EI321
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Cathay: No Plans For 787 Or A380 For Near Future

Tue Oct 30, 2007 9:58 pm

Quote:
NEW YORK — Cathay Pacific Airways Ltd. has no plans to buy either of the leading aircraft makers' newest models in the near future, the carrier's chief executive said Tuesday.

Hong Kong's flagship airline is in talks with both Airbus and Boeing about possible aircraft orders regarding a "business as usual" fleet expansion, Chief Executive Tony Tyler said in an interview with The Associated Press.

But the carrier is likely to stick with plane types it already operates, he said, rather than follow Asian competitors with orders for two high-profile models scheduled for widespread delivery: the Boeing 787 Dreamliner or the double-decker Airbus A380 superjumbo.

"We are not in the market for any of the new aircraft at the moment," Tyler said during a visit here to promote expanded North American service to Hong Kong.


http://www.chron.com/disp/story.mpl/ap/fn/5258373.html

Confirms what many of us thought, this airline wont be placing a big order anytime soon.
 
KL808
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Tue Oct 30, 2007 10:04 pm

In some ways this might be good news for Boeing.

They might order more B77W's

Drew
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dellatorre
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 12:37 am

Quoting EI321 (Thread starter):
Confirms what many of us thought, this airline wont be placing a big order anytime soon.

Depends on what you define near future!!!! If that is the next couple of years, then I would agree. Otherwise, can't see how CX will seat and watch the A380s flying by HKG, not whishing to join the party!!!
 
ebbuk
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 12:46 am

Me thinks CX is still in Hong Kong Flu mode.

At some point they will purchase. Will it be too late?
 
bennett123
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 12:47 am

Given that they operate A330, A340,B747,B777 they have plenty of options.
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Futu

Wed Oct 31, 2007 12:50 am

If I was CX, I'd wait for the A388R. That way, you're good across the Pacific and across the European and Asian continents from HKG 24x7, 365-days a year, in both directions, at max payload.
 
KELPkid
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RE: Cathay: No Plans For 787 Or A380 For Near Futu

Wed Oct 31, 2007 12:55 am

I'm sure that neither Boeing nor Airbus wanted to hear this...surely there are some dissapointed sales staff in the large aircraft divisions at both manufactuers  Sad
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PanAm747
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 12:56 am

Question: What routes does CX serve that would qualify as "long-thin"? The 787 might open some routes for CX, but I can't think of any offhand that are needed from HKG.

While we're at it, is there any route that CX really needs an A380 for? Keep capacity high and tight, rather than flooding the market...I think they've got the right idea.
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A388
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 2:09 am

Quoting PanAm747 (Reply 7):
Question: What routes does CX serve that would qualify as "long-thin"? The 787 might open some routes for CX, but I can't think of any offhand that are needed from HKG.

While we're at it, is there any route that CX really needs an A380 for? Keep capacity high and tight, rather than flooding the market...I think they've got the right idea.

Agreed. I take it that CX knows what they are doing. They know something we don't know apparently.

A388
 
jacobin777
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RE: Cathay: No Plans For 787 Or A380 For Near Futu

Wed Oct 31, 2007 2:26 am

Quoting A388 (Reply 8):

Agreed. I take it that CX knows what they are doing. They know something we don't know apparently.

..imagine if this was an A388 instead of a B744 flying in parallel @ SFO... bigthumbsup 


Shot at 2006-09-29

Quoting PanAm747 (Reply 7):
While we're at it, is there any route that CX really needs an A380 for? Keep capacity high and tight, rather than flooding the market...I think they've got the right idea.

....there are already problems ..for example, with O8 coming into the Hong Kong - London and Hong Kong - Vancouver route, CX has had to slash fares by almost 1/2.. Wow!

