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dennis2380
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 11:35 am

glad to hear this, can t stand working on the airbus planes united has.
 
airbazar
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 12:11 pm

ikramerica wrote:
Newbiepilot wrote:
Wow, I have never heard of such a contract clause before, but congratulations to AA for being able to get that clause. It means that none of their competitors will be getting A321s for lower prices. That's big for AA and a smart move.

Back when AA signed that contract, Airbus probably thought higher prices on the A321 were find and would remain since they were confident that their airplane outclassed the 737-900ER/737-9. Now that Boeing has an airplane in the same size category, the A321 has a real competitor, but Airbus is still charging a premium price as if it didn't have a competitor. That contract language could explain why the 737-10 launch was so successful. It sounds like a good deal for AA and bad deal for Airbus to have. They probably never expected a 737-10 back when that A321 deal was signed 5 years ago.


It's called a "most favored nation" clause.

It's also called "best price guarantee". It exists everywhere, from Walmart to Airbus. This is nothing new. Both Airbus and Boeing have been doing this for decades, everytime they need to "steal" a blue chip customer from the other. Not sure why everyone is acting like this is such a brilliant new thing.
 
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enzo011
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 12:18 pm

Newbiepilot wrote:
Then Boeing comes in and finds a way to stretch the 737MAX into a viable A321 competitor matching its capacity. This will have a detrimental impact to Airbus because if they have high margin sales at high prices, there is a lot of room for Boeing to undercut them on price. If Airbus does come down on price on an order for United for 100 A321s, then they have to pay American and lose twice. I wonder if Airbus has entered into similar contracts in other regions.

I think there is a reason John Leahy and Airbus marketing people were trying to downplay the 737-10 by calling it the MADMAX. It represents a real problem for Airbus that they may never have expected to face when signing the American deal. This cat and mouse game is incredibly fascinating.



If the sales contracts are kept confidential, seeing we don't see tons of them floating around on the internet, who will tell AA what UA paid for their order? Seeing that you don't know if Airbus has such contracts in other regions and we only know this because we have someone that was at AA and is now at UA, you would either think that it isn't that common practice, or if it is you have one person who cannot keep his mouth shut on what is supposed to be confidential contracts and who both companies will be cautious about what they reveal to UA, because it seems that the President of the airline is revealing what is supposed to be, at the very least sensitive if not confidential information.
 
SFOtoORD
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 1:18 pm

shankly wrote:
The car I really want is a BMW3 series, but I'm not prepared to pay BMW prices, so I will get a Ford Focus

3 years down the line..."wish I'd bought the Beemer"


Unless you have a business hauling other people or things in that car the analogy is not apt.
 
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zkojq
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 2:40 pm

1) I smell a lot of BS here. Where's the actual proof of this contract clause? Employee forums aren't legally binding like investor presentations. Why would SK make that public knowledge?

2) Business 101. If you have a vastly superior product, you are a price maker, not a price taker. Why would UA think they could name their own price for A321neos? Airbus are reaping the benefits of the A321neo being something of a god's gift to airline economics whilst the 737-9MAX is a bit of a dog. The 737-10MAX might erode this somewhat going forwards.
First to fly the 787-9
 
dash400
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 2:50 pm

dennis2380 wrote:
glad to hear this, can t stand working on the airbus planes united has.

Dennis - YOU surely jest ! Are you pm-CO ? Have you ever worked the Airbus 319/320 (but especially the A319 - with only 8 in First ) - roomy lavs, brighter cabin. I wanted UA to order more Airbus narrowbodies. When classic United Airlines got rid of the 737 fleet back in 2008 we were very happy to be getting rid of those girt bars! COUNTING the days until NEXT October !!
 
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ikolkyo
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 2:53 pm

dash400 wrote:
dennis2380 wrote:
glad to hear this, can t stand working on the airbus planes united has.

