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Air Berlin Near 787 Order Cancellation.  
User currently offlineFCKC From France, joined Nov 2004, 2348 posts, RR: 4
Posted (4 years 12 months 1 day 14 hours ago) and read 16564 times:

http://www.lesechos.fr/info/aero/afp_00177338.htm

After knowing more about the 787 calendar , and depending of the future strategy of AB in the long haul market , they could decide to cancel their 787 order which was placed to replace the Ex A330s LTU and expansion.

Sorry , article only in French , but really AB CEO is not laughing about the 787 delays.

54 replies: All unread, showing first 25:
 
User currently offlineBoeingfever777 From United States of America, joined Jul 2009, 409 posts, RR: 53
Reply 1, posted (4 years 12 months 1 day 14 hours ago) and read 16554 times:



Quoting FCKC (Thread starter):
article only in French

English

http://blog.seattlepi.com/aerospace/archives/177391.asp



Faire du ciel le plus bel endroit de la terre.
User currently offlineFXramper From United States of America, joined Dec 2005, 7247 posts, RR: 85
Reply 2, posted (4 years 12 months 1 day 13 hours ago) and read 16396 times:
Support Airliners.net - become a First Class Member!



Quoting Boeingfever777 (Reply 1):

Hooray, more slots for Boeing super customer, AA!  airplane 


User currently offlineFrigatebird From Netherlands, joined Jun 2008, 1583 posts, RR: 1
Reply 3, posted (4 years 12 months 1 day 13 hours ago) and read 16150 times:



Quoting FCKC (Thread starter):
the future strategy of AB in the long haul market

has far more to do with it than the delays of the 787 program. Were the 787 on time, AB would probably ask to defer delivery  eyebrow 
The delays are just an easy way out, without penalties, and abandon their long haul future plans. I very much doubt we'll see an A350 order immediately after a 787 cancellation.

Quote from the article in Aviation week: "One alternative option considered is to sell the delivery slots to another operator once demand for the type resurges and economic conditions improve."
But is that really an option? I thought certain clauses don't allow airlines to do that without permission from the manufacturer. Confused

The article also says that AB is busy trying to sell 737NG's to Asia. They really have bitten off more than they can chew, it seems...  banghead  How many 737's and A320's do they still have on order?



146,318/19/20/21,AB6,332,343,345,388,722,732/3/4/5/G/8,9,742,74E,744,752,762,763,772,77E,773,77W,AT4/7,ATP,CRK,E90,F50/7
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 4, posted (4 years 12 months 1 day 13 hours ago) and read 16154 times:



Quoting FXramper (Reply 2):
Hooray, more slots for Boeing super customer, AA!

Yes, they can't wait to get their hands on those early 787 slots..


User currently offlineIkramerica From United States of America, joined May 2005, 21503 posts, RR: 60
Reply 5, posted (4 years 12 months 1 day 12 hours ago) and read 16022 times:



Quoting Frigatebird (Reply 3):
has far more to do with it than the delays of the 787 program. Were the 787 on time, AB would probably ask to defer delivery   

Yes, but the delays in the 787 program allow all airlines to readjust their long term strategies to the new market realities they see, without penalty.

So the delays seem to really be a win for a lot of customers, but still cost Boeing mucho dinero. It's not win-win for Customer-Boeing, it's win-lose.



Of all the things to worry about... the Wookie has no pants.
User currently offlineBoeingfever777 From United States of America, joined Jul 2009, 409 posts, RR: 53
Reply 6, posted (4 years 12 months 1 day 12 hours ago) and read 15914 times:



Quoting Frigatebird (Reply 3):
How many 737's and A320's do they still have on order?

a320 - 4 on order
737-700/800 22/89 active.

So they have (67) 737's they have not taken delivery on.

I think AB was the one carrier that placed their 787 order on 7/7/07. Big grin



Faire du ciel le plus bel endroit de la terre.
User currently offlineFrigatebird From Netherlands, joined Jun 2008, 1583 posts, RR: 1
Reply 7, posted (4 years 12 months 1 day 10 hours ago) and read 15473 times:



Quoting Ikramerica (Reply 5):

Yeah, and the cynical thing is that airlines get compensation for late delivery too.

