LAXintl
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Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 12:07 am

I don’t know of the actions are related considering common management theme but Reuters decided to link them.


As mentioned on the JetBlue earnings call today, JetBlue would be cancelling some E190 orders in additional to delivery deferrals. Per Embraer the formal cancelled count is 11.

And surprise surprise, Azul Linhas Aéreas Brasileiras itself places and order for 11 today. Carrier has opted for the 118-seat E195 with delivery planned in 2013.


Story
Azul orders 11 Embraer jets, JetBlue scraps order
http://www.reuters.com/article/2011/...0/26/embraer-idUSN1E79P2DO20111026

=
From the desert to the sea, to all of Southern California
 
C010T3
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 12:19 am

Well, it is surely interesting that while one airline is dropping 11 orders, the other is ordering 11. I would also say that 2013 isn't far, so AD may be inheriting B6 slots.
 
LAXintl
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 1:17 am

Yes would not surprise me if they are talking about the same common delivery positions.

In addition to the JetBlue cancellations, they also deferred delivery of 7 E190s from 2013-2014 all the way till 2018.
From the desert to the sea, to all of Southern California
 
VC10er
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 1:44 am

What I'm hoping for is the first widebody for Azul. That airline would look awesome at JFK. I know it's just a dream but it's ok to dream.
The world is missing love, let's use our flights to spread it!
 
bjorn14
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 11:58 am

Wasn't it Neeleman who originally placed the E190 order for B6? So he must have more faith in it than Barger. This brings AD's total order book of EJets to 52, IIRC
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Navion
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 12:31 pm

Quoting bjorn14 (Reply 4):
Wasn't it Neeleman who originally placed the E190 order for B6? So he must have more faith in it than Barger

I doubt it's a case of Barger not having faith in the E190 but instead a reflection of the slowing market conditions. Most of the U.S. majors are contemplating or in fact reducing flights for the coming winter season and offering less growth for the next few years. The E190 works very well for JetBlue and JetBlue has already demonstrated it's faith in the design by taking delivery of a bunch of them which are doing very well.
 
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 12:42 pm

I have flown the JetBlue E190's out of JFK and the ac inside is extremely comfortable and looks fresh and new, not claustrophobic for what is considered an RJ. Plus a 3 hour flight seems to whiz by with the IFE. Does Azul have all the IFE JetBlue does?
The world is missing love, let's use our flights to spread it!
 
richierich
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 3:53 pm

The net effect to Embraer is zero, unless they got a different price on the Azul sales versus the B6 sales.

Azul needs their aircraft now and more of them. JetBlue doesn't need them as quickly or as many, so it worked out for all parties. I really don't think this a reflection of the E190 performance at all but economics. JetBlue still operates one of the largest E190 fleets in the world and this won't change - by the time their current orders are fulfilled, they'll have nearly 90 E190 by my count (OK, some 30 are leased.) JetBlue's growth is on a far slower pace than Azul's right now, but in fairness JetBlue is also a much bigger airline.
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jfklganyc
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 4:11 pm

"I doubt it's a case of Barger not having faith in the E190 but instead a reflection of the slowing market conditions."

No it's not.

B6 seems to be doing 2 things:

1. Neeleman left them with 20+ orders a year which is not sustainable. They seem to prefer ~10 aircraft a year

2. The 190 has 2/3 the seats of the 320, yet costs (fuel/mx/crew) are not 2/3 the costs. This makes the 190 cost per seat mile significantly higher than a 320 sized airplane. They seem to want the 10ish deliveries they are taking in a year to be a majority Airbus going forward.

If you notice, the 190 has not been a huge seller in the US with the majors for this reason. It is an expensive airplane to operate in a mainline environment.

Neeleman, with Brazilian ties, seems to like the 190 a lot. While he is a visionary, he left B6 unprofitable and with a growth plan that simply wasn't sustainable. He also left them with an aircraft (190) that has seemingly high costs and doesn't perform as expected.

Azul, watch for this going forward IMO
 
xdlx
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 4:23 pm

Quoting jfklganyc (Reply 8):

Would it be feasable to cancel the E190 and opt for A319 instead!
I do not understand why they did not exploit this option!
 
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 5:17 pm

Quoting jfklganyc (Reply 8):
2. The 190 has 2/3 the seats of the 320, yet costs (fuel/mx/crew) are not 2/3 the costs. This makes the 190 cost per seat mile significantly higher than a 320 sized airplane. They seem to want the 10ish deliveries they are taking in a year to be a majority Airbus going forward.

If you notice, the 190 has not been a huge seller in the US with the majors for this reason. It is an expensive airplane to operate in a mainline environment.