"The budget airline has shaken up the Hong Kong aviation market, prompting traditional carriers to cut their fares. Cathay Pacific, for example, has slashed its prices to London and Vancouver by nearly half."

http://english.pravda.ru/news/world/26-10-2007/99634-HK_Oasis-0
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WingedMigrator
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 2:37 am

More detail from Reuters:
http://www.reuters.com/article/tnBas...ndustries-SP/idUSN3022007420071030

What I don't get is these two contradictory quotes from CEO Tony Tyler:

Quote:
All our financial modeling shows that we are better off offering more frequency with a very efficient aircraft like the 777 than simply adding more capacity to an existing frequency, which is what we would be doing if we introduced the A380

And then:

Quote:
Despite his caution over the A380, Tyler said that if Airbus stretched the plane to fit more passengers, or increased its take-off weight to extend its range, Cathay might buy.

"Either of those options would make it more economic and more competitive from our point of view," said Tyler, who wants a bigger plane which can carry more cargo and is more suited to very long trans-Pacific routes.

So let me get this right... the A388 is too big, but the A389 is an attractive possibility?!?  scratchchin 
 
aerokiwi
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 2:46 am

Quoting EbbUK (Reply 3):
At some point they will purchase. Will it be too late?

Too late? For what? As already mentioned, CX is facing some competitive pressures from the arrival of Oasis and Air NZ on the London route alone. Throw in BA, Virgin and QF and that's an awful lot of capacity (all 744s bar VS's A346) on the HKG-LON route alone. That's 6 airlines! surely making it one of the more competitive routes in the world. And while QF and BA are likely to send the A380 to HKG, it might even become a selling point for CX to sell its smaller planes as time savers for passenger processing at either end (checkin, luggage colelction etc).

With Oasis expanding, there are likely going to be 3 carriers on several long haul routes to/from Hong Kong in the near term. So this seems emminently sensible to me. Plus the A330s are doing their job very well for CX, so why not keep them onboard for as long as possible?

One thing though, as the article states that they will likely stick to aircraft types that they are operating NOW, does this include the 747, meaning a hint at a 748i order? Stretching it maybe, but ooooo how I hope!
 
dl767captain
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 4:14 am

It seems like a good idea for them to wait, they have a relatively young fleet and they might as well sit back, make more money, and order the 787-10 or something, wait until the planes are proven, there is no rush since neither planes will be delivered until around 2015. I do wonder if they are looking at the 748 though.
 
kaitak
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 5:07 am

I am surprised at this, because I had thought that CX was looking at replacements for its A330/A340 and 772 fleets and that a decision was due sometime next year. I'm nearly sure Tyler said that sometime last year or earlier this year.

Still, as said above, this doesn't rule out more 77Ws.

I guess more time is actually in both manufacturers' interests in some way, in that it gives Airbus more time to freeze the A350 design and Boeing more time to define/launch the 787-10.

Can we now count CX as a potential A389 customer?

Quoting PanAm747 (Reply 7):
While we're at it, is there any route that CX really needs an A380 for?

I would say there are quite a few - SFO, LHR, LAX, JFK, Asian regional routes too. Remember that HKG is probably the region's premier hub, so the acquisition of the A380 would allow them to increase traffic through it.
 
art
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 9:56 am

Quoting WingedMigrator (Reply 10):
What I don't get is these two contradictory quotes from CEO Tony Tyler:

Quote:
All our financial modeling shows that we are better off offering more frequency with a very efficient aircraft like the 777 than simply adding more capacity to an existing frequency, which is what we would be doing if we introduced the A380

And then:

Quote:
Despite his caution over the A380, Tyler said that if Airbus stretched the plane to fit more passengers, or increased its take-off weight to extend its range, Cathay might buy.

"Either of those options would make it more economic and more competitive from our point of view," said Tyler, who wants a bigger plane which can carry more cargo and is more suited to very long trans-Pacific routes.

So let me get this right... the A388 is too big, but the A389 is an attractive possibility?!?

Could it be that Tyler thinks the present A380 needs a reduction in CASM to justify the reduction in frequency that using a larger aircraft entails?
 
scouseflyer
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 10:05 am

Quoting Art (Reply 14):
Could it be that Tyler thinks the present A380 needs a reduction in CASM to justify the reduction in frequency that using a larger aircraft entails?

