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seahawk
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 12:17 pm

Motorhussy wrote:
seahawk wrote:
Amazing news and a wise decision.


The wisdom of their decision will be a financial one and appears to me that Boeing, GE, GECAS have pulled out all stops for this. Be interesting to find out just what kind of a deal they cut. It’ll be quite the signal to other customers looking for Boeing to sharpen their pencils, if not drop their pants.


It is also wise to not buy an orphan plane that has no other orders. Now they are getting the gold standard of the class and will probably pay a very good price for it.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 12:25 pm

seahawk wrote:
Motorhussy wrote:
seahawk wrote:
Amazing news and a wise decision.


The wisdom of their decision will be a financial one and appears to me that Boeing, GE, GECAS have pulled out all stops for this. Be interesting to find out just what kind of a deal they cut. It’ll be quite the signal to other customers looking for Boeing to sharpen their pencils, if not drop their pants.


It is also wise to not buy an orphan plane that has no other orders. Now they are getting the gold standard of the class and will probably pay a very good price for it.


To be sure, there are probably few major differences between an A330-800 and -900. A customer that operated the latter could probably operate the former with few complications.
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 12:33 pm

Still the used value of such a small fleet would be limited. So they would be stuck with flying the wings of those A330.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 12:36 pm

I feel sorry for everyone flying in those awful, 9-abreast Economy Class, crampy seats 787 has!
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 1:26 pm

Regardless of what some people here kept insisting, the A338 was never going to fly with an airline. I was shocked that Airbus even assembled one. Airbus didn't want to build the thing. HA didn't want to take it. Can't understand why this thing dragged along for such a long time.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 2:24 pm

rlo4934 wrote:
Kumulani wrote:
JAAlbert wrote:

My thoughts exactly! I hope they send those 787s here to SAN! (although it is nice to see airbus widebodies at our little airport)


SAN is probably only going to see the A321neo going forward.


Doubt it. Hawaiian is flying the A330 and A321 into SAN currently. Only markets smaller than SAN will get the A321 exclusively.


The A321neo is not currently flying to SAN. The only A321neo services currently operating are PDX-OGG and OAK-OGG. SAN-OGG is scheduled to start later this year. For now SAN-HNL will stay A330, but that doesn't mean it will be that way forever. They will only have a small number of 321s this year, even less than scheduled due to the engine delays, so they can only run a limited number of routes. With their first 321s, their priorities are to replace the 767 and add new routes that their widebodies were too big for. Once they do that, and they are further into their deliveries, we will see some 330 routes being downsized to 321, and I think the chances are high that SAN will be one of those routes.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 4:10 pm

juliuswong wrote:
For those saying Boeing will try persuading AirAsia to switch over, it ain't gonna happen in next decade or maybe even lifetime. Tony Fernandes has a very very close relationship with Airbus, especially sales team. He mentioned this several times in his autobiography. Unless Airbus management burn bridges with AirAsia, it will remain solely Airbus for now and into next decade. They weren't really impressed with Boeing last time when AirAsia issued RFP for 100 narrowbodies, that somehow 'cement' AirAsia view on Boeing.


Well, Boeing apparently DID try persuading AirAsia. It just happened to be unsuccessful. If you are saying it "ain't gonna happen" in that AirAsia switches, I agree. But, Boeing will certainly try.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 4:25 pm

juliuswong wrote:
For those saying Boeing will try persuading AirAsia to switch over, it ain't gonna happen in next decade or maybe even lifetime. Tony Fernandes has a very very close relationship with Airbus, especially sales team. He mentioned this several times in his autobiography. Unless Airbus management burn bridges with AirAsia, it will remain solely Airbus for now and into next decade. They weren't really impressed with Boeing last time when AirAsia issued RFP for 100 narrowbodies, that somehow 'cement' AirAsia view on Boeing.


See Anet, there is nothing wrong when an airline aligns itself with one maker for whatever the reason. Keep that in mind when casting dispersion on an airline that "chooses" to go all Boeing.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 4:31 pm

seabosdca wrote:
Polot wrote:
As I noted in th other thread, interesting that they selected GE and not RR (which powers their A332s and would power their A338 if they keep that order).


Especially given that their average stage length is not long for a 787 operator. Seems like the current Trent 1000 issues may be causing long-term damage to RR.


Regarding the first argument, if HA still wants to fly to Europe, that would be a rather long stage length.

Regarding the second argument, airlines usually do not make long term commitments based on short term issues.

Which brings us to:

Revelation wrote:
It's interesting how everyone here is saying that HA was fearful of the issues that RR is having with T1000 engines, yet these frames won't start delivery till 2021 when (one would presume) the RR issues should be ironed out. Thus I think there's more to the story. Hopefully we'll hear more soon.


According to latest Flightglobal article, GE undercut RR on price.

Airbus says the Rolls-Royce Trent 7000-powered aircraft is "excellent" but claims it was "simply undercut in price" from its competitor.

"You win some and you lose some," says a spokesman for the company, stressing that Hawaiian is still a "valued Airbus customer".


Ref https://www.flightglobal.com/news/artic ... de-446523/

People sometimes forget how important engine deals are. They can be a key decision.
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 4:47 pm

Revelation wrote:
I agree no one owes him an apology, nor does he owe us an apology. His original story said "no agreements were signed" which to me tells us that the situation was not 100% firm. It's regrettable that he said the A338 deal was already cancelled when it really was not, but his update just said it was "to be cancelled" so his update did in fact reflect the true situation.