Dennis - YOU surely jest ! Are you pm-CO ? Have you ever worked the Airbus 319/320 (but especially the A319 - with only 8 in First ) - roomy lavs, brighter cabin. I wanted UA to order more Airbus narrowbodies. When classic United Airlines got rid of the 737 fleet back in 2008 we were very happy to be getting rid of those girt bars! COUNTING the days until NEXT October !!


And you surely are PMUA favored!!!!! Who cares? Everyone can have their own opinion on aircraft.
 
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hOMSaR
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 4:27 pm

ikolkyo wrote:
dash400 wrote:
dennis2380 wrote:
glad to hear this, can t stand working on the airbus planes united has.

Dennis - YOU surely jest ! Are you pm-CO ? Have you ever worked the Airbus 319/320 (but especially the A319 - with only 8 in First ) - roomy lavs, brighter cabin. I wanted UA to order more Airbus narrowbodies. When classic United Airlines got rid of the 737 fleet back in 2008 we were very happy to be getting rid of those girt bars! COUNTING the days until NEXT October !!


And you surely are PMUA favored!!!!! Who cares? Everyone can have their own opinion on aircraft.


And in both cases, comparing the latest 2017-era 737MAX and A320neo to the 1980s/90s build 737 classics and A320s from old UA and old CO isn't really an apt comparison.

As far as the size of the lavs and brightness of the cabin, both manufacturers now offer shoebox-sized lavs to maximize seating capacity, and both have completely revamped the decor and lighting systems.
I was raised by a cup of coffee.
 
itchief
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 4:51 pm

I am not a lawyer and I do not play one on the internet.

Is Kirby opening him self up to some legal problems by giving away proprietary information about his ex employer? Since he went to UA with no problems after leaving AA he did not have a non-compete and bringing this up in the board room at UA would not be a problem. But putting this out to the public, not so sure.
 
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diverdave
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 5:06 pm

itchief wrote:
Is Kirby opening him self up to some legal problems by giving away proprietary information about his ex employer? Since he went to UA with no problems after leaving AA he did not have a non-compete and bringing this up in the board room at UA would not be a problem. But putting this out to the public, not so sure.


And this makes it all the more surprising that AA did not have an employment contract to forbid his walking out the door at AA one day and into the door at UA the next.
 
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GreenArc
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 5:25 pm

ericm2031 wrote:
And in the town hall he mentioned the increase in size was just for efficiency purposes of having a larger fleet for crews, parts, etc. He also did say deferring it was so they can hold an RFP with Boeing for the replacement of the 777's but it wasn't time for that yet so they deferred them. The way he worded it, it still doesn't sound like a for sure thing they are going to with them considering he wants to still put it up against what Boeing will offer. Which doesn't make much sense considering they already have deposits down for them, but that's just what he said.

This was the big revelation of the meeting, not the B737-10MAX conversions. Not a done deal, not by a long shot.
 
airzona11
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 5:29 pm

itchief wrote:
I am not a lawyer and I do not play one on the internet.

Is Kirby opening him self up to some legal problems by giving away proprietary information about his ex employer? Since he went to UA with no problems after leaving AA he did not have a non-compete and bringing this up in the board room at UA would not be a problem. But putting this out to the public, not so sure.


Nothing proprietary about it. AA is the largest Airbus client, it is reasonable they have awesome favorable pricing.
 
cledaybuck
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 5:36 pm

airzona11 wrote:
itchief wrote:
I am not a lawyer and I do not play one on the internet.

Is Kirby opening him self up to some legal problems by giving away proprietary information about his ex employer? Since he went to UA with no problems after leaving AA he did not have a non-compete and bringing this up in the board room at UA would not be a problem. But putting this out to the public, not so sure.


Nothing proprietary about it. AA is the largest Airbus client, it is reasonable they have awesome favorable pricing.
Except Kirby is saying they don't.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
airzona11
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 6:10 pm

cledaybuck wrote:
airzona11 wrote:
itchief wrote:
I am not a lawyer and I do not play one on the internet.

