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KarelXWB
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Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 12:25 pm

Azul has signed agreements with Wells Fargo for the lease of five A330-900 aircraft.

"Azul Linhas Aéreas Brasileiras (AD, Campinas Viracopos) has signed longterm lease agreements with Wells Fargo for five A330-900s, Bohai Financial Investment Holding has announced.

According to a Shenzhen stock exchange filing, the aircraft have been secured on 144-month contracts at a cost of USD783,000 per month per aircraft to the Brazilian budget carrier with Avolon appointed manager. No delivery dates were disclosed.


Article
https://www.ch-aviation.com/portal/news ... ve-a330neo

The A330neo is probably a better fit than the A350s Azul had on order.

And for the first time A330-900 lease costs have been revealed.
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Re: Azul to add 5 A330neo aircraft

Wed Sep 20, 2017 12:32 pm

Not that surprising, the A350 was always quite ambitious, especially since there don't seem to be many routes that the A330s can't do.

What shape are Azul in financially, and are their existing long haul flights doing well?
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 12:40 pm

To be clear it sounds like the planes are Avolon's (who has 15 on order), with Azul doing the deal through Wells Fargo.
 
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Re: Azul to add 5 A330neo aircraft

Wed Sep 20, 2017 1:17 pm

MrHMSH wrote:
Not that surprising, the A350 was always quite ambitious, especially since there don't seem to be many routes that the A330s can't do.

It depends. They never stated which routes they intended to fly the A350's on. To me the A350 order indicated that they may have wanted to expand to places like LAX/CDG/FCO. Sure the A330's can probably do these but the A339 is optimized for 4,000nm (8-10hr), flights. Routes such as GIG/VCP-FCO/CDG/LAX are all 5,000+nm and on the far end of the A339 performance curve.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:23 pm

Always great to see more A330neo orders. Let's hope they do take them up this time though ;)
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:25 pm

KarelXWB wrote:

According to a Shenzhen stock exchange filing, the aircraft have been secured on 144-month contracts at a cost of USD783,000 per month per aircraft .


That's less than what some A330-300s are leasing for according to this

viewtopic.php?t=1361025

It's also quite a bit cheaper than 787-9s or A350s.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:26 pm

Does anybody have the link to a full article about this? The article linked here is closed to non-members of the site. I would like to read everything.

A388
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:29 pm

Newbiepilot wrote:
That's less than what some A330-300s are leasing for according to this

viewtopic.php?t=1361025

It's also quite a bit cheaper than 787-9s or A350s.


Well Avolon was launch customer so they must have gotten a pretty good deal.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:38 pm

KarelXWB wrote:
Newbiepilot wrote:
That's less than what some A330-300s are leasing for according to this

viewtopic.php?t=1361025

It's also quite a bit cheaper than 787-9s or A350s.


Well Avolon was launch customer so they must have gotten a pretty good deal.


That must have been a very good deal. It is surprising to see A330-900s leasing for less than A330-300s. Even if Avalon got a killer deal, I would have expected them to be able to charge airlines more for the A330-900 than A330-300. That 14% fuel savings for the airline is practically free, which is not how value based pricing in the industry typically works out.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:46 pm

KarelXWB wrote:
And for the first time A330-900 lease costs have been revealed.


Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 1:59 pm

Newbiepilot wrote:
That must have been a very good deal. It is surprising to see A330-900s leasing for less than A330-300s. Even if Avalon got a killer deal, I would have expected them to be able to charge airlines more for the A330-900 than A330-300. That 14% fuel savings for the airline is practically free, which is not how value based pricing in the industry typically works out.


B777LRF wrote:
Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


True, and it's just a launch price (Avolon was one of the launch lessors). I expect lease rates of brand new A330-900 orders to be higher than the current A330-300 market value.

