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EA CO AS
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Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 3:37 am

Just speculation, of course, but this article shows where tax reform may have given AS another reason to order Boeing aircraft to replace the former VX fleet:

https://www.fool.com/investing/2018/01/ ... a-air.aspx

Fair-use excerpt:

One key provision of the recent tax-reform bill makes the prospect of buying lots of airplanes in the next few years much more appealing. From 2018 until 2022, companies will be able to deduct the cost of capital expenditures (capex) immediately for tax purposes. This provision will then phase out gradually over the following five years. Thus, it would be possible for Alaska Air to replace the bulk of its Airbus fleet in the 2021-2023 time frame. For the first two years, it would be able to fully expense its fleet expenditures, while in 2023, it could expense 80% of the cost.

Including Alaska Air's normal capex costs, this could reduce the carrier's cash tax bill to nearly zero in those years. In other words, the tax bill will make it much easier for Alaska Air to afford a major fleet overhaul in the next few years.


While no decision has been announced, it's likely this is a big consideration for 737 MAX10s or even a MoM/NSA, once Boeing firms up a design.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 3:51 am

Or it could buy Airbus or Cseries or ......

Why does it need to be Boeing ?
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
BoeingGuy
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 3:51 am

zeke wrote:
Or it could buy Airbus or Cseries or ......

Why does it need to be Boeing ?


Because AS has found a single fleet to be beneficial and they have mostly 737s in their fleet.
 
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cpd
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:00 am

BoeingGuy wrote:
zeke wrote:
Or it could buy Airbus or Cseries or ......

Why does it need to be Boeing ?


Because AS has found a single fleet to be beneficial and they have mostly 737s in their fleet.



All the more reason to replace all those ancient 737 aircraft with far more modern Airbus ones. :duck:

Kidding aside, they could do just that.
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:01 am

Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.
Last edited by zeke on Wed Jan 03, 2018 4:04 am, edited 1 time in total.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
wedgetail737
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:01 am

AS did entertain offers from Airbus prior to committing to the 737 MAX aircraft. And I would assume that AS would order more 737 MAX 9's and perhaps MAX 10's?
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:05 am

zeke wrote:
Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.


I’d say you’re the one doing the knocking and showing bias. Since AS chose to go with a large all 737 fleet prior to the VX merger - and was profitable doing so - it’s a reasonable guess that they may wish to eventually standardize on the 737 again. Sorry if that distresses you.
 
wedgetail737
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:05 am

Even if AS ordered another big set of 737 MAX jets, it would be a couple of years before they would take delivery of those airplanes.
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:11 am

BoeingGuy wrote:
I’d say you’re the one doing the knocking and showing bias. Since AS chose to go with a large all 737 fleet prior to the VX merger - and was profitable doing so - it’s a reasonable guess that they may wish to eventually standardize on the 737 again. Sorry if that distresses you.


I have shown no bias, all I have stated is there is no reason it could not be Airbus, that is different from
making up contrived reasons why it has to Boeing.

As they say in the returns for all public companies, historical performance does not guarantee future performance.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
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ikolkyo
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:15 am

zeke wrote:
BoeingGuy wrote:
I’d say you’re the one doing the knocking and showing bias. Since AS chose to go with a large all 737 fleet prior to the VX merger - and was profitable doing so - it’s a reasonable guess that they may wish to eventually standardize on the 737 again. Sorry if that distresses you.


I have shown no bias, all I have stated is there is no reason it could not be Airbus, that is different from
making up contrived reasons why it has to Boeing.

As they as in the returns for all public companies, historical performance does not guarantee future performance.



Good choice in editing out that Al Jazeera link, we have seen the past airlines that inherit another fleet type that wasn't in line with their fleet plan before hand they simply phase them out over time. A good example would be WN phasing out AirTran's 717s with used 737-700s. The reason it wouldn't be Airbus in this case is because that is a much smaller fleet compared to the existing Alaska 737 fleet and orderbook. Just my 2 cents.
 
QXAS
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:17 am

Boeing may also have better short term availability, especially within the US. I’m guessing that Mobile is probably pretty booked with all of the US carriers that have booked orders with Airbus and the sheer size of those orders. I want AS to buy MAX 7 for 73G and 319 replacements. There must be places in the AS network that warrant a jet smaller than MAX 8. AS also has 12 non ER 900s that will need replacement probably between 2020 and 2025. Airbus could potentially sell some A321NEOs to replace them. Unless the incoming MAX 9 will replace them. I hope AS goes with a mixed fleet so that they can optimize routes. I think they’ll be big enough that it will be economical.
 