I wonder, does it really matter whether Leeham used "canceled" instead of "to be canceled"? When you have a good story you want to publish as quickly as possible and perhaps made a typing error by doing so. Point being, Leeham successfully detected smoke, which suggest they are well informed.
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 4:49 pm

BlatantEcho wrote:
Wonder what our buddy Zeke has to say about all this.

Maybe we should close the thread and open a new one to celebrate with HA?


I stand by what I said, I said the airline had confirmed that A388 order had not been cancelled, which was published on the 22nd on Flight global. As a result of the statement Leeham changed their story.

https://www.flightglobal.com/news/artic ... ow-446147/

Now since they made that statement, the deal was signed on the 27th

https://www.flightglobal.com/news/artic ... or-446506/

RickNRoll wrote:
Point of order. Hawaiian ordered the A350-800 which was cancelled and the less capable A330-800 substituted by Airbus.


I thought HA actually ordered the original A350 (A330 with new wing and engines) then they got converted to the A350XWB then to A330neo
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 4:54 pm

KarelXWB wrote:
Which brings us to:
Revelation wrote:
It's interesting how everyone here is saying that HA was fearful of the issues that RR is having with T1000 engines, yet these frames won't start delivery till 2021 when (one would presume) the RR issues should be ironed out. Thus I think there's more to the story. Hopefully we'll hear more soon.

According to latest Flightglobal article, GE undercut RR on price.

Airbus says the Rolls-Royce Trent 7000-powered aircraft is "excellent" but claims it was "simply undercut in price" from its competitor.
"You win some and you lose some," says a spokesman for the company, stressing that Hawaiian is still a "valued Airbus customer".

Ref https://www.flightglobal.com/news/artic ... de-446523/

People sometimes forget how important engine deals are. They can be a key decision.

Which perhaps brings us to something I wrote four days ago ( ref: viewtopic.php?f=3&t=1387017&start=550#p20217257 ):

Revelation wrote:
The story, whether it's just smoke or if it's fire, is already in the aviation media, so whomever is the "loser" in this will have to issue an official or unofficial statement to "save face".

Sorry, folks, but there's more to the way the aviation industry communicates than just filing reports with the financial regulators.

If that's your standard then chances are you'll find all the info you need on the financial media sites.

Yet while the FG article does point to cost being the issue, I don't read it as saying engine cost was the issue.

The inclusion of "the Rolls-Royce Trent 7000-powered aircraft" in that sentence could easily be an (unfortunate?) editing choice.

And while it talks about A338 having a "strong outlook" it isn't as bold to give us any concrete examples of who might be ordering any.

The last part is a stellar example of corporate-speak:

Airbus designed the -800 simultaneously with the -900 – the better-selling of the two, with 214 orders – and it says that little investment in development is needed to take the -800 to certification.

"Both the A330-800 and -900 share the same final assembly line stations, tools and equipment, which allows for full flexibility according to market demand," it adds.

It says "little investment in development is needed to take the -800 to certification" but does not say "we shall take the -800 to certification".
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 4:54 pm

zeke wrote:
BlatantEcho wrote:
Wonder what our buddy Zeke has to say about all this.

Maybe we should close the thread and open a new one to celebrate with HA?


I stand by what I said, I said the airline had confirmed that A388 order had not been cancelled, which was published on the 22nd on Flight global. As a result of the statement Leeham changed their story.

https://www.flightglobal.com/news/artic ... ow-446147/

Now since they made that statement, the deal was signed on the 27th

https://www.flightglobal.com/news/artic ... or-446506/

RickNRoll wrote:
Point of order. Hawaiian ordered the A350-800 which was cancelled and the less capable A330-800 substituted by Airbus.


I thought HA actually ordered the original A350 (A330 with new wing and engines) then they got converted to the A350XWB then to A330neo

No HA first ordered in the A358 in 2008 when it was the XWB (announced as MoU in late 2007). You might be confusing them with US who ordered the original A350 then converted to XWB (then merged with AA who has been defferring/evaluating order several times).
Last edited by Polot on Wed Mar 07, 2018 4:57 pm, edited 1 time in total.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 4:58 pm

seahawk wrote:
Still the used value of such a small fleet would be limited. So they would be stuck with flying the wings of those A330.


On the contrary. In case of orphans, Airbus tend to make buyback guarantees. That's why LDE is parked with A340s and early A380s. As such financing the a/c should not be an issue, and the airline does not have to worry when the lease expires.
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 5:01 pm

Revelation wrote:
It says "little investment in development is needed to take the -800 to certification" but does not say "we shall take the -800 to certification".


I believe the frame is flying certification and testing now and if not, it will be soon because Airbus would want it certified to present it in current and future RFPs.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 5:07 pm

JustSomeDood wrote:
..........the deferred costs have already be spent and accounted for in the financial statements, and that the whole shebang is merely income smoothing, which Airbus would have gladly done for all their programs if they were allowed by the relevant authorities. If at the end of the 787s program life, there's still some deferred production cost left, then B will just write it off as a paper loss, as long as B still has been generating truckloads of cash from the program that's simply not nearly a big a deal as people think it is.


Run that by me again......