Still, at least we have a ballpark figure and it shows how steep Airbus could go on A330neo sales. And while other airlines might pay considerably more, I expect A330neo lease rates to stay far below 787 and A350 transactions.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 2:23 pm

My employer received an offer last year for 5 A330-900 (2018 deliveries, also from a "launch"-lessor) that was about 10% less than the rate above. A330neo lease rates could easily go below $700k/month for larger commitments.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 2:27 pm

engines included?
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 2:30 pm

These are 12 year leases, some airlines that buy direct do not keep them that long. Bound to be cheaper than shorter duration leases.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 2:34 pm

JerseyFlyer wrote:
These are 12 year leases, some airlines that buy direct do not keep them that long. Bound to be cheaper than shorter duration leases.

12 years is pretty standard for widebody leases. Shorter may not necessarily be that much more expensive, as the [new build] aircraft will also be worth more at the end of the lease term.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 2:45 pm

Anything on the delivery schedule?
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 3:27 pm

WIederling wrote:
engines included?


Most likely yes. It would be unusual for engines, APU and Landing Gear not to be included for a new airplane lease. Leasing companies usually don't split up the pricing.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 3:32 pm

sf260 wrote:
My employer received an offer last year for 5 A330-900 (2018 deliveries, also from a "launch"-lessor) that was about 10% less than the rate above. A330neo lease rates could easily go below $700k/month for larger commitments.


I think it was rather unusual for the A330neo to launch with so many leasing company orders that weren't tied to specific airlines. That could be resulting in leasing companies having to aggressively market the airplane. The leasing companies will compete against Airbus for customers. I can't think of any other widebodies that launched with as large of a share of leasing company orders. The A330 does very well in the leasing market, but it does make me wonder if leasing companies might have overcommitted since we are in a bit of a widebody slump.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 3:41 pm

Newbiepilot wrote:
sf260 wrote:
My employer received an offer last year for 5 A330-900 (2018 deliveries, also from a "launch"-lessor) that was about 10% less than the rate above. A330neo lease rates could easily go below $700k/month for larger commitments.


I think it was rather unusual for the A330neo to launch with so many leasing company orders that weren't tied to specific airlines. That could be resulting in leasing companies having to aggressively market the airplane. The leasing companies will compete against Airbus for customers. I can't think of any other widebodies that launched with as large of a share of leasing company orders. The A330 does very well in the leasing market, but it does make me wonder if leasing companies might have overcommitted since we are in a bit of a widebody slump.


An interesting observation, but I note this was less of a concern for the 737 MAX 10, which has a similar mix of airline orders and speculative leasing orders, except in this case the A330neo has steadily picked up orders through leasing companies.

Perhaps the reason the A330neo is in demand amongst leasing companies is because they think the transition from the very strong A330ceo market will be smooth.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 6:56 pm

B777LRF wrote:
KarelXWB wrote:
And for the first time A330-900 lease costs have been revealed.


Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Wed Sep 20, 2017 7:35 pm

PW100 wrote:
B777LRF wrote:
KarelXWB wrote:
And for the first time A330-900 lease costs have been revealed.


Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .

Well said.

Disclosed / published lease costs and list prices are close to meaningless unless all side agreements and T&C's are also available.

However, A330 family margins, including the NEO, are unsurpassed by any WB, including the 767 built only as a freighter.
 
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Re: Azul to add 5 A330neo aircraft

Wed Sep 20, 2017 7:59 pm

airbazar wrote:
It depends. They never stated which routes they intended to fly the A350's on. To me the A350 order indicated that they may have wanted to expand to places like LAX/CDG/FCO. Sure the A330's can probably do these but the A339 is optimized for 4,000nm (8-10hr), flights. Routes such as GIG/VCP-FCO/CDG/LAX are all 5,000+nm and on the far end of the A339 performance curve.


The range quoted by Airbus for the 339 is 6550 nm. That should be sufficient for 6200 mi in operation.
VCP-LAX 6104 mi
VCP-FCO 5854 mi
VCP-CDG 5829 mi
VCP-FRA 6072 mi.