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atcsundevil
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:22 am

Please stick to the topic without an Airbus vs. Boeing flame war...again. Just keep to the facts and try to have a productive discussion.

✈️ atcsundevil
 
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EA CO AS
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:30 am

zeke wrote:
Still no reason why that fleet could not be Airbus.


True, although fleet commonality is a money-saver; just look at WN.

zeke wrote:
Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.


Hogwash, I actually really like Airbus products as well, and hope to see at least the A321NEOs stay in the fleet. This article gave some compelling reasons why AS might choose to buy new planes, however, and if they do, I'd put the odds substantially in Boeing's favor.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:45 am

ikolkyo wrote:
Good choice in editing out that Al Jazeera link, we have seen the past airlines that inherit another fleet type that wasn't in line with their fleet plan before hand they simply phase them out over time.


Sorry Sir that is a lie, I made no such edit. The post I quoted and my reply has been deleted.

If you have an issue with that take it up with moderates@airliners.net

I edited my post to change a typo from “as” to “say”.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
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ikolkyo
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:53 am

zeke wrote:
ikolkyo wrote:
Good choice in editing out that Al Jazeera link, we have seen the past airlines that inherit another fleet type that wasn't in line with their fleet plan before hand they simply phase them out over time.


Sorry Sir that is a lie, I made no such edit. The post I quoted and my reply has been deleted.

If you have an issue with that take it up with moderates@airliners.net

I edited my post to change a typo from “as” to “say”.


I don't have an issue at all, good that it was deleted.
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:02 am

EA CO AS wrote:
Hogwash, I actually really like Airbus products as well, and hope to see at least the A321NEOs stay in the fleet. This article gave some compelling reasons why AS might choose to buy new planes, however, and if they do, I'd put the odds substantially in Boeing's favor.


My understanding is they have around 150 737s with over 70 A320 series in service or on order. Plus around 20 ERJ-175s.

The basis of the article was to the capex tax reforms. If they decide to use those A320 series on order to replace 737s and they could use the capex tax provisions buy another 100 American made combination of A320/A321 and Cseries.

Equally they could end up with a fleet Boeing 737 and Boeing 175s, however that would have less of a capex tax advantage.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
kabq737
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:13 am

zeke wrote:
Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.


Thanks for the common sense Zeke. If AS has a single ounce of common sense they won't care who makes the aircraft they will care how it performs under their operational conditions.
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:32 am

kabq737 wrote:
zeke wrote:
Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.


Thanks for the common sense Zeke. If AS has a single ounce of common sense they won't care who makes the aircraft they will care how it performs under their operational conditions.


AS is moving away from the 73G/A319 size. They have more 738s than A320, but the majority of VX fleet is A320s.. The a321 will be 10 frames, vs many 739s (that they have said meet their network better). This tax bill does create an opportunity for capital investment (airplanes). Maybe they will order more Airbus planes. But what ones?

Seems like a top-up order for 738Max could take care of the A320CEOs. Maybe transfer the Airbus options to the A321 to build out that fleet so it is economical (beyond the 10 they will have). Will be interesting to see, how much is sunk into those NEO deposits. Would be cool to see them transfer to A350s, but I think the smaller 788/789 combo would favor AS more if they went the widebody route.

Maybe DL/AA/UA would be in market for some used A320s? I think there are some scenarios where it isn't that far fetched.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:37 am

The tax reform applies to Us-buuilt airplanes, right? Well, there's some Airbus outfit in Alabama churning those out precisely for this kind of reason. AS is just like any other airline: they will buy what works best. EasyJet switched from an all-Boeing to an all-Airbus fleet. Let the bidding begin.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:41 am

AS has already made decisions about their future fleet & it exclusively favors Boeing, that isn't anything but factual, it isn't a bash at Airbus nor anything other than what will happen.

AS would not ever benefit from the fullest range of the A-321 fully, nor does AS use pallet loading, two selling points for the A-321, AS's longest segments are 6 hours & the 737-800 can make that with headwinds & full of fuel & passengers. The A-321 will get more testing to it's limits with say, HA.