So you're saying that "deferred costs have already be spent and accounted for in the financial statements"........, but....." If at the end of the 787s program life; [i](or block period?); there's still some deferred production cost left, then B will just write it off as a paper loss"[/i]....

If deferred costs are still left to be paid, then they cannot have not been accounted for properly in the first place; and unit prices are not meeting the true costs of production.

This is the kind of false 'accounting' that infuriates organisations like the WTO, and should anger Boeing shareholders; but probably will not. Its almost like Boeing have an internal insurance premium for 787 hedged against profitable future programmes; (or probably more accurately, military programmes, whose true costs/revenues we are never likely to see). Essentially military programmes are cross-subsidising 787; thats fine, but at least be honest about it.

It might not be a 'big-deal' to you, but it was the basis of what Boeing hypocritically complained about Bombardier doing in the C-series fiasco.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 5:11 pm

Stitch wrote:
Revelation wrote:
It says "little investment in development is needed to take the -800 to certification" but does not say "we shall take the -800 to certification".

I believe the frame is flying certification and testing now and if not, it will be soon because Airbus would want it certified to present it in current and future RFPs.

Last I read, it was being readied for certification testing, and indeed I'd expect it is sensible for Airbus to just get it certified now, but the corporate statement was ambiguous when it could have easily been made unambiguous.
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 5:13 pm

KarelXWB wrote:
Revelation wrote:
I agree no one owes him an apology, nor does he owe us an apology. His original story said "no agreements were signed" which to me tells us that the situation was not 100% firm. It's regrettable that he said the A338 deal was already cancelled when it really was not, but his update just said it was "to be cancelled" so his update did in fact reflect the true situation.


I wonder, does it really matter whether Leeham used "canceled" instead of "to be canceled"? When you have a good story you want to publish as quickly as possible and perhaps made a typing error by doing so. Point being, Leeham successfully detected smoke, which suggest they are well informed.


In the grand scheme, it doesn't matter. We already knew that HA was looking at the 787 - this had been going on for quite some time - so it wasn't a shock to anyone paying attention to their fleet plans. However, by presenting it inaccurately, it created doubt, which followed by HA's denial led some folks to question the story. I'm not sure why that's surprising? But yes, he had the basic story correct and it was entertaining following it along in this thread.
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 5:15 pm

airbazar wrote:
Regardless of what some people here kept insisting, the A338 was never going to fly with an airline. I was shocked that Airbus even assembled one. Airbus didn't want to build the thing. HA didn't want to take it. Can't understand why this thing dragged along for such a long time.


Never is a very long time........
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 5:19 pm

Kumulani wrote:
rlo4934 wrote:
Kumulani wrote:

SAN is probably only going to see the A321neo going forward.


Doubt it. Hawaiian is flying the A330 and A321 into SAN currently. Only markets smaller than SAN will get the A321 exclusively.


The A321neo is not currently flying to SAN. The only A321neo services currently operating are PDX-OGG and OAK-OGG. SAN-OGG is scheduled to start later this year. For now SAN-HNL will stay A330, but that doesn't mean it will be that way forever. They will only have a small number of 321s this year, even less than scheduled due to the engine delays, so they can only run a limited number of routes. With their first 321s, their priorities are to replace the 767 and add new routes that their widebodies were too big for. Once they do that, and they are further into their deliveries, we will see some 330 routes being downsized to 321, and I think the chances are high that SAN will be one of those routes.


Particularly given the very good odds that WN enters the market sooner than later.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 5:58 pm

zeke wrote:
Revelation wrote:
There's lots of ways to fudge that. For instance, both VS and QF have A380 orders no one expects them to take. QF's CEO has even said publicly they don't intend to take them. At some point in time the orders will disappear.


There is no way to fudge things, these are material changes to public companies. If they defer deliveries it requires accounting of such deferrals, if they convert models it requires accounting, if they cancel it requires accounting, and if they order it requires accounting.

You say the orders will disappear, they may or may not, personally I dont think the QF ones will. I think they will end up getting replacements down the track with new engines. AJ makes a lot of contradicting statements, he is not bound by them.

None of this changes my previous assertion, Boeing, Airbus, and Hawaiian are public companies, if there has been a material change, they cannot “fudge” it, they required to make full disclosure to the market. We have seen no such disclosure.

In another victory (sic) for public disclosure, the VS orders just disappeared...

Ref: viewtopic.php?p=20229999#p20229999
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 6:08 pm

SelseyBill wrote:
If deferred costs are still left to be paid, then they cannot have not been accounted for properly in the first place; and unit prices are not meeting the true costs of production.


They are not left to be paid, they are left to be reported against the company's earnings.
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 6:16 pm

HA made the right choice with the 789. No “orphan” 338 that they never really wanted. The 789 will not only allow them to stretch their legs to Europe/elsewhere in Asia, but give them a proven, popular model that will not only look good in their livery, but one that they will feel totally comfortable having in their fleet. Perhaps the 797 will join the HA fleet someday as well.
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 10:24 pm

brian415 wrote:
L0VE2FLY wrote:
[..] The 787 is my least favorite airliner and will remain so until Boeing offers the traditional window shades as an option, I absolutely despise the stupid e-tint windows. :mad:

Great! We agree that this airframe is a bucket of bolts and/or a non-innovation.


Nobody said that, it's only the stupid e-tint windows that I hate about the 787. It's innovation nobody asked for, pax on both ends of the spectrum dislike it, folks like me who just love to look out the window and those suffering from flyingphobia who want to see absolutely nothing, even on the darkest setting you can stll see a little which can be terrifying for a nervous flyer.


