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Is A Large Airbus Order A Sign Of Airline Death?  
User currently offlineCX747 From United States of America, joined May 1999, 4454 posts, RR: 5
Posted (12 years 4 months 2 weeks 2 days 22 hours ago) and read 2621 times:

First off, calm down. This is NOT an A vs. B war. What I would like to discuss though is a philosophy of mine. It seems to me that when a large carrier that is not doing extremely well places a large Airbus order. They believe that by operating a large fleet of homogenious aircraft, they will save money and right their ship so to speak. They therefore place humongous orders and end up paying a fortune for their new fleet of Airbus rather than stick with their older 737-200s or-300s or MD-80s. U.S. Air is the most recent example of this. Sabena and Swiss Air are two examples. They were not doing financially well but order quite a few Airbus jets as they thought operating them would save more money that sticking with their current fleets. Both of the airlines went belly up. U.S. Air was also looking to consolidate its fleet and save money. They went with the A32X family and are now in dire straits. Am I crazy?


"History does not long entrust the care of freedom to the weak or timid." D. Eisenhower
34 replies: All unread, showing first 25:
 
User currently offlineFlying-Tiger From Germany, joined Aug 1999, 4165 posts, RR: 36
Reply 1, posted (12 years 4 months 2 weeks 2 days 22 hours ago) and read 2578 times:

Forget SR and SN as an example. SR ordered its first Airbus when they were financially very well off and continued to build its fleet around the A320 and later the A330. They did not burn their money with their fleet decisions but with their alliance strategy (buying insolvent airlines and pumping billions intothem) and in the end their obligation ate them. SN was one of these obligation, this carrier has never been able to produce continuing profits, neither with a Boeing nor with an Airbus fleet. In the end they had decided to grow too large too soon and burned their money too fast.

US is no example, too, they had 2 of every type from the large nnumber of mergers and Airbus just made the better dealto replace this mix. I don´t see the reason why US wouldn´t be in the same situation if they had gone with the B737NG.

Regards
Flying-Tiger
http://fly.to/rorders



Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
User currently offlineRick767 From United Kingdom, joined Jan 2000, 2662 posts, RR: 51
Reply 2, posted (12 years 4 months 2 weeks 2 days 22 hours ago) and read 2564 times:

A more simple explanation would be that airlines who are not doing very well will go for the cheapest deal on new aircraft (Airbus).

The fact that they go bust or don't perform very well is irrelevant - they were going to anyway.

So it's not that they thought Airbuses would operate more cheaply (they probably do, and even if they don't they aren't that different from Boeings) but it was that they were cheaper to buy / lease.



I used to love the smell of Jet-A in the morning...
User currently offlineTravelin man From United States of America, joined Mar 2000, 3529 posts, RR: 0
Reply 3, posted (12 years 4 months 2 weeks 2 days 22 hours ago) and read 2528 times:

Actually, I don't think it's an Airbus issue. I think the common thread is that struggling airlines think that somehow large fleet replacement programs are a salvation out of bad managerial decisions. Heck, Sun Country and Midway were purchasing 737NGs when they went bankrupt.

The argument should potentially be that large fleet replacement programs are no panacea when you are hemoragging cash, and perhaps you should streamline operations rather than buy lots of new aircraft.


User currently offlineGerardo From Spain, joined May 2000, 3481 posts, RR: 31
Reply 4, posted (12 years 4 months 2 weeks 2 days 21 hours ago) and read 2479 times:

Struggling airlines have to cut costs and to show, that they are still able to react. Unfortunately, not all costs can be cut fast enough. You can't resize your fleet and fire workforce. Sabena is a good example for that. So, they perhaps think, by placing an order to replace their older fleet with efficient new aircraft (Airbus or Boeing) with most probably a leasing contract they try to show, they are still able to take their chances. TWA with their B717/A318 order comes to mind.

