mffoda
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A340 Lovers "Beware"

Fri Jun 14, 2013 3:38 am

The following WSJ article puts to bed many of the fan based arguments regarding the merits of the A340... Despite her eye appealing beauty. The financial community speaks out.



harder than woodpecker lips...
 
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Francoflier
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:44 am

The link is 404...

But I certainly look forward to another completely unbiased and expert opinion of everything aviation by the WSJ...  

And what's the point of beating a dead horse anyway?

[Edited 2013-06-13 20:47:36]
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mffoda
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:49 am

The link won't post here...

But if you google: For Airbus and Bankers, Big A340s Pose Sizable Risks

It will bring you to the article.
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BreninTW
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:51 am

I think the article being referenced is the one entitled "For Airbus and Bankers, Big A340s Pose Sizable Risks" -- from WSJ Online.

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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:54 am

 
mffoda
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:57 am

Quoting flood (Reply 4):

Thank you flood,  
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 3:57 am

The article is quite vicious. If you're an A340 fan and so are inclined to assume that negative articles are biased, how do you counter those assertions? They seem to have good sources.
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Stitch
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:07 am

The A340 did what it said on the side of the tin it would do, however by guaranteeing a minimum asset value to help secure deals, the value Airbus contractually guaranteed for the plane is more than what the standard market value is. And potential customers for those used planes are not willing to pay that price. I also expect those potential customers want their own guaranteed asset values as A340 values will only fall farther as 777s come onto the second hand market in competition.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:08 am

There was talk in industry publications, that many of these a/c would see a second life as freighters, yet there is no mention of it in this article as no formal program has been announced. Ironically, the plane that killed the MD-11 is now going to have the last laugh  
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:14 am

Quoting crownvic (Reply 8):
There was talk in industry publications, that many of these a/c would see a second life as freighters, yet there is no mention of it in this article as no formal program has been announced.

I think the A330P2F program has killed any real prospects for an A340P2F.
 
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Francoflier
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:15 am

Ok, got it. Thanks.

I guess someone should mention that the article talks about the A340-500 and -600, their much faster than planned depreciation and how it is affecting the companies that financed them, leased them as well as the airline's accounting books. Problem is that they have virtually no residual value and airlines are trying to replace them early for more efficient models.

That being said, I believe the only ones really affected by this might be smaller financing companies who were proportionally more exposed in these deals. Airbus itself is more than ready to wipe the chalkboard and move on, while most airlines are able to get rid of theirs through deals with manufacturers on future purchases or by ending the leases altogether.

Most of the damage is done already. I can only think of VS who will shortly get rid of theirs, and EK's which were part of the A350 deal. LH will be keeping them until their accounting value reaches their actual value (=scarp), so that's not an issue for them, as long as they're happy to fly them.


I like this quote:
"But the company continues to sell new aircraft aggressively, and banks facing losses on A340s complain that the new sales undercut the value of planes that they helped Airbus sell just a few years ago."

Note to banks financing new aircrafts: While the A340-500/600 was certainly a bad bet, it is somewhat of an indications of things to come. With more and more financial burden switching to operating the airplanes rather than financing their purchase, operators will now be switching models quicker than ever before, and that doesn't bode well for resale and residual values generally speaking...
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Revelation
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:18 am

Interesting to read how the article explicitly says Boeing will scrap the A340s it took in as a part of deals to sell 777s yet it seems pretty obvious that most if not all of the planes discussed won't fly again. As mentioned in another thread, the best economic value of A340s these days seems to be to serve as parts donors for A330s...
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BreninTW
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:18 am

Quoting francoflier (Reply 10):
With more and more financial burden switching to operating the airplanes rather than financing their purchase, operators will now be switching models quicker than ever before, and that doesn't bode well for resale and residual values generally speaking...

I wouldn't be surprised to see re-engining programs being instituted in the future. By this I mean that after 10 years or so, the engines get swapped out for more efficient models while the fuselage remains in service.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:24 am

Quoting Revelation (Reply 11):
it seems pretty obvious that most if not all of the planes discussed won't fly again.