Still, if airlines outright cancel their order, wouldn't they forfeit their compensation too? In that case, Boeing could sell the slots to another airline for roughly the same price, but without the need of compensation (unless they botch it another time). So that wouldn't be too disastrous, although it needs another sales effort and you can't have too many of your customers wanting to bail out - doesn't do very well for your image.

Quoting Boeingfever777 (Reply 6):
Quoting Frigatebird (Reply 3):
How many 737's and A320's do they still have on order?

a320 - 4 on order
737-700/800 22/89 active.

So they have (67) 737's they have not taken delivery on.

 wideeyed  Thank you!



146,318/19/20/21,AB6,332,343,345,388,722,732/3/4/5/G/8,9,742,74E,744,752,762,763,772,77E,773,77W,AT4/7,ATP,CRK,E90,F50/7
User currently offlineIkramerica From United States of America, joined May 2005, 21503 posts, RR: 60
Reply 8, posted (4 years 12 months 1 day 10 hours ago) and read 15438 times:



Quoting Frigatebird (Reply 7):
Still, if airlines outright cancel their order, wouldn't they forfeit their compensation too?

It depends. If they cancel them after the first delay, sure. But if they cancel them after the third delay, they may be able to keep some of the compensation already "earned" by the first two delays.

Either way, it gets the airlines out of a bind.

I say it's a money loser for BA even if they don't have to compensate, because the delay itself costs money in added R&D and time value of investment, as well as deferred income. So it's lose for Boeing even if they can resell the slots. All they gain is the ability to avoid compensation to some carriers, but the other additional costs are still sunk.



Of all the things to worry about... the Wookie has no pants.
User currently offlineStitch From United States of America, joined Jul 2005, 30877 posts, RR: 86
Reply 9, posted (4 years 12 months 1 day 9 hours ago) and read 15156 times:
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Quoting Frigatebird (Reply 7):
Still, if airlines outright cancel their order, wouldn't they forfeit their compensation too?

It depends on the contract. QF, for example, is now allowed to walk away from their entire 787 order without penalty because Boeing is so late in meeting delivery. However, QF is the largest 787 customer so they had extra leverage to use in the negotiations.

For some smaller customers, they may be contractually obligated to forfeit payments even with Boeing being so late.

BA, for example, is working with Boeing to defer payments they owe on their 787s, even though the planes have not yet begun production and BA is (likely) many years away from receiving the first bird.


User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 10, posted (4 years 12 months 1 day 9 hours ago) and read 14960 times:



Quoting FXramper (Reply 2):
Hooray, more slots for Boeing super customer, AA! airplane

I agree. The more cancellations from bit player airlines will work superbly for the legacy carriers in a rush to bring in more fuel efficient metal into their fleets.

Every cloud has a silver lining. Sure Boeing's paper profit prior to the delays to the Bad-Dreamliner will never be realised but a profit the plane will make. All it has to do is get airborne this year.


User currently offlineYULWinterSkies From United States of America, joined Jun 2005, 2178 posts, RR: 5
Reply 11, posted (4 years 12 months 1 day 3 hours ago) and read 12586 times:



Quoting EbbUK (Reply 10):
The more cancellations from bit player airlines will work superbly for the legacy carriers in a rush to bring in more fuel efficient metal into their fleets.

Or more fuel efficient composite in this precise situation...

Quoting FXramper (Reply 2):
Hooray, more slots for Boeing super customer, AA! airplane

This is imo very premature to state that AA will rush to get them. Of course, they would if they could afford it, but they might be happy with the delays as well... And frankly, a "super" customer who did not even order any 744 or 77W is not so super either...



When I doubt... go running!
User currently offlineN1120A From United States of America, joined Dec 2003, 26422 posts, RR: 76
Reply 12, posted (4 years 12 months 1 day 3 hours ago) and read 12450 times:



Quoting YULWinterSkies (Reply 11):
And frankly, a "super" customer who did not even order any 744 or 77W is not so super either...

AA has never had the route structure to support aircraft that large. They are definitely a super customer for Boeing, given their agreement.



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlinePHX Flyer From United States of America, joined Apr 2001, 545 posts, RR: 0
Reply 13, posted (4 years 12 months 1 day 3 hours ago) and read 12447 times:



Quoting FCKC (Thread starter):
... really AB CEO is not laughing about the 787 delays.