Gerardo



dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
User currently offlineSabena 690 From , joined Dec 1969, posts, RR:
Reply 5, posted (12 years 4 months 2 weeks 2 days 21 hours ago) and read 2438 times:

@Flying-Tiger:

Forget SR and SN as an example. SR ordered its first Airbus when they were financially very well off and continued to build its fleet around the A320 and later the A330. They did not burn their money with their fleet decisions but with their alliance strategy (buying insolvent airlines and pumping billions intothem) and in the end their obligation ate them. SN was one of these obligation, this carrier has never been able to produce continuing profits, neither with a Boeing nor with an Airbus fleet. In the end they had decided to grow too large too soon and burned their money too fast.

Sorry, but here are you making some errors.

SN ordered it's first A340 in 1988.
Than in 1995 SR became the partner airline of Sabena. Some facts:

x SR wanted those Airbusses, not Sabena. Sabena had an enormous Boeing reputation. And SN wanted to stay flying with Boeing!! But the SR management wanted Airbus aircrafts for fleet harmonisation, and under their high pressure, the SN management agreed, although it was prooved that Boeing was much cheaper.

x Reutlinger decided that SN had to replace it's whole fleet, and that SN had to highten the number of aircrafts. This was the biggest mistake he could have made. SN only needed some new aircrafts (of course no 34 medium haul aircrafts like ordered) to replace their ageing B732's, the other short and medium haul fleet consisted of B733-734-735. Some aircrafts even weren't 10 years old!! But the mismanagement of SR and SN, and the bad role of our Belgian politicians decided that everything had to be replaced.

(buying insolvent airlines and pumping billions intothem) and in the end their obligation ate them. SN was one of these obligation, this carrier has never been able to produce continuing profits

Sabena was no insolvent airline. If SR had made good decisions, and if SR had been honnest to SN, and if our Belgian politics had opened their eyes, the SN/SR partnership could have been one of the strongest in Europe!!! And BTW: that SR pumped millions into SN, the other thing is true too: SR took millions out of SN.

Regards,
Frederic



User currently onlineOA412 From United States of America, joined Dec 2000, 5309 posts, RR: 25
Reply 6, posted (12 years 4 months 2 weeks 2 days 19 hours ago) and read 2340 times:

I agree that it was not SRs decision to buy Airbus, per se but its ridiculous alliance strategy that did them in. As others have noted, SR purchased Airbus when it was still doing very well financially. It went into the toilet some years after buying the A320s. Regarding the alliance strategy, the funniest line I have ever heard was in this months issue of Airliner World. It said that Bruegisser's logic was good enough, but what he never explained was how a bunch of losers (not SR mind you but the airline's it purchased stakes in) would translate into a winner. 20/20 hindsight is great but, it really doesn't take a financial genius to realize just how disastrous SRs strategy really was.


Hughes Airwest - Top Banana In The West
User currently offlineThe Coachman From Australia, joined Apr 2001, 1429 posts, RR: 0
Reply 7, posted (12 years 4 months 2 weeks 2 days 16 hours ago) and read 2257 times:

If you're running out of money, you don't order aircraft! Streamlining is normal and necessary in today's world.


M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
User currently offlineDonder10 From Canada, joined Oct 2001, 6660 posts, RR: 21
Reply 8, posted (12 years 4 months 2 weeks 2 days 16 hours ago) and read 2238 times:

Agree Coachman!ARG (Argentinian)is replacing 73Gs with 732s as to reduce costs!Perhaps US Airways could learn a trick ?

User currently offlineBWIA 772 From Barbados, joined May 2002, 2200 posts, RR: 2
Reply 9, posted (12 years 4 months 2 weeks 2 days 15 hours ago) and read 2206 times:

This might not be the best example but I will use it anyway.

BWIA after privitisation had a number of fleet replacement programmes but were all ditched at the last moment. The 2 340s they ordered to replace 4 L1011 were cancelled weeks before delivery this was in 1997, they also had 2 320s for a short period in 1996 but were re leased to Air Alfa (apprently the airline had no money) BWIA therefore had to stream line its operation with it 4 L1011 and 5 Md 83s and made a profit in 1998 and then made plans for a fleet renewal programme which saw 737Ngs intorduced in 1999-2000 and was on profitable up to september 2001 after the events that rocked the industry.