Even those that Airbus bought back will likely be headed the same way...

Quoting BreninTW (Reply 12):
By this I mean that after 10 years or so, the engines get swapped out for more efficient models while the fuselage remains in service.

I think New Engines + New Wings seems to be the developing trend. Those are the 2 areas where most fuel saving can be done. That's essentially what the NEO, MAX, 777-9X and 748 are. I'd like to see the A330 getting that treatment too.
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mandala499
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:27 am

As an A340 fan, I say, "Whopeeee! Cheap 340s on the market!"   

However, I stick with the 342 and 343... the 345 looks awesome but from the beginning I thought it (345) together with the 346 are in my opinion, financial timebombs... Sadly, I'm not wrong.

If one does not need the payload range, stick to the 343 and not be tempted to go 345/6.

---

I do feel the article is a bit harsh as it isolates purely on the 340... the 342/3 are part of the 330/340 program, while the 345/6 are in my view the separate program. The 345/6 are flunks. No stats can skew it otherwise, but if some carriers find good use for it, good.

On the other hand, will the 747-8i face the same fate as the 345/6?

[Edited 2013-06-13 21:30:40]
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:30 am

Okay what stands out for me is how cheap the aircraft are.
This seems to be less than what i heard a year or two ago for the 744, though
given that in the last 2 years a lot more of them have been pulled from service that
may have fallen even lower.

But what got me thinking, is if its cheap enough to buy, that will go someway to offsetting the
aircrafts higher fuel consumption (and it is still lower than the 744...anybody at virgin or Lufthansa
who operate both care to comment?) Then this aircraft could potentially be a good aircraft in the longer
range leisure market, in a high density configuration. I'm thinking the long range operations of the TUI group,
or even Jetstar or Norwegian Air Shuttle etc. Squeeze 400 plus seats in it and send it to places like Cancun, SXM or HNL.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:33 am

Quoting mandala499 (Reply 14):
On the other hand, will the 747-8i face the same fate as the 345/6?

Potentially worse. If Boeing Launch their next gen 777 and it grows even slightly, it's going to be tough
selling 748s. Unless at a significant discount. It will be pretty much what the 77W did to the 744 all over again.
 
tortugamon
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:39 am

My favorite quote from the article: "Unfortunately," says Akbar Al Baker, chief executive of Qatar Airways, the A340 isn't an old car "that you can just throw away." Who throws away cars? I would love to be AAB for a bit just to see how that guy's mind works.

Interesting and depressing article for sure. Less than $20 Million for a 10 year old plane? Boeing buying them just to scrap them is sad. I would like to think we could come up with a positive use for these aircraft. Infrequent but long distance high rollers with engine confidence issues and a large possy does not sound like a huge market though.

Anybody else a conspiracy theorist like me; maybe the timing of this article had an intended purpose? Is there any new information in this article that was not also true and available six months ago? I know it is a stretch but there seems to be some interesting articles coming out and it is only 3.5 hours until #A350FF.

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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:40 am

Quoting BreninTW (Reply 12):
I wouldn't be surprised to see re-engining programs being instituted in the future. By this I mean that after 10 years or so, the engines get swapped out for more efficient models while the fuselage remains in service.

Interesting idea. how much of a fuel saving would you say sticking the Gen EX engine or the 787 trent engine on the A346? It would have to be quite significant to justify the investment.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:40 am

Quoting francoflier (Reply 13):
I think New Engines + New Wings seems to be the developing trend. Those are the 2 areas where most fuel saving can be done. That's essentially what the NEO, MAX, 777-9X and 748 are. I'd like to see the A330 getting that treatment too.

Yes, I can see that being a trend for new-manufacture aircraft.

However, I wouldn't be surprised to see similar programs being applied to second-hand/in-service aircraft. Something similar to what happened with the DC8 aircraft that were re-engined with CFM engines.