To the contrary, Mr. Hunold is laughing all the way to the bank, as this is an easy way out of an order that the airline can ill-afford.

AB has increased ist losses since last year and is teetering on the brink of bankruptcy.
They practically repeated the mistake of Swissair, that is, acquiring one airline after another, including LTU (which, ironically, was bought by Swissair before in 1998), without ever integrating them to a true network carrier.

Air Berlin simply does not have the financial resources to stem a widebody order of this magnitude. The faster they can get rid of it, the better for the airline's financial health.
My hunch is that sooner or later they will give up long-haul flying altogether.


User currently offlineIkramerica From United States of America, joined May 2005, 21503 posts, RR: 60
Reply 14, posted (4 years 12 months 1 day 3 hours ago) and read 12384 times:



Quoting N1120A (Reply 12):
AA has never had the route structure to support aircraft that large. They are definitely a super customer for Boeing, given their agreement.

When you add up the 777, 767 and 757 fleet, they undoubtedly are. 738 fleet is growing, and of course in the past, they had 707s and a few 747s. But they were a very devoted DC/MD customer too, and now that they are swallowed by Boeing and the retirement of the A300, AA is the ultimate "super customer" for Boeing: one of the largest airlines in the world, with a 100% Boeing fleet!



Of all the things to worry about... the Wookie has no pants.
User currently offlineLanAlemania From Germany, joined Oct 2003, 191 posts, RR: 0
Reply 15, posted (4 years 12 months 1 day 1 hour ago) and read 11471 times:

According to this article, AB apparently stopped integrating LTU, as "the cost of integrating them outweighs any synergetic effects" (rough translation):

http://www.airliners.de/nachrichten/...air-berlin-baut-verluste-aus/18915 (german only)

Furthermore, this article shows AB openly thinking about selling LTU:

http://www.flightglobal.com/articles...lling-long-haul-operation-ltu.html

No good signs for LT  Sad


User currently offlineRheinwaldner From Switzerland, joined Jan 2008, 2222 posts, RR: 5
Reply 16, posted (4 years 12 months 1 day 1 hour ago) and read 11246 times:

After this canceling the present number of firm sales would drop below the number that would be required to avoid a forward loss. The accounting quantity to bring the 787 program into a positive position is estimated to be 850..900 planes by some:
http://leehamnews.wordpress.com/2009...25/split-view-on-787-forward-loss/

Of course the sales success is still magnificent. Which other aircraft managed to get the required sales for a positive ROI before first flight? And this is not achieved because of the first flight delay. In fact the first flight delay eats away more and more of that success. It looked much better some time ago when the sales number had a large positive margin over the break even number. As I said, currently that margin has been eaten away and probably would even become negative if AB cancels.

Edited because I forgot about the prospects:
This is of course only a snapshot about the present situation. The 787 has the qualities to generate sales far beyond the current number. I would however not dream about the second 1000. The current trend points to a sales bottom at maybe 700...800 sales. It is IMO far from certain that after the sales trend gets positive again the selling turbo will ignite like before. IMO Boeing can be satisfied if 1000 sales totally will be reached once. If the total sales will climb above 1500 it would be phenomenal.

[Edited 2009-08-27 00:49:05]

User currently offlineIkramerica From United States of America, joined May 2005, 21503 posts, RR: 60
Reply 17, posted (4 years 12 months 1 day ago) and read 11195 times:



Quoting Rheinwaldner (Reply 16):
After this canceling the present number of firm sales would drop below the number that would be required to avoid a forward loss. The accounting quantity to bring the 787 program into a positive position is estimated to be 850..900 planes by some

I believe this further delay will already put them there even if AB doesn't cancel. At this point, they have to be pushing 1000 to avoid losses, but considering AA hasn't committed yet, and UA and a few others have yet to make a choice, and there will be follow on orders by many carriers, I doubt 1000 is a worry.

As long as it flies and deliveries after #20 perform as advertised.



Of all the things to worry about... the Wookie has no pants.
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9999 posts, RR: 96
Reply 18, posted (4 years 12 months 1 day ago) and read 11073 times:



Quoting Ikramerica (Reply 17):
I doubt 1000 is a worry.

 thumbsup 
I doubt it, too. This plane will be selling for a LONG time.

