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PanAm_DC10
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Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:04 pm

FARNBOROUGH, England, July 17 /PRNewswire-FirstCall/ -- The Boeing Company
(NYSE: BA) and Jakarta-based Lion Air today announced that the airline
exercised its purchase rights and ordered an additional 30 737-900ERs
(Extended Range). Valued at more than $2.2 billion at list prices, deliveries
of these additional 737-900ERs are scheduled to begin in early 2010 and
continue through 2012.

The agreement was announced by Boeing Commercial Airplanes President and
CEO Alan Mulally and Lion Air President Director Rusdi Kirana at the
Farnborough Air Show. Lion Air, the launch customer for the 737-900ER,
announced its first order for 30 737-900ERs and 30 purchase rights in July
2005. These two orders combined total 60 airplanes. Deliveries of the first
order are scheduled to begin in 2007.

http://www.boeing.com

The order is the 30 booked as UFO last week

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Flying-Tiger
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:08 pm

Two questions:

a) Who is financing this order? And is the first order already financed?
b) Where do they actually want to fly them? AFAIK the number of B737-capable airports in Indonesia isn't exactly high, and there is still competition out.
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:11 pm

Cool !  cool 

The 737-900ER is starting to appear to be a hit !

Halibut
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:23 pm

Anyone even slightly acquainted with Indonesian aviation should now be puzzled about how this most mediocre of airlines has been able to secure financing for 60 B737-900ER airframes, and, even more interesting, what they are planning to do with them.

As said above, the number of domestic airports in Indonesia capable of handling this aircraft is restricted, and Lion Air hasn't exactly been the biggest of successes on the international scene. The airline is currently operating all of 2 (two) international routes, between Jakarta and Singapore and Kuala Lumpur respectively. The Singapore route was such a disaster that the initial frequency of 4 daily flights was quickly dropped to just one.

On the domestic front, the market has been so saturated for quite a while now, that various airlines, inclusing Lion Air itself, have been forced to park planes. And with no improvement in the buying power of the average Indonesian on the horizon, there is no market increase to be expected.

Lion Air, meanwhile, has not been able -or willing?- to gather sufficient financing to upkeep its fleet of ageing MD80s, and several frames have been withdrawn from use and are now being cannibalized to keep the remainder of the fleet airworthy.

Given the sorry state of this company and many, many other background details, I cannot believe that Lion Air has been able to secure the necessary financing for the deal currently being signed. Nor have I any clue what they are ever planning to do with 60 of these frames, for that matter...
 
pavlin
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:25 pm

Is this thos UFO 30 737-900ER order?
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:25 pm

Quoting Flying-Tiger (Reply 1):
Who is financing this order?

The same financing is in place for this order as the first tranche they placed.

Quoting Flying-Tiger (Reply 1):
And is the first order already financed?

Yes via the Export-Import Bank, which is owned by the Government of the USA, whom have guaranteed the loans. The first orders financing, in addition to financing for this order, was finalised on the 30th of September 2005.

Also of note the President of Lion Air has stated that they intend to order the B787 in the future.  Wow!

Regards, PanAm_DC10
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DAL767400ER
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:26 pm

Quoting HB-IWC (Reply 3):
Given the sorry state of this company and many, many other background details, I cannot believe that Lion Air has been able to secure the necessary financing for the deal currently being signed. Nor have I any clue what they are ever planning to do with 60 of these frames, for that matter...

Agreed, but as long as they pay Boeing for the planes, I couldn't care less what they'll do with the planes  Silly .

Quoting Pavlin (Reply 4):
Is this thos UFO 30 737-900ER order?



Quoting PanAm_DC10 (Thread starter):
The order is the 30 booked as UFO last week
 
HB-IWC
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:33 pm

Quoting PanAm_DC10 (Reply 5):
Also of note the President of Lion Air has stated that they intend to order the B787 in the future.

The President of Lion Air has previously announced his company's intentions for so many mega projects, after which nothing was ever heard of them again, that these kinds of statements are to be taken with quite some grains of salt. Still, one has to give this company credit for closing this huge financing deal. I just can't see it happening...
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 8:44 pm

Quoting HB-IWC (Reply 7):
The President of Lion Air has previously announced his company's intentions for so many mega projects, after which nothing was ever heard of them again, that these kinds of statements are to be taken with quite some grains of salt. Still, one has to give this company credit for closing this huge financing deal. I just can't see it happening...

HB-IWC I most definately agree with your statement and over the years have thoroughly enjoyed your knowledgeable and in depth posts on the Indonesion aviation scene, for which I thank you.

