Swadian
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 6:47 pm

Swadian wrote:
itchief wrote:
Austin787 wrote:
The LUS management team, including the CEO, running AA prefers Airbus. The 787s they are taking delivery were ordered by previous AA management. I don't see them taking any of the 787 options. Instead, I think they will eventually take delivery of the Airbus A350-900 when they are ready to replace the 772. AA has 47 772s, so that should be enough A350 to justify operating that type. Plus, AA could also take the A350-1000 to eventually replace the 77W.


You angle leaves out something. AA has stated in the not to distant past that they want to simplify the fleet. The newest type add to the fleet is the 787 and they are up to 34 of these. Since the 777 and 787 have a similar type rating how does adding the A350 get AA to this goal?

AA just finished up the cabin refurb/replacement of the 772's in the past 2 months, they will be around for more than a few years to recoup the investment. The 77W's are all less than 5 years old and will be around for at least another 15-18 years. It is waaaay to early to start talking about what will replace them.


Concur, AA is stalling and keep deferring the A359 order because they don't need to replace the 77Es yet. The A359 may be more efficient but the 77E still gets the job done and AA can exercise more 789 options at its leisure to replace them. Ordering more A321LRs would address the pressing need to replace the 757/767 fleet and the top end of 767 capacity could be replaced by 77Es moved off long-haul routes as more 789s come in, and one should note that one of the main reasons for AA retiring the A333 is because of its PW engines.

So I see AA continuing to stall on the A359 order, eventually converting it to A321LR, and exercise a ton of 789 options (and possibly ordering 778/779) to replace the A332/77E/77W fleet down the road. Sure AA has vast A32x options, but with the S80/E190/A320 and older A319, A321, and 738 to replace, there could be over 400 frames needed and they'll "only" have 100 738MAX and 100 A321neo.
 
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Boeing778X
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 7:04 pm

itchief wrote:
Austin787 wrote:
The LUS management team, including the CEO, running AA prefers Airbus. The 787s they are taking delivery were ordered by previous AA management. I don't see them taking any of the 787 options. Instead, I think they will eventually take delivery of the Airbus A350-900 when they are ready to replace the 772. AA has 47 772s, so that should be enough A350 to justify operating that type. Plus, AA could also take the A350-1000 to eventually replace the 77W.


You angle leaves out something. AA has stated in the not to distant past that they want to simplify the fleet. The newest type add to the fleet is the 787 and they are up to 34 of these. Since the 777 and 787 have a similar type rating how does adding the A350 get AA to this goal?

AA just finished up the cabin refurb/replacement of the 772's in the past 2 months, they will be around for more than a few years to recoup the investment. The 77W's are all less than 5 years old and will be around for at least another 15-18 years. It is waaaay to early to start talking about what will replace them.


Concur. To say that AA is going to drop the 77Ws to invest in the A350-1000 is an Airbus fanboys pipe dream.

Here's what's happening.

AA has...what, 58x 787 options? To say AA isn't going to exercise even a portion of those is ludicrous. Wasteful.
58x 787 options to replace 47x 777-200ERs next decade. Sounds like the problem is solved. You even have options leftover to replace the A330-300 fleet one for one, and you still have 2x options left. Plus, this management isn't going to last forever. Doug might be an Airbus guy, but plenty of people below him, including Isom, are as Boeing as they come. You never know.

Now don't take what I'm saying as Boeing fanboyism, but honestly, the majority of the Airbus crowd on this thread has had one unreasonable proposal after another, just so another airline has the A350.

The 787 is the perfect workhorse for AA main international service going forward, and I fully expect more in the years ahead.

AA swapping out the A350 for another model is a win-win for both companies for several reasons. One, it will free up A350 slots that are only just a few years ahead, which I'm sure Airbus would welcome. Two, swapping to the A330-800neo as a 767 replacement not only gives the type the blue chip carrier it needs, but it can be acquired relatively quick. Three, swapping to perhaps the A321LR over the A330-800neo gives AA an aircraft to replace Int'l 757s at the low end, with the 757/767s replaced fully by the MoM next decade. Hell, even last minute A330-200s would work well.