Rgds


User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 19, posted (4 years 12 months 1 day ago) and read 10884 times:



Quoting YULWinterSkies (Reply 11):

Quoting EbbUK (Reply 10):
The more cancellations from bit player airlines will work superbly for the legacy carriers in a rush to bring in more fuel efficient metal into their fleets.

Or more fuel efficient composite in this precise situation...

Yes of course. But they do seem to be adding more bits of metal with every delay


User currently onlineNorlander From Faroe Islands, joined Sep 2007, 159 posts, RR: 0
Reply 20, posted (4 years 12 months 1 day ago) and read 10663 times:



Quoting EbbUK (Reply 10):
I agree. The more cancellations from bit player airlines will work superbly for the legacy carriers in a rush to bring in more fuel efficient metal into their fleets.

Calling Air Berlin a bit player airline, when it has an order book of over a 100 Boeing planes, is either foolish or misleading...



Longtime Lurker
User currently offlineAirNz From , joined Dec 1969, posts, RR:
Reply 21, posted (4 years 12 months 23 hours ago) and read 10407 times:



Quoting Rheinwaldner (Reply 16):
After this canceling the present number of firm sales would drop below the number that would be required to avoid a forward loss. The accounting quantity to bring the 787 program into a positive position is estimated to be 850..900 planes by some:
http://leehamnews.wordpress.com/2009...25/split-view-on-787-forward-loss/

Of course the sales success is still magnificent. Which other aircraft managed to get the required sales for a positive ROI before first flight? And this is not achieved because of the first flight delay. In fact the first flight delay eats away more and more of that success. It looked much better some time ago when the sales number had a large positive margin over the break even number. As I said, currently that margin has been eaten away and probably would even become negative if AB cancels.

Sorry, but I don't mean to be pedantic (although some will choose to see it that way), but why are repeatedly insisting on sales? With all due respect, they are orders......not one has yet been sold.
The orders are fantastic yes, but at this present time they are only that.....orders.
The rest of the post is spot on as, correctly, with these ongoing delays more and more orders will be required to generate profit. No, I certainly don't expect to see mass cancellations (unless Boeing really screw it up again) but, let's also be honest, I can't see substantial more orders until such times as Boeing can prove this aircraft can do what they claim it can.


User currently offlineR2rho From Germany, joined Feb 2007, 2601 posts, RR: 1
Reply 22, posted (4 years 12 months 22 hours ago) and read 10000 times:

AB is kinda stuck here though... IMO, the 787 would suit its needs best, the A350 is a bit too big for them. There is no alternative for the 787-8, so they have nowhere to go. Even if they cancel, they'll end up reordering again later on, but that time with even worse delivery slots.

User currently offlinePelican From Germany, joined Apr 2004, 2531 posts, RR: 8
Reply 23, posted (4 years 12 months 22 hours ago) and read 9969 times:



Quoting PHX Flyer (Reply 13):
AB has increased ist losses since last year and is teetering on the brink of bankruptcy.

That must be the reason why they have announced a by 33 per cent increased EBIT in the second quarter of 2009 compared to last year...  Yeah sure
The story is a little bit more complicated - they made big loss during the first quarter but could turn the wheel during the second quarter with an increased EBIT and higher liquidity.

Nonetheless they are most probably not in the financial shape to buy widebodies at the moment. This could change until the majority of payments for the 787 are due, though. Probably during the next economical up swing.
But then again they got wise and are now concentrating on profitable short haul routes while they reduce their long range network. That looks like the reason for a 787 cancellation to me.

pelican


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9999 posts, RR: 96
Reply 24, posted (4 years 12 months 22 hours ago) and read 9914 times:



Quoting R2rho (Reply 22):
There is no alternative for the 787-8

I would have thought the A330-200, at least in 238t form, represented a viable alternative, at least for now..

Quoting AirNz (Reply 21):
I can't see substantial more orders until such times as Boeing can prove this aircraft can do what they claim it can.

And as importantly, have a secure delivery programme for the backlog.