AS has many 737 Max aircraft on order, by the time those are all delivered, there will be even a greater difference between the number of Boeings v Airbus on property. the current A-319 & A-320 Airbi will be going back to lessors when the leases are up & after the Max 9's come on board & likely the Max 10, there will be little need for the A-321 in the AS fleet with similar projected performance.

Fleet commonality is one great way to keep expenses down at a carrier the size of AS, which is why I doubt AS wants a mixed fleet moving forward, just like WN & for the most part B6.

And for those 3 reasons & likely more that I am not privy to, is why AS will go with the 737 line now & for the foreseeable future, I bet AS is a launch customer for the 797 MoM.
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:45 am

Wouldn't be surprised by further MAX orders to replace leased VX A320s, more A321NEO orders and yet more E175. We'll see!
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:57 am

zeke wrote:
EA CO AS wrote:
Hogwash, I actually really like Airbus products as well, and hope to see at least the A321NEOs stay in the fleet. This article gave some compelling reasons why AS might choose to buy new planes, however, and if they do, I'd put the odds substantially in Boeing's favor.


My understanding is they have around 150 737s with over 70 A320 series in service or on order. Plus around 20 ERJ-175s.

The basis of the article was to the capex tax reforms. If they decide to use those A320 series on order to replace 737s and they could use the capex tax provisions buy another 100 American made combination of A320/A321 and Cseries.

Equally they could end up with a fleet Boeing 737 and Boeing 175s, however that would have less of a capex tax advantage.


Alaska's 737 fleet is mostly owned and is only 8 year's old on average. VX's A320 fleet is leased and those leases start expiring in 2019. Alaska hasn't made it any secret that they've been impressed with the A321NEO, but that they are less than thrilled with the smaller 'Bus's stacked up against the 738. It isn't unrealistic to say that the A321NEO may find a long term home with AS, but to somehow present an Alaska fleet order to take advantage of this tax opportunity as an "equal" proposition between the 737 and the A320/CSeries with a similar likelihood of either occurring is off the mark.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:05 am

BoeingGuy wrote:
zeke wrote:
Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.


I’d say you’re the one doing the knocking and showing bias. Since AS chose to go with a large all 737 fleet prior to the VX merger - and was profitable doing so - it’s a reasonable guess that they may wish to eventually standardize on the 737 again. Sorry if that distresses you.


Also on the Airbus side they had never actually operated them & switching without trained pilots would be a big cost. Now they are getting operational data & pilots on both platforms. Would reduce the cost if they chose to do it. However being Seattle based it could have political & personal consequences. So most likely they will stay Boeing, but not because it is for sure the better platform.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:09 am

I think it is much more interesting to reduce the remaining mad dog fleets than for AS going all Boeing again, especially as the buses are leased and ending the lease early comes with a penalty.
 
mast2407
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:52 am

Oh yay... another AvB thread... awesome.

Why can’t we get along guys n gals...
 
mjoelnir
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 8:18 am

The tax opportunity is a bit over emphasised. You invest and you are able to write of the investment faster. Writing off investments faster lowers your profit and that again lowers your taxes. Historically US airlines have not been interested in writing of their investments fast, but rather in keeping up their profits. The other drawback is, you can not lease the frames, a good way to keep CAPEX low.
 
d8s
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 8:23 am

zeke wrote:
Or it could buy Airbus or Cseries or ......

Why does it need to be Boeing ?


Or they could buy some C919's and SSJ's? Why does it always have to be Airbus or the C Series?
 
mjoelnir
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 9:19 am

Here is a thread that is set up by the Topic author as part of the A versus B war, how should it be possible to discuss this topic without going to A versus B?

Apart from that, I would not be astonished if AS decides to go all Boeing and get rid of the Airbus. But there are some buts.
- Is AS prepared to lower profits by writing off big investments fast to lower taxes?
- Will they be able to get 737MAX that fast, especially 737-10, to replace the A321?
- As AS does not only got Airbus frames, but also Airbus crew, it will cost extra to retrain them for Boeing.
- What if aircraft usage shows, that there is some economical advantage to keeping the Airbus fleet?