While I understand that the fuel consumption delta between the CFM and original P&W engines was substantial, with continued high fuel prices, and large in-service fleets of modern widebodies, it will become increasingly financially feasible to instigate re-engine programs. For example, if RR was to develop an updated engine for the A330 that is ... say ... 2.5% to 5% more fuel efficient than the installed engines and didn't require a new interface it could be a game-changer for the A330.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:44 am

Quoting Lufthansa (Reply 18):
Interesting idea. how much of a fuel saving would you say sticking the Gen EX engine or the 787 trent engine on the A346? It would have to be quite significant to justify the investment.

It wouldn't work for a small fleet such as the A346/A345 -- as you say the investment would be difficult to justify. However for aircraft with large "installed bases" it might become justifiable.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:45 am

Quoting Lufthansa (Reply 16):
It will be pretty much what the 77W did to the 744 all over again.

Well, the 744s have mostly flown long enough to justify their low to nil residual values, unlike the A346s.

Mandala499 raises a good point in saying that there are 747s (and A343s) which will outfly most A346s. Given how cheaply you can get one of these, and given they're still cheaper to operate than a 747, one wonders would could profitably operate them. However, it seems even high density charter operators are now shying away from bigger and older aircrafts and shifting to smaller and more efficient models...

On a side note, that Azerbaijan A345 does look stunning.

Quoting Lufthansa (Reply 16):
it's going to be tough
selling 748s.

Except the freighter model. There's nothing on the horizon that will replace it. I'm pretty sure it will keep getting orders for years to come, if only a trickle.
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 4:57 am

Quoting Lufthansa (Reply 16):
it's going to be tough
selling 748s.

Add in the fact that Airbus only got 9 orders for the A380 last year, and haven't landed any so far this year, and it begins to look as if four-engine types are just plain 'out of date'?
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:13 am

There will be no type savior like Delta for MD-90s? No one wants to accumulate cheap middle-aged A340s?
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:23 am

Quoting BreninTW (Reply 12):
I wouldn't be surprised to see re-engining programs being instituted in the future. By this I mean that after 10 years or so, the engines get swapped out for more efficient models while the fuselage remains in service.

I'm sure as big as Airbus is, they probably rolled that idea around with other possible solutions but the fact remains. The aviation community, insiders and outsiders, now know it had its chance. Gotta move on, cut your losses.

What surprises me more is the fact that with all the assumed gov't oversight, how could they give out those resale guarantees like that. So we know of Singapore. Who else received these resale guarantees like the ones mentioned?? They had to have known that you cant bet on resale values so far in the future. But I'm sure they have learned from this and going forward t'll be better for them.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:23 am

Quoting francoflier (Reply 10):

Note to banks financing new aircrafts: While the A340-500/600 was certainly a bad bet, it is somewhat of an indications of things to come. With more and more financial burden switching to operating the airplanes rather than financing their purchase, operators will now be switching models quicker than ever before, and that doesn't bode well for resale and residual values generally speaking...

I wonder if the guarantees that Airbus offered for the A340's resale value may have accelerated their retirements? I'm sure there's a point where Airbus offers enough compared to the market value that it makes more sense to retire the aircraft early and claim the guaranteed value than it does to continue operating the frame.
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:45 am

Quoting francoflier (Reply 10):
Note to banks financing new aircrafts: While the A340-500/600 was certainly a bad bet, it is somewhat of an indications of things to come. With more and more financial burden switching to operating the airplanes rather than financing their purchase, operators will now be switching models quicker than ever before, and that doesn't bode well for resale and residual values generally speaking...

I don't understand. My understanding is that newer aircraft are less and less expensive to operate but more and more expensive to buy. They are not getting cheaper to buy, nor are they getting more expensive to operate.

Quoting Lufthansa (Reply 18):
Interesting idea. how much of a fuel saving would you say sticking the Gen EX engine or the 787 trent engine on the A346? It would have to be quite significant to justify the investment.

For ~130 total aircraft sold, assume that 30 get the re-engine, an entire testing and certification and redesign program (structural changes to the wing) not to mention the capital costs of the new engines and execution of the modifications would probably run around US$90-100M per frame (I figure US$1Bn development cost/30 frames = about US$30M and a T1000 costs US$16M (x4). The result would still be less efficient than a twin with the same generation of engines installed.