It could be but the A388 has the best CASM of any plane in service at the moment. I guess what this means is that the extra cost of replacing 744s with A388s wouldn't be out-weighed by the savings made (yet). I see a few more T7s and S330s being ordered
 
keesje
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 10:57 am

Maybe Tony thinks he can't get them anyway before 2012-2014 in sizeable numbers so lets go for the improved mark II.

The market probably has grown by then, 5% per year until 2015 = ..
"Never mistake motion for action." Ernest Hemingway
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 11:13 am

I also think that CX do not want to get planes that are not fully proven in revenue operations. They had quite some problems with the A330 engines and (as I remember) also some problems with their early 777 operations. The history of their A346 is also well known. I think that they want to see both the 380 as well as the 787 and 350 working reliably in service before they want to get in the market themselves!


Abba
 
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 11:30 am

Quoting WingedMigrator (Reply 10):
So let me get this right... the A388 is too big, but the A389 is an attractive possibility?!?

He does have a point... despite all the words on that the A380 has the lowest CASM and it is a people mover, what many forget is that it is not that much better to justify giving up on the revenue of carrying cargo and the benefits of offering high paying passengers the benefits of frequency. It is a gr8 aircraft and possibly a good people mover, but there are many mission profiles that simply does not justify buying it.... however a A389 could further reduce CASM to a point where it is a done deal.

Quoting Art (Reply 14):
Could it be that Tyler thinks the present A380 needs a reduction in CASM to justify the reduction in frequency that using a larger aircraft entails?

 checkmark  exactly what I was thinking when reading his comments....
Peet7G
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Futu

Wed Oct 31, 2007 12:03 pm

Quoting Kaitak (Reply 13):
Can we now count CX as a potential A389 customer?

I think CX would find an A388R to be a more effective model then the A389.
 
ConcordeBoy
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 2:28 pm

Quoting PanAm747 (Reply 7):
What routes does CX serve that would qualify as "long-thin"?

I'd say the question would be more along the lines of what routes do they not serve which could qualify as such.

Quoting Scouseflyer (Reply 15):
the A388 has the best CASM of any plane in service at the moment.

In theory, but that has yet to be operationally verified.
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Reggaebird
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 6:27 pm

I think that this messaging is codespeak for "....we are looking at the A350 and the B747-8i, both of which are going through further design updates.

Reggaebird
 
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ER757
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 8:35 pm

Quoting Aerokiwi (Reply 11):
One thing though, as the article states that they will likely stick to aircraft types that they are operating NOW, does this include the 747, meaning a hint at a 748i order?

I was wondering the same thing. I think it would be a good fit for CX. We can hope, can't we?  crossfingers 

Quoting KELPkid (Reply 6):
I'm sure that neither Boeing nor Airbus wanted to hear this

True, but it would seem that CX will still be looking to purchase exisiting models so the T7 and the A330 still have a shot.
I just don't think they'll go for more A340's though. Nothing but a gut feeling to base this assumption on.
 
tonforty
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 9:00 pm

It may be a shrewd decision by CX. Their fleet is young enough to wait a bit and make sure any teething issues with the new aircraft are ironed out in the first few years. It may be that the a350 is the one that would fit their needs best and if that is the case, they probably want to wait until the design is frozen, maybe until it flies, maybe even until it proves itself in service with other airlines.
 
ctang
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Wed Oct 31, 2007 10:42 pm

I think CX is just being responsible to its shareholders. Unlike EK, SQ, TG, Cathay is a public company. They would rather order aircraft like 330 and 777 which are already proven by CX.

They are focusing on frequency.
 
A388
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 12:10 am

Quoting Jacobin777 (Reply 9):
..imagine if this was an A388 instead of a B744 flying in parallel @ SFO...

Hwy Jacob, my KL 777 man over in SFO!!! LOL How are you doing? I see your collection of aircraft photos is increasing here in the forum, but still nothing beats that KL 777 photo that makes you very proud. I totally agree with you though Big grin

A388
 
OldAeroGuy
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 1:13 am

Quoting ER757 (Reply 22):
I just don't think they'll go for more A340's though. Nothing but a gut feeling to base this assumption on.