ClipperYankee wrote:
And the dimmable windows are the reason the 787 is MY favorite airliner because at least the crew can't make you close the shades all the way down like they do in most of my non-787 flights. Also, I've yet to have a crew lock them in the fully dim position.


The dimmable windows would've been great if only the pax were in control of their windows, it could be useful when the glare is too intense just after sunrise. I wouldn't mind flying on Hawaiian's 787 as my flight would be entirely over the ocean. A friend of mine had his window fully dimmed along with all others while enjoying a gorgeous view over the Himalayas, I'm sure it'll happen to you one day, a dark cabin means more sleeping pax which is exactly what the airlines want!
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Wed Mar 07, 2018 10:45 pm

StTim wrote:
Shows hypocrisy though


Please explain how this shows "hypocrisy". Just because they have A330s on deck doesn't mean they have to ALWAYS order them. Jeez, I don't know why Airbus fans are losing their minds over this. It's only 10 airplanes........
 
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Re: Update: Hawaiian signs 787 LOI

Wed Mar 07, 2018 11:31 pm

Revelation wrote:
juliuswong wrote:
For those saying Boeing will try persuading AirAsia to switch over, it ain't gonna happen in next decade or maybe even lifetime. Tony Fernandes has a very very close relationship with Airbus, especially sales team. He mentioned this several times in his autobiography. Unless Airbus management burn bridges with AirAsia, it will remain solely Airbus for now and into next decade. They weren't really impressed with Boeing last time when AirAsia issued RFP for 100 narrowbodies, that somehow 'cement' AirAsia view on Boeing.

https://www.reuters.com/article/us-airb ... SKCN1GI289 suggests the order is secure but "analysts say that could change if it feels too exposed as the dominant buyer.".

See also: viewtopic.php?f=3&t=1388401

AirAsia is exposed. The question is the terms for financing. Airbus normally only agrees to the original owner for a certain return timeframe. This can hurt sale/leaseback flexibility.

I'll look at the other thread. AirAsia cannot be blindly loyal.

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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 12:02 am

SelseyBill wrote:
JustSomeDood wrote:
..........the deferred costs have already be spent and accounted for in the financial statements, and that the whole shebang is merely income smoothing, which Airbus would have gladly done for all their programs if they were allowed by the relevant authorities. If at the end of the 787s program life, there's still some deferred production cost left, then B will just write it off as a paper loss, as long as B still has been generating truckloads of cash from the program that's simply not nearly a big a deal as people think it is.


Run that by me again......

So you're saying that "deferred costs have already be spent and accounted for in the financial statements"........, but....." If at the end of the 787s program life; [i](or block period?); there's still some deferred production cost left, then B will just write it off as a paper loss"[/i]....

If deferred costs are still left to be paid, then they cannot have not been accounted for properly in the first place; and unit prices are not meeting the true costs of production.

This is the kind of false 'accounting' that infuriates organisations like the WTO, and should anger Boeing shareholders; but probably will not. Its almost like Boeing have an internal insurance premium for 787 hedged against profitable future programmes; (or probably more accurately, military programmes, whose true costs/revenues we are never likely to see). Essentially military programmes are cross-subsidising 787; thats fine, but at least be honest about it.

It might not be a 'big-deal' to you, but it was the basis of what Boeing hypocritically complained about Bombardier doing in the C-series fiasco.


I tire of debating this subject but there is some abject silliness here.

One you can’t reduce the accounting deferred cost from revenues outside of the program so there isn’t any cross subsidizing from non 787 programs going on. The only way for the block to go down is for deliveries of 787’s to be made with profit in excess of that allocated for in the block.

Second this has so little to do with the C-Series that it really is kind of a joke to bring it up. Airbus has all but admitted that you need a good deal more sales to drive more volume to get prices down to where one can begin to turn a profit on a per plane basis, let alone as a program. Do up any reasonable accounting block based on actual production plans and sales for the C-Series and see if it ever even gets to reducing its accounting block. I would guess not. Volumes are simply too low and pricing pressure too great.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 12:50 am

^^^^

For the record, the ‘e-tint’ windows are one of my favorite parts of being a pax on the 787.

Just great execution of something that technology made a lot better. Better view, better control, can still stare out the window at all times. Really love this feature of the plane.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 12:53 am

BlueSky1976 wrote:
I feel sorry for everyone flying in those awful, 9-abreast Economy Class, crampy seats 787 has!


Well don't feel sorry for me. I've flown economy on the plane now three times and I was comfortable on all three flights.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 1:00 am

dampfnudel wrote:
HA made the right choice with the 789. No “orphan” 338 that they never really wanted. The 789 will not only allow them to stretch their legs to Europe/elsewhere in Asia, but give them a proven, popular model that will not only look good in their livery, but one that they will feel totally comfortable having in their fleet. Perhaps the 797 will join the HA fleet someday as well.


Hawaii to Europe would be a sure way to lose money fast. Europeans just have a lot more choices closer to home (cheaper) than flying all the way to Hawaii. And if they do want to visit Hawaii, most will fly there after spending a few days in the continental U.S. This is just based on my more than 26 years in the industry.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 1:30 am

The engine deal might be key. About half the maintenance costs are the engines. If GE stepped up with a good deal.. That is enough.