But AA becoming an A350/787 airline is really almost a fantasy for a lot of the Airbus fans.

A332/A338
787-8/-9/-10(?)
777-300ER (Maybe even the -9 at some point)

I really do fail to see what's bad about that. It is a simple widebody fleet, with the A330s working Europe and South America, the 787s going everywhere the 777-200ERs go now, and the 777-300ERs/-9 doing the premium routes.
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Planesmart
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 7:27 pm

Every time a contract (order) milestone is reached, parts of the contract are negotiable and non-negotiable. Often these are prescribed, in that if neither party can agree, there is a default position, which in 2017 is not the status quo.

No contracts reach a milestone and allow the buyer to defer, cancel, part cancel or model hop without cost. Both Boeing and Airbus now require Board approval for zero cost deferrals. The 'cost' can be reduced future flexibility, unit price adjustment, or even dollars (often deducted from deposits already paid, which must then be topped up within a stated timeframe).

Penalties can be mitigated by only deferring early delivery aircraft, and leaving the balance of the order untouched. But eventually, if deferred often enough, the entire order is affected.

For those who believe if AA has written a sharp enough deal that they can take delivery, and flick them on immediately to a third party, not so. Customers are limited to a single sale leaseback, and can obviously transfer to other owned entities. But no, AA cannot immediately sell to EK and pocket any windfall.

No collusion between A+B where contracts are involved. Both will have seen each other's standard templates through customer sharing, and obviously privy to those large customers who issue their own templates (though may not have seen variations negotiated/agreed by each each OEM). Both have tightened up on contract enforcement since 2013.
 
Newbiepilot
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 7:47 pm

Planesmart wrote:
Every time a contract (order) milestone is reached, parts of the contract are negotiable and non-negotiable. Often these are prescribed, in that if neither party can agree, there is a default position, which in 2017 is not the status quo.

No contracts reach a milestone and allow the buyer to defer, cancel, part cancel or model hop without cost. Both Boeing and Airbus now require Board approval for zero cost deferrals. The 'cost' can be reduced future flexibility, unit price adjustment, or even dollars (often deducted from deposits already paid, which must then be topped up within a stated timeframe).

Penalties can be mitigated by only deferring early delivery aircraft, and leaving the balance of the order untouched. But eventually, if deferred often enough, the entire order is affected.

For those who believe if AA has written a sharp enough deal that they can take delivery, and flick them on immediately to a third party, not so. Customers are limited to a single sale leaseback, and can obviously transfer to other owned entities. But no, AA cannot immediately sell to EK and pocket any windfall.

No collusion between A+B where contracts are involved. Both will have seen each other's standard templates through customer sharing, and obviously privy to those large customers who issue their own templates (though may not have seen variations negotiated/agreed by each each OEM). Both have tightened up on contract enforcement since 2013.


This order has a lot of history to it, so it is hard to know how much flexibility AA has negotiated into it over time. This started as an order for 20 of the original never built A350s in 2005 set for 2011 delivery. Then in 2007 was converted for 18 A350-800s and 4 A350-900s in 2007. It was then converted to 22 A350-900s in 2013. It was then delayed in 2016. With so many iterations including Airbus dropping the airplane that US Airways ordered twice, I think that is why some think AA has a lot of flexibility here. I seriously doubt that Airbus was able to get some of the more strict cancellation and deferral clauses that they have now during the negotiations in 2007 or 2013, since both of those negotiations were partially in response to Airbus cancelling the version that US/AA had ordered. I doubt AA management would have agreed to more limiting cancellation or deferral terms.