Eagles Soar!
User currently offlineHkgspotter1 From Hong Kong, joined Nov 2005, 0 posts, RR: 0
Reply 10, posted (12 years 4 months 2 weeks 2 days 15 hours ago) and read 2192 times:

What a load of rubbish, one of the most stupid post I've seen in a long while.

As for Airbus planes being cheap HA !!, Boeing are now trying to give planes away just to keep up with the competition. Why do you think Midwest Express got the 717 ?, they wanted the A318.


User currently offlineDynkrisolo From United States of America, joined Feb 2001, 1866 posts, RR: 7
Reply 11, posted (12 years 4 months 2 weeks 2 days 15 hours ago) and read 2180 times:

This hypothesis isn't very sound, is it? If it's true, Lufthansa should have been gone by now, shouldn't they?

Hkgspotter1, your Midwest Express speculation is totally baseless. In fact, one of the factors that Midwest Express ordered the B717 is because they prefer the narrower fuselage of the B717. The narrower fuselage is ideal for their luxurious seating of four across the cabin. Boeing might be selling the B717 dirt cheap to attract customers, but Airbus is also selling their A318 dirt cheap to attract customers. The argument goes both way. Somehow, you just want to believe Boeing is selling their planes dirt cheap on some of the deals, but you refuse to believe Airbus is doing the same thing.


User currently offlineBa777-236 From Canada, joined Oct 2001, 674 posts, RR: 4
Reply 12, posted (12 years 4 months 2 weeks 2 days 15 hours ago) and read 2169 times:

I think it just seems that airlines that order new Airbus fleets are going bankrupt. Here in Canada, Canada 3000 was thriving in the charter market, they ordered several A330's and started scheduled service and last October they flopped Sad But I just believe it's a bad coincidence.


I like British Airways! I'm not sure why, but I do! ;-)
User currently offlineN949WP From Hong Kong, joined Feb 2000, 1437 posts, RR: 1
Reply 13, posted (12 years 4 months 2 weeks 2 days 14 hours ago) and read 2155 times:

Perhaps some of those struggling airlines were wishing that an image makeover (with new planes, perhaps a new livery too) can change the travelling public's perception of them being "struggling", thus boosting confidence and bookings.

It's interesting to see how this discussion has remained civil for so long, until inevitably someone lit the A vs. B fuse.

'949


User currently offlineCedarjet From United Kingdom, joined May 1999, 8145 posts, RR: 54
Reply 14, posted (12 years 4 months 2 weeks 2 days 14 hours ago) and read 2151 times:

I have also been giving this much thought over the last few weeks, the obvious example alongside Swissair and Sabena is of course Aer Lingus, who are in dire straights and may not be around very much longer. But I can't really see a reason for the pattern which is undeniable, maybe a new Airbus fleet is extravagent when the ink is running red but no-one buys jets with cash, they're bought by merchant banks and lease-owned for 20 year terms etc. And a new fleet (especially, dare I say it, Airbus) will be a lot more fuel efficient than 15 year old 737s, 747 classics etc.

Sabena 690, I have to take issue with your statement that Sabena and Swissair could have been the "strongest airline group in Europe" if Swissair had been more honest or whatever. I don't know what possessed Swissair to embark on the path a more perceptive contributor described as "buying bankrupt airlines and pumping millions of dollars into them", but I DO know that Sabena hadn't made a profit since 1959 and was in useless shape, disliked by passengers and a massive financial burden to anyone who came near (didn't BA look into buying some of SN about ten years ago to establish a joint hub at Brussels, before recoiling in horror?). I'm sorry to be so critical but the idea of an airline that had been unprofitable for 43 straight years being part of the strongest airline group of anywhere (let alone Europe) is frankly impossible, and it is the worst form of denial think otherwise. The only mistake Swissair made was getting involved in the first place, and not withdrawing sooner. As has been said above, Swissair were a viable operation, much respected around the world and loved by the classiest members of the travelling public. Pissing about with the likes of Air Outre Mer, Portugalia and their bete noir, Sabena, was what killed them.



fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
User currently offlineThe Coachman From Australia, joined Apr 2001, 1429 posts, RR: 0
Reply 15, posted (12 years 4 months 2 weeks 2 days 14 hours ago) and read 2125 times:

Yeah, add QF into the mix.