The obvious winner is HA.

Orders can switch. I'm wondering what other A330NEO buyers are being talked to. With newly lowered 787 production costs, Boeing can be more agressive.


DDR wrote:
BlueSky1976 wrote:
I feel sorry for everyone flying in those awful, 9-abreast Economy Class, crampy seats 787 has!


Well don't feel sorry for me. I've flown economy on the plane now three times and I was comfortable on all three flights.

I prefer pitch over width myself, so I don't see the fuss either.

To others:
Everyone should remember HA flies penny pinching tourists. Non cheapskates buy a bigger seat, so they don't worry about coach.

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juliuswong
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 4:27 am

lightsaber wrote:
Revelation wrote:
juliuswong wrote:
For those saying Boeing will try persuading AirAsia to switch over, it ain't gonna happen in next decade or maybe even lifetime. Tony Fernandes has a very very close relationship with Airbus, especially sales team. He mentioned this several times in his autobiography. Unless Airbus management burn bridges with AirAsia, it will remain solely Airbus for now and into next decade. They weren't really impressed with Boeing last time when AirAsia issued RFP for 100 narrowbodies, that somehow 'cement' AirAsia view on Boeing.

https://www.reuters.com/article/us-airb ... SKCN1GI289 suggests the order is secure but "analysts say that could change if it feels too exposed as the dominant buyer.".

See also: viewtopic.php?f=3&t=1388401

AirAsia is exposed. The question is the terms for financing. Airbus normally only agrees to the original owner for a certain return timeframe. This can hurt sale/leaseback flexibility.

I'll look at the other thread. AirAsia cannot be blindly loyal.

Lightsaber

They can be blindly loyal to be honest cause Tony has mentioned (again and again) they have and will always prefer single OEM for both single aisle and widebodies.

That being said, something happened over the past 24 hours. Benyamin Ismail (AirAsia X CEO) is currently at Seattle and just concluded discussion with Boeing with B787-10. In his Instagram account, he is holding a B787-10 model in AirAsia X colour. Interesting time.......I shall take back my words tbh.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 4:28 am

juliuswong wrote:
lightsaber wrote:
Revelation wrote:
https://www.reuters.com/article/us-airb ... SKCN1GI289 suggests the order is secure but "analysts say that could change if it feels too exposed as the dominant buyer.".

See also: viewtopic.php?f=3&t=1388401

AirAsia is exposed. The question is the terms for financing. Airbus normally only agrees to the original owner for a certain return timeframe. This can hurt sale/leaseback flexibility.

I'll look at the other thread. AirAsia cannot be blindly loyal.

Lightsaber

They can be blindly loyal to be honest cause Tony has mentioned (again and again) they have and will always prefer single OEM for both single aisle and widebodies.

That being said, something happened over the past 24 hours. Benyamin Ismail (AirAsia X CEO) is currently at Seattle and just concluded discussion with Boeing with B787-10. In his Instagram account, he is holding a B787-10 model in AirAsia X colour. Interesting time.......I shall take back my words tbh.


This industry sure knows how to twist arms in the media. All’s fair I guess.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 5:16 am

juliuswong wrote:
They can be blindly loyal to be honest cause Tony has mentioned (again and again) they have and will always prefer single OEM for both single aisle and widebodies.

That being said, something happened over the past 24 hours. Benyamin Ismail (AirAsia X CEO) is currently at Seattle and just concluded discussion with Boeing with B787-10. In his Instagram account, he is holding a B787-10 model in AirAsia X colour. Interesting time.......I shall take back my words tbh.

Airasia did not get to where they are by being dumb - they are only loyal to their next best business deal. With the departure of John Leahy, they should not feel too bad should they ditch Airbus because Boeing can give them a better deal.

The A339 does look a little limited in capacity while the A359 is not at the bargain basement price that D7 wants. That is why they are leasing used A333s with a single class configuration - they need more seats! The 787-10 looks ideal for their Asia Pacific network - more capacity and sufficient range. Now, they are just waiting to see if Boeing can give them a great price. Unlike Airasia, D7 does not have much invested in maintenance infrastructure. So, with the exception of crew training, the 787 should not cost too much to switch to.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 5:40 am

juliuswong wrote:
lightsaber wrote:
Revelation wrote:
https://www.reuters.com/article/us-airb ... SKCN1GI289 suggests the order is secure but "analysts say that could change if it feels too exposed as the dominant buyer.".

See also: viewtopic.php?f=3&t=1388401

AirAsia is exposed. The question is the terms for financing. Airbus normally only agrees to the original owner for a certain return timeframe. This can hurt sale/leaseback flexibility.

I'll look at the other thread. AirAsia cannot be blindly loyal.

Lightsaber

They can be blindly loyal to be honest cause Tony has mentioned (again and again) they have and will always prefer single OEM for both single aisle and widebodies.

That being said, something happened over the past 24 hours. Benyamin Ismail (AirAsia X CEO) is currently at Seattle and just concluded discussion with Boeing with B787-10. In his Instagram account, he is holding a B787-10 model in AirAsia X colour. Interesting time.......I shall take back my words tbh.



Very interesting indeed, I'll start up a new thread to not hijack this from the Hawaiian discussion. https://www.instagram.com/p/BgCPCtOHPVU ... aminismail
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 6:04 am

texl1649 wrote:
william wrote:
MIflyer12 wrote:
Do we need to remind Leeham that an aircraft sold from Washington state to Hawaiian isn't international commerce? I guess we do.