The for me logical thing to happen, is AS replacing outgoing A320/A219 with incoming 737-8.
But the average fleet age is for the A319 is only 10.3 years and for the A320 only 7.3 years. I do not know how long the leasing contracts run, but even at 12 years we will not see a fast replacement. The other possibility would be exchanging A320 leasing contracts for 737 leasing contracts, but to take advantage of the tax reform I think you have to buy.

Regarding the A321neo coming in new, I only see it as a bad solution not to take them. They fall under the same tax provisions as the 737 would and it could be rather expensive not to take them. AS could of course not use them themselves, lease them out or sell them on to an other interested airline and buy 737-10 instead.

My guess is we will not see an all Boeing AS, but rather an airline flying both Boeing and Airbus frames for quite a while. What happens in ten years time is anybodies guess.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 9:45 am

I think it makes sense for AS to sell of the NEO's. The A321NEO's are the hottest deal in town, there is a 5-6 yrs backlog so Alaska prrobably can get a good price for their new ones. Their network / cargo guys might scratch their heads but overall it might be the best decision for Alaska Airlines. Seattle will be flooded with A321's from all over (Delta, Jetblue, Rouge, Frontier, Spirit, American, Hawaiian, Volaris) but I'm sure the 737s will do just as fine!

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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 10:16 am

zeke wrote:
Still no reason why that fleet could not be Airbus. Just another Boeing fanboy thread to have a knock at Airbus for any reason, real or contrived.

To make most use of this situation would be to replace as many aircraft as possible, so the existing fleet plays no part.

Unless of course that is that does not achieve the bias agenda.


Fleet commonality, being seen to support the hometown industry... these are two reasons to support one manufacturer over the other. As reasons, do they count as "bias"? I do not know. It probably is bias, if, all other things considered, Alaska use those two reasons to choose manufacturer B over A when A's products would otherwise be cheaper to own and operate for them.

But then again, only AS management can say if there is a financial benefit of A over B for them and their network - or indeed, of B over A.

I do not know how important to the local north western market and Alaska's position in it, Alaska's hitherto very visible support of Boeing is. That, I think, is the interesting question. Let's see what happens when Alaska paints the Airbii in AS colours and see if there is any revolt.

I suspect most passengers will not even notice.
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WIederling
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 11:20 am

zeke wrote:
I have shown no bias, all I have stated is there is no reason it could not be Airbus, that is different from
making up contrived reasons why it has to Boeing.


Tax reductions.
No funny little clause that this is only possible for local market purchases?
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JayWings
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 3:51 pm

Alaska is going to make the choice on whether or not to keep a mixed mainline fleet of Airbus and Boeing based on one thing... cost. If the cost of having a mixed fleet is worth the benefits of having both aircraft types, they will stay. In my opinion, the only Airbus I could see having a legitimate chance of staying long term and getting additional orders is the A321 NEO. That’s not because the A319/20/21 are inferior, or that AS is blinded by love for Boeing or any A vs B bull... just simply that Alaska has committed to the 737 as the bread and butter of their operations. They will continue to gage the performance of the NEO and the 319 and 320 fleets and whatever call they make will have a solid business case behind it.
 
BoeingGuy
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 4:39 pm

mast2407 wrote:
Oh yay... another AvB thread... awesome.

Why can’t we get along guys n gals...


The tread title is "....quickly replaces Airbus with Boeing". What do you expect?

This is actually an interesting topic. It will be interesting to see what AS decides to do for their fleet.
 
IPFreely
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:00 pm

mjoelnir wrote:
Here is a thread that is set up by the Topic author as part of the A versus B war, how should it be possible to discuss this topic without going to A versus B?


You are attributing this to the OP very unfairly. He was just posting a link to an article speculating what Alaska might do based on the new tax laws. If you have a problem with a pro Boeing or pro Airbus bias, your problem is with the author of the article, not the OP.

In fairness to the author of the article, he drew a reasonable conclusion. Not that long ago Alaska decided an all-Boeing fleet was the best option for them vs. a mixed fleet or an all-Airbus fleet. Now that they’ve inherited Airbus planes via acquisition they can re-evaluate all-Boeing vs. mixed vs. all-Airbus. If you ask yourself what has changed that would lead Alaska to a different decision today, the answer is probably not much.
 
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 5:08 pm

mjoelnir wrote:
Here is a thread that is set up by the Topic author as part of the A versus B war, how should it be possible to discuss this topic without going to A versus B?