I too was of the same opinion as you and took the initial B739ER announcement with a grain of salt. But when they got Ex-Im Bank financing that gave me no choice but to sit up and take notice. However I have only seen part of their business plan which secured the financing for the 739ERs and I have to admit that the comment on the 787 has taken me by surprise. In this case I feel you are correct and that they will need to build upon their operation with the 737s before they will be in a position to order the 787.

Regards, PanAm_DC10
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:08 pm

Quoting PanAm_DC10 (Reply 8):
I too was of the same opinion as you and took the initial B739ER announcement with a grain of salt. But when they got Ex-Im Bank financing that gave me no choice but to sit up and take notice.

I believe, like you, that the 737 order seems to be a done deal. But there is no way that they will ever be able to deploy such a massive fleet using the business concept they have been using so far. I have seen no indication at all as so what kind of future operation Lion Air has in mind.

I thoroughly believe that Lion Air and its President are blinded by the success of Air Asia, and that they are planning to do what Indonesians are best at: copying others. Nobody in in this country has had an innovative idea in the past decade or so and so Lion's aim is nothing else than to become a copycat of Air Asia.

Yet to do so, the airline will have to deal with some huge stumbling blocks: Lion Air lacks the human resources, the know how, and last but most certainly not least the professionalism to set up and run an operation like Air Asia. And most of all: the market is just not there; not in Indonesia -where even the local Air Asia branch is suffering- and not in the immediate vicinity, where other, far more professional outlets, like Air Asia, Tiger and Nok Air, have firmly established themselves and are holding a strong grip on the market.

I wish them good luck, though, and I wish even better luck to the American financers of this deal. Many financing companies have previously been burnt through mega deals with Indonesian companies and quite a few of them are currently lining up with International Arbitration panels trying to get their money back.
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:20 pm

Quoting HB-IWC (Reply 7):
after which nothing was ever heard of them again

During my five years in Indoland, We were involved in many dreams that were ego driven by rich guys ,with no real numbers to finance them.
We had a saying for their meetings, another NATO "no action talk only"
 
HB-IWC
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:42 pm

Quoting Nitrohelper (Reply 10):
During my five years in Indoland, We were involved in many dreams that were ego driven by rich guys ,with no real numbers to finance them.

Here are some extracts of some of the multiple grandiose projects previously announced by Lion Air and its President:

- dedicated Lion Air Terminal 3 at Jakarta's Soekarno Hatta International Airport ;

- an own airport for all of Lion Air's flights, whereby Lion Air would take the lease of the entire Jakarta Halim Perdanakusuma International Airport ;

- a plethora of international destinations, including Amsterdam, Tokyo, Paris, Sydney, Perth, Beijing and others ;

- the acquisition of B747-400s and A330s for the previously mentioned international destinations ;

- and IPO on the Indonesian and selected international stock markets (Adam Air has similar plans) ;

and many, many more, apparently to be joined today by the annoucement of a future B787 order. None of the projects above, all of whcih were announced through formal press conferences, has even been heard of again. Most of it is no more than senseless grandstanding, with no numbers to back it up.

Today, though, apart from the out of touch B787 order intention, Lion Air seems to have secured international backing for what must be the largest order in Indonesian civial aviation history. The order, although seemingly signed and sealed, has not yet been delivered, and I will only believe that it is indeed reality when I indeed see 60 B737-900ER airframes up and running with Lion Air titles on them. My guess right now is that Lion will stop taking delivery after the first ten or so frames have been received...
 
LY777
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:44 pm

Congrats!!!the 739ER is going to be a success!!!
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:45 pm

Quoting HB-IWC (Reply 9):
I wish them good luck, though, and I wish even better luck to the American financers of this deal. Many financing companies have previously been burnt through mega deals with Indonesian companies and quite a few of them are currently lining up with International Arbitration panels trying to get their money back.

Thank you again HB-IWC for your insight and again I fully understand and accept your opinions and most valid input. It's just that in the case of LionAir the financiers are the taxpayers of the U.S.A. as the Ex-Im Bank is owned by the Government.

Regards, PanAm_DC10
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kanebear
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:48 pm

Which means we the US taxpayers will own these aircraft. Big grin
 
HB-IWC
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 9:55 pm

Quoting Kanebear (Reply 14):
Which means we the US taxpayers will own these aircraft.

Good luck having them repossessed when the airline keeps flying them on domestic stretches. Lufthansa can tell you a story or two about the time they were trying to get their hands back on the two B733s they leased to yet another Indonesian debacle: Indonesian Airlines. The companies can go to local courts, which in all their xenophobic wisdom these courts will rule invariably in favor of the Indonesian party in the dispute. There is no legal certainty whatsoever in Indonesia. That's why International Arbitration Panels are loaded with cases originating in the country.
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 10:05 pm

Quoting LY777 (Reply 12):
Congrats!!!the 739ER is going to be a success!!!

with 60 of all 63 orders up to date originating from one customer, that apparently doesn't have a very bright future? I think it's a little too early to speak of a success.
 
