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Why The Delay In British Airways Fleet Replacement  
User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Posted (4 years 4 months 1 week 6 days 7 hours ago) and read 8055 times:

How comes BA has delayed it's aircraft deliveries and has yet to decide it's future aircraft orders when other airlines seem to be jumping on the order band wagon and have new aircraft arriving?

I was so surprised to hear that BA won't even have any A380's for the 2012 London Olympics.

Why the delay?

19 replies: All unread, jump to last
 
User currently offlineLHRlocal From United Kingdom, joined Jan 2008, 282 posts, RR: 0
Reply 1, posted (4 years 4 months 1 week 6 days 7 hours ago) and read 8000 times:

Quoting BAfan (Thread starter):
Why the delay?

I'm gonna guess Money (or lack of it) owing too: Strikes, Volanic Ash, Law suits (price fixing etc), Record fines, Economic downturn etc etc.


User currently offlineLX138 From United Kingdom, joined Jul 2009, 404 posts, RR: 0
Reply 2, posted (4 years 4 months 1 week 6 days 6 hours ago) and read 7861 times:

How to you mean? They are taking deliveries of new aircraft AND they do have significant orders on the longhaul side - A380's, 787's, A320's and have just taken a load of E-jets! They put back the A380's to defer capital spending during the recession. That's all.


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User currently offlineGDB From United Kingdom, joined May 2001, 13254 posts, RR: 77
Reply 3, posted (4 years 4 months 1 week 6 days 4 hours ago) and read 7639 times:

Well the 787 is delayed due to circumstances outside of BA's control - the same for everyone else.
I suspect the A380 slippage was due to financial issues.
But - we have the 777-300ER's coming apart from the RJ's.


User currently offlineCRJ900 From Norway, joined Jun 2004, 2234 posts, RR: 1
Reply 4, posted (4 years 4 months 1 week 6 days 4 hours ago) and read 7609 times:
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Could it also be due to the merger with Iberia? Perhaps they will look at ordering for both airlines and get some really nice discounts...


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User currently offlinespeedbird9 From United Kingdom, joined Jan 2008, 231 posts, RR: 0
Reply 5, posted (4 years 4 months 1 week 6 days 3 hours ago) and read 7469 times:

Quoting BAfan (Thread starter):
I was so surprised to hear that BA won't even have any A380's for the 2012 London Olympics.

i heard that BA kept the first one to be dilivered in 2012 but the rest got be pushed back but i cant remeber when to



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User currently offlineBongodog1964 From United Kingdom, joined Oct 2006, 3695 posts, RR: 4
Reply 6, posted (4 years 4 months 1 week 6 days 2 hours ago) and read 7306 times:

BA took advantage of delays to both the A380 and B787 programmes, delaying their deliveries in order to preserve cash during the recession. Of course it was unlikely that they would ever have received them on time anyway, unless other operators delayed their orders quite significantly.

BA have of course completely replaced the LCY fleet in the past 12 months, 10 E jets & 2 A318's, plus new A320's at LHR and the 773's just commencing delivery. They've probably brought in enough aircraft to either keep the fleet age constant.


User currently offlineB777LRF From Luxembourg, joined Nov 2008, 1475 posts, RR: 3
Reply 7, posted (4 years 4 months 1 week 6 days 2 hours ago) and read 7211 times:

I suppose the only really big decision BA has in the medium-term is on a replacement of their 772 fleet - either additional 787 orders or an order for the A350. Top-up A380 orders will probably announced over the coming years as the 747 fleet is being wound down, and there will most likely also be orders for more 77Ws down the line, but apart from that don't really see what else would be in need of replacement within the next 2-4 years.


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User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 8, posted (4 years 4 months 1 week 6 days 2 hours ago) and read 7204 times:

Quoting LHRlocal (Reply 1):
I'm gonna guess Money (or lack of it) owing too: Strikes, Volanic Ash, Law suits (price fixing etc), Record fines, Economic downturn etc etc.

Yup...good old UK! But something surely isn't right....they're sitting on a huge cash pile. How come other airlines like SQ, LH, EK to name just a few, are making money and BA are not?


User currently offlineTristarsteve From Sweden, joined Nov 2005, 4073 posts, RR: 33
Reply 9, posted (4 years 4 months 1 week 6 days 2 hours ago) and read 7162 times:

Quoting Bongodog1964 (Reply 6):
and the 773's just commencing delivery.

The first one is due at LHR on the 18th. (if they can get the IFE working!)