I cannot think of any destination typically covered by Brazilian carriers that would need the A350. VCP-SFO is 6420 mi and even this one the 339 may be able to limp into. Outside of this envelope the ones within range for A350 are really not viable like SEA, TLV, SVO, AKL.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 12:50 pm

Someone83 wrote:
Anything on the delivery schedule?


Late 2018.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 12:50 pm

Configuration will be 34 Business, 108 'Economy Extra' and 156 Economy.

http://www.prnewswire.com/news-releases ... 23560.html
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 12:53 pm

Azul posted a notice to the Brazilian stock market (it is listed there) stating that the aircraft will come from Avolon, will be delivered in the last quarter of 2018 and will feature the configuration of 34C / 108W / 154Y.

Avolon is controlled by China's HNA Group which has a large stake at the Brazilian airline.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 1:47 pm

So, figure 2 flights a day at 298 seats divided by 30 days, that's only around $44 a ticket going to lease costs one way. Not bad.

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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 4:07 pm

OA940 wrote:
Always great to see more A330neo orders. Let's hope they do take them up this time though ;)


I agree totally. It seems an excisting order, a lessor who found a lessee (or vice versa). Awe, sounds very romantic :couple:

Considering it means these planes will actually be built. Now I hope more airlines will follow. I love the looks of this new neo bird.
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Re: Azul to add 5 A330neo aircraft

Thu Sep 21, 2017 6:59 pm

incitatus wrote:
airbazar wrote:
It depends. They never stated which routes they intended to fly the A350's on. To me the A350 order indicated that they may have wanted to expand to places like LAX/CDG/FCO. Sure the A330's can probably do these but the A339 is optimized for 4,000nm (8-10hr), flights. Routes such as GIG/VCP-FCO/CDG/LAX are all 5,000+nm and on the far end of the A339 performance curve.


The range quoted by Airbus for the 339 is 6550 nm. That should be sufficient for 6200 mi in operation.
VCP-LAX 6104 mi
VCP-FCO 5854 mi
VCP-CDG 5829 mi
VCP-FRA 6072 mi.

And like I said, they are all at the far end of the performance curve. At about 4,000nm the current 242t A333 starts to trade payload for range. At 6,000nm it falls off a cliff :)
That is why IIRC, DL waited to receive the 242t A333 to swap it in for the 772ER that was operating JFK-TLV. And that is "only" ~5,000nm. Still an impressive distance for an A333, however.
I think a NEO adds another 500nm of viability to the current A333 capability (I could be wrong on this), so I'd say 5,500nm is about the longest feasible route for an early A339.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 7:14 pm

AF086 wrote:
Avolon is controlled by China's HNA Group which has a large stake at the Brazilian airline.


No nepotism there then!
 
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Re: Azul to add 5 A330neo aircraft

Thu Sep 21, 2017 7:41 pm

incitatus wrote:
airbazar wrote:
It depends. They never stated which routes they intended to fly the A350's on. To me the A350 order indicated that they may have wanted to expand to places like LAX/CDG/FCO. Sure the A330's can probably do these but the A339 is optimized for 4,000nm (8-10hr), flights. Routes such as GIG/VCP-FCO/CDG/LAX are all 5,000+nm and on the far end of the A339 performance curve.


The range quoted by Airbus for the 339 is 6550 nm. That should be sufficient for 6200 mi in operation.
VCP-LAX 6104 mi
VCP-FCO 5854 mi
VCP-CDG 5829 mi
VCP-FRA 6072 mi.

I cannot think of any destination typically covered by Brazilian carriers that would need the A350. VCP-SFO is 6420 mi and even this one the 339 may be able to limp into. Outside of this envelope the ones within range for A350 are really not viable like SEA, TLV, SVO, AKL.