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clickhappy
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 10:10 pm

Hmmm, seems sketchy.

I would like to see the 739ER being ordered by some established carriers!
 
kanebear
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 10:12 pm

Quoting HB-IWC (Reply 15):
Good luck having them repossessed when the airline keeps flying them on domestic stretches.

Oh I never thought we'd be able to repossess the things... but we'll own them from start to finish. Just think of it as our little gift to Indonesian commercial aviation.
 
HB-IWC
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 10:23 pm

Quoting Clickhappy (Reply 17):
I would like to see the 739ER being ordered by some established carriers!

Well, Lion Air is most certainly established by now, albeit for all the wrong reasons. It must be the rattiest of carriers on the not all that resplendent firmament of Indonesian aviation. The airline has come to stand symbol for shabbyness and lack of reliability, yet can dispose of a phenomal PR machine which seems to be able to put a positive spin on the most horrendous of stories. After one of their MD80s came down the wrong way in Solo in December of 2004, they managed to make one of key headlines in the local newspapers to be their immediate disbursement of 5 million Indonsian Rupiahs (USD500) to the families of the victims. I can't wait to see tomorrow morning's newspaper headlines. It'll be Lion Air all over.

Quoting Kanebear (Reply 18):
Just think of it as our little gift to Indonesian commercial aviation.

How thoughtful, but the money would be far better spent feeding children currently starving in Eastern Indonesia. Stuffing Indonesian tycoons' hands with American tax payer dollars isn't exactly the epitome of humanitarian munificence.
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 11:02 pm

Quoting AMSSFO (Reply 16):
with 60 of all 63 orders

Shouldn't that be 67 as Excel Airways are taking 4 on lease from Avion via GECAS.

To add it appears Lion Air have found the money to power them too;

FARNBOROUGH -- July 17, 2006 -- Indonesian carrier Lion Air today announced that it has firmed option orders for 30 additional CFM56-7B powered Boeing 737-900ER aircraft. The engine order is valued at $360 million at list price. The airline, which placed an initial order for 30 aircraft in July 2005, will begin taking delivery of the new 737s in the first half of 2007.

Regards, PanAm_DC10
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 11:11 pm

When is the 737-900Er scheduled for its first flight, certification, and delivery? Wasn't there discussion that Alaska would be an excellent fit for this aircraft?
 
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clickhappy
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 11:12 pm

Rollout will be 8August, first flight is scheduled for late August, early September.

First frame will wear the Dreamliner house colors, with a Lion Air tail.
 
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RobK
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 11:14 pm

Like others, I'm very sceptical of this. In fact, I've said right from the start of the first order of 30 that they would never happen but as the first one is built and soon ready to make its maiden flight then it looks like it is happening! It's still to be delivered yet though and I'll only believe it when that happens and I see it in their colours and operating routes in Indoland.

I'd wager money on them not getting all 60 though. Should be interesting to watch what happens over the next few years.

R
 
AMSSFO
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RE: Lion Air Order 30 More Boeing 737-900ER

Mon Jul 17, 2006 11:50 pm

Quoting PanAm_DC10 (Reply 20):
Shouldn't that be 67 as Excel Airways are taking 4 on lease from Avion via GECAS.

GECAS/Avion is not listed at the Boeing website, so likely not firm (yet). Similarly, SpiceJet is not listed as well for 5.
 
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 12:01 am

Quoting AMSSFO (Reply 24):
GECAS/Avion is not listed at the Boeing website,

True though GECAS has already ordered them as 738s which are convertible into the 739ER, so it will appear as a conversion at some stage. Spicejet, you are correct in highlighting that they remain pending.

Regards, PanAm_DC10
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oldeuropean
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 1:43 am

This reminds me on the 787 order of Primaris.

Both were the launch commitments, (Primaris for the 787 and Lion Air for the 737-900ER) for a new type and seem to be more a PR spin of both, Boeing and the airlines, than serious interest to buy these planes. The difference is that Lion Air firmed the order.
But from the beginning, the doubts about the credibility of Lion Air and of their commitment rose and some connoisseurs of the Indonesian airline industry reported about an questionable airline.

I`m curious which cancellations will follow this of Primaris.

Axel

[Edited 2006-07-17 19:15:31]
Wer nichts weiss muss alles glauben
 
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clickhappy
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 1:48 am

While I don't think Lion Air is an ideal launch customer for a new model, comparing them to Primaris is way off base.
 
oldeuropean
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 2:11 am

Quoting Clickhappy (Reply 27):
While I don't think Lion Air is an ideal launch customer for a new model, comparing them to Primaris is way off base.

