CX747
Topic Author
Posts: 5579
Joined: Tue May 18, 1999 2:54 am

Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 3:07 am

First off, calm down. This is NOT an A vs. B war. What I would like to discuss though is a philosophy of mine. It seems to me that when a large carrier that is not doing extremely well places a large Airbus order. They believe that by operating a large fleet of homogenious aircraft, they will save money and right their ship so to speak. They therefore place humongous orders and end up paying a fortune for their new fleet of Airbus rather than stick with their older 737-200s or-300s or MD-80s. U.S. Air is the most recent example of this. Sabena and Swiss Air are two examples. They were not doing financially well but order quite a few Airbus jets as they thought operating them would save more money that sticking with their current fleets. Both of the airlines went belly up. U.S. Air was also looking to consolidate its fleet and save money. They went with the A32X family and are now in dire straits. Am I crazy?
"History does not long entrust the care of freedom to the weak or timid." D. Eisenhower
 
Flying-Tiger
Posts: 3924
Joined: Mon Aug 23, 1999 5:35 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 3:14 am

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

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

Regards
Flying-Tiger
http://fly.to/rorders
Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
 
Rick767
Posts: 2613
Joined: Sun Jan 30, 2000 8:11 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 3:18 am

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

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

So it's not that they thought Airbuses would operate more cheaply (they probably do, and even if they don't they aren't that different from Boeings) but it was that they were cheaper to buy / lease.
I used to love the smell of Jet-A in the morning...
 
travelin man
Posts: 3198
Joined: Tue Mar 14, 2000 10:04 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 3:29 am

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

The argument should potentially be that large fleet replacement programs are no panacea when you are hemoragging cash, and perhaps you should streamline operations rather than buy lots of new aircraft.
 
gerardo
Posts: 3372
Joined: Sun May 21, 2000 6:22 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 3:58 am

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

Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
Sabena 690
Posts: 6065
Joined: Sat Feb 02, 2002 12:48 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 4:26 am

@Flying-Tiger:

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

Sorry, but here are you making some errors.

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

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

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

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

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

Regards,
Frederic

 
User avatar
OA412
Crew
Posts: 3778
Joined: Thu Dec 28, 2000 6:22 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 6:27 am

I agree that it was not SRs decision to buy Airbus, per se but its ridiculous alliance strategy that did them in. As others have noted, SR purchased Airbus when it was still doing very well financially. It went into the toilet some years after buying the A320s. Regarding the alliance strategy, the funniest line I have ever heard was in this months issue of Airliner World. It said that Bruegisser's logic was good enough, but what he never explained was how a bunch of losers (not SR mind you but the airline's it purchased stakes in) would translate into a winner. 20/20 hindsight is great but, it really doesn't take a financial genius to realize just how disastrous SRs strategy really was.
Hughes Airwest - Top Banana In The West
 
The Coachman
Posts: 1192
Joined: Sun Apr 29, 2001 9:57 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 8:49 am

If you're running out of money, you don't order aircraft! Streamlining is normal and necessary in today's world.
M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
 
donder10
Posts: 6944
Joined: Sun Oct 21, 2001 5:29 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 9:01 am

Agree Coachman!ARG (Argentinian)is replacing 73Gs with 732s as to reduce costs!Perhaps US Airways could learn a trick ?
 
BWIA 772
Posts: 1613
Joined: Sun May 12, 2002 2:33 am

RE: Is A Large Airbus Order A Sign Of Airline Deat

Thu Jun 13, 2002 9:46 am

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

BWIA after privitisation had a number of fleet replacement programmes but were all ditched at the last moment. The 2 340s they ordered to replace 4 L1011 were cancelled weeks before delivery this was in 1997, they also had 2 320s for a short period in 1996 but were re leased to Air Alfa (apprently the airline had no money) BWIA therefore had to stream line its operation with it 4 L1011 and 5 Md 83s and made a profit in 1998 and then made plans for a fleet renewal programme which saw 737Ngs intorduced in 1999-2000 and was on profitable up to september 2001 after the events that rocked the industry.
Eagles Soar!
 
hkgspotter1
Posts: 5750
Joined: Fri Nov 04, 2005 12:43 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 10:04 am

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

As for Airbus planes being cheap HA !!, Boeing are now trying to give planes away just to keep up with the competition. Why do you think Midwest Express got the 717 ?, they wanted the A318.
 