You folks know that VCP by itself has a minimal pax demand overseas, right? Apart from Azul, there are few regular international flights from there (if there's any left besides AD).
In no universe or circumstances would someone open a new route from São Paulo thru VCP instead of GRU, like the examples said (SEA, TLV, SVO, AKL), once none of these 4 pleasant localities are currently served from Brazil.
 
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Re: Azul to add 5 A330neo aircraft

Thu Sep 21, 2017 8:43 pm

airbazar wrote:
I think a NEO adds another 500nm of viability to the current A333 capability (I could be wrong on this), so I'd say 5,500nm is about the longest feasible route for an early A339.


Almost correct, make that 400nm :)
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Re: Azul to add 5 A330neo aircraft

Thu Sep 21, 2017 9:11 pm

airbazar wrote:
incitatus wrote:
airbazar wrote:
It depends. They never stated which routes they intended to fly the A350's on. To me the A350 order indicated that they may have wanted to expand to places like LAX/CDG/FCO. Sure the A330's can probably do these but the A339 is optimized for 4,000nm (8-10hr), flights. Routes such as GIG/VCP-FCO/CDG/LAX are all 5,000+nm and on the far end of the A339 performance curve.


The range quoted by Airbus for the 339 is 6550 nm. That should be sufficient for 6200 mi in operation.
VCP-LAX 6104 mi
VCP-FCO 5854 mi
VCP-CDG 5829 mi
VCP-FRA 6072 mi.

And like I said, they are all at the far end of the performance curve. At about 4,000nm the current 242t A333 starts to trade payload for range. At 6,000nm it falls off a cliff :)
That is why IIRC, DL waited to receive the 242t A333 to swap it in for the 772ER that was operating JFK-TLV. And that is "only" ~5,000nm. Still an impressive distance for an A333, however.
I think a NEO adds another 500nm of viability to the current A333 capability (I could be wrong on this), so I'd say 5,500nm is about the longest feasible route for an early A339.


Incitatus is quoting range in statute miles and airbazar is quoting in nautical miles.

I am saying this because it seems there might be some misunderstanding stemming from that.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Thu Sep 21, 2017 9:39 pm

The 'OEM-advertised' A330-900neo range is 12,130 km, or 6,550 nm, at 242t MTOW. However, this really translates into only, say 11,000 km, or approximately 5,950 nm. As mentioned, the longest potentially identified route for AD from Sao Paulo would be SFO, approximately 10,500 km distance, placing it within the aircraft's range envelope. Avolon is placing early-build frames with AD, which is presumably why the lease rate appears attractive, as mentioned. However, early-build frames are also notorious for 'teething issues', which will hopefully be a non-event for the A330neo, allowing AD to make full use of the aircraft's range and efficiency performance.

Interestingly, there is increasing speculation Airbus will launch a 251t version of the A330neo, which could extend the model's range significantly. The A330-300 is categorized as a 'medium range' wide body, but at 13,000 km, or greater, range, a 251t A330-900neo program would enter 'long range' category. An 'ultra long-range' model would likely require 16,000 km+ OEM advertised range, perhaps something to consider for the yet-to-be-built A300-800neo with 251t!!
 
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Re: Azul to add 5 A330neo aircraft

Fri Sep 22, 2017 12:00 am

MoKa777 wrote:

Incitatus is quoting range in statute miles and airbazar is quoting in nautical miles.

I am saying this because it seems there might be some misunderstanding stemming from that.


I have quoted both. I wrote that Airbus' quote of 6550 nm (nautical miles) nominal range should be sufficient to fly 6200 mi (statute miles) in actual operation.

These routes are not north-Transatlantic routes and as such as not exposed to the same headwinds as say TLV-JFK. The nominal range translates into more capability in actual operation.

