art
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A350: What About Interim A330's Post 2012?

Tue May 23, 2006 7:51 pm

Airbus is a little (litotes) late with A350 EIS compare with 787 EIS. As I understand it, Airbus would supply A330 aircraft to airlines ordering the A350 as an interim measure. If this happens, what will Airbus do with these aircraft when customers hand them back on receiving their A350's?

On this basis, I see a problem: the more A350 orders there are, the more A330's Airbus will end up with in the next decade. What will they do with them? Will they convert them to freighters and sell them as such?
 
MYT332
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 7:55 pm

Quoting Art (Thread starter):
On this basis, I see a problem: the more A350 orders there are, the more A330's Airbus will end up with in the next decade. What will they do with them?

In a world where we still fly DC-8's and 10's from 30 years ago I think a 5 year old A330 will have no problems finding a home.
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Flying-Tiger
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 8:29 pm

Quite correct - I don't think that Airbus will have big worries about providing interim A330s. One even has to say the more the better. The more A330s are on the market and operated by 2nd-tier carriers / start-ups, the better are Airbus' chances to place new A350 with them.

Not to forget the potential conversion business for A330-200s (and maybe -300s) which will come up at one point. It is expected that the freighter market will grow by 100% until 2020 or so - plenty of space for converted A330s.

AND the spares business - the more busses fly, the more money they can make on spares.
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art
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 8:52 pm

Quoting Flying-Tiger (Reply 2):
The more A330s are on the market and operated by 2nd-tier carriers / start-ups, the better are Airbus' chances to place new A350 with them.

I think you make good point. However, what price will Airbus get when it sells these "returned" 5 year old A330's in the middle of the next decade? More than it cost to build them? I wonder.
 
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 8:59 pm

Quoting Art (Reply 3):
I think you make good point. However, what price will Airbus get when it sells these "returned" 5 year old A330's in the middle of the next decade? More than it cost to build them? I wonder.

Depends on the financing anyway. Are these owned by Airbus? Are they owned by the airline? Are they owned by one of the big lessors and just leased? Are they financed by a bank? Will all depend on these factors...

If these A330s have been flown for 5 years for the airline (and are not owned by Airbus, which is seldom anyway), then Airbus has received the buying price usually at aircraft acceptance. If they buy it back 5 years in the future they will certainly pay far less (depending on market, airframe etc condition).

But - as I said before - placing those frames with second-tier and start-ups might be financially quite attractive, as those carriers usually pay some kind of a risk premium factored into the leasing rate anyway (lower buying power compared to tier-one airlines anyway).
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 9:13 pm

Quoting Flying-Tiger (Reply 2):
The more A330s are on the market and operated by 2nd-tier carriers / start-ups, the better are Airbus' chances to place new A350 with them.

And the less chance ther would be of those airlines ordering the 787.
 
leelaw
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 9:13 pm

Quoting Art (Reply 3):
I think you make good point. However, what price will Airbus get when it sells these "returned" 5 year old A330's in the middle of the next decade? More than it cost to build them? I wonder.

That's the point that makes your thesis/argument meritorious. The example/historical comparison of the DC-8 and DC-10 is a good one, as it was the very precipitous, and relatively premature drop in their residual values at the time of a general fleet transition period, that made them attractive as freighter conversions.
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kappel
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 9:52 pm

Quoting Leelaw (Reply 6):
that made them attractive as freighter conversions.

That would of course also be attractive for the a332's. relatively new, but probably cheaper than a new a332F, IMHO lots of airlines would like this option to replace older a300F's
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leelaw
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 10:22 pm

Quoting Kappel (Reply 7):
That would of course also be attractive for the a332's. relatively new, but probably cheaper than a new a332F, IMHO lots of airlines would like this option to replace older a300F's

Such a "swap-out" scheme, would definitely be a delicate balancing act and relatively risky. IMO, after nearly twenty years experience in used-aircraft transactions, Airbus would be extremely fortunate to even breakeven with such an enterprise on a discounted cash flow basis.
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Stitch
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 10:27 pm

The A330 is a very solid plane and might very well find homes with smaller carriers who cannot afford the "latest and greatest" equipment. But more then residual values, I'd be a bit worried about how many airlines are in a position to face a competitor operating a more efficient plane with lower overall operating costs (the 787).
 
leelaw
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RE: A350: What About Interim A330's Post 2012?

Tue May 23, 2006 11:41 pm

Quoting Stitch (Reply 9):
The A330 is a very solid plane and might very well find homes with smaller carriers who cannot afford the "latest and greatest" equipment. But more then residual values, I'd be a bit worried about how many airlines are in a position to face a competitor operating a more efficient plane with lower overall operating costs (the 787).

The other reality that addresses this point, is that some of the "second-tier" operators have options to acquire/finance new-build aircraft through lessors at an attractive relative cost, that didn't exist 10-15 years ago; it has significantly changed the dynamics of the second-hand (after) market. Bottom-line is, if an OEM has to devise all sorts of "Rube Goldberg" schemes to sell a new-build, based on a clean sheet design, and its competitor doesn't, there might be something wrong with the business plan and/or the design.

[Edited 2006-05-23 16:44:15]
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boeingguy1
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RE: A350: What About Interim A330's Post 2012?

Wed May 24, 2006 2:48 am

Quoting Stitch (Reply 9):
The A330 is a very solid plane and might very well find homes with smaller carriers who cannot afford the "latest and greatest" equipment.

This strikes me as funny- Today, planes we see as old, without A-VOD or PTVs such as a 747-200 or a DC-10 or L-1011... in years to come, they will be 777's, A330's... it just amazes me!
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