Given the fact that a new airplane costs only 2-3 times that and lasts a lot longer an burns less fuel, I just don't see the business case.

I love the A340. It's beautiful and it's technically a fantastic aircraft that delivers good payload/range and an excellent safety profile. Unfortunately, for companies who care more about books and bottom lines than whether the plane is pretty, the A340 is a dog.
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lightsaber
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:46 am

From the OP, link, its not as bad as I feared:
EADS has set aside more than $1 billion to cover guarantees on its products, the company said in its 2012 financial statement. It also said Airbus is "taking mitigation action to reduce the impact of asset-value guarantees falling due in the coming years relating to A340s in particular."
$1,000M divided by 131 is but $7.6M per aircraft. Ok, not trivial, but on a per aircraft bases, that represents only an extra 5% depreciation per aircraft.

So while the article is negative (I'm not exactly a fan of the A340's economics and I've been vocal on a.net), but let's take a step back. Airbus made guarantees on the aircraft resale value and while they will have to pay out, it is a paltry sum of each aircraft's initial sales price on average.

Now later in the OP article it notes that for EK's A340s, Airbus might be in for 'tens of millions of dollars per aircraft.' But, I assume that is part of the billion Airbus has put aside. As well as for SQ.

Now anyone who has read my posts on the A340 won't be surprised that I agree with the article. The A345/A346 is being undermined by high oil prices.

Now I'm a very analytic person... So I'm trying to figure out how the 744 is doing so well. I'll admit to being confused at the different paths of the two quads.

Quoting mandala499 (Reply 14):
On the other hand, will the 747-8i face the same fate as the 345/6?

I'm getting a feeling in my stomach that the A380 is heading down that same path.   I don't want it to be the case, but the pax sales just aren't there for the 748i and unless at Paris this year there sales, I would say the market has spoken. As others have noted the 777X is going to do to the 748i what the 77W did to the 744. And my rumor mill has exactly *zero* on 748 sales this year. Ok, its another bad year for freight, but that market will eventually recover. There the 748F has some unique properties that will sell further examples.

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Stitch
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:48 am

I don't see the business case for a re-engine of the A340 - the engines could be worth more than the frame.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 5:51 am

Okay, this ship has sailed, but maybe someone can tell me why it's a poor idea.:

Instead of DL refurbishing its 16 747-451s (oldest built in 1989) could they have purchased 16 A340-600s that were 10 years old for ~$20 million a pop and kitted them out with their new interiors? You get a newer aircraft than what your replacing, somewhat commonality with the flight decks of the A330s, low captal expense, and it buys you time to make a large capital expenditure for replacement aircraft. Sure, fuel burn would be higher than 777-300ER, but it'd still be lower than the 747-451.

And I think this article illustrates brilliantly why the 748 has a dearth of orders: The financing companies don't see the residual values of the aircraft.
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 6:04 am

Lightsaber any insight into how much fuel the 346 saves over the 744. I'm getting the impression not a great deal?
 
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 6:31 am

Quoting lightsaber (Reply 27):
So I'm trying to figure out how the 744 is doing so well.

It is not, all of the leased A346s from CX found new homes, look how many 744s, and even fairly recently converted 744BCFs CX has scrapped in the last year.

Quoting Lufthansa (Reply 30):
much fuel the 346 saves over the 744

Between 2-4 t per hour.
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 6:38 am

Interesting that Airbus tried to compete with the 777 by using two Aircraft, the 330 / 340.


This was not a winning strategy for them.


Now they are going up against the 787 / 777X with one type, the A350.


Too early to tell..
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 6:46 am

Quoting Stitch (Reply 28):
I don't see the business case for a re-engine of the A340 - the engines could be worth more than the frame.