dynkrisolo
Posts: 1825
Joined: Mon Feb 12, 2001 12:12 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 10:15 am

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

Hkgspotter1, your Midwest Express speculation is totally baseless. In fact, one of the factors that Midwest Express ordered the B717 is because they prefer the narrower fuselage of the B717. The narrower fuselage is ideal for their luxurious seating of four across the cabin. Boeing might be selling the B717 dirt cheap to attract customers, but Airbus is also selling their A318 dirt cheap to attract customers. The argument goes both way. Somehow, you just want to believe Boeing is selling their planes dirt cheap on some of the deals, but you refuse to believe Airbus is doing the same thing.
 
ba777-236
Posts: 645
Joined: Sat Oct 27, 2001 11:35 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 10:23 am

I think it just seems that airlines that order new Airbus fleets are going bankrupt. Here in Canada, Canada 3000 was thriving in the charter market, they ordered several A330's and started scheduled service and last October they flopped Sad But I just believe it's a bad coincidence.
I like British Airways! I'm not sure why, but I do! ;-)
 
n949wp
Posts: 1398
Joined: Thu Feb 03, 2000 3:45 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 10:34 am

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

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

'949
 
cedarjet
Posts: 8101
Joined: Mon May 24, 1999 1:12 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 10:41 am

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

Sabena 690, I have to take issue with your statement that Sabena and Swissair could have been the "strongest airline group in Europe" if Swissair had been more honest or whatever. I don't know what possessed Swissair to embark on the path a more perceptive contributor described as "buying bankrupt airlines and pumping millions of dollars into them", but I DO know that Sabena hadn't made a profit since 1959 and was in useless shape, disliked by passengers and a massive financial burden to anyone who came near (didn't BA look into buying some of SN about ten years ago to establish a joint hub at Brussels, before recoiling in horror?). I'm sorry to be so critical but the idea of an airline that had been unprofitable for 43 straight years being part of the strongest airline group of anywhere (let alone Europe) is frankly impossible, and it is the worst form of denial think otherwise. The only mistake Swissair made was getting involved in the first place, and not withdrawing sooner. As has been said above, Swissair were a viable operation, much respected around the world and loved by the classiest members of the travelling public. Pissing about with the likes of Air Outre Mer, Portugalia and their bete noir, Sabena, was what killed them.
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
 
The Coachman
Posts: 1192
Joined: Sun Apr 29, 2001 9:57 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 11:05 am

Yeah, add QF into the mix.

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

I wouldn't call that a small order...and QF is by no means financially insecure (in airline terms anyway).
M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
 
User avatar
OA412
Crew
Posts: 3778
Joined: Thu Dec 28, 2000 6:22 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 12:54 pm

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

EXACTLY!!!!! To this day, I still cannot believe that an outfit as classy, well respected, and much beloved as SR would get in bed with the likes of SN, AOM, Air Liberte, TAP, etc., etc. nevermind the fact that their own arrogance would lead them to allow these loss making carriers to blead them dry. What the hell were they thinking?
Hughes Airwest - Top Banana In The West
 
Reggaebird
Posts: 886
Joined: Tue Nov 02, 1999 7:43 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 1:03 pm


Midwest Airlines bought the B717 because it met their performance demands and the price was right. Besides, the Airbuse A318 is just too heavy. It's seat/mile costs are the highest for 100-seater aircraft.
 
9V-SVE
Posts: 1953
Joined: Mon Nov 12, 2001 7:51 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 1:30 pm

HKGSpotter1, I wish that you post as good as when you post in the Project Airbus forums!
 
gerardo
Posts: 3372
Joined: Sun May 21, 2000 6:22 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Thu Jun 13, 2002 2:50 pm

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

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

Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
Udo
Posts: 4288
Joined: Tue May 18, 1999 5:16 pm

Wow!

Thu Jun 13, 2002 3:58 pm

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

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

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

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

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


Regards
Udo
Me & You & a Plane Named Blue...
 