Their purchase of the 773ER in 2005 should give your gut a pretty good indication on CX's future A340 buys.
Airplane design is easy, the difficulty is getting them to fly - Barnes Wallis
 
jacobin777
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RE: Cathay: No Plans For 787 Or A380 For Near Futu

Thu Nov 01, 2007 2:08 am

Quoting A388 (Reply 25):
Quoting Jacobin777 (Reply 9):
..imagine if this was an A388 instead of a B744 flying in parallel @ SFO...

Hwy Jacob, my KL 777 man over in SFO!!! LOL How are you doing? I see your collection of aircraft photos is increasing here in the forum, but still nothing beats that KL 777 photo that makes you very proud. I totally agree with you though  biggrin 

...Hey A388... rotfl  at my aircraft photo collection growing..mate, its EVER-growing.. bigthumbsup 

I figured you would like the parallel approach at SFO... Smile

..and yes, NOTHING beats my KL 777 photo... biggrin 
"Up the Irons!"
 
RedChili
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 5:19 am

ATW has a few Tyler quotes today. Some quotes from the article:

Quote:
Tyler said the airline is not close to making any decision on acquiring A380s, 787s or A350 XWBs...

"I don't think we'll be making any decision on any of these aircraft for at least two years. .

http://www.atwonline.com/news/story.html?storyID=10703

The 748 isn't even mentioned as a possible candidate. Does that mean that they've already decided to acquire the 748i? Hardly, as Tyler also said that Cathay is not comfortable about ordering a new aircraft type for delivery several years into the future. Could it mean that Cathay has ruled out getting the 748i? I don't know.
Top 10 airplanes: B737, T154, B747, IL96, T134, IL62, A320, MD80, B757, DC10
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 6:46 am

Quoting Tonforty (Reply 23):
It may be a shrewd decision by CX. Their fleet is young enough to wait a bit and make sure any teething issues with the new aircraft are ironed out in the first few years.

And they have a bad habit of running their equipment completely down before they ever consider replacing it. The number of issues they had on their 747 classics and their Tristars before they finally got rid of them were legendary in the colony at the time...


Abba
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 12:00 pm

I would not be surprised if CX is no longer looking seriously at the 747-8I, except to negotiate a better price out of Airbus for the A380-800 and/or Boeing for the 787.
 
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RayChuang
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 2:48 pm

I do think CX might be looking for a good deal on 12-14 A380-800's powered by Trent 970 engines. They'll need it, especially on the routes from HKG to LHR, SYD/MEL, NRT, LAX and YYZ via YVR.
 
jacobin777
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 3:52 pm

Quoting RayChuang (Reply 31):
They'll need it, especially on the routes from HKG to LHR,

..

Quoting RayChuang (Reply 31):
YVR.

..is that why they've had to cut fares by almost 1/2 to said destinations?
"Up the Irons!"
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 4:46 pm

Quoting Jacobin777 (Reply 32):
..is that why they've had to cut fares by almost 1/2 to said destinations?

Their prizes were possibly over prized to begin with (that is - prizes that few - if any - paid anyway). That seems to be a certain - at least Asian - habit. I have been holding tickets where the list price written on the ticket were quoted to some 25000 HK - and I have been paying about 5000....

I am not sure that you should put too much stress on this....
 
jacobin777
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 5:15 pm

Quoting Abba (Reply 33):
I am not sure that you should put too much stress on this....

..anytime a company has to cut ticket prices by 1/2 isn't going to be good..regardless if it was overpriced to begin with..as that only decreases their RASM, yields and overall profit margins...
"Up the Irons!"
 
jfk777
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 7:21 pm

I can imagine Cathay not wanting then 787 or the A380 today, but when BA, Singapore, Lufthansa, Air France, Qantas and Virgin start flying the A380 to Hong Kong Cathay is going to have to do something. The 773ER look great compared to an A340 but a 744 isn't to appealing against an A380, either a Cathay 744. If Cathay gets 748's and other do too then the world is different, but it depends on whom. UA and NW probably will not get the A380.
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 10:56 pm

Quoting Jacobin777 (Reply 34):
..anytime a company has to cut ticket prices by 1/2 isn't going to be good..regardless if it was overpriced to begin with..as that only decreases their RASM, yields and overall profit margins...