I also understand what airbazar said on the 339 taking a weight restriction for some of these routes. That means Azul may not be able to carry a full cargo load, but the 339 is plenty capable for a full passenger load on them. Just like a 763 really only is fully capable for about 4000 mi, but it has been used on a lot of other longer routes like GRU-MXP. Buying a 350 to carry a little more freight makes no sense.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Fri Sep 22, 2017 6:18 am

 
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Re: Azul to add 5 A330neo aircraft

Fri Sep 22, 2017 11:51 am

incitatus wrote:
MoKa777 wrote:

Incitatus is quoting range in statute miles and airbazar is quoting in nautical miles.

I am saying this because it seems there might be some misunderstanding stemming from that.


I have quoted both. I wrote that Airbus' quote of 6550 nm (nautical miles) nominal range should be sufficient to fly 6200 mi (statute miles) in actual operation.

These routes are not north-Transatlantic routes and as such as not exposed to the same headwinds as say TLV-JFK. The nominal range translates into more capability in actual operation.

I also understand what airbazar said on the 339 taking a weight restriction for some of these routes. That means Azul may not be able to carry a full cargo load, but the 339 is plenty capable for a full passenger load on them. Just like a 763 really only is fully capable for about 4000 mi, but it has been used on a lot of other longer routes like GRU-MXP. Buying a 350 to carry a little more freight makes no sense.


My apologies.

Also, I agree with you.

The A339 makes sense. If it can fully do 80-90% of an airline's routes, taking a slight knock on the other 10-20% may not be such a bad idea. Incorporating another aircraft model (like the A359, for example) into the fleet for these few routes may have a greater negative effect on revenue and profit than stretching the A339's capabilities to the max.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Fri Sep 22, 2017 1:05 pm

PW100 wrote:
B777LRF wrote:
KarelXWB wrote:
And for the first time A330-900 lease costs have been revealed.


Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .


And if the engines are 'by the hour' it is another wild card in our trying to nail down actual costs, particularly on a leased plane. But it is a price point and of some help.
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Fri Sep 22, 2017 1:08 pm

frmrCapCadet wrote:
PW100 wrote:
B777LRF wrote:

Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .


And if the engines are 'by the hour' it is another wild card in our trying to nail down actual costs, particularly on a leased plane. But it is a price point and of some help.


Power by the hour engine agreements are generally for maintenance, not the rent paid for the right to use the engines. The only engine leases by the hour are for really old engines or spares.

The quoted lease rate is for the whole aircraft and it is high compared to other A330neo offers.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Fri Sep 22, 2017 2:11 pm

A330freak wrote:


Loved it! Reminds me the old Varig blue pattern style...
 
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Re: Azul to add 5 A330neo aircraft

Fri Sep 22, 2017 2:22 pm

MoKa777 wrote:
The A339 makes sense. If it can fully do 80-90% of an airline's routes, taking a slight knock on the other 10-20% may not be such a bad idea. Incorporating another aircraft model (like the A359, for example) into the fleet for these few routes may have a greater negative effect on revenue and profit than stretching the A339's capabilities to the max.

Right, I also agree that trading A359's for A339's is a good idea. I was simply suggesting that perhaps this means that expansion into longer routes might be put on a hold for a while. Or perhaps not. Maybe they're happy code-sharing with TP thru LIS and will continue to focus on N.America.

incitatus wrote:
I also understand what airbazar said on the 339 taking a weight restriction for some of these routes. That means Azul may not be able to carry a full cargo load, but the 339 is plenty capable for a full passenger load on them. Just like a 763 really only is fully capable for about 4000 mi, but it has been used on a lot of other longer routes like GRU-MXP. Buying a 350 to carry a little more freight makes no sense.

I agree with the premise of your statement however the 763ER has better range than the A333 :)
Take a look at page 50:
http://www.boeing.com/assets/pdf/commer ... ps/767.pdf
The 767ER may not be the most fuel efficient aircraft but it has a mighty impressive payload/range chart and probably why there are still so many flying, and it's still in production.
 
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Re: Azul to add 5 A330neo aircraft, reveals lease cost

Fri Sep 22, 2017 2:50 pm

frmrCapCadet wrote:
PW100 wrote:
B777LRF wrote:

Truth be told, we only know what the price is from this particular lessor to this particular customer. You may safely assume no other airline will be paying the exact same; some might pay considerably more, some a fair bit less.