Embraer designed the E-series for a completely different mission compared to the A320. You cannot compare CASM of a E190 with that of A320, that would be absurd. The E190 was designed for regional markets that would not sustain the capacity of a 150+ PAX aircraft like the A320 or the 737NG for that matter. This is precisely why B6 ordered the E190.

To argue that the E190 is "an expensive airplane to operate in a mainline environment" is a subjective point as a "mainline environment" can be defined in an arbitrary way. A better point to argue is that the E190 is optimized for certain mission types.

The E190 has been an absolute and total resounding success! No one can debate that, regardless of the fact B6 has now decided to operate a total of 65 E90s rather than the original plan for 100 E90s. The E-series has close to 1,000 pending orders, spread among the E70, 75, 90 and 95. The Sukhoi SSJ, the Mitsubishi MRJ, and the new BBD CRJ 1000 do not enjoy a similar order book.
 
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 5:44 pm

reply 10


The E190 has been an absolute and total resounding success! No one can debate that, regardless of the fact B6 has now decided to operate a total of 65 E90s rather than the original plan for 100 E90s. The E-series has close to 1,000 pending orders, spread among the E70, 75, 90 and 95. The Sukhoi SSJ, the Mitsubishi MRJ, and the new BBD CRJ 1000 do not enjoy a similar order book.

And that (to me) is the extraordinary fact.The E series keeps on selling racking up new orders and customers --- In the face of 3 brand new state of the art regional aircraft - 2 with "game changing" new GTF engines.

Good for them - terrible news for the others. If it was not bad enough already we know that Embraer are looking at one of two possibe re engine options if required.

BAE and Focker left the arena for good reasons.I can't see what led people to believe that there was a new pot of gold in this regional marketplace with products that are in reality very similar.
 
richierich
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 6:56 pm

Quoting jfklganyc (Reply 8):
If you notice, the 190 has not been a huge seller in the US with the majors for this reason. It is an expensive airplane to operate in a mainline environment.

Neeleman, with Brazilian ties, seems to like the 190 a lot. While he is a visionary, he left B6 unprofitable and with a growth plan that simply wasn't sustainable. He also left them with an aircraft (190) that has seemingly high costs and doesn't perform as expected.

I won't disagree with you on your first two points but I disagree with the above.

The E170 and E190 have been very good sellers in North America, filling a niche below the small Airbus and Boeing offerings. Compared to the DC9/MD80/B717/A318, the E-jets have very favorable operating economics. The E190, in particular, has a decent range and while it may not operate at "2/3 the cost" of an A320, it is certainly considerably less!

As for JetBlue, the E190 has done exactly as advertised. Sure, there were growing pains (new type, launch customer, etc.) but I think it is safe to say JetBlue would look very different today if their 50 or so E190s have been 30 or so A320s, for example. There are a lot of markets they serve that wouldn't necessarily work with the Airbus. Neeleman's vision for JetBlue was right on target even if there is some room for criticism of how to run an operation. Have any of us heard about Azul having any massive breakdowns? No, I think to solely blame Neeleman is wholly unfair.
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jfklganyc
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 7:08 pm

Guys I said E190.

I didn't say 170 or 175.

And the E190 has not been an astounding success in the US.

B6 operates them.

US operates 15.

Republic operates them.

That's it.

The 170/175 does well as a replacement for large RJ (700/900) and 50 seaters with fewer/upgraded freq.

The 190 is too big to be flown by a regional (scope rules) and too big to fly a route like LGA-XNA.

Once you start to get into long, thin routes that could sustain 190 seating 100-110 give or take, you are only a stones throw away from the 737/320 family which is cheaper to operate.


"Embraer designed the E-series for a completely different mission compared to the A320. You cannot compare CASM of a E190 with that of A320, that would be absurd."

But JetBlue is flying them side by side on the same routes. With the exception of MVY and ACK, virtually every route they fly has been swung between both fleets. There are some newer cities such as DCA and BDL where this hasn't happened yet . . . but it will.

So when you look at it that way, the missions of both aircraft are pretty similar to an airline like B6. And when they are similar, the 190 is a lot more expensive to operate per seat than the 320 is.


Please note that B6 shut down their 190 operation on the West Coast and switched to the 320 on every route. Nothing ended, frequencies are still in tact. The extra 50 seats vs the seat mile cost of running the more expensive 190 far from an east coast base was a very real part of the decision in my humble opinion.
 
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mariner
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 7:27 pm

Quoting jfklganyc (Reply 13):
B6 operates them.

US operates 15.

Republic operates them.

And Republic has put a few of its E190's on the market to see what sort of price they would fetch. These are owned aircraft (ex-US) and they can be used as an asset to raise cash.

Republic hasn't given up on the E190 - it is leasing two more in November - but the rest of its order has been put on indefinite hold.