I didn`t compare Lion Air with Primaris. I had and have my doubts about the seriousness of their former commitments respectively the order.

Axel

[Edited 2006-07-17 19:20:15]
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kanebear
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 3:00 am

Quoting HB-IWC (Reply 19):
How thoughtful, but the money would be far better spent feeding children currently starving in Eastern Indonesia. Stuffing Indonesian tycoons' hands with American tax payer dollars isn't exactly the epitome of humanitarian munificence.



Quote:

S: (n) sarcasm, irony, satire, caustic remark (witty language used to convey insults or scorn) "he used sarcasm to upset his opponent"; "irony is wasted on the stupid"; "Satire is a sort of glass, wherein beholders do generally discover everybody's face but their own"--Jonathan Swift

The money would be far better unspent, untaxed, and remaining where it belongs with the taxpayers that earned it.
 
lutfi
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 11:00 am

My favourite Lion Air story. After the fatal crash in Jogja, JAMSOSTEK (the local national insurance/ Social Security) said so sorry, no life insurance payouts to Lion Air staff killed. Reason? Lion Air doesn't bother paying any payroll taxes to the Indonesian government (about 7% split between company and employee)

Their staff get paid by cash at the end of the month, as in banknotes. So nothing need be reported to the tax authorities...
 
mandala499
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 1:32 pm

WHAT THE? Another 30 739ERs?

Airports able to handle the 739ERs are:

Jakarta, Medan, Batam, Banda Aceh, Padang, Pekanbaru, Palembang, Banjarmasin, Balikpapan, Jogjakarta, Solo, Surabaya, Denpasar, Makassar, Palu, Kendari, Manado, Biak, Timika, Jayapura... (Though some of these are with weight restrictions)...

Given the improvements in the infrastructure, I am beginning to see how Lion can operate 30 739ERs... but not 60... This is UNLESS the deliveries are stretched over a VERY long period of time! (Say 30 over 5 - 10 years).

My guess is that they'll send about 10 - 15 of the planes to Vietnam and Myanmar on wet leases... and the rest will be in Lion... though I see no need further than 20 - 30 planes... Now, how are they going to use 20 more 739s on regional and Asian routes I dunno... This is the best estimate there is on how they will utilise the future fleet... And this will not be a pure expansion, just replacing the current fleet with these planes...

The dedicated T3 in Soekarno Hatta and the Halim Airport lease discussions did happen... Lion was playing the two airports against each other. The problem is that Halim has its hands tied as they are prohibited from giving another airline a monopoly deal on the airport until its "agreement" (MoU) with Lion expires... which is a pity...

Amsterdam is on the cards, but, as will all Lion talk, I know they've talked to Schiphol Airport's reps in Jakarta, but, another appointment regarding the route and whatever set up that's needed have not materialised in the past 2 months...

The IPO will not happen until the MD80s leave I bet... There are so many hands in Lion at the moment it would put a public company to shame! LOL But, given how they operate and how they are financed, an IPO is a long way off.

Then to add to HB-IWC's list of Lion's announcement was:
- "We'll be leasing 734s from Boeing's leasing subsidiary, GECAS" and...
- "We'll be leasing MD90s from McDonnell Douglas' leasing subsidiary, CIT Leasing" and...
- "We'll be taking in MD90s built after year 2000"...

All the three comments were quickly criticised as lies and Lion recanted all but the last one citing "journalistic errors" as a reason, and the last one was only recanted after an extensive search found that it was impossible for Lion to attain those aircraft and proved that the aircraft was not as they claimed.

However, contrary to most critics of Lion, I believe that they will get at least 20 of these 739ERs delivered... over a period of 5 - 6 years, and awaiting for the 734s to be be returned to the lessors... The remaining 739s will eventually replace Lion's fleet in Pacific Airlines (and MAI)... however, much of the success in their plans depend on the uphill struggle of the "good" within the airline against the "bad"... which have always won to date.

A sinister PR plan was discovered a few months ago regarding a "type replacement"... and a few more others... However, it is unethical to disclose this at the moment. If it is fully implemented, it is extremely destructive, however if successful, I can see why they're ordering 60 739ERs...

Mandala499
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socal
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 1:42 pm

I think this airframe is going to be a hot buy. Cant wait to see who else orders them.
I Love HNL.............
 
lutfi
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 6:00 pm

"A sinister PR plan was discovered a few months ago regarding a "type replacement"... and a few more others... However, it is unethical to disclose this at the moment. If it is fully implemented, it is extremely destructive, however if successful, I can see why they're ordering 60 739ERs..."