I don't know why this is so funny to me...... :rotfl:


To be fair, it is closer if it is from a “red” state like right to work South Carolina. Resist!


Resistance is futile
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 6:43 am

DDR wrote:
Hawaii to Europe would be a sure way to lose money fast. Europeans just have a lot more choices closer to home (cheaper) than flying all the way to Hawaii.


They have choices closer to home that are cheaper than flying to Hawaii, but those choices are nothing like Hawaii. Don't get me wrong, the Canaries and such are nice and all, but Hawaii is downright magical. I've stood on seven continents and traveled all over many of these places and Hawaii is something unique and special. I am very fortunate to live a mere five hour flight away.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 8:50 am

DocLightning wrote:
DDR wrote:
Hawaii to Europe would be a sure way to lose money fast. Europeans just have a lot more choices closer to home (cheaper) than flying all the way to Hawaii.


They have choices closer to home that are cheaper than flying to Hawaii, but those choices are nothing like Hawaii. Don't get me wrong, the Canaries and such are nice and all, but Hawaii is downright magical. I've stood on seven continents and traveled all over many of these places and Hawaii is something unique and special. I am very fortunate to live a mere five hour flight away.


Yes, lots of European's would like to visit Hawaii. I'm one of them. Grew up on Hawaii 5-O and Magnum.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 9:29 am

lightsaber wrote:
The engine deal might be key. About half the maintenance costs are the engines. If GE stepped up with a good deal.. That is enough.

The obvious winner is HA.

Orders can switch. I'm wondering what other A330NEO buyers are being talked to. With newly lowered 787 production costs, Boeing can be more agressive.


DDR wrote:
BlueSky1976 wrote:
I feel sorry for everyone flying in those awful, 9-abreast Economy Class, crampy seats 787 has!


Well don't feel sorry for me. I've flown economy on the plane now three times and I was comfortable on all three flights.

I prefer pitch over width myself, so I don't see the fuss either.

To others:
Everyone should remember HA flies penny pinching tourists. Non cheapskates buy a bigger seat, so they don't worry about coach.

Lightsaber


If GE was the key factor in the switch, and it was a result of GE and Boeing working closely together it will have deep implications for the future. We should not forget that those 787s must have cost less then the A330s, as their will be cancellation costs with Airbus and RR. But more importantly it sends a message to RR that GE is the preferred partner on the 787 for Boeing. So for RR it makes sense to put all effort into the A350/A330EO sales campaigns now, because Boeing seems to favour GE on the 787.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 10:06 am

seahawk wrote:
But more importantly it sends a message to RR that GE is the preferred partner on the 787 for Boeing.


I'm always stunned when people arrive at such conclusions, based on an airplane order of just 10 aircraft.

Engine deals can be a key factor. We have seen plenty other examples in the past. But Boeing and GE are working together on the 787 for 14 years now, and GE lost plenty opportunities as well. Sometimes you win some, and sometimes you lose some. There is no proof that HA's engine deal sets a trent trend.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 10:18 am

KarelXWB wrote:
seahawk wrote:
But more importantly it sends a message to RR that GE is the preferred partner on the 787 for Boeing.


I'm always stunned when people arrive at such conclusions, based on an airplane order of just 10 aircraft.

Engine deals can be a key factor. We have seen plenty other examples in the past. But Boeing and GE are working together on the 787 for 14 years now, and GE lost plenty opportunities as well. Sometimes you win some, and sometimes you lose some. There is no proof that HA's engine deal sets a trent trend.


I hope we agree that the deal must have been pretty good to compensate the cancellation penalties HA will have to pay Airbus and RR. However the RR penalty might be avoidable if HA would order the Trent Ten on the 787, which they did not. Imho Boeing and GE must have worked together to make the deal happen and if they did, I can not see how RR can understand this deal in any other way than what I wrote.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 10:26 am

bigjku wrote:
SelseyBill wrote:
JustSomeDood wrote:
..........the deferred costs have already be spent and accounted for in the financial statements, and that the whole shebang is merely income smoothing, which Airbus would have gladly done for all their programs if they were allowed by the relevant authorities. If at the end of the 787s program life, there's still some deferred production cost left, then B will just write it off as a paper loss, as long as B still has been generating truckloads of cash from the program that's simply not nearly a big a deal as people think it is.


Run that by me again......

So you're saying that "deferred costs have already be spent and accounted for in the financial statements"........, but....." If at the end of the 787s program life; [i](or block period?); there's still some deferred production cost left, then B will just write it off as a paper loss"[/i]....

If deferred costs are still left to be paid, then they cannot have not been accounted for properly in the first place; and unit prices are not meeting the true costs of production.

This is the kind of false 'accounting' that infuriates organisations like the WTO, and should anger Boeing shareholders; but probably will not. Its almost like Boeing have an internal insurance premium for 787 hedged against profitable future programmes; (or probably more accurately, military programmes, whose true costs/revenues we are never likely to see). Essentially military programmes are cross-subsidising 787; thats fine, but at least be honest about it.

It might not be a 'big-deal' to you, but it was the basis of what Boeing hypocritically complained about Bombardier doing in the C-series fiasco.


I tire of debating this subject but there is some abject silliness here.