Apart from that, I would not be astonished if AS decides to go all Boeing and get rid of the Airbus. But there are some buts.
- Is AS prepared to lower profits by writing off big investments fast to lower taxes?
- Will they be able to get 737MAX that fast, especially 737-10, to replace the A321?
- As AS does not only got Airbus frames, but also Airbus crew, it will cost extra to retrain them for Boeing.
- What if aircraft usage shows, that there is some economical advantage to keeping the Airbus fleet?

The for me logical thing to happen, is AS replacing outgoing A320/A219 with incoming 737-8.
But the average fleet age is for the A319 is only 10.3 years and for the A320 only 7.3 years. I do not know how long the leasing contracts run, but even at 12 years we will not see a fast replacement. The other possibility would be exchanging A320 leasing contracts for 737 leasing contracts, but to take advantage of the tax reform I think you have to buy.

Regarding the A321neo coming in new, I only see it as a bad solution not to take them. They fall under the same tax provisions as the 737 would and it could be rather expensive not to take them. AS could of course not use them themselves, lease them out or sell them on to an other interested airline and buy 737-10 instead.

My guess is we will not see an all Boeing AS, but rather an airline flying both Boeing and Airbus frames for quite a while. What happens in ten years time is anybodies guess.

:checkmark:
Much better, thank you.
IPFreely wrote:
You are attributing this to the OP very unfairly. He was just posting a link to an article speculating what Alaska might do based on the new tax laws. If you have a problem with a pro Boeing or pro Airbus bias, your problem is with the author of the article, not the OP.

In fairness to the author of the article, he drew a reasonable conclusion. Not that long ago Alaska decided an all-Boeing fleet was the best option for them vs. a mixed fleet or an all-Airbus fleet. Now that they’ve inherited Airbus planes via acquisition they can re-evaluate all-Boeing vs. mixed vs. all-Airbus. If you ask yourself what has changed that would lead Alaska to a different decision today, the answer is probably not much.

Intention or not it ends up being flame bait anyway when A vs B and the word replace is used in the title. It’s a tricky topic to touch on without causing that. AS has changed a lot though. Over the course of the merger much has changed that could lead Alaska to a different decision such as meting a much larger airline now and one that already has both type in its fleet and on order. That’s huge.
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:21 pm

IPFreely wrote:
In fairness to the author of the article, he drew a reasonable conclusion. Not that long ago Alaska decided an all-Boeing fleet was the best option for them vs. a mixed fleet or an all-Airbus fleet. Now that they’ve inherited Airbus planes via acquisition they can re-evaluate all-Boeing vs. mixed vs. all-Airbus. If you ask yourself what has changed that would lead Alaska to a different decision today, the answer is probably not much.


As a point of order, Alaska chose to inherit those Airbus planes.
They didn't buy out VA and then go "oh sh*t - they appear to operate Airbuses".
The operation of the Airbuses was a decision, every bit as much as the all-Boeing fleet once was.
What has changed? They now actually operate Airbus planes.
Whether that leads them to a different decision is another question.

Rgds
 
mast2407
Posts: 84
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:26 pm

BoeingGuy wrote:
mast2407 wrote:
Oh yay... another AvB thread... awesome.

Why can’t we get along guys n gals...


The tread title is "....quickly replaces Airbus with Boeing". What do you expect?

This is actually an interesting topic. It will be interesting to see what AS decides to do for their fleet.


Yup, it is. The mods removed a chunk of posts that I was referring to, so they may want to remove this post too.

I agree, it is interesting, when you look at policies regarding how airlines upgrade aircraft, it’s just not helpful when people are taking chunks out of one another for having a preference, or start taking chunks out of airlines for preferring one or the other. Academic discussion is good, personal goal scoring is really not.
 
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flybynight
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:39 pm

RWA380 wrote:
AS has already made decisions about their future fleet & it exclusively favors Boeing, that isn't anything but factual, it isn't a bash at Airbus nor anything other than what will happen.

AS would not ever benefit from the fullest range of the A-321 fully, nor does AS use pallet loading, two selling points for the A-321, AS's longest segments are 6 hours & the 737-800 can make that with headwinds & full of fuel & passengers. The A-321 will get more testing to it's limits with say, HA.