Well - if the prizes that they are talking about are prizes they (almost) never charge in reality the entire exercise is rather theoretical - don't you think?

If the prizes they were actually and in fact charging were going down 50% it is a different matter indeed as it is the charged and not the claimed prizes that has to do with profit margins and RASM. But I doubt that very much.
 
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RayChuang
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 11:05 pm

SQ will fly the A380 to Hong Kong first, as part of the SQ 001/002 route (SIN to SFO via HKG). I think CX might be watching how well SQ does with the A388 on the SQ 001/002 route before seriously looking at buying this big plane.
 
jacobin777
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Thu Nov 01, 2007 11:15 pm

Quoting Abba (Reply 36):

Well - if the prizes that they are talking about are prizes they (almost) never charge in reality the entire exercise is rather theoretical - don't you think?

..actually not as they are usually projected into calculations...its not an infinite amount..it has to be a finite amount i.e.-amount of what the majority of pax are willing to pay....
"Up the Irons!"
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 7:10 am

Quoting Jacobin777 (Reply 38):
it has to be a finite amount i.e.-amount of what the majority of pax are willing to pay....

Having lived in HK for quite some time I guess it it mostly hot air from CX. List prizes getting closer to actual sales prizes. I can't say for sure though, but I would be highly surprised if it was otherwise.
 
bill142
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 7:47 am

Quoting KELPkid (Reply 6):
I'm sure that neither Boeing nor Airbus wanted to hear this...surely there are some dissapointed sales staff in the large aircraft divisions at both manufactuers

Not really. The potential for orders of other types is still there.

Quoting Ctang (Reply 24):
Unlike EK, SQ, TG, Cathay is a public company.

SQ is listed on the Singapore Stock Exchange,
 
United Airline
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 7:51 am

Just because they don't mention the B 747-8 doesn't mean that they won't order it.

I suppose they will order 20-25 B 747-8 eventually. And maybe even 5-10 A 380s together with B 747-8 order
 
keesje
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 9:23 am

Quoting United Airline (Reply 41):
I suppose they will order 20-25 B 747-8 eventually. And maybe even 5-10 A 380s together with B 747-8 order

Loyal Boeing / 747 customers Qantas and Singapore Airlines loudly told the world they think the 747-8 is not up to par. Recently BA also skipped the aircraft. AI and others probably will.

Cathay (or any other airline) needs a very good story towards there stakeholders for investing in a new 747 fleet.

If Cathay has interest in the 747-8i they do an excellent job in hiding so.

http://news.google.com/news?hl=en&q=...ng+747-8&um=1&ie=UTF-8&sa=N&tab=wn
"Never mistake motion for action." Ernest Hemingway
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 12:30 pm

Quoting United Airline (Reply 41):
Just because they don't mention the B 747-8 doesn't mean that they won't order it.

Honestly? Yes it does.

No major airline with a choice (and I don't think LH has a choice) is reasonably going to choose the 747-8I over the A380-800.
 
PVG
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 2:11 pm

Quoting Stitch (Reply 43):
No major airline with a choice (and I don't think LH has a choice) is reasonably going to choose the 747-8I over the A380-800.

I would imagine that with the cost advantages that Boeing enjoys in this segment and USD/EUR exchange situation, that they should be able to make "an offer they can't refuse". Is the 747-8 so inferior that even a substantial discount won't bag an order? The only thing I can think of is that with the 747-8F orders so strong, Boeing doesn't want to discount the price in order to attract passenger orders. They must have made the calculation that they'll make more money selling freighters than passenger planes in this segment.
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Fri Nov 02, 2007 3:05 pm

Quoting PVG (Reply 44):
I would imagine that with the cost advantages that Boeing enjoys in this segment and USD/EUR exchange situation, that they should be able to make "an offer they can't refuse".

Airbus appears to be willing to discount lower then Boeing, since nobody but LH has yet chosen Boeing on any RFP between the 747-8I and the A380-800. Yes, Boeing could cut so deep they lose money on each frame, but why do that when they can instead sell a 747-8F and make money?