And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .


And if the engines are 'by the hour' it is another wild card in our trying to nail down actual costs, particularly on a leased plane. But it is a price point and of some help.



sxf24 wrote:
frmrCapCadet wrote:
PW100 wrote:

And without knowing the return conditions, engine program, maintenance resposibilities, (upfront-) payment schemes, escalation schemes, insurance coverage etc. etc., really, we don't know much at all to be fair . . .


And if the engines are 'by the hour' it is another wild card in our trying to nail down actual costs, particularly on a leased plane. But it is a price point and of some help.


Power by the hour engine agreements are generally for maintenance, not the rent paid for the right to use the engines. The only engine leases by the hour are for really old engines or spares.

The quoted lease rate is for the whole aircraft and it is high compared to other A330neo offers.


sxf24 is correct, this is for the whole aircraft, airframe and engines. The power-by-the-hour as an engine lease structure is a common misconception on A.net. PBH agreements are engine maintenance structures, not engine lease structures. Any company that is leasing engines out solely on the basis of power-by-the-hour payments is leaving considerable money on the table as most engines have actual market value above and beyond the simple repair costs.

The only time you might see a power-by-the-hour engine lease agreement is when the engine maintenance provider has fallen short of their maintenance obligations. In these circumstances, they will lease spare engines out to the airline that are free-of-charge on a market-lease basis, and only charge for maintenance consumed during the lease. This is the exception, not the rule, and only results when they are unable to get the airline's engines back to them on-time.
 
incitatus
Posts: 3317
Joined: Wed Feb 09, 2005 1:49 am

Re: Azul to add 5 A330neo aircraft

Sat Sep 23, 2017 1:58 am

airbazar wrote:
Right, I also agree that trading A359's for A339's is a good idea. I was simply suggesting that perhaps this means that expansion into longer routes might be put on a hold for a while. Or perhaps not. Maybe they're happy code-sharing with TP thru LIS and will continue to focus on N.America.


I wonder if LATAM has buyer's remorse.
I do not consume Murdoch products including the Wall Street Journal
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

Re: Azul to add 5 A330neo aircraft, reveals lease cost

Sat Sep 23, 2017 4:50 am

heavymetal wrote:
sxf24 is correct, this is for the whole aircraft, airframe and engines. The power-by-the-hour as an engine lease structure is a common misconception on A.net. PBH agreements are engine maintenance structures, not engine lease structures. Any company that is leasing engines out solely on the basis of power-by-the-hour payments is leaving considerable money on the table as most engines have actual market value above and beyond the simple repair costs.

The only time you might see a power-by-the-hour engine lease agreement is when the engine maintenance provider has fallen short of their maintenance obligations. In these circumstances, they will lease spare engines out to the airline that are free-of-charge on a market-lease basis, and only charge for maintenance consumed during the lease. This is the exception, not the rule, and only results when they are unable to get the airline's engines back to them on-time.

PBTH can refer to engine lease & maintenance, or engine maintenance alone.

PBTH maintenance is the defacto standard for WB engines, and growing in popularity for NB. PBTH maintenance and lease is growing in popularity for WB. Aircraft leasing companies like the latter, as they have the ability to offer the leasee either option, with certain margins, and upgrades are included.

Comparing monthly payments for PBTH are meaningless. What are the T&C's of the agreement? What time period, hours and conditions are covered? Leasor will often contract PBTH maintenance beyond the first lease term of the aircraft. Is PBTH monthly charge flat or floating? Has the fee been smoothed for life of lease - in other words over paying initially, underpaying later? Has part of the PBTH been capitalised? Is part of the PBTH contained in the final balloon payment?