12 x A380's, 7 x A330-200's and 6 x A330-300's.

I wouldn't call that a small order...and QF is by no means financially insecure (in airline terms anyway).



M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
User currently onlineOA412 From United States of America, joined Dec 2000, 5309 posts, RR: 25
Reply 16, posted (12 years 4 months 2 weeks 2 days 12 hours ago) and read 2086 times:

The only mistake Swissair made was getting involved in the first place, and not withdrawing sooner. As has been said above, Swissair were a viable operation, much respected around the world and loved by the classiest members of the travelling public. Pissing about with the likes of Air Outre Mer, Portugalia and their bete noir, Sabena, was what killed them.

EXACTLY!!!!! To this day, I still cannot believe that an outfit as classy, well respected, and much beloved as SR would get in bed with the likes of SN, AOM, Air Liberte, TAP, etc., etc. nevermind the fact that their own arrogance would lead them to allow these loss making carriers to blead them dry. What the hell were they thinking?



Hughes Airwest - Top Banana In The West
User currently offlineReggaebird From Jamaica, joined Nov 1999, 1176 posts, RR: 0
Reply 17, posted (12 years 4 months 2 weeks 2 days 12 hours ago) and read 2071 times:


Midwest Airlines bought the B717 because it met their performance demands and the price was right. Besides, the Airbuse A318 is just too heavy. It's seat/mile costs are the highest for 100-seater aircraft.


User currently offline9V-SVE From Singapore, joined Nov 2001, 2066 posts, RR: 2
Reply 18, posted (12 years 4 months 2 weeks 2 days 11 hours ago) and read 2049 times:

HKGSpotter1, I wish that you post as good as when you post in the Project Airbus forums!

User currently offlineGerardo From Spain, joined May 2000, 3481 posts, RR: 31
Reply 19, posted (12 years 4 months 2 weeks 2 days 10 hours ago) and read 2013 times:

SN690: Don't you forget a few facts? Guilty according to you: SR and Belgian government. Of course not SN management, not the striking employees, not the unions and so on.

Now, give your best shot, although, I won't answer anymore  Smile/happy/getting dizzy

Gerardo



dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
User currently offlineUdo From , joined Dec 1969, posts, RR:
Reply 20, posted (12 years 4 months 2 weeks 2 days 9 hours ago) and read 2003 times:

Wow, what a wise philosophy...CX showed us his latest theory.
CX, have you ever spent only an hour in a statistics class? That would have taught you that few examples (to say it precise: three) for a certain development do not justify a general conclusion.

And, come on, the three examples which you chose are just ridiculous. US Airways was already doing bad before the Airbus order. And some of their disastrous adventures (such as Metrojet) can not be related to the Airbus fleet. And if they can still find the straw to survive, then it will be at a certain extent be caused by the new and economic Airbus fleet.
Swissair's fault was not its fleet (which by the way has done a great job regarding economics, except for the MD-11) but its policy of buying financially troubled or almost dead airlines like Sabena, Air Liberte, Air Littoral, TAP, LTU or whatever broke their neck.
Sabena would have crashed even earlier without SR’s, at a time when they didn’t have any Airbusses yet.

Ok, tell us more examples! We want to see you feeding your theory…I fear you cannot. But I can name some airlines which are doing very well after large Airbus orders…Lufthansa, Iberia, Air France, Northwest, JetBlue, Emirates, TAM Brasil, America West, Frontier, TACA, bmi, Qatar, Cathay Pacific, Korean Air, Thai and so on…

Do you really think a fleet mix of F28, F100, MD-81/82, B732, B733, B734, B727, B757 and B762 can be operated more economically than a mix of A319/A320/A321/A330? Have you ever thought about the possibility that US might have bought to much of something in a situation when buying to much of ANYTHING is a fault?

