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lightsaber
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Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:07 am

I was just reading my online Wall Street Journal and was surprised there wasn't a thread on the discounts easyjet received for their Airbus order.

http://online.wsj.com/article/0,,SB110746205226745296,00.html?mod=todays_us_money_and_investing

Analysts figure easyJet received a 50% discount on the $44 million list price of an A319. EasyJet itself told shareholders at the time of the purchase that it was 33% less costly than the Boeing 737 aircraft that formed its initial fleet.  Wow!

Mr. Avery figures easyJet buys the planes at around $22 million each, assuming a 50% discount. It quickly sells the bulk of them to different aircraft-leasing companies for about $28 million each, published figures reveal.

 Wow! A quick instant profit off cheap jets!  Wow!

If there is already a thread... mea culpa, I didn't find it.
I'm just wondering if B6 received discounts like this. If the leasors are willing to buy aircraft to lease back for more than the airline paid... This gives quite a leg up to the airline that received the discount.

Note: this isn't a "B6 didn't pay for their jets" thread. I've argued before that they received great pricing on the A320's (and E190's). This is the first reputable article I've seen that quantified the discounts airbus gave in the time frame of interest.  Smile

Lightsaber
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NWDC10
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:12 am

I don't buy jets but i do shop for bargains/sales to streatch my dollar. If i were in the airline industry, i'd do the same for a/c. Robert NWDC10
 
A340600
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:16 am

Though generally more popular with EZY crews and passengers, the A319 is proving a bit of a trouble for EZY. They've always got an old 733 in bacuase one isn't working,

Sam
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:21 am

A340600

Can you be specific on the A319 trouble for EZY? (Link?)

I'm trying to keep this from going A vs. B and instead keep a discussion on the aircraft discounting that was/is going on. I'm fascinated that analysts believe such discounts occurred. (They tend to be good at following the money...)

But... Obviously I've left the door open for EZY A319 discussions too! I just don't want my 2nd thread started to go A vs. B.

Lightsaber.
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A340600
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:25 am

I am not turning this into an AvB thread. As many know, i easily prefer the A319, but EZY has had many many troubles with their batch. My father works at LGW on pier 1 with them and he says that on average 2 of them break down a week. Sometimes, you go to LGW and there will be 3 733s, all standing in for broken 319s!

Something else interesting, EZY are looking at BA for maintenence at LGW, one of the BA employees told me. The thought Laugh out loud!

Sam Smile

[Edited 2005-02-05 03:34:57]
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:30 am

Sam/A340600
Thanks!  Smile The facts from your dad were exactly what I was wondering.

Neil/Lightsaber
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A340600
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 11:35 am

Pleasure to be of help,

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LRGT
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 2:05 pm

I was wondering the same thing myself...YOU BEAT ME TO THE THREAD Lightsaber!

Who is the leasing company that paid $28M each? I think they got quite the bargain too!!!

I find it difficult to beleive the A319's are so unreliable.
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N867BX
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 2:29 pm

Hmm...

I think I will order up one 319 and then sell it to a leasing company. I could live well on $6,000,000. Do you think Airbus will take a personal check and not cash it till I resell the plane?
 
LRGT
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 2:40 pm

N867BX...Do you have an famous airline with an all-Boeing fleet???
Don't bring up the NW DC9's unless you have to!
 
Planesmart
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 3:02 pm

Analyst/s are better informed than leasing companies that actually deal with A & B? I don't think so. Leasing companies are so badly informed that they wouldn't order A319's for the same $'s as EZY?

The analyst should look a bit more carefully at the order / current ownership / common shareholders, and they might think up another explanation.
 
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 7:57 pm

U2, like all businesses, exist to make a profit (accept those that don't make a profit, like charities). Accordingly, it is essential to be as efficient as possible to help in the achievement of this. This explains why they rightly negociated very keenly and got such an excellent deal. From the sound of it, numerous people on this website would accept the listed price and pay that.
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
EZYAirbus
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 8:04 pm

we do have some problems with our A319s most probably teething problems, on occasions we have had to replace the daily A319 service to Dortmund with a 737 on occasions, the A319 landed at LTN and been stuck here once, nothing serious though has gone wrong yet!