If an aircraft lease seems high, or it appears the leasor has acquired the aircraft from the airline at a premium, usually, but not always, it indicates the lease has two purposes - aircraft lease and general / specific funding.
 
heavymetal
Posts: 4579
Joined: Fri May 08, 2015 3:37 am

Re: Azul to add 5 A330neo aircraft, reveals lease cost

Sat Sep 23, 2017 12:46 pm

Planesmart wrote:
heavymetal wrote:
sxf24 is correct, this is for the whole aircraft, airframe and engines. The power-by-the-hour as an engine lease structure is a common misconception on A.net. PBH agreements are engine maintenance structures, not engine lease structures. Any company that is leasing engines out solely on the basis of power-by-the-hour payments is leaving considerable money on the table as most engines have actual market value above and beyond the simple repair costs.

The only time you might see a power-by-the-hour engine lease agreement is when the engine maintenance provider has fallen short of their maintenance obligations. In these circumstances, they will lease spare engines out to the airline that are free-of-charge on a market-lease basis, and only charge for maintenance consumed during the lease. This is the exception, not the rule, and only results when they are unable to get the airline's engines back to them on-time.

PBTH can refer to engine lease & maintenance, or engine maintenance alone.

PBTH maintenance is the defacto standard for WB engines, and growing in popularity for NB. PBTH maintenance and lease is growing in popularity for WB. Aircraft leasing companies like the latter, as they have the ability to offer the leasee either option, with certain margins, and upgrades are included.

Comparing monthly payments for PBTH are meaningless. What are the T&C's of the agreement? What time period, hours and conditions are covered? Leasor will often contract PBTH maintenance beyond the first lease term of the aircraft. Is PBTH monthly charge flat or floating? Has the fee been smoothed for life of lease - in other words over paying initially, underpaying later? Has part of the PBTH been capitalised? Is part of the PBTH contained in the final balloon payment?

If an aircraft lease seems high, or it appears the leasor has acquired the aircraft from the airline at a premium, usually, but not always, it indicates the lease has two purposes - aircraft lease and general / specific funding.


I agree that PBH agreements are becoming more popular for both WBs and NBs, but I think you may be confusing terms with regards to aircraft leasing. I have never seen an aircraft leasing company offer pass-through maintenance services as an option - maintenance during the lease term always falls on the operator. For starters, it makes no sense that the airline would pay a leasing company for maintenance that has margins baked in when they can simply go to the MRO's and avoid adding the cost of the leasing company's margin. Additionally, there is simply too much liability for a leasing company to offer pass-through maintenance services. Aircraft or Engine MRO's may provide dual lease/maintenance structures, but again, their primary business is maintenance and not leasing. They are typically smaller players in the leasing wold.

I think what you are referring to are maintenace reserves, or lease-end return adjustments, where the leasing company will charge the operator to get the aircraft back in the same state it was delivered in. If the airline pays monthly maintenance reserves, they are usually charged by the hour and have to put the money in an escrow account until they, the airline, perform the maintenance. If the airline performs the maintenance before the end of the lease, that money is returned, if they don't, then the leasing company takes the money so they can have the maintenance done themselves - sometimes with buffer in to ensure they are never out-of-pocket on maintenance. Alternatively, larger blue-chip airlines can elect to not pay monthly reserves, and instead make a balloon payment at the end of the lease. Much like maintenance reserves, there will be a specified rate in the contract and if the airline returns the aircraft with all of the required checks/overhauls done, they owe nothing. If they return the aircraft with none of the checks/overhauls done, then they will owe a lump sum of cash to the leasing company. In either of these scenarios, the airline is still paying for maintenace work done over the term.

This headline lease figure could plausibly include the maintenance reserves, but I have doubts that David Neeleman has to pay reserves.

I think your last statement is referring to a sale/leaseback, where the airline sells the aircraft to the lessor and the lessor leases it back to the airline. You're assessment looks good. SLB's are a source of cash funds for the airline, and in today's market, offer more competitive economics vs. a standard operating lease.

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