One you can’t reduce the accounting deferred cost from revenues outside of the program so there isn’t any cross subsidizing from non 787 programs going on. The only way for the block to go down is for deliveries of 787’s to be made with profit in excess of that allocated for in the block.

Second this has so little to do with the C-Series that it really is kind of a joke to bring it up. Airbus has all but admitted that you need a good deal more sales to drive more volume to get prices down to where one can begin to turn a profit on a per plane basis, let alone as a program. Do up any reasonable accounting block based on actual production plans and sales for the C-Series and see if it ever even gets to reducing its accounting block. I would guess not. Volumes are simply too low and pricing pressure too great.


The silliness is with you. The 787 program has a accumulated a production loss of 25-30 Billion USD. Somewhere this money has to come from. It is either on loan, or it is provided by other programs, that turn a profit. So there is absolutely no question about there being cross subsidizing at Boeing. It is actually normal that a mature program provides the money for a new program.
But there are around 650 787 delivered and no sign of the 787 turning profitable. Did Boeing sell the the 787-9 to Hawaiian below production cost, or at least for a lower price than to other airlines? Than Boeing is doing what the accuse Bombardier off. It is only OK because an USA producer does it with an USA airline and therefore it is not defined as dumping.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 10:46 am

seahawk wrote:
[I hope we agree that the deal must have been pretty good to compensate the cancellation penalties HA will have to pay Airbus and RR. However the RR penalty might be avoidable if HA would order the Trent Ten on the 787, which they did not. Imho Boeing and GE must have worked together to make the deal happen and if they did, I can not see how RR can understand this deal in any other way than what I wrote.


That's not how it works.

Customers have walk away clausules in the contract. Duo to the original A350 delay, and later on the A330neo delay, HA would have executed such clause. Cancellation penalties must have been in the same region as VS A380 cancellation fees: close to zero.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 10:48 am

I think a lot of a.netters don't know the difference between cashflow and cost accounting. Yes, those deferred production costs have been spent - cash wise. However, the cost of B787 production is not fully accounted for.

Every 787 that now goes out of the factory has to bear its portion of the deferred production costs to reflect its true cost of production. This will go on until the end of the accounting block. If the cash spent on deferred production costs have not been fully allocated, Boeing will have to write them off and take a charge in the profits.
 
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 11:11 am

KarelXWB wrote:
seahawk wrote:
[I hope we agree that the deal must have been pretty good to compensate the cancellation penalties HA will have to pay Airbus and RR. However the RR penalty might be avoidable if HA would order the Trent Ten on the 787, which they did not. Imho Boeing and GE must have worked together to make the deal happen and if they did, I can not see how RR can understand this deal in any other way than what I wrote.


That's not how it works.

Customers have walk away clausules in the contract. Duo to the original A350 delay, and later on the A330neo delay, HA would have executed such clause. Cancellation penalties must have been in the same region as VS A380 cancellation fees: close to zero.


VS will most likely have transferred the down payments to the A350 order. And in the end even if HA had a walk away option that they could use, they would still get compensations for the delay of the NEOs, so that the net amount of money does not change much.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 12:16 pm

mjoelnir wrote:
The silliness is with you. The 787 program has a accumulated a production loss of 25-30 Billion USD. Somewhere this money has to come from. It is either on loan, or it is provided by other programs, that turn a profit.

You keep making the same argument again and again to tedium. Can we at least stipulate that whatever the amount of money, it has been spent? That the cash has walked out the door? And I don't recall if it was from you or one of your like minded usual suspects who said that on the A320 Airbus paid back so much to the funding governments and increased shareholder value that it didn't matter that the A380 was in the red?

mjoelnir wrote:
So there is absolutely no question about there being cross subsidizing at Boeing. It is actually normal that a mature program provides the money for a new program.

So wait, is what you just went on about a normal thing or an evil thing? I can't keep it straight, unless you mean it's fine for one and yet not for the other.

mjoelnir wrote:
But there are around 650 787 delivered and no sign of the 787 turning profitable.

On a total basis, likely not. But as I have pointed out many many times to exhaustion, you mistakenly allocate deferred costs (intangible) to production costs (tangible). By that metric, you're saddling each new potential sale with the 25-30 billion, just so you can make your specious case. The standard, "yeah but". The only way that deferred cost gets reduced is by selling for greater than your tangible production costs, therefore making a profit on a per frame basis. Making money on a per frame basis is what Boeing is doing. There is nothing to whine about there though, except that it may not ever get back 30 billion.

mjoelnir wrote:
Did Boeing sell the the 787-9 to Hawaiian below production cost, or at least for a lower price than to other airlines?

Those are two entirely different things, and you're smart enough to know that. Conflating them is disingenuous.

mjoelnir wrote:
Than Boeing is doing what the accuse Bombardier off. It is only OK because an USA producer does it with an USA airline and therefore it is not defined as dumping.

If Boeing made money on the sale to HA, and the deferred goes down, then QED they didn't dump. What evidence do you have to support your case? Given that the frames won't be built until 2020 when most sensible folk would say production costs will be lower than today, I guess we can wait and see.
 
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 1:00 pm

mjoelnir wrote:
The silliness is with you. The 787 program has a accumulated a production loss of 25-30 Billion USD. Somewhere this money has to come from. It is either on loan, or it is provided by other programs, that turn a profit. So there is absolutely no question about there being cross subsidizing at Boeing. It is actually normal that a mature program provides the money for a new program.