I don't know what AA will do, but I expect this order to either grow or get cancelled. 22 planes doesn't make much sense in AA's vast fleet.
 
ehaase
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 9:31 pm

Why don't 22 planes work for AA when Delta is fine with 15 A359's in its vast fleet?
 
mig17
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:04 pm

In principle, the 787 family could effectively replace every widebody aircraft in American fleet at the exception of the 77W.
767-300ER => 787-8 & 9
A330-200 => 787-8 & 9
A330-300 => 787-10
777-200ER => 787-9 & 10

And no, it is not "too much of an aircraft" for some missions like TATL, since there isn't any alternative. On the opposite, in some cases, the 787 may even "not be enough of an aircraft " to fully replace 77E.

But now, the facts are that American have 34 787 on property, only 8 left on firm order and the reste of the +50 787 are options while 22 A359 are also on firm order. If the A350 order did not exist, there would be no question American would go all 787 for future planes, but since it does exist, what American want and what American can do are not the same anymore. A firm order means legal terms and so to do any change to that order, American need Airbus to be onboard to. Or they have to pay termination costs to cancel it.

Cancellation is possible but costly.
Converting the order for A330 NEO would certainely please Airbus, but you don't need A330 NEO when you have the 787, they do the same job.
Converting the order to narrowbody would please American but not Airbus except if it is part of a significantly bigger deal. For example, 22 A350 becoming 50 A321LR part of a 150 to 200 A32X NEO order.

So American has to choose between :
- cancelling with penalties
- converting to A32X inside a huge new order
- taking those A350 and ordering more allong with 787 to built a coherent fleet

In the last case, the long term result on the fleet would be :
767-300ER => 787-8 & 9
A330-200 => 787-8 & 9
A330-300 => 787-10
777-200ER => 787-9 & 10 & A359
777-300ER => A359 (& A35K)
It is still a simplification from today even if there is the introduction of a new type.

ps, if the A350 is axed, I am pretty sure, American will not go for some 77X "down the line" instead. The 797 is another story so.
 
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Boeing778X
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:16 pm

mig17 wrote:
If the A350 order did not exist, there would be no question American would go all 787 for future planes


Very Incorrect :shakehead:

AA still has the A330 and 777, both will stay prevalent in the decades ahead. Once again, an A350/787 fleet is unreasonable for AA at this time, ESPECIALLY if they end up reverting away from the order.

ps, if the A350 is axed, I am pretty sure, American will not go for some 77X "down the line" instead.


Don't be so sure about that. Since AA has the 777-300ER active, and are utilizing it well, there's no reason to think the wouldn't eventually get the 777Xs.
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:24 pm

ehaase wrote:
Why don't 22 planes work for AA when Delta is fine with 15 A359's in its vast fleet?


Um, DL ordered 25x units. They might even take more in the years ahead!
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mig17
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:28 pm

Very Incorrect :shakehead:

AA still has the A330 and 777, both will stay prevalent in the decades ahead. Once again, an A350/787 fleet is unreasonable.

future planes means future deliveries.

Don't be so sure about that. Since AA has the 777-300ER active, and are utilizing it well, there's no reason to think the wouldn't eventually get the 777Xs.

If American chooses to replace 77E with 787 which is at least a payload/range downgrade, it means the don't intend to upgrade more of their service than the 20 77W they already have and which will stay for a long time. So no 77X needed.
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:30 pm

mig17 wrote:
Very Incorrect :shakehead:

AA still has the A330 and 777, both will stay prevalent in the decades ahead. Once again, an A350/787 fleet is unreasonable.

future planes means future deliveries.

Don't be so sure about that. Since AA has the 777-300ER active, and are utilizing it well, there's no reason to think the wouldn't eventually get the 777Xs.

If American chooses to replace 77E with 787 which is at least a payload/range downgrade, it means the don't intend to upgrade more of their service than the 20 77W they already have and which will stay for a long time. So no 77X needed.


Nope. The 777X can definitely fit into AAs network, so I disagree. And you might see it happen. AA is heavily reliant of their premium routes, which require the 77W.