AS has many 737 Max aircraft on order, by the time those are all delivered, there will be even a greater difference between the number of Boeings v Airbus on property. the current A-319 & A-320 Airbi will be going back to lessors when the leases are up & after the Max 9's come on board & likely the Max 10, there will be little need for the A-321 in the AS fleet with similar projected performance.

Fleet commonality is one great way to keep expenses down at a carrier the size of AS, which is why I doubt AS wants a mixed fleet moving forward, just like WN & for the most part B6.

And for those 3 reasons & likely more that I am not privy to, is why AS will go with the 737 line now & for the foreseeable future, I bet AS is a launch customer for the 797 MoM.


I agree with this 100%. I actually like seeing the nix of planes with A&B, but from a business perspective and cost perspective I find it likely AS will stay mostly Boeing. The A321 might be a better overall plane, but not so much as to make a sizable difference.
Also, we don't know what deals AS is getting to stay with Boeing. With both companies calling Seattle home (yeah, Boeing is Chicago-based on paper) there could be extra monatary incentives that none of us geeks know about. We do not know what goes on behind closed doors.
And the 797 - AS will be all over that.
Heia Norge!
 
cledaybuck
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:42 pm

Does either A or B have many narrowbody slots open between now and 2022?
 
axiom
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 6:51 pm

astuteman wrote:
IPFreely wrote:
In fairness to the author of the article, he drew a reasonable conclusion. Not that long ago Alaska decided an all-Boeing fleet was the best option for them vs. a mixed fleet or an all-Airbus fleet. Now that they’ve inherited Airbus planes via acquisition they can re-evaluate all-Boeing vs. mixed vs. all-Airbus. If you ask yourself what has changed that would lead Alaska to a different decision today, the answer is probably not much.


As a point of order, Alaska chose to inherit those Airbus planes.
They didn't buy out VA and then go "oh sh*t - they appear to operate Airbuses".
The operation of the Airbuses was a decision, every bit as much as the all-Boeing fleet once was.
What has changed? They now actually operate Airbus planes.
Whether that leads them to a different decision is another question.

Rgds


A point of order to this point. Alaska chose to eliminate a competitor and to shore up its market share through acquisition. The acquisition landed them a bundle of leases and an orderbook, and was not the primary driver of the acquisition. Let's not overstate the arrival of AB product in SEA.

Now, the question about what comes next is a good one. Fascinating thread.
 
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par13del
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 7:34 pm

zeke wrote:
buy another 100 American made combination of A320/A321 and Cseries.

Since the Mobile plant is just scheduled to produce 40 to 50 a/c per year starting in 2018 and based on the number of a/c on order by the USA carriers, it will be years before
the American made will have any influence on purchase decisions since most of the a/c will have to be made overseas, unless they want delivery 10 years down the road.
I posted the link below in another thread for this same reason, the USA carriers presently operate hundreds of Airbus a/c and the fact that they were all made in Europe did not seem to affect the purchase decision.

http://www.airbus.com/newsroom/press-re ... ility.html
 
Route66
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 7:52 pm

mjoelnir wrote:
Writing off investments faster lowers your profit.......


I am having a hard time understanding that. Can you explain how you think that works under US tax laws?

At any rate, the article clearly states that the immediate capital expenditure deduction is optional.

As a small business owner, I can see how this is an absolute boon for equipment purchasing during profitable years. I didn't know....great news.
 
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JustWingIt
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 8:08 pm

axiom wrote:
astuteman wrote:
IPFreely wrote:
In fairness to the author of the article, he drew a reasonable conclusion. Not that long ago Alaska decided an all-Boeing fleet was the best option for them vs. a mixed fleet or an all-Airbus fleet. Now that they’ve inherited Airbus planes via acquisition they can re-evaluate all-Boeing vs. mixed vs. all-Airbus. If you ask yourself what has changed that would lead Alaska to a different decision today, the answer is probably not much.


As a point of order, Alaska chose to inherit those Airbus planes.
They didn't buy out VA and then go "oh sh*t - they appear to operate Airbuses".
The operation of the Airbuses was a decision, every bit as much as the all-Boeing fleet once was.
What has changed? They now actually operate Airbus planes.
Whether that leads them to a different decision is another question.