I worked on an A346 GTF proposal. Due to the weight of the airframe, we couldn't make the numbers work. At some point the A340 has to pay for every added pound vs. the competition. About $500 per kg per decade. That is the cost, per kg, of added fuel and wear and tear (say brakes and tires) that the added weight puts in costs.

And the A345/A346 wasn't competitive even when it had better engines than the 744 (but less advanced than the 77W, but only a little). It now has the A350 and 787 where the airframe/engine combination has been optimized.

If the airframes are really only worth $20 million, than how could one justify putting on $80 million of new engines, nacelles, and control computers? Engines w/nacelles are a large fraction of new airframe costs. Why give up that lighter CFRP wing with superior aerodynamics? Not to mention the A350 has a superior cargo hold design.

The A35J is the natural A346 replacement. No one should fight that trend.

Quoting Lufthansa (Reply 30):
Lightsaber any insight into how much fuel the 346 saves over the 744. I'm getting the impression not a great deal?

IIRC (I'm going from memory), its about 10% per passenger.

Quoting zeke (Reply 31):
look how many 744s, and even fairly recently converted 744BCFs CX has scrapped in the last year.

Those have mostly been older examples. Overall, for such a well aged queen, the 744 is doing well. Yes, the BCFs were a flop... but that is the poor freight market and their comparative performance. Yes, I see them being retired. But the 744 should be doing worse than the A346. IMHO, while they are both going over the cliff, the 744 is doing so a bit less abruptly.

Now the big thing for the A346 will be when LH gets around to replacing them. I suspect we'll hear about that order within 18 months.

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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 7:05 am

Quoting Max Q (Reply 32):

Interesting that Airbus tried to compete with the 777 by using two Aircraft, the 330 / 340.


This was not a winning strategy for them.

Assuming that you are right that Airbus made the 330/340 only to compete with the 777 (and conveniently forgetting the 767) I would say that the 330 did not sell that bad. I believe at the end the numbers of the project (ROI) are in the black, don't you?
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 7:33 am

Quoting Max Q (Reply 32):

Rewriting history to suit yourself ? The A330/A340 was launched before the 777 was.

Quoting lightsaber (Reply 33):

No the 744 is not doing well, care to share your substance to support this ? Oil prices is not the only thing hurting them, it is the reliability.

There a lot of airlines trying to offload them, no takers.
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mandala499
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 8:08 am

Quoting francoflier (Reply 21):
Mandala499 raises a good point in saying that there are 747s (and A343s) which will outfly most A346s. Given how cheaply you can get one of these, and given they're still cheaper to operate than a 747, one wonders would could profitably operate them. However, it seems even high density charter operators are now shying away from bigger and older aircrafts and shifting to smaller and more efficient models...

I am sure the 343s still have some more years ahead of them than the 345/346. Operating 343s profitably is a lot easier than 346s. The 343s is competitive with the 777s, the 345/6s aren't. One needs to have the payload to operate the 346s but at that point the 77Ws are way more profitable. With the 744s, well no future for them on the frontline passenger services, cargo and charters are their future (and they remain popular amongst hajj charters... am surprised I haven't seen 346s doing it here!).

From personal experience, at one stage some at Airbus seemed to be 'desperate' to sell the 345/6 to the extent that on one of the projects I was doing, they were willing to offer a brand new 345/6 for cheaper than a new 343 or a young used 343. I came up with my own burn and trip projections and they said it was wrong and produced their own numbers... I asked them to open the then FCOM2 for the aircraft and tell me how they came out with the numbers... At which point they backed off and agreed to offer the 343 instead (they used marketing numbers). To me, that is desperation!

Quoting lightsaber (Reply 27):
Now anyone who has read my posts on the A340 won't be surprised that I agree with the article. The A345/A346 is being undermined by high oil prices.

Now I'm a very analytic person... So I'm trying to figure out how the 744 is doing so well. I'll admit to being confused at the different paths of the two quads.
Quoting SSTeve (Reply 23):
There will be no type savior like Delta for MD-90s? No one wants to accumulate cheap middle-aged A340s?