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BALandorLivery
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 8:45 pm

Looks like airbus will do anything to sell its aircraft these days.

Thats a big discount!! How much profit can they make from those prices?
Are they doing this just to undercut Boeing and to try 2 get more of a cut in the low cost market?

Also which other airlines have had discounts in order to get airbus orders rather than Boeing orders?

no A v B war comments though pls
Regds
 
Leskova
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 8:53 pm

Looks like airbus will do anything to sell its aircraft these days

These days? This order isn't exactly a recent one... they received their first planes in 2003...

In any case, yes, Airbus does discount the planes - so, by the way, does Boeing, even if not as far as Airbus. Then again, who really knows...

As for the constant and recurring claims that Airbus sells its planes below cost... no-one has ever been able to bring up real proof of that, and as long as Airbus continues to produce healthy profits, I guess they really won't change anything in the way they do business - after all: why should they?

Regards,
Frank
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BALandorLivery
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 9:08 pm

Leskova :

Thats a very good and valid point.

I am not suggesting that Boeing don't discount, of course they will offer deals.
And yes airbus do continue to post profits.

But 33%-50% off list price, if those figures are true, is a huge reduction in price.

It would be interesting to find out how much money they make of those orders and how much money they make off a normal list price A319 sale.

Regds.
 
A340600
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RE: Easyjet A319 50% Price Discounts

Sat Feb 05, 2005 10:45 pm

the A319 landed at LTN and been stuck here once, nothing serious though has gone wrong yet!

Wait till you have hundreds of Bus flights a day, then they'll start! They are having major teething problems, but let's hope everything is ok soon!

Sam
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glideslope
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:03 am


OMG!!! Talk about subsidies!!!  Nuts

The truth is starting to come out. Keep the WTO pressure on!!!
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ramerinianair
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:41 am

So what is Airbus' goal in the industry? Do they really NEED all that money from Germany and France amoung others????? Is a 50% discount really warranted to compete???
From what it sounds like, even steep discounts cannot fix bad dispatch rates!
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pelican
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:51 am

@RamerinianAir
You should know the reasons for their bad dispatch reliabilty before making any comments...

pelican
 
Aither
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:54 am

A lot of BS in this thread.

Just wondering why Boeing did not go straight to the WTO years ago...

The A319 is an excellent aircraft. Purchasing price is important for the LCCs but quite less important that pure operational economics (otherwise they would just operate second hand aircraft). Indeed, LCCs operate their fleet with a high utilisation so they are "the most" operational costs sensitives.

Now about the 50% discount - we don't no for sure - think about economics related to volumes.
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AirbusDriver
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 1:05 pm

50% OFF I don't think so!!! They got the order because it's a better plane, I know I've got thousands of hours on both...Day and night...
 
gkirk
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:06 pm

They got the huge discount, and Airbus offered to train their pilots for free on the A319.
Just like when Ryanair ""raped" Boeing for their 738s
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Pe@rson
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 7:13 pm

It's business. Negociation is fundamental until one side can sell at a price they're willing to and the other can get a very decent - and discounted - price for bulk-buying. If, say, you wanted 1 million cars you would, if you were sane, negociate until you reached a decent discounted price - somewhere, perhaps, between half and the three-quarter price for one car. Yes, the dealer would be getting less for each car, but overall would be earning a considerable sum. If a sufficently discounted price was not reached, then it might be possible for the potential buyer to go elsewhere.
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N79969
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 8:16 pm

I think the bulk discount notion is very obvious. It is a well-known and routine business practice from retail sales to aircraft sales. I doubt the Wall Street Journal needs to educate readers about this concept and devote an article to it. I think the issue is how narrow of a profit or how big of a loss Airbus absorbed to get a foothold into a market it deigned "strategic."

It is doubtful that was the only sale in which Airbus aimed for market share over profit. Although I have not read Milton's book, Airbus supposedly sold A340-500 to Air Canada at $80 million each. (I believe that is the source) While I have not purchased an airplane, I know enough to know that is a hugely discounted price.

EU competition doctrine aims to ensure competition by essentially protecting competitors. But I would bet money that the responsible DG in Brussels would never be allowed to even begin an anti-dumping inquiry against Airbus not even for a sale in Europe.