Rgds


A point of order to this point. Alaska chose to eliminate a competitor and to shore up its market share through acquisition. The acquisition landed them a bundle of leases and an orderbook, and was not the primary driver of the acquisition. Let's not overstate the arrival of AB product in SEA.

Now, the question about what comes next is a good one. Fascinating thread.


Yeah definitely. AS is headquatered in Seattle, and VX is headquartered somewhere in California, so they definitely were strong competetors operating similar routes from the west coast. Also now that they are together, they really dominate the west coast market.

About the Airbus and Boeing thing, I honestly think AS will keep the Airbus planes in their fleet for now because that would be a huge growth in their fleet in general, but honestly if they make orders for new planes, they would probably stick with Boeing. (Kinda off topic here) DL also was an all Boeing/McDonnell Douglas operator until acquiring NW, and they just kept the Airbus aircraft, which are now proving to be very useful. Before anyone tells me that DL ordered A321neos, they have much more of a market for longer flights than AS, so that makes sense for them. That doesn't quite fit AS though. If the mixed fleet option doesn't happen, then they will probably stick with all Boeing. AS has always been one of Boeing's best customers, and it helps that they both have strong Seattle roots. I don't see all Airbus as a choice they would make, as on the nose of AS 737s, it says "PROUDLY All Boeing"

I can't wait to see how this turns out as I am a seasoned AS flyer. This is definitely an interesting topic
 
Skywatcher
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 8:20 pm

Tax deduction expense and financial statement expense rates for depreciation don't have to be the same. In fact they are often different.
 
Planesmart
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 9:23 pm

Route66 wrote:
mjoelnir wrote:
Writing off investments faster lowers your profit.......


I am having a hard time understanding that. Can you explain how you think that works under US tax laws?

At any rate, the article clearly states that the immediate capital expenditure deduction is optional.

As a small business owner, I can see how this is an absolute boon for equipment purchasing during profitable years. I didn't know....great news.

Profit lower in the year inflated depreciation is deducted - higher in future when no depreciation available.

CEO's on 3-5 year contracts are not usually keen to suppress profits.
 
Bricktop
Posts: 768
Joined: Fri Jan 22, 2016 11:04 am

Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 9:46 pm

Planesmart wrote:
Route66 wrote:
mjoelnir wrote:
Writing off investments faster lowers your profit.......


I am having a hard time understanding that. Can you explain how you think that works under US tax laws?

At any rate, the article clearly states that the immediate capital expenditure deduction is optional.

As a small business owner, I can see how this is an absolute boon for equipment purchasing during profitable years. I didn't know....great news.

Profit lower in the year inflated depreciation is deducted - higher in future when no depreciation available.

CEO's on 3-5 year contracts are not usually keen to suppress profits.

Income per tax and income per books are only loosely related.
 
jbs2886
Posts: 1612
Joined: Wed Apr 01, 2015 9:07 pm

Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 9:57 pm

Bricktop wrote:
Planesmart wrote:
Route66 wrote:

I am having a hard time understanding that. Can you explain how you think that works under US tax laws?

At any rate, the article clearly states that the immediate capital expenditure deduction is optional.

As a small business owner, I can see how this is an absolute boon for equipment purchasing during profitable years. I didn't know....great news.

Profit lower in the year inflated depreciation is deducted - higher in future when no depreciation available.

CEO's on 3-5 year contracts are not usually keen to suppress profits.

Income per tax and income per books are only loosely related.


All correct (FYI, I'm a tax attorney). Depreciation is a tax and accounting concept that is an expense. So for tax purposes, depreciation reduces your taxable income. For example, you have $100 income, $50 expenses excluding depreciation and $10 depreciation expense; you have $40 net income ($60 in expenses total).

Edit to add that you have lower taxable income, but your actual cash flow isn't decreased by depreciation. So you not only don't have that actual cash expense, but you likely have lower taxes. That's why often you see "bonus depreciation" and "accelerated depreciation" as tax policy changes to incentivize capital asset purchases (thus, theoretically, stimulating that part of the economy).

Edit again (I get excited), a lot of countries have taxes on gross income, not net like the United States. So it would make sense why there is some confusion.
 
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zeke
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 10:21 pm

d8s wrote:
Or they could buy some C919's and SSJ's? Why does it always have to be Airbus or the C Series?