Rgds


25 Post contains links MWHCVT : I would have quoted your post more selectively but my notebook is having issue with a.net at the moment, but this kind on shows AA have ordered the B
26 GlobeEx : Well, yeah, you might say that.. however was ruled illigal and voided as far as I know a looong time ago. Same with Delta. b While I would say, that
27 Rheinwaldner : About that I am not sure. In the past aircraft types were offered and produced for 40..50 years or experienced several upgrades (737, 747, DC10). Is
28 AA777223 : I'm inclined to agree with you, but considering they are yet to even ORDER the aircraft, let alone be jockeying for earlier slots would imply otherwi
29 Brons2 : Isn't the LTU subsidiary all A330? If so I question the need for immediate 787. The pre LN 20 will not distance itself from the A330, and who knows wh
30 Aircellist : This is a very recent trend, in fact. Only the 737 and 747 have been on offer so long. I guess nobody in Seattle figured, in 1968, that the 737 would
31 WINGS : Airbus willingness to continue to upgrade the A340 will be close to zero. The A330 will continue to do so, as we have seen recently with the launch o
32 Stitch : Boeing CEO James Bell would disagree with you. Even with a US$2.5 billion write-down being applied to ZA001 through ZA006, he noted about 30 minutes
33 Stitch : Because the words are interchangeable, at least in determining future projections. Also, Boeing doesn't agree to a future delivery of a 787 on a hand
34 Stitch : Frankly, the whole thing about "sales" is like "break-even" - just another pedantic way to take a swipe at a program and company you don't happen to l
35 Rheinwaldner : Yes these are very nice and important improvements. But what I meant were upgrades like from 732 to 734 and then to 73NG. The A330 may never see such
36 Astuteman : Now THAT must be some aircraft....... Me neither. Between the A330 and A350 I'd say they're reasonably positioned today. Product lifecycles around th
37 Brons2 : You mean the 238T version. There is no 278T version, that would require a 3rd bogie or a 3rd truck on the mains.
38 WINGS : Ooooooops I did it again. Sorry mate. The A330 should continue to do well. Should the avitaion market pickup in the near future, then I expect it to
39 R2rho : I agree, but it depends on what AB's plans are. If they need long-haul capacity in the next 5-7years, then the A332 is definitely a good choice. If t
40 AirNz : If you're referring to myself Stitch, I'll both respectfully and catagorically disagree with you. There is absolutely no "swipe" intended at any prog
41 Stitch : It's not accuracy, it's semantics. I can fill this thread with hundreds, if not thousands, of examples where the word "sale" is used to describe a tra
42 Post contains links Viscount724 : Isn't Boeing's CEO James McNerny? http://www.boeing.com/companyoffices...aboutus/execprofiles/mcnerney.html
43 Stitch : I meant CFO. Though I believe Bell should be the CEO and Chairman, so consider it also a Freudian slip.
44 Ikramerica : It will do about as well as the 767 did once the A330 was well established. Sales will dry up mostly, with follow-on orders for a few carriers. 763 s
45 Astuteman : Again, history may not necessarily be a reliable indicator. The 767 had similar engine technology AND materials technology to the A330. But the confi
46 Post contains links ElbowRoom : It will be fascinating to see how this plays out once the 787 gets flying. A330 cabin width 528cm - configured 8-abreast in Y by most carriers B787 c
47 SurfandSnow : First there were the delays with the A380, and now the 787. Planes are just getting ever more complex with all of the new technologies being added to
48 Astuteman : I'm not sure that will be universally true. The 787-8 and A330-200 are near-on identical in terms of cabin area. The A330-200 can be (and is) operate
49 Frigatebird : Which sounds pretty good... But if Airbus wait till A330 sales dry up, I'm pretty sure they'll be too late. THAT will be when the 787 line will be up
50 ElbowRoom : OK, can't argue with that! By the way, the A350-800 looks like having 9% bigger cabin area. And 7% of that is due to extra length. Thanks for the ins
51 PM : No, the Airbus "front page" shows 997 deliveries. Do you seriously doubt that they won't deliver three more? And should we take the successful delive
52 Astuteman : Of course the airlines say that - they want to push the manufacturers at every turn. But they also said the original A350 wasn't advanced enough eith
53 Stitch : The 767's sales have only recently slowed to a crawl (probably in no small part to Boeing floating the 7E7 and 787 to customers). If you look at the n
54 Ikramerica : Other than F models, 767 sales dried up years ago. The only sales happening were to LAN, JL and NH for the most part, with JL and NH taking some to co
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