ultrapig
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Primaris 787 Order

Tue Apr 26, 2005 11:09 pm

Many people have questioned whether the big order is real since there is no evidence they have financing-But with the order book filing up is it conceivable that Primaris's biggest asset may be its delivery positions? Right around the time of deregulation some airlines (including Ozark) made a few bucks by selling airplanes they never took delivery of!
Any thoughts?
 
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RE: Primaris 787 Order

Tue Apr 26, 2005 11:11 pm

I heard they might actually do a sell-lease back of the 787 with ILFC (can't recall where or when I heard that) but it would make sense for them to do that as they don't have too mcuh in terms of capital right now.
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scbriml
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RE: Primaris 787 Order

Tue Apr 26, 2005 11:18 pm

Primaris will never take these planes.

I think as far as Boeing is concerned, Primaris served its purpose by getting the 787 some early publicity. I can't imagine Boeing keeping production line slots for Primaris for very much longer (if they haven't already returned the deposit).
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leelaw
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RE: Primaris 787 Order

Tue Apr 26, 2005 11:32 pm

Quoting Ultrapig (Thread starter):
Primaris's biggest asset may be its delivery positions

Delivery positions themselves are generally not independently transferable to 3RD parties. If Primaris wants to play this game it would likely have to formally contract to purchase the aircraft and downstream them to other owners/operators by means of outright sale or capital leases.
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n801dm
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RE: Primaris 787 Order

Tue Apr 26, 2005 11:39 pm

Primaris is still operating with only one 757. They are a very top heavy company I cannot imagine how much longer they can sustain operations in the charter market with only one aircraft and no firm long term operating contracts.

What about the 737NG's they placed an order for in addition to the 787?


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N328KF
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RE: Primaris 787 Order

Tue Apr 26, 2005 11:41 pm

Yes, but Primaris could be sold to one of the majors, who would acquire it for slots. After all, what are its assets? Liabilties? A single 757?
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AeroWesty
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RE: Primaris 787 Order

Wed Apr 27, 2005 12:27 am

Quoting Leelaw (Reply 3):
Delivery positions themselves are generally not independently transferable to 3RD parties.

I was beginning to think of the same thing regarding Primaris' order while reading the other threads. But if Ryanair can buy 737's and make a profit selling them to a leasing company only to lease them back, what would prevent Primaris from doing the same with a lessor, only issuing the aircraft to another airline?

Southwest makes a ton of cash hedging fuel, maybe this could be a new form of financial derivative--aircraft hedging! I'm sure there are plenty of people (Icahn comes to mind) who could structure a deal for the cash needed to turn a quick profit.
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leelaw
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RE: Primaris 787 Order

Wed Apr 27, 2005 12:50 am

Quoting AeroWesty (Reply 6):
I was beginning to think of the same thing regarding Primaris' order while reading the other threads. But if Ryanair can buy 737's and make a profit selling them to a leasing company only to lease them back, what would prevent Primaris from doing the same with a lessor, only issuing the aircraft to another airline?

Southwest makes a ton of cash hedging fuel, maybe this could be a new form of financial derivative--aircraft hedging! I'm sure there are plenty of people (Icahn comes to mind) who could structure a deal for the cash needed to turn a quick profit.

It's an interesting concept "Westy," but I'm confident Boeing has restrictions in these "refundable deposit agreements" which effectively block Primaris from profiting in such a manner from any price premiums which may develop in the 787 marketplace. Namely, there is an outright prohibition against transferring the delivery slots held for refundable deposits to 3RD parties, and transfer of any such delivery slots to successor owners of Primaris itself may subject be to approval by Boeing. Why should Boeing cede potential price premiums to Primaris when all it's put at risk is a refundable deposit?
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AeroWesty
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RE: Primaris 787 Order

Wed Apr 27, 2005 1:27 am

Quoting Leelaw (Reply 7):
Why should Boeing cede potential price premiums to Primaris when all it's put at risk is a refundable deposit?

It's called "leverage" in financial circles. I don't see how Boeing could prevent Primaris taking delivery in much the same way Ryanair did, and then selling them to a lessor.

Quoting Leelaw (Reply 7):
there is an outright prohibition against transferring the delivery slots held for refundable deposits to 3RD parties

It's not unusual for one airline to buy aircraft already in production for another airline. United did it with a couple of 747-400's destined for Northwest in 1994, although I'm not familiar with whether NW profited in the transaction or not.

All I'm suggesting is that there "may" be a way for Primaris to take advantage of having ordered early, in consideration of the general consensus that they will never take delivery of what they ordered. No one without the specific contract in hand can really say one way or the other if it's possible or not.
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PanAm_DC10
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RE: Primaris 787 Order

Wed Apr 27, 2005 1:33 am

Quoting Scbriml (Reply 2):
Primaris will never take these planes.

Yes they will, via ILFC.

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MidnightMike
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RE: Primaris 787 Order

Wed Apr 27, 2005 1:35 am

Primaris has most of the financing in place, so far, Primaris will take flight next year.
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DeltaA380
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RE: Primaris 787 Order

Wed Apr 27, 2005 2:15 am

If Primaris was able to find a way to profit from this early 787 order my question would be; what is the timeframe for selecting the options you want in your new 787 and what opportunities are there for another airline that gets the rights to change the configuration before the aircraft is completed and it becomes cost prohibitive to do so (e.g. engines, seating etc)?
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leelaw
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RE: Primaris 787 Order

Wed Apr 27, 2005 2:41 am

Quoting AeroWesty (Reply 8):
It's called "leverage" in financial circles.

You can't leverage something which isn't at risk, a refundable deposit by definition isn't at risk.

Quoting AeroWesty (Reply 8):
I don't see how Boeing could prevent Primaris taking delivery in much the same way Ryanair did, and then selling them to a lessor.

They couldn't. But at that point the transaction would be governed by a purchase contract for which valuable consideration has been exchanged, not a refundable deposit agreement to hold open a delivery slot. IMO, there is a huge difference as I discussed in my prior replies.

AFAIK, all Primaris has done so far is make a refundable deposit to hold a delivery slot.

Quoting AeroWesty (Reply 8):
All I'm suggesting is that there "may" be a way for Primaris to take advantage of having ordered early

IMO, unless Primaris progresses beyond refundable deposits and enters into an actual purchase contract, or at least purchases an option to buy there isn't an "order" and no way to profit from it.
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MAH4546
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RE: Primaris 787 Order

Wed Apr 27, 2005 2:58 am

Quoting N328KF (Reply 5):
Yes, but Primaris could be sold to one of the majors, who would acquire it for slots.

What slots?
a.