[Edited 2005-02-06 12:44:46]
 
A340600
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 8:49 pm

Exactly, for all those complaining that Airbus are offereing EZY such good prices, wonder how FR got all those 738's!

Sam
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Leskova
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 8:53 pm

N79969, seeing that not even the US authorities have, to my knowledge, opened up an anti-dumping inquiry about Airbus, I doubt that the European side sees a real necessity to do so...  Big grin

I do have to admit, though, that I'm not sure who would have to lodge a complaint for such an inquiry to start - could, in theory, Boeing do so, or would it have to be a European competitor? If the latter, the question of why it hasn't happened would practically answer itself - after all: what European competitor?

Regards,
Frank
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 9:01 pm

LCC don't buy 2nd hand planes because Airbus have forced the price down that much, that it is cheaper, to buy new ones, once maintenance etc of 2nd hand planes is considered.

I casn think of 2 times where Airbus itself has as much as admitted they have sold aircraft bgelow cost.
The first is Easyjet itself where the comment was that the deal is "cash flow positive", which is a nice way of saying we sold them for more than they cost to build if you don't consider development costs etc, etc, etc. In fact if the Easyjet 319's are giving a spot of trouble, then Airbus will be feeling it because part of the arrangement was that they would meet the extra costs of chnging from a one type fleet.

Second, many years ago it was reported in FI in a very small tucked away paragraph, mention was made that some Airbus official had let slip that overall, sales of Airbus aircraft to the USA was running at a loss. I'm not going to go look for it.

Airbus will rue the day they started discounting when the next recesuion comes and they have large nunbers of employees, whom they can't put off and not a lot of sales to support them.

Ruscoe
 
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 10:00 pm

A340600,
Your info is incorrect and sensationalist. I have flown over 300 hours in the last 6 months and not had one AOG. The 3 -300s you talk about were there to cover the late delivery of 3 A319s, that had engine damage before delivery due to a damaged runway at the Airbus field. Sure we get some technical glitches but no more than I had on the 737-700, and certainly a lot less on the -300.
Also FYI we have 30 A319s around our bases (not just LGW!) with one being delivered every week for the foreseeable future. I guess that would count as hundreds of flights per day already!
 
A340600
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 10:50 pm

Calm it Laugh out loud

Actually the A319's have had a lot of teething problems themselves, ask a lot of EZY staff.

Oh and also, I never said LGW had all the A319's. I know we do not, obviously. However, LGW is the biggest all bus base, therefore, we do see the most EZY bus flights a day.

Oh, and also, EZY are not recieving new A319's every week! The recieve 1/2 a month, do you maths Big grin

I do prefer the 319s, they are much nicer a/c, they have just had a lot of teething problems,

Sam Smile
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planesarecool
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 11:25 pm

Actually sam, for the first few months of 2005 they are/have been coming every 8 days, which is nearer to a week (7 days) than half a month (15 days).

13th Jan: G-EZMK
14th Jan: G-EZEY (Delayed)
21st Jan: G-EZMS
1st Feb: G-EJJB (Delayed)

Then

7th Feb (Tomorrow): G-EZBS
15th Feb: G-EZPG
23rd Feb: G-HMCC

Now disregard the delays and you have one order every 8 days.

And also like Rightwayup said the B737-300's were to cover for delayed delivery of G-EZEY, G-EJJB and G-EZMS. Not because they were "broken."

The only real problems they did have were before delivery that caused a lot to be slightly delayed.

-Stephen
 
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 11:48 pm

A340-600
You are reporting 2nd hand info and obviously do not have a tab on what is going on at LGW. You say "ask Easyjet staff". Everyday I sign the techlog to accept an Easyjet A319. I think that puts me in a position to know the score.
If you are going to make such strong and sweeping statements such as "They've always got an old 733 in bacuase one isn't working," then I suggest you improve your sources.
 
N79969
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RE: Easyjet A319 50% Price Discounts

Sun Feb 06, 2005 11:59 pm

Frank,

The US anti-dumping laws apply in cases involving imports to the United States. They could be invoked in neither the Easyjet deal nor the Air Canada deal.

On the other hand, if the EU does have the authority in the case of EasyJet.
 