I was thinking the impact of the information I read in the “U.S. Dept of Commerce backs Boeing in dispute with Bombardier” thread would equally impact further purchase of non US built jets from Embraer, Mitsubishi, Sukhoi, Comac etc. The arguments put forward by Boeing could be used by other US manufacturers, which also now includes Airbus.

737, A320, and CSeries can be built and purchased in the US. The CSeries will also be assembled in Mobile, Alabama as part of recent announcements which will enable US based airlines to comply with the Dept of Commerce decision when purchasing CSeries.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
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NeBaNi
Posts: 303
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 10:23 pm

mjoelnir wrote:
Here is a thread that is set up by the Topic author as part of the A versus B war, how should it be possible to discuss this topic without going to A versus B?

Apart from that, I would not be astonished if AS decides to go all Boeing and get rid of the Airbus. But there are some buts.
- Is AS prepared to lower profits by writing off big investments fast to lower taxes?
- Will they be able to get 737MAX that fast, especially 737-10, to replace the A321?
- As AS does not only got Airbus frames, but also Airbus crew, it will cost extra to retrain them for Boeing.
- What if aircraft usage shows, that there is some economical advantage to keeping the Airbus fleet?

The for me logical thing to happen, is AS replacing outgoing A320/A219 with incoming 737-8.
But the average fleet age is for the A319 is only 10.3 years and for the A320 only 7.3 years. I do not know how long the leasing contracts run, but even at 12 years we will not see a fast replacement. The other possibility would be exchanging A320 leasing contracts for 737 leasing contracts, but to take advantage of the tax reform I think you have to buy.

Regarding the A321neo coming in new, I only see it as a bad solution not to take them. They fall under the same tax provisions as the 737 would and it could be rather expensive not to take them. AS could of course not use them themselves, lease them out or sell them on to an other interested airline and buy 737-10 instead.

My guess is we will not see an all Boeing AS, but rather an airline flying both Boeing and Airbus frames for quite a while. What happens in ten years time is anybodies guess.

I was going to write up a similar reply to yours, but you did the job much better - thank you! :thumbsup:

I think, as other companies have already alluded to, we will see AS reward its shareholders and employees from the windfall due to tax reform before making any fleet decisions. The only way I see AS going all Boeing, which I think is highly unlikely, is if Boeing comes with a killer deal such that Boeing takes back all the ex-VA Airbus aircraft from AS while supplying the 737NG/737MAX. I think this is higly unlikely for two reasons:
(1) Boeing has a huge backlog on the 737, why would it need to swoop in to replace A32X at AS and deliver 737s at an unreasonable timeframe? If Boeing has/creates additional delivery slots, it would be much better off to sell them to other carriers than a previously mostly Boeing carrier which will expect huge discounts.

(2) While A320s are hot property, Boeing would be competing with lessors and Airbus to place those A320s. Why would Boeing create itself additional headache to place aircraft form a competing manufacturer?

(3) I expect if Boeing comes up with such a plan, AS expects Boeing to cover retraining costs.

(4) It's not like the VA/AS fleet has a lot of slack, especially with the west coast expansion. Replacing a fleet means aircraft out of service at a time they desperately need said aircraft.
 
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coronado
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Re: Tax reform = AS quickly replaces Airbus with Boeing?

Wed Jan 03, 2018 10:31 pm

cledaybuck wrote:
Does either A or B have many narrowbody slots open between now and 2022?



The accelerated depreciation provisions of the new tax law are in effect a big gift to the capital equipment manufacturers. Companies anxious to get production delivery slots in the 2 prime years of the tax law will be less sensitive to the costs if Uncle Sam is effectively subsidizing a larger portion of the Capex. Wherdas right now Boeing and Airbus have been willing to sell 737-900ER and A321 to Delta for the low $40millions, they should be able to command a extra few million in the selling price, in exchange for allocating some of the more favorable, tax wise, delivery slots (2022 and before) to US airlines.

One thing that will be coming into effect in 2019 is that the new US accounting rules will require all leases to to be accounted for within the balance sheet. This is going to make a lot of airlines look a lot worse. I can see a lot of airlines trying to buy aircraft off of existing lease contracts during these next years to take advantage of the accelerated depreciation provisions. Some leasing companies will be making out quite well negotiating hefty lease termination 'prepayment' penalties.
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