 2003, 5935 posts, RR: 9
Reply 22, posted (6 years 2 weeks 4 days 20 hours ago) and read 9598 times:



Quoting VC10DC10 (Reply 19):
I'm still puzzled why UA has written off this asset

I'm not an accountant but doesn't writing off this asset also allow UA to write the debt that they would be assuming off the books as well?

Quoting VC10DC10 (Reply 19):
Under what terms would a supplier (in this case equipment manufacturer Airbus) not refund such an enormous deposit, at least in part?

They would probably not refund it however Airbus might convert it to something else. As others have mentioned a few of UAs A320s are approaching 15 years out of the presumed 20 year life span of the aircraft. airbus announced a while ago that it was considering coming up with some sort of life extension program for the aircraft perhaps UA will be one of the first in line for that modification.



Semper Fi - PowerPoint makes us stupid.
User currently offlineVS11 From United States of America, joined Jul 2001, 1111 posts, RR: 0
Reply 23, posted (6 years 2 weeks 4 days 20 hours ago) and read 9539 times:



Quoting United1 (Reply 22):
I'm not an accountant but doesn't writing off this asset also allow UA to write the debt that they would be assuming off the books as well?

They would not be incurring the debt until they take delivery of the aircraft. They certainly have other debt but not related to those future and cancelled deliveries.


User currently offlineVC10DC10 From United States of America, joined Apr 2006, 1036 posts, RR: 3
Reply 24, posted (6 years 2 weeks 4 days 20 hours ago) and read 9512 times:



Quoting VS11 (Reply 23):
They would not be incurring the debt until they take delivery of the aircraft. They certainly have other debt but not related to those future and cancelled deliveries.

That's just what I was thinking. If I were the CEO of UA (a stretch, I realize  Wink ) I would inform Airbus that I would expect either a full refund or interest on the deposit until such time as new orders materialize. But then I'm a cranky guy anyway  Smile


25 United1 : Cool I wasnt sure how that was abount for, I know that future lease/mortage payments have to be carriered on the books but wasnt sure about outstandi
26 VS11 : This most likely is pre-arranged. Granted, I have not seen any legal work to be sure but I would assume that there are industry practices. Airbus or
27 VC10DC10 : I see what you mean. My point was more that there's no way in Purgatory I would just write off $91 million unless I had literally no choice at all.
28 VS11 : Well, future payments of current mortgages/leases - yes, they are accounted for usually in long-term liabilities. But in this case, the leases are no
29 Azjubilee : Hmmm... I smell a merger with CO.
30 Revelation : The article you linked to says: And most of us take this to mean 10 years. This kind of meets up with where CFM is coming up with a new engine, and p
31 VC10DC10 : True .
32 Eghansen : I was wondering about that myself. There is a huge backlog of orders for the A320 family of aircraft and it would seem more profitable to take delive
33 Hiflyer : Continental does not want airbus......and the deposits are not transferable.....not difficult to figure out. grin
34 LAXintl : Non refundable place holder deposits are quite common in the industry. Matter of fact this really works out to only a bit more then $2mil a plane whi
35 ScottB : I don't get that either. Delta has had a good number of 737-800's on order which are being sold upon delivery -- presumably at a profit. JetBlue and
36 Revelation : Hmm, you here are allowing for the fact that UA may not need them. However I tend to agree they can't afford them. Chill out... In #24, VC10DC10 made
37 RobK : Yes, glad you said that as I was just about to put the same thing myself. With the huge backlog of Airbus narrowbodies they could make a mint out of
38 VC10DC10 : The going guess here on a.net is that apparently the positions UA reserved with this $91 million are now history. Still, it raises the question why t
39 Stitch : With NW and AA flying some of their birds towards the half-century mark, no reason for UA to scrap those planes at 20/25 if they still have life in t
40 Jacobin777 : I went to college with Jillian Anderson..she' was a bit weird back then as well... Actually it might be a smart move..even though the A32X are "hot i
41 Platinumfoota : I remember reading that UA was very interested in the 777-300, is it possible that they still have this in mind? I'm sure they are looking to expand i
42 United1 : All of the Airbuses delivery dates were shifted during BK to 2013+ the intention was that if UA needed the aircraft sooner Airbus would advance the d
43 VC10DC10 : Maybe I'm dense, but why would this make sense? Surely UA signed for these Airbii quite a few years ago and I would think that the list prices would
44 LAXintl : Very easy to explain -- when one options an aircraft one gets the options at a fixed price+certain escalation clause (% normally) over a time defined
45 Nwarooster : United actually canceled the A319 and A320 orders a couple of years ago. The deposits are not refundable. United apparently has NO intention of orderi
46 United1 : Nope the orders are still on the books just deferred till 2013 at the earliest, I think this was the first step that UA is taking to finally cancelin
47 Columba : Why would they do that, they have one of the largest A32x fleet already, why replace them now with 737-800 an aircraft that at that time would not of
48 VC10DC10 : Yes, it does. I couldn't have said it better myself!
49 AA767LOVER : I'm hoping they will take out an order on 332's or 333's and use it to compete with NW on flights out of NRT, or else operate a new Southeast Asia hub
50 Scouseflyer : My thoughts entirely - they appear to be the most vunerable of the big US carriers at the moment But it was United that deferred the order - it's lik
51 Danny : That's sorry to hear that United will forfeit $100M and will not be getting any new mainline equipment.
52 Jacobin777 : ....also, part of the reason as to why UA ordered the Airbus was because Boeing didn't have a competing plane which was capable of matching the A32X
53 Ikramerica : Of course it doesn't rule them out. I was just having fun. If you don't need and or can't afford 42 planes at a cost of $2 billion dollars in cash an
54 STT757 : CO's executives made the recommendation to CO's board to not pursue a merger, the board approved their decision. The painful process of merging compa
55 United1 : Possible but probably not the way it would work In BK CO would have to pay cold hard cash for UAs assets which are worth quite a bit more then UAs st
56 Azjubilee : As I said before... I smell a CO/UA merger. They're seeing the DL/NW merger unfold before their eyes. Follow in their foot steps and perhaps they'll s
57 UAL777UK : I have to agree with some on this thread, UA and CO will in time go back to the merging possibly after they have seen how the DL/NW marriage has gone,
58 9252fly : Very plausible. As mentioned in another post,UA assets could make an all out buyout challenging for CO. Stay tuned as they say... A buyout/merger see
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