User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Reply 10, posted (4 years 4 months 1 week 5 days 13 hours ago) and read 6760 times:

They only have 6 B777-300ER on order though, and I thought this was just short term in relation to the B787 delays?

User currently offlinevv701 From United Kingdom, joined Aug 2005, 7743 posts, RR: 17
Reply 11, posted (4 years 4 months 1 week 5 days 8 hours ago) and read 6533 times:

There are a number of policies that an airline can adopt in terms of fleet replacement.

At one extreme is a policy like that adopted by FR which requires a quick fleet turnover. The advantages appear to be that it maximises both the second hand sale price, maximises the fuel efficiency of the fleet and minimises third party maintenance and repainting costs.

Towards the other extreme is a policy like that adopted by BA which requires a slow fleet turnover. Here one of the advantages is that it minimises fleet depreciation or leasing costs.

Short haul aircraft (like BA's recently retired A320 100s) serve for around 20 years.

Long haul aircraft (like BA's retired B747 100 and 200 fleet) serve for up to 25 and sometimes more years.

It also helps maximises the use of internal maintenance and repainting facilities like those operated by BA at CWL, GLA, LHR and LGW. This helps reduce unit engineering costs while providing BA with a maintenance service whose activities it can prioritise on a day-to-day basis to meet its changing needs.

If aircraft are on lease BA have often extend the original leases, thus reducing leasing costs. As an exampke this is what they did with the fleet of 733s and 735s that they operated out of LGW until recently.

Indeed BA are planning to further exploit their policy by selling their maintenance, engineering and repainting services to other airlines. In the past they have limited themselves to maintaining their own aircraft and only using their paint shop to repaint their own aircraft and paint aircraft in other airlines' liveries prior to returning them to their lessors. Willie Walsh was discussing some of the advantages of the BA/IB merger at the BA Investors' Day Meeting in May. He said that BA planned to learn from IB all the benefits of selling such services externally, an activity IB was already heavilly involved in.

In terms of delaying orders, the one order BA has delayed is that for the 380. The first delivery was postponed to the first quarter in BA's 2013-14 financial year - i.e. in the April to June period of 2013. Originally 6 380s were to be delivered in 2012-13 and six in 2013-14. Now 4 will be delivered in 2013-14, 3 in both 2014-15 and 2015-16 and 2 in 2016-17.

I am guessing that the postponement in 380 deliveries is intimately entwined with the parking of 8 BA 744s following the reduction in traffic during the worldwide credit crunch. And it is probably not unrelated to the unexpected order for 6 77Ws, the first of which will enter service in the next couple of weeks and will provide for passenger growth and (most importantly) freight growth. One of the 8 744s (perhaps 2) will be stood up and returned to service before the end of this year. The remaining 6 can be returned to service at virtually any time to flexibly meet actual demand as world economies improve. Some would argue that BA is in a fortunate position in not having to take a gamble on how quickly passenger and freight growth will return following the credit crunch because it will be able to meet any reasonable return to growth with low capital cost equipment.

Returning to freight growth for a moment, the announcement that was only made a few weeks ago that BA World Cargo will be wet leasing three 748Fs from Atlas Air / Global Supply Systems from early next year (to replace the 744Fs) illustrates the fleet flexibility that BA is aiming for during the hoped for worldwide economic recovery.

Of course history will probably show that some other airlines will have matched their new aircraft plans correctly to future actual as opposed to forecast growth. But few will have the flexibility illustrated in the long haul BA plan to meet different possible traffic growth rates.


User currently offlinefxramper From United States of America, joined Dec 2005, 7367 posts, RR: 85
Reply 12, posted (4 years 4 months 1 week 5 days 7 hours ago) and read 6411 times:
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Quoting LHRlocal (Reply 1):

I'm gonna guess Money (or lack of it) owing too: Strikes, Volanic Ash, Law suits (price fixing etc), Record fines, Economic downturn etc etc.

The answer to the thread on the first reply; brilliant.   


User currently offlineLX138 From United Kingdom, joined Jul 2009, 404 posts, RR: 0
Reply 13, posted (4 years 4 months 1 week 5 days 5 hours ago) and read 6221 times:

Quoting Scotron11 (Reply 8):
Yup...good old UK! But something surely isn't right....they're sitting on a huge cash pile. How come other airlines like SQ, LH, EK to name just a few, are making money and BA are not?

They are based in different regions of the globe. Asia-Pacific has been much less hit than the rest of the world and growth has returned very quickly, helping airlines like SQ and EK which are well positioned to take advantage. Both EK and SQ have far lower cost bases.

Europe is hugely competitive in the airline arena and has been the slowest region to bounce back.