Those markets are only going to grow. Adding the 777-9 is only logical.

Plus, really? You think that adding more 787s means they don't intend to grow?
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mig17
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Re: Is AA going to cancel their A350 order?

Wed Dec 20, 2017 10:44 pm

Boeing778X wrote:
mig17 wrote:
Very Incorrect :shakehead:

AA still has the A330 and 777, both will stay prevalent in the decades ahead. Once again, an A350/787 fleet is unreasonable.

future planes means future deliveries.

Don't be so sure about that. Since AA has the 777-300ER active, and are utilizing it well, there's no reason to think the wouldn't eventually get the 777Xs.

If American chooses to replace 77E with 787 which is at least a payload/range downgrade, it means the don't intend to upgrade more of their service than the 20 77W they already have and which will stay for a long time. So no 77X needed.


Nope. The 777X can definitely fit into AAs network, so I disagree. And you might see it happen. AA is heavily reliant of their premium routes, which require the 77W.

Those markets are only going to grow. Adding the 777-9 is only logical.

Plus, really? You think that adding more 787s means they don't intend to grow?

And if the prenium markets are so important for AA, the A350 is a more valid 77E replacement than the 787 ...
What I am trying to make you understand, because, yes my ps was aimed at you, is that you can't give us arguments in favor of the 787 being AA's choice for the future against the A350 and then throw in like you did in all your posts the 777-X which isn't even on order or an option. It looks like you don't want the A350 at AA just so there is a chance for the 777-X.
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itchief
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 12:43 am

Planesmart wrote:
Every time a contract (order) milestone is reached, parts of the contract are negotiable and non-negotiable. Often these are prescribed, in that if neither party can agree, there is a default position, which in 2017 is not the status quo.

No contracts reach a milestone and allow the buyer to defer, cancel, part cancel or model hop without cost. Both Boeing and Airbus now require Board approval for zero cost deferrals. The 'cost' can be reduced future flexibility, unit price adjustment, or even dollars (often deducted from deposits already paid, which must then be topped up within a stated timeframe).

Penalties can be mitigated by only deferring early delivery aircraft, and leaving the balance of the order untouched. But eventually, if deferred often enough, the entire order is affected.

For those who believe if AA has written a sharp enough deal that they can take delivery, and flick them on immediately to a third party, not so. Customers are limited to a single sale leaseback, and can obviously transfer to other owned entities. But no, AA cannot immediately sell to EK and pocket any windfall.

No collusion between A+B where contracts are involved. Both will have seen each other's standard templates through customer sharing, and obviously privy to those large customers who issue their own templates (though may not have seen variations negotiated/agreed by each each OEM). Both have tightened up on contract enforcement since 2013.


No one here on A-net knows what the deferral/cancelation cost would be. We can all write long a post about it but in the end we do not know the terms. When DL canceled the 787 order they got with the merger from NWA it did not kill DL financially. If AA cancels the A350 they got from the merger with US it will not kill AA financially.
 
AngMoh
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 1:23 am

mig17 wrote:
Boeing778X wrote:
mig17 wrote:
future planes means future deliveries.


If American chooses to replace 77E with 787 which is at least a payload/range downgrade, it means the don't intend to upgrade more of their service than the 20 77W they already have and which will stay for a long time. So no 77X needed.


Nope. The 777X can definitely fit into AAs network, so I disagree. And you might see it happen. AA is heavily reliant of their premium routes, which require the 77W.

Those markets are only going to grow. Adding the 777-9 is only logical.

Plus, really? You think that adding more 787s means they don't intend to grow?

And if the prenium markets are so important for AA, the A350 is a more valid 77E replacement than the 787 ...
What I am trying to make you understand, because, yes my ps was aimed at you, is that you can't give us arguments in favor of the 787 being AA's choice for the future against the A350 and then throw in like you did in all your posts the 777-X which isn't even on order or an option. It looks like you don't want the A350 at AA just so there is a chance for the 777-X.