If you read what he wrote,

bigjku wrote:
One you can’t reduce the accounting deferred cost from revenues outside of the program so there isn’t any cross subsidizing from non 787 programs going on. The only way for the block to go down is for deliveries of 787’s to be made with profit in excess of that allocated for in the block.

he gave the exact context of his statement (the accounting deferred cost) and you ignored that.

Man, if you're going to keep dragging us through detailed accounting nonsense, please pay attention to detail!

In the end it doesn't matter. When you look at the detail, Boeing is doing everything according to US accounting law and its own established tradition. When you look at the big picture, deferred production cost isn't limiting Boeing's ability to be aggressive on price.
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Re: A330-800 out, B787-9 in at Hawaiian? -Leeham

Thu Mar 08, 2018 1:21 pm

Bricktop wrote:
mjoelnir wrote:
The silliness is with you. The 787 program has a accumulated a production loss of 25-30 Billion USD. Somewhere this money has to come from. It is either on loan, or it is provided by other programs, that turn a profit.

You keep making the same argument again and again to tedium. Can we at least stipulate that whatever the amount of money, it has been spent? That the cash has walked out the door? And I don't recall if it was from you or one of your like minded usual suspects who said that on the A320 Airbus paid back so much to the funding governments and increased shareholder value that it didn't matter that the A380 was in the red?

mjoelnir wrote:
So there is absolutely no question about there being cross subsidizing at Boeing. It is actually normal that a mature program provides the money for a new program.

So wait, is what you just went on about a normal thing or an evil thing? I can't keep it straight, unless you mean it's fine for one and yet not for the other.

mjoelnir wrote:
But there are around 650 787 delivered and no sign of the 787 turning profitable.

On a total basis, likely not. But as I have pointed out many many times to exhaustion, you mistakenly allocate deferred costs (intangible) to production costs (tangible). By that metric, you're saddling each new potential sale with the 25-30 billion, just so you can make your specious case. The standard, "yeah but". The only way that deferred cost gets reduced is by selling for greater than your tangible production costs, therefore making a profit on a per frame basis. Making money on a per frame basis is what Boeing is doing. There is nothing to whine about there though, except that it may not ever get back 30 billion.

mjoelnir wrote:
Did Boeing sell the the 787-9 to Hawaiian below production cost, or at least for a lower price than to other airlines?

Those are two entirely different things, and you're smart enough to know that. Conflating them is disingenuous.

mjoelnir wrote:
Than Boeing is doing what the accuse Bombardier off. It is only OK because an USA producer does it with an USA airline and therefore it is not defined as dumping.

If Boeing made money on the sale to HA, and the deferred goes down, then QED they didn't dump. What evidence do you have to support your case? Given that the frames won't be built until 2020 when most sensible folk would say production costs will be lower than today, I guess we can wait and see.

:checkmark: we can just always go back to what someone (maybe even you?) said earlier in this (?) thread. If Boeing wrote off the deferred production costs tomorrow does that suddenly mean a 787 is cheaper to build next week?

The whole deferred production costs is a red herring. Boeing doesn’t have to account for all of them in the current block- they can extend the block if more orders is realistic or...they can write off whatever is left at the end of the block which would make A.net freak out for a week then life will march on.

But mjoelnr has spoken guys. Never mind if 787s currently rolling off the line are currrently profitable. The program as a whole will likely never make a net profit so Boeing should just throw in the white flag and kill it. Stop trying to get more orders, just fulfill backlog then turn off the lights and move on. You can only produce aircrafts as part of a profitable program, or fully write off costs and continue making planes at a loss to punish yourself for your program mistakes.
Last edited by Polot on Thu Mar 08, 2018 1:37 pm, edited 2 times in total.
 
DaveFly
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 1:29 pm

DDR wrote:
dampfnudel wrote:
HA made the right choice with the 789. No “orphan” 338 that they never really wanted. The 789 will not only allow them to stretch their legs to Europe/elsewhere in Asia, but give them a proven, popular model that will not only look good in their livery, but one that they will feel totally comfortable having in their fleet. Perhaps the 797 will join the HA fleet someday as well.


Hawaii to Europe would be a sure way to lose money fast. Europeans just have a lot more choices closer to home (cheaper) than flying all the way to Hawaii. And if they do want to visit Hawaii, most will fly there after spending a few days in the continental U.S. This is just based on my more than 26 years in the industry.


I agree, and I said so about 400 comments ago! HA isn’t seeking European holiday-makers when they have so many closer destinations. HA had barely touched China, and I think that will be their focus.

I have to ask you though — you’ve been in the industry for 26 years? Your admittedly handsome profile photo shows a man in his 30s. I’m confused.
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Re: Update: Hawaiian signs 787 LOI

Thu Mar 08, 2018 2:31 pm

seahawk wrote:
VS will most likely have transferred the down payments to the A350 order. And in the end even if HA had a walk away option that they could use,


Based on interviews with airline executives over the years, and people familiar with aircraft deals, walk away clauses are pretty much the norm in the industry. Given that HA's A350 order dates back to 2007, and Airbus was the one who flipped the A350-800 to A330neo, HA would have been offered a generous deal. At least to me it sounds illogical to suggest that HA would be paying hefty cancellation fees.

they would still get compensations for the delay of the NEOs, so that the net amount of money does not change much.


Which even strengthens my point.
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