Maybe you have the chance to visit a statistics class one day…if you present your theory there expect a loud laughter following immediately…
Maybe the time for a new theory? What about “Flying Airbus creates headache”, “Airlines ordering Airbus offer worse meals”, or “Relation between A318 orders and damages on bikes in Antananarivo” ???  Laugh out loud


Regards
Udo


User currently offlineCX747 From United States of America, joined May 1999, 4454 posts, RR: 5
Reply 21, posted (12 years 4 months 2 weeks 1 day 14 hours ago) and read 1863 times:

I'm glad to see that the discussion hasn't hit rock bottom yet! It's just a little theory I have been floating around in my head. Thanks for your two Euros Udo, knew I could count on you. As for sitting through a statistics class, yes I have. Just graduated out of a prestigous University, and if you read the original post, you would see that I am talking about carriers that are in financial difficulties. Also, didn't I state that they order a large amount of aircraft? Possibly to much for them to afford? I don't think that the reason the companies I have discussed went bankrupt was because they operate Airbus aicraft, but because of the finacial constraints that the Airbus deal put them in. Believing that a new fleet of aircraft can solve the problem when they can't. As for other examples, I guess we can add Pan Am and Braniff! As for America West doing financially sound, I doubt it. I was just out in Phoenix, and I believe that they have a huge loan right now just to stay afloat. Their livery is pretty intereting though. I like how it looks on the A319 and 737-200s!

Also, do I think that a new fleet of A32Xs can operate more efficiently than a mixed fleet like U.S. has? Definately, but if your company goes bankrupt while making the switch, then it really hasn't helped you now has it?



"History does not long entrust the care of freedom to the weak or timid." D. Eisenhower
User currently offlineAussie_ From Australia, joined Dec 2000, 1766 posts, RR: 5
Reply 22, posted (12 years 4 months 2 weeks 1 day 14 hours ago) and read 1858 times:

Don't forget the reincarnation of Ansett (Fox/Lew) had signed for 20 A32Xs (I think)....

Never got off the ground...

Kiwi Airlines (NZ version) collapsed after they introduced A320s. Phillipine Airlines shut down for a while with their new fleet of A330s and A340s. Air Lanka survived but got much of its new Airbus widebody fleet smashed into pieces during the attack on Colombo Airport...

That said, it is all coincidence and just a bit of fun... Many of these airlines had Boeing planes too. Impulse for example flew a new fleet of 717s...


User currently offlineGr8SlvrFlt From United States of America, joined Jan 2002, 1608 posts, RR: 10
Reply 23, posted (12 years 4 months 2 weeks 1 day 13 hours ago) and read 1834 times:

I think we're on to something here. Braniff (II) and Pan Am both ordered large Airbus fleets before their respective demises. Wink/being sarcastic

User currently offlineBoeing in pdx From , joined Dec 1969, posts, RR:
Reply 24, posted (12 years 4 months 2 weeks 1 day 13 hours ago) and read 1829 times:

Udo,

America West is not doing good. They are living on the Goverment.


25 IMissPiedmont : What? I'm just more than a bit confused. This seems to have degenerated to a rather silly question to even sillier responses. Airbus has only been aro
26 Boeing in pdx : because it's not a word.
27 DeltaBoy777 : Since I am a Boeing guy, I will not comment on this. Although buying alot of Airbus before going bankrupt has nothing to do with the orders just bad j
28 David_mx : In the Mexican side, MX is replacing their 727's with A320, their 727's were the MX workhorse for 20 years, and they are really happy with their A320
29 Boeing in pdx : who cares about Mexicana. AeroMexico will always rule mexicos skys!
30 David_mx : Boeing: As a Mexican I care, and every Mexican should because basically MX and AM, including their regionals, and SEAT (ground support) are the very s
31 N79969 : This is a good illustration of the concept of causation versus correlation. I do not believe that buying Airbus aircraft is a sign of financial distre
32 Udo : If we take EK's upcoming additional A380 orders into consideration we could even add simultaneous stabbing to the cyanid and the bullet... Causation v
33 N79969 : If you add the 2 A330s that were announced this week- they set themselves on fire as well.
34 A388 : I just find this whole post being ridiculous. An airline's demise doesn't have anything to do with the fleet renewal programmes (of any size). It's ba
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