LH made a first half loss of $135.2m this year.



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User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 823 posts, RR: 1
Reply 14, posted (4 years 4 months 1 week 5 days 4 hours ago) and read 6189 times:

The 777s that have/are coming online were intended to be for growth, which in light of capacity cuts and storage of aircraft isn't being pursued. Deferring deliveries is sensible for both cash flow and managing capacity.

I think BA deserves credit for managing to continue to invest in the business during the downturn (New First, Club World London City) whilst cutting approriately in other areas instead of just battening down the hatches entirely. It's a delicate balance which is hard to get exactly right but they seem to be roughly doing the right thing.


User currently offlinevv701 From United Kingdom, joined Aug 2005, 7743 posts, RR: 17
Reply 15, posted (4 years 4 months 1 week 5 days 3 hours ago) and read 6100 times:

Quoting LHRFlyer (Reply 14):
The 777s that have/are coming online were intended to be for growth, which in light of capacity cuts and storage of aircraft isn't being pursued.

The four 772s delivered last year were certainly originally intended for capacity expansion when they were ordered before the start of the worldwide credit crunch. And the (temporary?) retirement of 8 BA 744s resulted in a net reduction of 4 long haul aircraft. However the 6 77Ws ordered since the start of the economic downturn primarily because of the delay in deliveries of the 787 actually results in a net increase of 2 aircraft. With the stand-up of one and almost certainly 2 of the parked 744s this coming winter adds a further 2 aircraft to the fleet as there have been no aircraft cancellations, only 380 postponements.

By postponing the delivery of their 380s BA leave themselves in the fortunate and flexible position of being able to quickly add up to 6 more of their old 744s to their active fleet if the recovery is sharp. But if it is slow they can leave all 6 in the desert. Either way they will avoid carrying the full capital cost of their new 380s during the recovery period. (If the recovery is not completed by the time of the first BA 380 delivery a lot of airlines will already be publishing some very red numbers.)


User currently offlineKappel From Suriname, joined Jul 2005, 3533 posts, RR: 17
Reply 16, posted (4 years 4 months 1 week 5 days 3 hours ago) and read 6028 times:

BA is not alone, AF/KL and LH for example have also not yet ordered any new gen widebodies yet.


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User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 17, posted (4 years 4 months 1 week 5 days 2 hours ago) and read 6028 times:

Quoting vv701 (Reply 15):
By postponing the delivery of their 380s BA leave themselves in the fortunate and flexible position of being able to quickly add up to 6 more of their old 744s to their active fleet if the recovery is sharp. But if it is slow they can leave all 6 in the desert. Either way they will avoid carrying the full capital cost of their new 380s during the recovery period. (If the recovery is not completed by the time of the first BA 380 delivery a lot of airlines will already be publishing some very red numbers.)

Well we all hope the recovery is ongoing and prolonged. Asides from that, how long will they then intend flying thier 744s? The oldest must be well over 20yrs old already, and by 2017 almost 30yrs old.

cheers


User currently offlinevv701 From United Kingdom, joined Aug 2005, 7743 posts, RR: 17
Reply 18, posted (4 years 4 months 1 week 4 days 22 hours ago) and read 5861 times:

Quoting Scotron11 (Reply 17):
how long will they then intend flying thier 744s? The oldest must be well over 20yrs old already

BA'S fleet of 57 744s were delivered over a period of almost ten years starting in June 1989 with G-BNLA. The last delivery in April 1999 (G-BYGG) was one of four delivered to them by Boeing in that year.

The BA Annual Report shows that they depreciate their long haul aircraft to a residual (scrap?) value over a period of 25 years. Of course this does not preclude them selling an aircraft before the end of those 25 years. Then they would hope to get a price for such a machine equal to or above its then current book value.

Looking forward what happened to their 741/742 fleet is not irrelevant. For example G-AWNA was delivered to BOAC in April 1970. BA sold it to AAR Aircraft Leasing in February 1998 but leased it back. They continued to operate it until November that year when it was returned to the lessor and scrapped at Bruntingthorpe. Note that when it was retired it was 28 years and seven months old.

While history may not repeat itself it is certainly a guide to what is possible. And this means it is at least feasible that BA will still be operating a small fleet of 744s post 2025.


User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Reply 19, posted (4 years 4 months 1 week 4 days 17 hours ago) and read 5745 times:

Quoting vv701 (Reply 18):
And this means it is at least feasible that BA will still be operating a small fleet of 744s post 2025.

I hope this is not apart of their plan, but I have a feeling you could be right!


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