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AA Pays Only $40mil For A 738?  
User currently offlineMountainFlyer From United States of America, joined Jul 2005, 476 posts, RR: 0
Posted (2 years 5 months 4 weeks 10 hours ago) and read 15190 times:

http://leehamnews.wordpress.com/2012...s-737-cost-not-price-bob-crandall/

Quote:
Based on the change in YTD flight equipment additions, AER added $80MM in planes in Q4; since the only Q4 additions were two new 737-800s leased back to American Airlines, the 20-F implies a $40MM unit price.

In the thread about DL (potentially) buying 717's, some figures of $60mil or so were thrown around as a price point of a brand new 738. Perhaps it's lower than that.

Is this a fair assessment, or am I missing something?


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19 replies: All unread, jump to last
 
User currently offlineRoseflyer From United States of America, joined Feb 2004, 9643 posts, RR: 52
Reply 1, posted (2 years 5 months 4 weeks 10 hours ago) and read 14977 times:

Often you can get a good estimate for price of a new airplane from reading SEC filings, but the problem is that you don't really know what the price includes. Does it include engines? Does it include buyer furnished equipment, interiors, etc? There's quite a bit of variability. Also values in SEC filings are ammortized over years so it can further be difficult to understand what the actual purchase price is. A sale leaseback provides the best information on value, but again there are some key features missing.


If you have never designed an airplane part before, let the real designers do the work!
User currently offlineStitch From United States of America, joined Jul 2005, 31003 posts, RR: 86
Reply 2, posted (2 years 5 months 4 weeks 9 hours ago) and read 14612 times:
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Quoting MountainFlyer (Thread starter):
In the thread about DL (potentially) buying 717's, some figures of $60mil or so were thrown around as a price point of a brand new 738. Perhaps it's lower than that.

Average list price for a 737-800 is $95 million, but 50% is the standard discount rate nowadays.

DL's SEC filing in August 2011 implied that they received 51% off their 100 frame 737-900ER order (including engines).

As for what AA paid, assuming these planes were part of an order from a few years back, $35 million sounds about right. FR paid $29 million (after special "price concessions") per 737-800 back in 2005 when they placed their 70-frame order.

[Edited 2012-03-27 14:53:03]

User currently offlinePlaneAdmirer From United States of America, joined Jul 2009, 564 posts, RR: 0
Reply 3, posted (2 years 5 months 4 weeks 7 hours ago) and read 14194 times:

Quoting Stitch (Reply 2):
Average list price for a 737-800 is $95 million

Just to be clear - is that with engines and fully outfitted?

Did the FR price you stated include engines as well? If so, I know why MOL used the term he did to describe the transaction.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15745 posts, RR: 27
Reply 4, posted (2 years 5 months 4 weeks 7 hours ago) and read 14159 times:

Quoting MountainFlyer (Thread starter):
AA Pays Only $40mil For A 738?

Not surprising. I just recently did a statistical correlation that indicated than a 737-800 costs (with engines, again a correlation) around $36,000,000 to make. In reality the number is probably smaller since the development is likely long been paid off.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinegizmonc From United States of America, joined Mar 2011, 309 posts, RR: 0
Reply 5, posted (2 years 5 months 4 weeks 7 hours ago) and read 13681 times:

Very interesting information, but if AA is paying 50% and they have not bought that many 737NG from Boeing what is WN paying for their aircraft. We all realize that the list prices are but that is a heavy discount off the list price.

User currently offlineTWASkyliner747 From United States of America, joined Apr 2011, 12 posts, RR: 0
Reply 6, posted (2 years 5 months 4 weeks 6 hours ago) and read 13286 times:

It might have something to do with the 172 738's AA has in service and the 135 738's AA has on order. But still, only paying $40 Million is a big haircut for Boeing.

User currently offlinelightsaber From United States of America, joined Jan 2005, 13130 posts, RR: 100
Reply 7, posted (2 years 5 months 4 weeks 6 hours ago) and read 12734 times:
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Quoting Stitch (Reply 2):
As for what AA paid, assuming these planes were part of an order from a few years back, $35 million sounds about right. FR paid $29 million (after special "price concessions") per 737-800 back in 2005 when they placed their 70-frame order.

It sounds about right as Boeing will still make the planes for less than they are paid when the planes go out the door.


Now here is a thought, what price did Airbus offer? Note: I do not believe Airbus lost money on the order. I just think that Boeing made a single digit (percentage wise) profit while Airbus was at or near breakeven.

Quoting TWASkyliner747 (Reply 6):
But still, only paying $40 Million is a big haircut for Boeing.

Out the door at an estimated single digit profit with future ancillary sales? Not a bad business for Boeing to be in!

Quoting BMI727 (Reply 4):
I just recently did a statistical correlation that indicated than a 737-800 costs (with engines, again a correlation) around $36,000,000 to make.

But there is also R&D for improvements to pay for that are 'loaded' onto current aircraft production. Either way, my 'thumb in the wind' estimate was ~$34M. So maybe Boeing is making an OK profit.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineStitch From United States of America, joined Jul 2005, 31003 posts, RR: 86
Reply 8, posted (2 years 5 months 4 weeks 5 hours ago) and read 12483 times:
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Quoting PlaneAdmirer (Reply 3):
Just to be clear - is that with engines and fully outfitted?

Yes.

Quoting PlaneAdmirer (Reply 3):
Did the FR price you stated include engines as well? If so, I know why MOL used the term he did to describe the transaction.

Yes they did.