Quoting jfklganyc (Reply 13):
Once you start to get into long, thin routes that could sustain 190 seating 100-110 give or take, you are only a stones throw away from the 737/320 family which is cheaper to operate.

  

The problem with the (Republic/Frontier) aircraft is the price of fuel. Republic (Frontier) conducted a fleet review in the first six months of this year - when oil was bit higher than it is now. From that review, it was effectively impossible for the E170 to make money on most Frontier routes because it had a break-even load factor in excess of 100%.

The break-even load factor on the E190 was below 100%, but not by a huge margin.

mariner

[Edited 2011-10-27 12:48:22]
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ScottB
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Thu Oct 27, 2011 8:19 pm

Quoting richierich (Reply 7):
JetBlue still operates one of the largest E190 fleets in the world and this won't change - by the time their current orders are fulfilled, they'll have nearly 90 E190 by my count

JetBlue won't get to 90 E190's. From: JetBlue Announces Revised Fleet Delivery Schedule

Quote:
In addition to the fleet adjustments noted above, JetBlue will optimize its EMBRAER 190 fleet to approximately 75 aircraft.

"The E190 is performing very well as our new, shorter-haul market aircraft, often serving to build the demand in the market for eventual up-gauge to our A320," Mr. Barger said. "We are now at the point where the balance between frequency and capacity is tipping in favor of capacity, and we are exercising our most strategic asset - our order book - to better match capacity with growing network demand."
Quoting LAXintl (Reply 2):
In addition to the JetBlue cancellations, they also deferred delivery of 7 E190s from 2013-2014 all the way till 2018.

Deferring deliveries out seven years is almost akin to cancellation, since any customer could order from Embraer today and receive delivery earlier. It looks better for EMB, though, since the orders still stay on the books.

Quoting jfklganyc (Reply 13):
The 190 is too big to be flown by a regional (scope rules) and too big to fly a route like LGA-XNA.

Once you start to get into long, thin routes that could sustain 190 seating 100-110 give or take, you are only a stones throw away from the 737/320 family which is cheaper to operate.

At a carrier like B6, the E190 is fine for developing new routes, but it won't perform well cost-wise against sustained competition with 737's or A320-family aircraft.
 
wjcandee
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 5:43 am

Nobody cares how inexpensive it is to operate per seat if you can't fill the seats.
 
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jfklganyc
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 12:56 pm

"Nobody cares how inexpensive it is to operate per seat if you can't fill the seats."

Yes but on most routes Jetblue flies, they can fill the seats with the plane that is cheaper to operate. Hence less 190s and more 320 family
 
Neo
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 1:35 pm

Quoting jfklganyc (Reply 13):

Then I guess the problem should be with B6 and US market / airlines because just up north in Canada, AC operates a total of 45 190's. Also in europe the 190 it's a big hit with many airlines, experiencing consistent orders throughout the whole decade.

All i'm saying is that maybe the question should be why can't B6 work more successfully their 190 while the vast majority of the 190 customers worldwide are pretty happy with it.

Neo
 
GCT64
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 1:47 pm

Quoting jfklganyc (Reply 13):
The 190 is too big to be flown by a regional (scope rules)

Scope is a purely artificial construct of, primarily, the US market. The fact that you can fly an E170 with "cheap" pilots and need to have "expensive" pilots to fly the E190/195 is absolutely artificial as clearly the same pilots are capable of flying both. It does not reflect on the performance of the aircraft just the operation of said aircraft in a market where market-warping rules are being applied.

If pure capitalist market forces were being applied, I would expect to see loads of E190s / E195s in the US.
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 5:42 pm

Quoting pdpsol (Reply 10):
Embraer designed the E-series for a completely different mission compared to the A320. You cannot compare CASM of a E190 with that of A320, that would be absurd.

Indeed it is completely absurd to compare!!

The trip costs are much lower for the E190... and that is the whole point... optimizing equipment for the traffic. That is why an airline will fly different equipment between city pairs depending on time of day and day of week. I just don't understand how some people can't seem to grasp this basic concept of airline ops.
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wjcandee
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RE: Azul Orders 11 Embraer Jets, JetBlue Scraps Order

Fri Oct 28, 2011 8:49 pm

Quoting jfklganyc (Reply 17):
Yes but on most routes Jetblue flies, they can fill the seats with the plane that is cheaper to operate

First of all, it's not "cheaper to operate". It may be cheaper to operate per seat-mile or per seat-trip. Also, the discussion completely ignores relative capital cost.

However, if B6 is regularly leaving behind profitably-paying pax on flights with its 190, then it's the wrong plane. If not, then it's the right plane. What happens on "most" (50%) of routes doesn't matter if there are routes that can be profitably operated with the 190 that can't be profitably operated with the A320. In short, focusing on narrow metrics loses the big picture. Not to say that analysts don't do it all the time.

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