Oh come on, do tell! This wouldn't be a project to try and displace GA as de facto flag carrier....?

I hear that Cardig/ Mandala are in talks with Indigo partners/ Temasek to invest in Mandala. possibly tie up with Tiger
 
mandala499
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RE: Lion Air Order 30 More Boeing 737-900ER

Tue Jul 18, 2006 7:53 pm

Cardig bought into Mandala using money from Bimantara group in the hope that Indigo would join.... however, nothing's concrete at the moment.

Lutfi, I could, I want to, but unless I'm legally covered, I won't... especially under Indonesian law... I can however phrase it as: "it is rumoured that the airline intends to use the government for a blanket reason to phase out its MD82s, minimising penalty clauses, with repercussions of credibility throughout the Indonesian airline industry, of which, Lion or whoever is behind it is the major benefactor to such a move in the long run. This plan has so far been investigated for any possibility of containing the truth."

Hint: 732s having a lot of attention, but the MD82s are suffering the same if not worse incident/accident ratios.

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
lutfi
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 10:33 am

Gotcha  Wink Sneaky, especially with lease rates on B737-3/4/500's firming up at the moment.

Actually my new favourite LCC in IDO is Sriwijaya. Seems a no bullshit airline, that flies on a route I need to take often (JKT-MLG, especially now the SUB-MLG toll road is macet from the banjir lumpur)
 
TL925
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 11:21 am

Quoting Kanebear (Reply 14):
Thank you again HB-IWC for your insight and again I fully understand and accept your opinions and most valid input. It's just that in the case of LionAir the financiers are the taxpayers of the U.S.A. as the Ex-Im Bank is owned by the Government.

Not necessarily true that the Exim Bank is the financier of the aircraft. The financiers are in fact commercial banks who extend financing to the airlines, but these financial commitments are guaranteed by Exim Bank. Therefore, the take out for the banks are not the airline but in fact Exim Bank.

Quoting AMSSFO (Reply 16):
Good luck having them repossessed when the airline keeps flying them on domestic stretches. Lufthansa can tell you a story or two about the time they were trying to get their hands back on the two B733s they leased to yet another Indonesian debacle: Indonesian Airlines. The companies can go to local courts, which in all their xenophobic wisdom these courts will rule invariably in favor of the Indonesian party in the dispute. There is no legal certainty whatsoever in Indonesia. That's why International Arbitration Panels are loaded with cases originating in the country.

An interesting development in aviation finance is the Cape Town Treaty which is in relation to the protection of aviation objects for security (aircraft & engines) on a global basis. Though only 9 countries have adopted it so far (US, Nigeria, Malaysia, Ireland, Oman, Pakistan, Panama, Ethiopia & Senegal), the intention is to eventually have a global adoption of the Treaty. Indonesia is one of the world's most difficult legal jurisdictions as far as asset security, but I would assume the US govt would pushing as hard as possible for Indonesia to adopt Cape Town.
 
mandala499
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 12:08 pm

Looks like JT is financed with a 4 year grace period with 10 yrs payback thereafter or extendable to 25 yrs... at dirt cheap rates! With the aircraft as collateral... This explains the brave first few years of explosive expansion with utterly dirt cheap next to free fares!

US Exim banks just guarantees it to the manufacturer, and the US Exim banks get the promissory notes from a AAA issuer.

Something along those lines anyways...

Lutfi, SJY appears to be a no-nonsense airline... but until recently it has been total nonsense. However, sticking to their "strategy" is paying off... Gorontalo and Malang being a nice winner... But Adam's trying to dislodge the Malang airbase commander if they don't get given rights to use the airbase (typical eh?)... Next places targeted I think involves Madiun (this will be another FIRST!)... but the negotiations are far off. SJY's insistence on getting RVSM 732s are paying off... they are now preparing for -300s to come in, but they're not rushing... they're taking a looong time in studying its impact on their ops.... (I mean a VERY LOOONG time!) LOL...

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
lutfi
Posts: 687
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 2:20 pm

SJY also have decent maintenance on those B732's, allegedly.

Yes, MLG belongs to the air force still. It is a very cute airport, very fast and simple check in etc. And as Semeru & Bromo are both smoking, the flight in and out is beautiful (flying into the Malang basin, with volcanos on three sides, two active, cool...)
 
mandala499
Posts: 6458
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 3:28 pm

SJY's maintenance is done by AeroNusantara... we call them the wizards of the 732... Their foray into maintaining MDs flunked though... but with the 732s... how well you want your 732s depend on how much you wanna pay... that's ANI's bad side.