Airplane production per annum is a finite quantity. If you can only deliver 100 planes a year, why not deliver 100 that makes you a 10% RoI then give up some of those for a plane that delivers a lower RoI? It is why Airbus sells more A330s then A340s and Boeing sells more 77Es then 772s - the former makes more money then the latter. Boeing could undercut Airbus on the price of the 772 and win an order away from the A333, but they'd make more money selling a 77E/77L/77W/77F to fill that production slot. Likewise, Airbus could cut deep on an A340 sale to win an order, but they'd make more money selling an A332 or A333.

When a program is starting out, like the A380, you need all the sales you can swing, so you are more willing to take lower-RoI deals. But when your programs are mature, like the A330/A340/777, then you want to maximize the RoI those programs bring in.
 
PVG
Posts: 461
Joined: Wed Dec 01, 2004 7:39 pm

RE: Cathay: No Plans For 787 Or A380 For Near Future

Mon Nov 05, 2007 11:14 am

Quoting Stitch (Reply 45):
Airbus appears to be willing to discount lower then Boeing, since nobody but LH has yet chosen Boeing on any RFP between the 747-8I and the A380-800.

How can they afford to do that? With the extra costs of the 2 year delay and the EUR/USD exchange rate issue, how can they possibly afford to do that and still make sense of it? Understand the point of maximizing the business.

Thanks!
 
abba
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Mon Nov 05, 2007 12:20 pm

Quoting Stitch (Reply 43):
(and I don't think LH has a choice)

Why do you think that LH has no choice but to order the 748 (people usually say that they had no choice in getting the 388)?

Quoting PVG (Reply 46):
How can they afford to do that? With the extra costs of the 2 year delay and the EUR/USD exchange rate issue, how can they possibly afford to do that and still make sense of it? Understand the point of maximizing the business.

You should not overstate the EUR/USD exchange rate issue as there is quite a substantial percentage of an Airbus plane that is produced in USD (either in the US or in Asia etc). So part of the plane becomes cheaper while other parts become more expensive. At the same time a significant part of a Boeing is also made outside of the US - so the USD/EUR exchange rate only works on the relative balance.
 
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Stitch
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Mon Nov 05, 2007 1:24 pm

Quoting PVG (Reply 46):
How can they afford to do that? With the extra costs of the 2 year delay and the EUR/USD exchange rate issue, how can they possibly afford to do that and still make sense of it?

Because Airbus is building future business. Every A388 they can place now with a customer makes it more likely that customer will choose the A388 later and it also influences other customers to choose the A388 themselves. As long as each frame is sold above the cost of producing it (and all data I have seen says this is the case), then the sale is worth making at this time, even if it has a minimal impact on RoI.
 
PVG
Posts: 461
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RE: Cathay: No Plans For 787 Or A380 For Near Future

Mon Nov 05, 2007 9:02 pm

Quoting Abba (Reply 47):
You should not overstate the EUR/USD exchange rate issue as there is quite a substantial percentage of an Airbus plane that is produced in USD (either in the US or in Asia etc). So part of the plane becomes cheaper while other parts become more expensive. At the same time a significant part of a Boeing is also made outside of the US - so the USD/EUR exchange rate only works on the relative balance.

Probably 40-60% of Airbus's costs are in Euro. It's got to be hurting. I'm guessing that most if not all of Boeings'
purchase arrangements are in fixed price USD contracts, so they should have a huge cost advantage.

Quoting Stitch (Reply 48):
Because Airbus is building future business. Every A388 they can place now with a customer makes it more likely that customer will choose the A388 later and it also influences other customers to choose the A388 themselves. As long as each frame is sold above the cost of producing it (and all data I have seen says this is the case), then the sale is worth making at this time, even if it has a minimal impact on RoI.

Are they ever going to be the business of making present profits rather generating future business, taking market share at all cost, and generating cash-flow to cover their mistakes!

What you say is that the A380 wins orders because it is cheaper, not exceptionally better than 747-8, correct?

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