CX747
Topic Author
Posts: 5579
Joined: Tue May 18, 1999 2:54 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 10:53 am

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

Also, do I think that a new fleet of A32Xs can operate more efficiently than a mixed fleet like U.S. has? Definately, but if your company goes bankrupt while making the switch, then it really hasn't helped you now has it?
"History does not long entrust the care of freedom to the weak or timid." D. Eisenhower
 
aussie_
Posts: 1600
Joined: Mon Dec 11, 2000 10:39 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 10:59 am

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

Never got off the ground...

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

That said, it is all coincidence and just a bit of fun... Many of these airlines had Boeing planes too. Impulse for example flew a new fleet of 717s...
 
gr8slvrflt
Posts: 1449
Joined: Wed Jan 30, 2002 10:53 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 11:32 am

I think we're on to something here. Braniff (II) and Pan Am both ordered large Airbus fleets before their respective demises. Wink/being sarcastic
I work for Southwest, but the views expressed are my own and do not necessarily represent those of Southwest.
 
Guest

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 11:37 am

Udo,

America West is not doing good. They are living on the Goverment.
 
IMissPiedmont
Posts: 6200
Joined: Wed May 23, 2001 12:58 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 12:09 pm

What? I'm just more than a bit confused. This seems to have degenerated to a rather silly question to even sillier responses. Airbus has only been around for 30 years so the list of airlines that ordered/operated them will seem high. Perhaps someone would like a list of the carriers that focused on other manufacturers that have failed in the past 57 years?

As I said, I'm confused. I doubt that an airline ordering AI aircraft is statistically more apt to go out of business than those that ordered the DC-1. Oops, bad example.

PS : Why is Airbus still not recognized by the ANet spell checker?
The day you stop learning is the day you should die.
 
Guest

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 1:38 pm

because it's not a word.
 
DeltaBoy777
Posts: 394
Joined: Sat Jun 16, 2001 4:22 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 1:41 pm

Since I am a Boeing guy, I will not comment on this. Although buying alot of Airbus before going bankrupt has nothing to do with the orders just bad judgement from the airline.
Thanks and Gig Em!
 
david_mx
Posts: 189
Joined: Wed Nov 10, 1999 10:44 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 2:02 pm

In the Mexican side, MX is replacing their 727's with A320, their 727's were the MX workhorse for 20 years, and they are really happy with their A320 series aircraft. Just got the A319. MX Situation is not that bad as other airlines. MX Is facing to get an all Airbus fleet and I'm sure they will replace their F100 with A318. I think is the fleet renewal will be great for MX.

David.
 
Guest

RE: Is A Large Airbus Order A Sign Of Airline Death?

Fri Jun 14, 2002 2:26 pm

who cares about Mexicana. AeroMexico will always rule mexicos skys!
 
david_mx
Posts: 189
Joined: Wed Nov 10, 1999 10:44 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Sat Jun 15, 2002 1:45 am

Boeing: As a Mexican I care, and every Mexican should because basically MX and AM, including their regionals, and SEAT (ground support) are the very same company. Owned by the government and IPAB (government institution that made a rescue after 1994 crisis), paid with my taxes.

David.
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Sat Jun 15, 2002 4:18 am

This is a good illustration of the concept of causation versus correlation. I do not believe that buying Airbus aircraft is a sign of financial distress or a decision that will lead to financial problems. There is no evidence to support it but some interesting anecdotes are there.

If CX747 is somehow right, then Emirates just shot itself and took cyanide at the same time.
 
Udo
Posts: 4288
Joined: Tue May 18, 1999 5:16 pm

RE: Is A Large Airbus Order A Sign Of Airline Death?

Sat Jun 15, 2002 4:26 am

If we take EK's upcoming additional A380 orders into consideration we could even add simultaneous stabbing to the cyanid and the bullet...

Causation versus correlation...and again we have familiar words of statistics classes here...


Regards
Udo
Me & You & a Plane Named Blue...
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Sat Jun 15, 2002 4:31 am

If you add the 2 A330s that were announced this week- they set themselves on fire as well.
 
A388
Posts: 7190
Joined: Mon May 21, 2001 3:48 am

RE: Is A Large Airbus Order A Sign Of Airline Death?

Sat Jun 15, 2002 5:12 am

I just find this whole post being ridiculous. An airline's demise doesn't have anything to do with the fleet renewal programmes (of any size). It's bad management. The airlines mentioned were already in a bad shape, as others already said and have nothing to do with the aircraft types they use or ordered.

Regards,

A388