Per regulatory filings at the time, the "basic price" of FR's 737-800s was $52 million, which represented a discount of between 17-27% off the list prices at the time (which ranged from $62-69 million). That included airframe, engines, optional features and customer supplied equipment. However, Boeing agreed to perform some work for free (installing the winglets, for example) and also provided some free ancillaries (like maintenance and spares). They also provided credits and allowances that reduced the "basic price" by "a significant amount" per airframe.

The $29 million figure was derived by taking the $593 million allocated to cover the delivery payment first 29 airframes (which works out to $20 million an airframe) and adding another $9 million to cover the deposit and pre-delivery progress payments spelled out in the contract.


User currently offlineadam42185 From United States of America, joined Dec 2005, 416 posts, RR: 0
Reply 9, posted (2 years 5 months 4 weeks 4 hours ago) and read 11312 times:

How much money does Boeing or Airbus make selling parts for repairs or maintenance over the lifetime of an aircraft such as a 737 or 320?

User currently offlineStitch From United States of America, joined Jul 2005, 31003 posts, RR: 86
Reply 10, posted (2 years 5 months 4 weeks 4 hours ago) and read 11061 times:
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Quoting lightsaber (Reply 7):
Now here is a thought, what price did Airbus offer?

I believe Airbus' financing package also helped land them the order. I also wonder if Airbus provided some value guarantees on the back-end since an A320 generally doesn't hold it's value quite as well as a 737NG (for when AA looks to resell their planes once the A320neo and 737MAX fleets arrive in quantity).


User currently offlinesxf24 From United States of America, joined Aug 2007, 1262 posts, RR: 0
Reply 11, posted (2 years 5 months 4 weeks 4 hours ago) and read 11031 times:

Quoting Stitch (Reply 10):
I believe Airbus' financing package also helped land them the order. I also wonder if Airbus provided some value guarantees on the back-end since an A320 generally doesn't hold it's value quite as well as a 737NG (for when AA looks to resell their planes once the A320neo and 737MAX fleets arrive in quantity).

Airbus provides residual value guarantees for many of its orders - something Boeing rarely does.


User currently offlinelightsaber From United States of America, joined Jan 2005, 13130 posts, RR: 100
Reply 12, posted (2 years 5 months 4 weeks 2 hours ago) and read 10325 times:
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Quoting Stitch (Reply 10):
I also wonder if Airbus provided some value guarantees on the back-end since an A320 generally doesn't hold it's value quite as well as a 737NG (for when AA looks to resell their planes once the A320neo and 737MAX fleets arrive in quantity).

IMHO, with the increase from 48k cycles/60k hours to 90k cycles/180k hours, the A320 resale values will do much better in the past.

http://www.asianaviation.com/article...4/Airbus-plans-A320-life-extension

Airbus extended maintenance intervals in 2007. I fully expect them to do so again after the current life extension.  
That will help the resale values of the A320s.   

Note: the above link noted a further extension of the A320 C-check interval in work in 2010, I do not know if that extension has yet happened. If it did, it will help bring 'in line' A320 maintenance scheduling and further lower type costs.

Longer life with lower maintenance costs will help resale. But not for OEO vs. NEO.  

In other words, I think Airbus will do ok with the sale to AA. I just made my comment as the pricing must have been excellent to convince AA to break commonality.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlinepenguins From United States of America, joined Mar 2010, 339 posts, RR: 0
Reply 13, posted (2 years 5 months 3 weeks 6 days 20 hours ago) and read 7741 times:

It sounds like Boeing wants to keep a customer. I didn't know that 50% discounts were common.

User currently offlineflylku From United States of America, joined Apr 2006, 809 posts, RR: 0
Reply 14, posted (2 years 5 months 3 weeks 6 days 14 hours ago) and read 4694 times:

Quoting penguins (Reply 13):
I didn't know that 50% discounts were common.

List price for the ariframers is like the rack rate you see on the back of a hotel door: laughable!



...are we there yet?
User currently offlinePHX787 From Japan, joined Mar 2012, 7577 posts, RR: 18
Reply 15, posted (2 years 5 months 3 weeks 6 days 11 hours ago) and read 3127 times:

Quoting Stitch (Reply 2):
Average list price for a 737-800 is $95 million, but 50% is the standard discount rate nowadays.

now would this be a brand new 737 or something that's second hand?



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User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 24
Reply 16, posted (2 years 5 months 3 weeks 6 days 11 hours ago) and read 2923 times:

Quoting Stitch (Reply 2):
Average list price for a 737-800 is $95 million

Where are these Average list prices found? (No, I don't want to see SEC filings.... I want to see like what car dealerships put on the side of the windows for each new car.)

So where do we find these "List prices" that are spoken of?



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineFabo From Slovakia, joined Aug 2005, 1219 posts, RR: 1
Reply 17, posted (2 years 5 months 3 weeks 6 days 11 hours ago) and read 2788 times:

Boeing Commercial site is your friend. http://www.boeing.com/commercial/prices/


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User currently offlineBMI727 From United States of America, joined Feb 2009, 15745 posts, RR: 27
Reply 18, posted (2 years 5 months 3 weeks 6 days 11 hours ago) and read 2714 times:

Quoting AirframeAS (Reply 16):
So where do we find these "List prices" that are spoken of?

Websites for manufacturers. Also, you can use sales sites (I like globalplanesearch.com) to get a cross section of market values.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 24
Reply 19, posted (2 years 5 months 3 weeks 6 days 10 hours ago) and read 2412 times:

Quoting Fabo (Reply 17):

Interesting! Thank you! I should start saving up for my own 73G!  



A Safe Flight Begins With Quality Maintenance On The Ground.
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