A340600
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 12:05 am

Oh for god's sake just calm down. There were a lot of EZY 319s breaking down, and yes, it appears that the teething problems are pretty much sorted Big thumbs up

Apologies for not knowing the 8 day deliveries, I have not caught up with the last few EZY deliveries, back on the ball for me, apologies,

Sam Smile
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Leskova
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 12:11 am

N79969, I'm well aware that the US laws are not applicable in the cases of U2 and AC, but what about the jetBlue deal - one where some have gone as far as claim that B6 got the planes free from Airbus... or Frontier, another deal where claims of extemely high discounts have repeatedly been made? Any inquiries in those cases?

And I'm still not certain if the EU - or the US - would start an inquiry without anyone actually complaining: to my knowledge, someone has to file a complaint (which is usually a competitor - which is why I mentioned Boeing) and that complaint gets investigated... or do either authorities start investigating without receiving any complaint?

Regards,
Frank
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Pe@rson
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 12:12 am

It is still humous that a mere fan is arguing against a pilot with the concerned airline on a topic on which one party will have considerably greater knowledge.  Smile
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
RightWayUp
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 12:23 am

Sam,
I am very calm. I just don't appreciate loose statements from which the travelling public will infer that Easyjet at LGW are unreliable, when they clearly are reliable. In a relatively short airline career so far (15 years) I have been made redundant 3 times. At least 2 of those redundancies were due to loose and untrue gossip around the aviation industry that destroyed any hope of those companies surviving. Unfortunately mud sticks, and gossip however untrue can undermine a companies position.
Anyway I think we should lay this to rest, as I think we have hijacked the original thread enough.
BTW Nice website!
 
N79969
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 12:52 am

Frank,

I should prefaced with an "as you know" in the last post.

I have heard of Airbus being aggressive in the U.S. but not predatory. I think Airbus knows they have to be careful in that respect when selling in the U.S. market. The CEO of JetBlue was quoted as saying that Airbus was not pricing all that low.

It is only from outside of the United States do I see actual numbers reflecting extremely large discounts- where they are safe from an anti-dumping case.

I also believe that competitor complaints are the trigger for dumping investigations.
 
icebird757
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 2:09 am

No we do not recieve any major discounts. We(jetBlue) pay around $54 million a piece for our planes.

[Edited 2005-02-06 18:10:28]
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Planesmart
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 3:42 am

Even though A & B contracts follow a fairly consistent format, it can be difficult, if not impossible to at a glance work out the purchase price.

And anyway, define purchase price?

For tax reasons, most western airlines want minimum capex, maximum non-capex. Did the price include/exclude fitout? Was the price the tax-effective capex only (purchase routed via Caymans, Jersey, Cook Islands, Netherland Antilles)? Was the aircraft priced ex-engines (because separate purchase contract, or leased, or power by the hour) ? Was the price the funded cost of the aircraft less buyback value? Was the price less deposit / less trade-in? Was the price 2000 value (time of ordering) or 2003 (time of delivery)? Did the price include/exclude local taxes? Were there a few white tails included? Wht else was packaged, and how was this priced?

Find it hard to believe students, rampers, flight crew, etc on this site have access to detailed and confidential pricing information, and are skilled enough to analyse and work out an effective purchase price. Ditto journalists, even if they call themselves analysts. Do groomers at Budget and Avis know what their employers are really paying for Ford's and Mercedes?

A unit price might be stated in a press release or annual report, but never the detail surrounding it. In fact this is always the subject of a confidentiality clause, at the request of BOTH parties.
 
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lightsaber
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 10:28 am

Planesmart: I agree, purchase price can be a slippery slope, but if analysts, who ONLY care about the money, say EZY is making a profit reselling to lessors from a source such as the WSJ, I would believe they received a low price. Just good negotiating.