Is Kirby opening him self up to some legal problems by giving away proprietary information about his ex employer? Since he went to UA with no problems after leaving AA he did not have a non-compete and bringing this up in the board room at UA would not be a problem. But putting this out to the public, not so sure.


Nothing proprietary about it. AA is the largest Airbus client, it is reasonable they have awesome favorable pricing.
Except Kirby is saying they don't.


Huh?
 
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TVNWZ
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 6:32 pm

enzo011 wrote:
If the sales contracts are kept confidential, seeing we don't see tons of them floating around on the internet, who will tell AA what UA paid for their order? Seeing that you don't know if Airbus has such contracts in other regions and we only know this because we have someone that was at AA and is now at UA, you would either think that it isn't that common practice, or if it is you have one person who cannot keep his mouth shut on what is supposed to be confidential contracts and who both companies will be cautious about what they reveal to UA, because it seems that the President of the airline is revealing what is supposed to be, at the very least sensitive if not confidential information.


These companies employ thousands of people. Hundreds of lawyers, accountants assistants, analysts, managers, directors, veepees etec. Kirby left one to join the other. There are probably hundreds of people moving among the airlines each year. All it takes is a lowly entry level accountant moving from one airline to the other who has that information. We act on this site as if there are only one or two people involved in these things when it is actually hundreds or thousands of people involved.
 
COPolynesianPub
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 6:55 pm

I hope I am not mistaken and am wondering why former CO people have not mentioned this; I believe Gordon Bethune made the same clause when he was President and ordered Boeing planes. I seem to remember him stating that if another airline got the plane for a lesser cost, Boeing would also be writing CO a check. I hope someone remembers and can add more information about this.
 
itchief
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 7:15 pm

TVNWZ wrote:
enzo011 wrote:
If the sales contracts are kept confidential, seeing we don't see tons of them floating around on the internet, who will tell AA what UA paid for their order? Seeing that you don't know if Airbus has such contracts in other regions and we only know this because we have someone that was at AA and is now at UA, you would either think that it isn't that common practice, or if it is you have one person who cannot keep his mouth shut on what is supposed to be confidential contracts and who both companies will be cautious about what they reveal to UA, because it seems that the President of the airline is revealing what is supposed to be, at the very least sensitive if not confidential information.


These companies employ thousands of people. Hundreds of lawyers, accountants assistants, analysts, managers, directors, veepees etec. Kirby left one to join the other. There are probably hundreds of people moving among the airlines each year. All it takes is a lowly entry level accountant moving from one airline to the other who has that information. We act on this site as if there are only one or two people involved in these things when it is actually hundreds or thousands of people involved.


I doubt that hundreds of thousands have access to contract details. I worked for a company where I did million $$ installs. In 10 years I only saw 3 or 4 contracts with the customers and I was not supposed to see them. A couple were sent to me by mistake and a couple of customers showed me the contracts. It was not for me to know. When I say 'I' did the install, yes it was just me and no one else from the company I worked for at the customer site.
Last edited by itchief on Thu Oct 05, 2017 7:25 pm, edited 1 time in total.
 
Strato2
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 7:24 pm

jayunited wrote:
According to Kirby AA pay a pretty penny for their Airbus's


So another a-net myth that Airbus only ever sold any planes because they were almost free is busted.
 
cledaybuck
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 7:34 pm

airzona11 wrote:
cledaybuck wrote:
airzona11 wrote:

Nothing proprietary about it. AA is the largest Airbus client, it is reasonable they have awesome favorable pricing.
Except Kirby is saying they don't.


Huh?
The price AA paid is higher than what UA was willing to pay. Airbus can't give the lower price to UA because they would have to retroactively give the price to AA too.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
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Tugger
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 7:44 pm

Regarding how Kirby could know such information or release such information without risking being sued etc. for a breach of information.
The truth is for one the AA contract terms were likely already known to United and two, they simply could have required Airbus to inform them if any competitors had an MFN in the contract. (You can also write what you are seeking into a contract and if the other party won't sign it then you know. Contracts are fun like that.)