343s yes, 345/6s, no. But then older 772ERs are also becoming available in the market, it locks the 345/6s out of the market for a few more years. The 350 will then start to have an effect on older 772ERs and 343s, but the major effect will be to detriment of the 345/6s.

Quoting YXD172 (Reply 25):
I wonder if the guarantees that Airbus offered for the A340's resale value may have accelerated their retirements?

No, it accelerated their sales and also accelerated their retirements. There would be a lot fewer sales if the guarantees weren't there. The 345/6 is in my eyes, merely a customer retention exercise until newer planes become available.   

Quoting lightsaber (Reply 27):
I'm getting a feeling in my stomach that the A380 is heading down that same path.

The 748 is a 747 stretch and it is reaching its limits. The 380 however can still be expanded. However, this does not mean the 380 will have a rosy future. The 744 replacement market is currently split between 77W and 380... the 748i doesn't come into the picture at the sales rate they're achieving. Congestion and frequency based bilateral agreements are the driver for the 380... that's about it.

Quoting lightsaber (Reply 27):
I don't want it to be the case, but the pax sales just aren't there for the 748i and unless at Paris this year there sales, I would say the market has spoken.

Sad but true.

Quoting lightsaber (Reply 27):
There the 748F has some unique properties that will sell further examples.

Agree, there'll be some markets the 748F can serve while no other (not even the 388F) can serve.

Quoting Stitch (Reply 28):
I don't see the business case for a re-engine of the A340 - the engines could be worth more than the frame.

I think reengining the 345/6s would be a futile exercise as lightsaber pointed out. However, 343 reengine market might actually be a more feasible one.

Anyone considering A343 vs A346, I urge them to obtain the certified performance numbers and do your own analysis... not brokers, not leasing companies' numbers....

Mandala499
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Aesma
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 10:04 am

Quoting rotating14 (Reply 24):
What surprises me more is the fact that with all the assumed gov't oversight, how could they give out those resale guarantees like that. So we know of Singapore. Who else received these resale guarantees like the ones mentioned?? They had to have known that you cant bet on resale values so far in the future. But I'm sure they have learned from this and going forward t'll be better for them.

Banks being banks. Governments being naive. To this day France and Germany are still trying to shield their banks from more oversight, while claiming otherwise.

Quoting DocLightning (Reply 26):
I don't understand. My understanding is that newer aircraft are less and less expensive to operate but more and more expensive to buy. They are not getting cheaper to buy, nor are they getting more expensive to operate.

The list price goes up, but that's only so that manufacturers can offer 50% discounts without losing money. An economic journalist was saying the other day that for the 748i Boeing offered 60% off.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
RickNRoll
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 10:17 am

Quoting mffoda (Thread starter):
The following WSJ article puts to bed many of the fan based arguments regarding the merits of the A340... Despite her eye appealing beauty. The financial community speaks out.

I liked my A340 ride to Thailand more than the delayed (due to some mechanical problems) return flight on a 747. The A340 is a good customer experience, it did what it was designed to do. As with all planes, there are factors outside your control that can make them no longer economically viable. In this case, it was the price of fuel. Boeing decided a big twin was a better idea, and it paid off for them well.
 
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Francoflier
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 10:22 am

Quoting lightsaber (Reply 33):
If the airframes are really only worth $20 million

But that's the interesting point. The difference between buying a $20 million A346 and a $250 million A35J (which you'll get in 7 years) will make up for a lot of fuel. Surely a second or third tier operator looking for capacity and range would be tempted by the deal and the immediate availability. And at such a cheap acquisition price, it's not such a burden on the books and no one cares about the dwindling value anymore.

Of course, as said above, the agressive selling tactics and facilitated financing options, plus the ever increasing operating cost of older frames, slant everything towards new planes these days. Just like cars... The manufacturers are sabotaging the resale values of their own aircrafts.

Quoting mandala499 (Reply 36):
But then older 772ERs are also becoming available in the market, it locks the 345/6s out of the market for a few more years.

To be honest I doubt the 772 ER will fare a better fate on the second hand market than the A346. For the same reason I mentioned above.