As others had noted, this was a bulk discount. I'm being too lazy to find the original press announcement, but a big part of the cut in price is:
1. Buying a lot of planes at once.
2. Short delivery time frame
3. NO variation plane to plane (and if EZY wants variation, they'll pay for it)

This improves manufacturing efficiencies. In the last four years, Boeing has cut their cost per plane ~ 20%. The rumor mill suggests airbus has done better on the A320 family. I know with Pratt, if we had high volume orders that lasted more than two years it was possible to cut the costs by more than 25%. (e.g., order castings 18+ months out, buy long lead materials in bulk rather than in batches, etc.) N79969 states correctly that there is an obvious business benefit with economies of scale. The "rule of thumb" for elasticity in manufacturing is 50% of the cost for 10X the volume (and airframes are considered one of the classic examples of this).

I was really hoping to find out more about the B6 prices when I started this thread. From what I'm reading, deep discounting doesn't seem to be the case. Yet... the rumor mill at Pratt was that IAE made a sweethart deal to B6 for the V2500's, including service (Pratt was the original assembler for B6's V2500's. Note I said rumor mill, I do not know the facts.) I'm also concerned with the facts of the F9 and America West deals.

Lightsaber.

Ps, I'm really glad to not have seen in this thread O'Reile's (sp?) famous quote when FR bought the 738's! In my opinion, B "knee jerked" to keep another LCC from defecting.

Edit: Stirling, thanks for the RR boost!

[Edited 2005-02-07 02:30:57]
"They did not know it was impossible, so they did it!" - Mark Twain
 
N1120A
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 10:38 am

>I'm just wondering if B6 received discounts like this. If the leasors are willing to buy aircraft to lease back for more than the airline paid... This gives quite a leg up to the airline that received the discount.<

Except for their start up planes, B6 owns most of what they fly.

>No we do not recieve any major discounts. We(jetBlue) pay around $54 million a piece for our planes.<

You have got the be kidding me. Of course B6 recieves really good discounts, they are a major Airbus customer and came to Airbus when Neelman was sure he would go 737-800. It is not that B6 does not pay for their planes (which they do), but they do get discounts like any other good customer at A or B
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
trevd
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 1:10 pm

Icebird757 - $54M is the list price and that's the only pricing info that is ever released to the public.

There's no question JetBlue got a great deal, but not around the 50% off like EZY got. But once Ray Webster's comments about the 50% off got around, you can bet that David (Neelman) was on the phone to Leahy!!
 
PVG
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 1:41 pm

Planesmart:

"EasyJet spokesman Toby Nichol said the company doesn't dispute Mr. Avery's general conclusions, although it can't disclose the price it pays for the new Airbus jets."

They more or less confirmed the guy's conclusions regardless of what the actual terms of the purchase/sale contract was. I appreciate your knowledge of the business, but why do you continually defend Airbus's methods? They made a decision a few years ago that they were going to buy market share in the LCC market and they went ahead and did it! I think that by now that is an indisputable fact.

Regardless of sophisticated finance arrangements, tax avoidance schemes, etc... there is a cost. At the end of the day there is a cost. Someone has to pay the cost of producing the plane. You can hide it for years by using sophisticated accounting and finance methods, but there is a cost. There is a cost! There is a cost! Why won't you just admit it! If was just a matter of finance and accounting, why can't Boeing do the same thing? I'm sure that they can figure out how to find a bank to finance and re-route the transaction through a tax haven. They don't because they're not willing to let the bank earn enough profit to justify the risks and use of capital. The fact is that Airbus has left so much money on the table that banks and airlines just can't refuse. 6 million bucks a unit? Are you kidding? That money is coming from AIRBUS and their European government backers who cannot lay-off employees and need to keep the lines moving at all costs. That is the reality. Why won't you accept it?

Airbus will rue the day they started discounting because they have forced their competitor to become so lean and mean that they can match their deals. Boeing has or will have labor and cost flexibilities that European operators can only dream about.
 
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lightsaber
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 5:17 pm

PVG
Airbus will rue the day they started discounting because they have forced their competitor to become so lean and mean that they can match their deals. Boeing has or will have labor and cost flexibilities that European operators can only dream about.
Does that mean that they will get away from their current paperwork system?  Wink/being sarcastic And yes, when Boeing goes to the RFID system, they'll turn the tides on this aspect (but then it won't be paper...). In other areas Boeing is hell bent on beating Airbus' cost structure. Both also outsource a lot.