JT on the other hand, does its own maintenance or with Universal Maintenance in Bandung... that is a completely different breed... then you got BTV being maintained by UMC (which 6 grounded 732s lay a partial testimony)... Adam is the great unknown... Radar INOP in monsoon? Who cares... if pilots refuse then just fire them (great huh? so much for progress)

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
HB-IWC
Posts: 4033
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 7:46 pm

Quoting Mandala499 (Reply 31):
Given the improvements in the infrastructure, I am beginning to see how Lion can operate 30 739ERs... but not 60...

What infrastructure improvements? Did I miss something? Most Indonesian airports are still ratholes, to put it lightly. I really wonder how Lion is expecting to operate 739s into Jogjakarta, Solo, Banjarmasin and the like. Let alone 60 of them.

Quoting Mandala499 (Reply 31):
My guess is that they'll send about 10 - 15 of the planes to Vietnam and Myanmar on wet leases... and the rest will be in Lion... though I see no need further than 20 - 30 planes... Now, how are they going to use 20 more 739s on regional and Asian routes I dunno... This is the best estimate there is on how they will utilise the future fleet... And this will not be a pure expansion, just replacing the current fleet with these planes...

Well, they have previously stated that they were interested in venturing into the leasing business, so there's always a possibility, I guess. I wonder how they will be sending 10-15 frames to Vietnam and Myanmar, though. There are only so many routes those airlines over there can possibly open, so I don't see more than a handful of Lion frames ending up there, if any at all...

Now let's talk Lion's core business. Anyone will surely agree that there is no way that Lion is going to deploy many more than 20-25 frames in the domestic market in its current state. Is there a lot of improvement in sight? I highly doubt it. Inflation remains high and wages are not increasing likewise. Domestic airfares will remain under pressure for quite some time to come whilst the buying power of the average Indonesian remains miserable. And a 3-week holiday period in June and a couple of days around Idul Fitri are unlikely to bring much relief. Meanwhile, Air Asia is planning further expansion in the domestic market.

What about international expansion? Let's face it: Lion's international ventures have so far been no less than horrendous debacles. Singapore was launched with a lot of fanfare and then quickly reduced from 4 daily to 2 and later 1 daily, with even this one remaining flight not a very high flyer. Saigon was ended in complete disgrace. That leaves Kuala Lumpur and there is probably a bit of growth left in that market, but in immediate competition with Air Asia, there is not a lot of money to be had there.

So, Lion will have to expand on the regional scene. They could move into Canton, in direct competition of Batavia, Garuda and China Southern, all at rock bottom fares. Bangkok is another possibility, but who wants to fly Lion if equally cheap tickets are to be had on Garuda? Garuda is a laughing stock on the Hong Kong route, so Lion would be well advised to stay away from there, unless they want to move into the Surabaya-Hong Kong market, which might not be such a bad idea, but Garuda might very well beat them to such a move. Other options are Manila and Taipei, but all of those markets are well catered as they are right now.

Over to Denpasar then, and Lion might try and fill the void left by the demise of Air Paradise and open routes to Perth, Sydney and Melbourne. There might be a bit of a market there, but again, at what kinds of yields?

Overall though, Lion has some serious PR work to do on the international scene. Their product is shabby at best, and while they get away with this within the homeland, where shabbiness is the norm rather than the exception, other markets may be less than enchanted to let Lion run into their warm embrace given the current state of the airline. An overall product upgrade is needed for the airline to stand a chance on highly competitive regional routes. Ordering a couple of sparking new B739ERs is one thing, but not running them into a state of shabbyness within weeks is another...

All in all, I really don't see any valid ground to warrant the addition of such a large number of new jets. But then again, Lion Air's CEO, in all his wisdom, is probably a man with a plan...

Quoting Mandala499 (Reply 31):
Amsterdam is on the cards, but, as will all Lion talk, I know they've talked to Schiphol Airport's reps in Jakarta

No more than wishful thinking on behalf of the airline. Amsterdam is very much not on the cards for Lion. Talking the talk is one thing. Walking the walk quite another...

Quoting Lutfi (Reply 33):
I hear that Cardig/ Mandala are in talks with Indigo partners/ Temasek to invest in Mandala. possibly tie up with Tiger

That would likely be one of the smarter strategic moves taken by any of the local LCCs. A tie up with Tiger would make a lot of sense from Mandala's perspective if only to upgrade the tarnished image of the company and introduce much needed reform and hard ware and IT upgrades. I have my serious doubts, though, as to whether the Indonesian part of this equation will be able to find any decision makers in Singapore crazy enough to embark on such a risky venture into Indoland.