Quoting DocLightning (Reply 26):
I don't understand. My understanding is that newer aircraft are less and less expensive to operate but more and more expensive to buy.

True, but the increase of operating costs increases a lot faster than the acquisition cost. A 744 burns 10 Tons of fuel every hour it flies. Increase the price of that fuel by just 5% and you'll quickly feel the pain, no matter how cheaply you got that aircraft.
I'll do my own airline. With Blackjack. And hookers. In fact, forget the airline.
 
AirbusA6
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 10:36 am

Is this one of those situations where neither Airbus nor Boeing want cheap A345/6s out there as competition for their newer models, as I would very happily buy a fleet of $20m A346s rather than spending 10 times as much on an A350.
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frigatebird
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 11:34 am

Quoting francoflier (Reply 10):
LH will be keeping them until their accounting value reaches their actual value (=scarp), so that's not an issue for them, as long as they're happy to fly them.

But LH is already planning to order a replacement for the whole fleet of A346s this year...

Quoting tortugamon (Reply 17):
Who throws away cars?

Mr. AAB himself quite often I guess, probably when the ashtray is full  

Quoting francoflier (Reply 21):
On a side note, that Azerbaijan A345 does look stunning.

Every A345 looks stunning. TG's is my favourite, but with those now parked Azerbaijan's is indeed a good replacement   

Quoting SSTeve (Reply 23):
No one wants to accumulate cheap middle-aged A340s?

Probably because there will be enough cheap middle-aged A330s on the market the next couple of years...

Quoting lightsaber (Reply 27):
Quoting mandala499 (Reply 14):On the other hand, will the 747-8i face the same fate as the 345/6?I'm getting a feeling in my stomach that the A380 is heading down that same path.

That's too pesstimistic. The A380 has no competition. The market may be smaller than envisioned, but there won't be another plane that blows it off the market, like the 77W did to the A346 and 744. And no, the 777X won't kill the A380, it will kill the 748 however.
146,318/19/20/21,AB6,332,343,345,388,722,732/3/4/5/G/8,9,742,74E,744,752,762,763,772,77E,773,77W,AT4/7,ATP,CRK,E90,F50/7
 
romeobravo
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 12:04 pm

Quoting Max Q (Reply 32):
Interesting that Airbus tried to compete with the 777 by using two Aircraft, the 330 / 340.

The A330 and A340 are the same aircraft for all intent and purposes.

Quoting Max Q (Reply 32):
This was not a winning strategy for them.

Sales speak differently i would argue.

The A340NGs would done alright if fuel prices hadn't skyrocketed after entering service. When you make a relatively low cost stretch that isn't that fuel efficient you always leave yourself open to that possibility though. Sometimes you win and sometimes you lose.

[Edited 2013-06-14 05:08:32]
 
jfk777
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 12:21 pm

The lack of fuel economy by the A340 is sad because its a beautiful airplane. What has killed the A340-300 is the A330-300, as the two engine brother has increased its range operators by it. SWISS and LH are two perfec examples, their recent Airbus for additonal planes have been for the A333.
 
bennett123
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 12:40 pm

It looks as if those of us who have never flown on an A340 may need to get a move on.
 
airbazar
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 1:03 pm

What exactly is a "big A340"? LOL
Where is the news on this article? They're not saying anything new. I have a message for the WSJ: 2005 called, they want their story back.
 
waly777
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 1:09 pm

Quoting bennett123 (Reply 44):
It looks as if those of us who have never flown on an A340 may need to get a move on.

Indeed, I've always wanted to fly either the 340-500 or 600. Seems LH or VS would be a good choice for a few more years @ least.

I've always thought the latter 340's were stunning aircraft but sadly fuel price increased @ an almost exponential level at the very wrong time. Well @ least another beauty the 350-1000, would be coming soon.
The test of first-rate intelligence is the ability to hold 2 opposed ideas in the mind concurrently, and still function
 
OldAeroGuy
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 1:12 pm

Quoting airbazar (Reply 45):
Where is the news on this article? They're not saying anything new. I have a message for the WSJ: 2005 called, they want their story back.