As to finding information, most any industry has competitive intelligence groups and any business of sufficient scale has a group that does competitive intelligence (CI) for them. CI looks for information regarding how their industry is, where threats are, how competitors area doing and what they are doing. Often there is information that cannot and will not be shared because it is classified as "espionage" and is not always obtained legally, but if desired CI will use this to find a way to make such information legal, normally by finding it somewhere released openly to the public. CI will take various paths to get to information, piecing together one report with another press clipping, with a company memo, with an old contract, etc. to piece together why they have some bit of information. This then frees their company to move on the information instead pretending they don't know it or they would be liable if they did act on it.

There is an entire industry on CI and groups (http://www.scip.org/ - Strategic and Competitive Intelligence Professionals) that participate in it.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey
 
redrooster3
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 7:52 pm

I feel the MAX10 will make a great P.S./United Coast replacement so SFO/LAX-EWR/BOS and so forth on..
Marry one of us, and you'll fly for free!
 
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TVNWZ
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 8:12 pm

itchief wrote:

I doubt that hundreds of thousands have access to contract details. I worked for a company where I did million $$ installs. In 10 years I only saw 3 or 4 contracts with the customers and I was not supposed to see them. A couple were sent to me by mistake and a couple of customers showed me the contracts. It was not for me to know. When I say 'I' did the install, yes it was just me and no one else from the company I worked for at the customer site.


I think you are making my point. I don't know how big your company is, but you are just an installer and you knew up to four contracts. Just think how many know in a big bureaucracy.
 
airbazar
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 8:15 pm

cledaybuck wrote:
airzona11 wrote:
cledaybuck wrote:
Except Kirby is saying they don't.


Huh?
The price AA paid is higher than what UA was willing to pay. Airbus can't give the lower price to UA because they would have to retroactively give the price to AA too.

Correction: Airbus can, and I'm pretty sure is very willing to give the lower price to UA. It's UA that does not want to see AA receive a nice bonus check in the mail.
In fact, I'd be shocked if AA isn't already receiving the "rebates". AA is hardly the only Airbus customer in the World, or even in the US.
 
cledaybuck
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Re: UA's Kirby Explains why UA order 737-10MAX

Thu Oct 05, 2017 8:27 pm

airbazar wrote:
cledaybuck wrote:
airzona11 wrote:

Huh?
The price AA paid is higher than what UA was willing to pay. Airbus can't give the lower price to UA because they would have to retroactively give the price to AA too.

Correction: Airbus can, and I'm pretty sure is very willing to give the lower price to UA. It's UA that does not want to see AA receive a nice bonus check in the mail.
In fact, I'd be shocked if AA isn't already receiving the "rebates". AA is hardly the only Airbus customer in the World, or even in the US.
Whether that is true or not, I don't know. But that is not what Kirby says.

“One of the challenges for us buying new airplanes right now is that Airbus did a deal with American — this was before I was there and before American filed for bankruptcy — where American paid a pretty rich price for airplanes,” Kirby said in a video for employees, a copy of which was obtained by Skift. “Airbus gave them a most-favored customer clause, meaning if they give anyone else a lower price, they have to write a check to American to give American retroactively that price. Airbus just can’t give us a competitive price today.”
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
itchief
Posts: 247
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Re: UA's Kirby Explains why UA order 737-10MAX

Fri Oct 06, 2017 12:48 am

TVNWZ wrote:
itchief wrote:

I doubt that hundreds of thousands have access to contract details. I worked for a company where I did million $$ installs. In 10 years I only saw 3 or 4 contracts with the customers and I was not supposed to see them. A couple were sent to me by mistake and a couple of customers showed me the contracts. It was not for me to know. When I say 'I' did the install, yes it was just me and no one else from the company I worked for at the customer site.


I think you are making my point. I don't know how big your company is, but you are just an installer and you knew up to four contracts. Just think how many know in a big bureaucracy.



I can tell you not many. Every customer paid a different price and that was not shared with every day employees. Yes I saw 4 contracts, 45 installs per year at 10 years.

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