Quoting TL925 (Reply 36):
An interesting development in aviation finance is the Cape Town Treaty which is in relation to the protection of aviation objects for security (aircraft & engines) on a global basis. Though only 9 countries have adopted it so far (US, Nigeria, Malaysia, Ireland, Oman, Pakistan, Panama, Ethiopia & Senegal), the intention is to eventually have a global adoption of the Treaty. Indonesia is one of the world's most difficult legal jurisdictions as far as asset security, but I would assume the US govt would pushing as hard as possible for Indonesia to adopt Cape Town.

Given the current state of affairs here in Indonesia, I believe it is more likely hell will freeze over before Indonesia would ever sign up for such a treaty, and even if it were to sign up, there is always the problem of the actual enforcement. Contracts are known in here not to be worth the paper they are written on. There is no legal certainty whatsoever in this country, and when combining this lack of legal stability with a deeply instilled sense of xenophobia within the government and the population at large, it is hard to believe that there will be a lot of improvement pertaining to asset security in the foreseeable future.

Quoting Mandala499 (Reply 37):
Looks like JT is financed with a 4 year grace period with 10 yrs payback thereafter or extendable to 25 yrs... at dirt cheap rates! With the aircraft as collateral... This explains the brave first few years of explosive expansion with utterly dirt cheap next to free fares!

So four years of grace period, after which some payments will be made, after which the company will quickly renege on the 10 years packback period and move to renegotiate and extend that period. After a couple of rounds of renegotiations, the company will finally default on their obligations, but by that time the assets will have been decreased in value to such an extent that the damage will have been done. Many international companies in a wide range of industrial sectors have previously burnt their fingers whilst doing business in Indonesia. I believe the next victim is lining up as we speak...
 
nitrohelper
Posts: 406
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RE: Lion Air Order 30 More Boeing 737-900ER

Wed Jul 19, 2006 9:19 pm

Quoting HB-IWC (Reply 40):
companies in a wide range of industrial sectors have previously burnt their fingers whilst doing business in Indonesia. I believe the next victim is lining up as we speak...

Well said .we left over three million US dollars in Indoland after the '97 collapse, and before that we had much trouble collecting payments during the life of the contracts. As the projects got older the payments became slower until we would stop work to force payment. Many Japanese banks were hurt after '97 , but covered it up well.
 
mandala499
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 12:25 am

Not disagreeing with HB-IWC here... 30 is about the limit as far as I can see it... Those 739s into JOG will be a bit problem... Solo and Banjarmasin won't be much of a problem... but when they talk 60... it places demands on one's imagination knowing how Lion is nowadays... right?

Infrastructural improvements include Pontianak due to have an upgrade in 2008, Semarang's new runway extension currently under way (but I dunno about strengthening it!), Palembang's new terminal is open and the runway is going to have further extensions, new Padang is operational... these are the ones... but again, it puts 30 as the max, and that's a 1 for 1 replacement of their current fleet and a little more.

As to Lion sending the frames to Myanmar, I see no more than 5... 3 is probably stretching it already... as for Pacific Airlines, 5 is a realistic number, 10 is about the limits as far as realistic optimism goes.

Quoting HB-IWC (Reply 40):
Now let's talk Lion's core business. Anyone will surely agree that there is no way that Lion is going to deploy many more than 20-25 frames in the domestic market in its current state. Is there a lot of improvement in sight? I highly doubt it. Inflation remains high and wages are not increasing likewise. Domestic airfares will remain under pressure for quite some time to come whilst the buying power of the average Indonesian remains miserable. And a 3-week holiday period in June and a couple of days around Idul Fitri are unlikely to bring much relief. Meanwhile, Air Asia is planning further expansion in the domestic market.

Lion's fares are beginning to go up... again, this is why I very much doubt the 60...

As to where they can fly around Asia?
Guangzhou is a no-no with the competition... Bangkok? LOL, even GA is not having an easy time right? HKG? Well, maybe from Surabaya, but come on, GA won't just let that go, and perhaps some others are eyeing that (Batavia maybe?). Manila? We know what happened last time Lion flew there, 2 weeks and that was it! Perth? People laughed when they heard JT was opening an office there! The only possible avenue for expansion would be other Chinese routes (which can be gobbled up by competition quickly), and India (which would face serious competition from the whole region!)

Quoting HB-IWC (Reply 40):
But then again, Lion Air's CEO, in all his wisdom, is probably a man with a plan...

To be frank, I feel sorry for Rusdi... wisdom, a plan, a care for his people... but there's a huge barrier between him and those, which is his management!

On the Amsterdam thing... it's been >2 months since they first mentioned it, but JT seems to be avoiding going to the meetings regarding those at the moment! LOL

As to Mandala... Well, smart idea, but whether it'll be implemented is another story... So far it's stagnating... and now Bimantara is revealed as an investor... Don't you love these twists in the stories?