One piece of news in the article is:

"The 777 is "a much better airplane," Airbus Chief Commercial Officer John Leahy conceded at a conference earlier this year."

Leahy wouldn't have said that in public in 2005.

[Edited 2013-06-14 06:15:07]
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lightsaber
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 1:15 pm

Quoting zeke (Reply 35):
No the 744 is not doing well, care to share your substance to support this ?

Years ago when discussing A346 economics, the point was made that the 744s would be retired first. Now it isn't that the 744s aren't being retired, but most of the examples I've seen scrapped had completed full (20 year) service lives. We've seen investment in seats from a number of 744 operators that implies they will still be in service to the next D-check.

I'm not arguing the 744 will go on for a long time. It is just doing better *relative to the A346* than I was expecting. That's all. We look at the same data, same number of airline retirements, and yet the 744s being retired are substantially older than the A346s.

Quoting mandala499 (Reply 36):
But then older 772ERs are also becoming available in the market, it locks the 345/6s out of the market for a few more years.

That ends the window for the A346 as in 2015 or 2016 77Ws start coming off leases...

Quoting mandala499 (Reply 36):
The 748 is a 747 stretch and it is reaching its limits. The 380 however can still be expanded.

Agreed. And I had a typo. I meant to write 748i, not A380. Mea culpa. I'm a huge fan of the A380!

Quoting frigatebird (Reply 41):
That's too pesstimistic. The A380 has no competition.

Typo! (Well... we call it a 'brain fart.') I meant to write 748i...  
Quoting AirbusA6 (Reply 40):
as I would very happily buy a fleet of $20m A346s rather than spending 10 times as much on an A350.

That $20m A346 would need a D-check. Also, no one pays list on an A350. But there is a large cost difference.
The A346 needs 54,000 gallons of fuel loaded for a 7,500nm still air voyage. That compares to a 77W max fuel capacity of 47,890 which, IIRC, isn't full at 8,000nm. Jet fuel is at $2.75/gallon per http://www.indexmundi.com/commodities/?commodity=jet-fuel.

Thus for a 7,500nm flight, the A346 burns about $25,000 more in fuel per day or about $9m/year. Add to that a few million per year in additional maintenance costs, about a million USD a year in higher ATC fees, and the market adopting the 77W becomes clear. We're talking about a $12million/year operating cost difference.

For pricing, 77W's trade up to $162M. No way is an A359 or even A35J earning 50% more. So the break even in operating costs between a used $20M A346 and $162M 77W is 12 years at most. But that $20M A346 is a circa 2002 model with eleven years of wear and tear. It probably needs another $20M or so to be ready to fly for another airline. So that brings in break even 18 months. And its competing with a $88M used 77W. ($88M-$20M)/$12M/yr=5.7 years minus whatever it costs to make the A346 competitive.

So there is only a narrow window before the A346 new airline would have to replace their fleet. Since an old 77E is going for only $40M, why not fly that and be ahead in 3 years (or less)? And the 77E will have more resale at the end of 3 years than the A346...

Aircraft Values, And Lease Pricing - Spring 2013 (by LAXintl May 14 2013 in Civil Aviation)

And what routes would you fly these A346s? On anything within A333 range, the A333 will eat its siblings lunch. That means competing on the longest haul routes. Against 787s. Against 77Ws. Against $11.5M used 744s, A380s, and soon A359s. That extra $12M/year in estimated costs adds up quickly (vs. the 77W, more vs. the A35J).


Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
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Francoflier
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RE: A340 Lovers "Beware"

Fri Jun 14, 2013 1:31 pm

Quoting airbazar (Reply 45):
I have a message for the WSJ: 2005 called, they want their story back.

The WSJ mostly hates everything that comes from Europe. With the A350 coming under the spotlight, the sarcastic and caustic side of me wants to say that they needed a story to play it down...  
I'll do my own airline. With Blackjack. And hookers. In fact, forget the airline.

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