Somewhere I read that both Boeing and Airbus have cut the cost of manufacturing a 737 (or 320 family) by 30% since 2000. In my opinion, the first airframer to get to Toyota efficiency levels will win. In 2000, both were at about 1/6th of Toyota's efficiency levels; Toyota remains the most efficient manufacturer in the world.

Trevd: What I would have PAID to listen to Neeleman calling in when another airline got a better deal. Hmmm... could the E190 order have anything to do with this?  Innocent

Oh, I see O'Riley's quote was used.  Pissed Just kidding!  Smile
"They did not know it was impossible, so they did it!" - Mark Twain
 
Planesmart
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 8:40 pm

Steady as she goes PVG.

In the mid-70's i tried to buy a new Porsche in the UK, and was turned down because i didn't meet Porsche ownership requirements. Nothing to do with having the cash. I just didn't meet the Porsche customer profile. Of course 5 years later they couldn't wait to get me into a car, right profile or not.

It was B that initially created A's niche with LCC's. The 737 was the LCC's aircraft of choice. B made a point of not doing business with them, or being difficult, even to the extent of giving advice on how to run an airline (= follow the US model).

B offended the finance industry, because on one hand we, and many others, were assessing and approving funding to purchase aircraft, and then B was telling customers to buy fewer, borrow less, grow more slowly, etc.

At the time, the only justification we could think of for B's approach, was that they were concerned failures could see large numbers of 737's dumped on the market, and orders for new aircraft cancelled before delivery.

Honestly PVG, B gave A a real shot in the arm where marketing to LCC's was concerned. And this approach wasn't just confined to LCC's. Any airline, based on B's assessment to be under-capitalised, poorly managed, in a less stable country, etc, got the same treatment. Even though they had NO credit risk.

If you read my 737 v A320 comments from y/day, you will see i say:

The B marketing team seem to have been given their mojo back, and are getting their act together.

Given rapid progress in other areas of the marketing package, i've no doubt that before the year ends, B will have head-hunted appropriate expertise to compete aggressively on all package components.

If you logically follow the A v B arguments on this site, if B overtakes A in sales, it will be because they are out-discounting them. Utter rubbish.

When it comes to negotiating expensive capital items, there is a lot of ego at stake. Some of the personalities boasting about how little they paid, are not making statements for a.net, but to wind-up competitors.

Do you think A would release info on past discounted A32 sales? More likely in fact that such news came from B, for the benefit of an airline they are currently negotiating a potential 737 order. Prospective customer says to A, we want the same deal. A says that was never the price. The customer says a respected analyst and a.net say otherwise - we want the same deal. Now if you are the customer, and A is not budging, which way are you leaning?
 
PVG
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RE: Easyjet A319 50% Price Discounts

Mon Feb 07, 2005 11:09 pm

Got it planesmart. I feel better now that I've got everything done before Chinese New Year.

I see your point. I think that B's concept was not to fuel too much competition for their loyal customers by selling too many cheap planes, ie SWA/Ryan etc... Didn't work in the end when you have a competitor that is willing to take any business that you refuse. In fact, I think that the aggressive sales tactics taken by A are going to come back to haunt them. I look at comments made by the chairman of SQ about being worried by the LCC competition in Asia and wonder if that will effect their long-term thinking in terms of who they buy planes from.

Gong Xi Fa Cai!
 
col
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RE: Easyjet A319 50% Price Discounts

Tue Feb 08, 2005 1:20 am

What advantage does Airbus have by offering two engine manufacturers against Boeings single. Surely, it is better for the airline to get a better deal from the engine manufacturers because of competition?
 
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lightsaber
Crew
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RE: Easyjet A319 50% Price Discounts

Tue Feb 08, 2005 2:07 am

Col: Bingo! On average an A320 engine sells for $900k less (each) than the 737 engines. Ok, at least in 2001. (I don't have current numbers.)

Planesmart: Interesting comment on the financing... As I think about it, the only rapidly expanding "new model" LCC on B is Ryanair. Note: I do not consider WN's ~12%/year expansion rate to be rapid.
"They did not know it was impossible, so they did it!" - Mark Twain
 
col
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RE: Easyjet A319 50% Price Discounts

Tue Feb 08, 2005 2:19 am

Lightsaber,

That is some saving on motors. Has RR pushed for an engine on the 350 yet?