On the Cape Town treaty? Indonesia? Difficult? just ask that to Sempati's lessors and perhaps ask Lufthansa on the 733s with IOO... then you got those with wild ideas for Hajj flights... including someone tried to sell a few 742s to those unaware of the 22 yr old aircraft age limit rule for Hajj flight...

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
CRJ900
Posts: 1937
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 12:56 am

Has Lion Air disclosed how many seats they will put in the B739ER, and how many classes of travel?
Come, fly the prevailing winds with me
 
HB-IWC
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 3:16 am

Quoting Mandala499 (Reply 42):
The only possible avenue for expansion would be other Chinese routes (which can be gobbled up by competition quickly), and India (which would face serious competition from the whole region!)

Lion Air does neither have the expertise nor the professionalism to operate routes of that caliber. As said, their product is ratty and a couple of sparkling new airframes is not going to change that. Apart from that, there are probably some hurdles to be cleared for the airline to get landing rights in China and India.

Quoting CRJ900 (Reply 43):
Has Lion Air disclosed how many seats they will put in the B739ER, and how many classes of travel?

Well, if the likes of BA and UA can operate a 4-class product, then Lion Air should easily be able to offer a 5- or 6-class product. That sounds more ridiculous than it really is, if you know this company: when Lion Air introduced a sort of yield control system based on subclasses rather than selling all seats at the same price as they did in the beginning, they made very well sure and stated in public that their system had MORE subclasses than archrival Garuda Indonesia. At a certain point, Lion had a booking system with about 20 subclasses for a one-class service.

These days, Lion offers a two class product on board most of its planes, because the first/business class compartiment happened to come with the plane as it came from Continental, Reno Air and the like. I don't know how many people, if any, are using the Lion C-class, but it can't be all that much as witnessed by their ever deserted C-class check in counter.

As for the new B739 fleet, I believe that they will nevertheless operate a business class, even if nobody will be travelling in it. It's a prestige issue in the company's ongoing quest to topple Garuda.
 
thering
Posts: 527
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 12:39 pm

The 737-900ER would fit perfectly for the US cariers! For high demand transcon flights, Mexico, Caribian, North of South América and even short high demanded runs.
Considering this, don't understand why no US airline got some 739ER to replace 752s and MD-80s..
146 319 320 321 332 722 732 733 734 735 73G 738 742 743 744 762 763 772 773 CRJ ER4 100 F50 F27 M11 D10
 
TL925
Posts: 64
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 1:15 pm

I agree completely that the B737-900ER looks like a great aircraft which hopefully more carriers will realize soon enough. Unlike the B737-900 which was limited to 189 seats, the -900ER is an actual A321/B757 competitor which could work well into fleets of airlines looking for commonality with their NG fleet.
 
lutfi
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 2:37 pm

Even SUB-HKG is a stretch. CX have 1200 seats a week on the route, and the prices for the main SUB-HKG market (which is maids) is as low as JKT. On a four plus hour flight, you need cargo to make it work out of IDO, and narrowbodies don't take much cargo

Still, if JT wants to lose money, sure...

Bimantara/ Mandala/ SIN. Yes, Bimantara overpaid (30m USD or so) but it kept the Armed Forces happy... (a decent pay out on a dead business for them) Then again, SATS overpaid for PT JAS, so they had money to spare. I think Bimantara hope that their tie up with SATS/ SIAEC would give them an advantage with SIN when discussing Mandala, but SATS/ SIAEC have been careful to ringfence off the bits of cardig/ bimantara that they didn't want to participate in (catering, the cargo airline, etc)

There is an interesting peice in one of the local business magazines over GA problems with domestic BSP. 40 milliar (4 m USD) shortfall.
 
mandala499
Posts: 6458
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RE: Lion Air Order 30 More Boeing 737-900ER

Thu Jul 20, 2006 3:34 pm

30m USD for Mandala? LOL that was an 8m USD discount from what I was offered... We valued it at 8m - 12m USD ! LOL

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
mandala499
Posts: 6458
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RE: Lion Air Order 30 More Boeing 737-900ER

Fri Jul 21, 2006 3:24 pm

Just to add another twist...
Yesterday in BisnisIndonesia...

15 - 20% financed internally by Lion (which is still US$780 million... God knows where it came from!)
Finance is a syndication of US institutions
Exim bank is stated as a POSSIBILITY... (a reverse of what they have said)...
And it appears the article points to Lion having not fixed the financing channels yet (again, contrary to previous statements)

Hmm... why does it sounds like a Mediterranean Loan to me...

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !

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