I think the biggest issue is that US which ordered the A350 is not the same airline as AA which is planned to take delivery. Nothing to do with AA "preferring" B over A. I think for the first time in a long time we see all of the US3 run by reasonable competent management which is looking at the medium to long term rather than how to survive the next year only. DL had no 787 or A350 on board but was a heavy user of the A330 and decided to go A350/A339 going forward. UA seems to finally have a comprehensive plan after years of looking only 10 seconds into the future. AA is an interesting case. They have a good fleet of 787s but far less of a long haul network than the other carriers. The 77Ws are relatively new and won't be replaced for another 15-20 years so any talk about the 777-X is a waste of time - too much can change before any order is even seriously considered. So to me it would make sense to go all 787, but then there is the inherited A350 order. One option is to convert to A320/321, but I am not sure how you fit such a potentially large order with all the A319/A321/737 new metal already on order/on board. The second option is to convert to A338/9 with is a better fit in the network and useful of keeping Boeing honest by showing they don't have an easy monopoly. The real wild card would be a conversion to a sizeable CSeries order once the CSeries is an airbus product and then you see a deal being made only in 2020. I don't see a delivery happening of the A359, but I don't see an outright cancellation: AA is big enough and has enough aircraft needs to have to option for a deal which is financially better.
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Boeing778X
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 1:29 am

mig17 wrote:
Boeing778X wrote:
mig17 wrote:
future planes means future deliveries.


If American chooses to replace 77E with 787 which is at least a payload/range downgrade, it means the don't intend to upgrade more of their service than the 20 77W they already have and which will stay for a long time. So no 77X needed.


Nope. The 777X can definitely fit into AAs network, so I disagree. And you might see it happen. AA is heavily reliant of their premium routes, which require the 77W.

Those markets are only going to grow. Adding the 777-9 is only logical.

Plus, really? You think that adding more 787s means they don't intend to grow?

And if the prenium markets are so important for AA, the A350 is a more valid 77E replacement than the 787 ...
What I am trying to make you understand, because, yes my ps was aimed at you, is that you can't give us arguments in favor of the 787 being AA's choice for the future against the A350 and then throw in like you did in all your posts the 777-X which isn't even on order or an option. It looks like you don't want the A350 at AA just so there is a chance for the 777-X.


Well, you’d be incorrect again in your assumptions.

You have to also understand AA did not order the A350. US did.
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 1:38 am

...and the order was not cancelled by the merger so they have the order and have to do something with it, unfortunately we do not know the financial aspects of the deal which will be the deciding factor on this order. So far, neither side has shown why the A350 is a must have or a must not have based on the a/c capabilities and AA current route structure, future is also not known, so this will come down to finances, the capabilities of the a/c is for all intents and purposes irrelevant.
 
Newbiepilot
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 1:57 am

ehaase wrote:
Why don't 22 planes work for AA when Delta is fine with 15 A359's in its vast fleet?


Delta has an entirely different fleet strategy from AA. DL pretty much operates every airplane. 73G, 738, 739, A319, A320, A321, 752, 753, MD88, 717, MD90, 763, 764, 772, A332, A333, A359.

AA has driven towards fleet simplicity. Small subfleets seem less appealing to them.
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 5:57 am

Newbiepilot wrote:
ehaase wrote:
Why don't 22 planes work for AA when Delta is fine with 15 A359's in its vast fleet?


Delta has an entirely different fleet strategy from AA. DL pretty much operates every airplane. 73G, 738, 739, A319, A320, A321, 752, 753, MD88, 717, MD90, 763, 764, 772, A332, A333, A359.

AA has driven towards fleet simplicity. Small subfleets seem less appealing to them.


Well then, if small subfleets are less appealing to them, what are they going to do with the 15 A332s once the 9 A333s leave the fleet? They are not planning on dumping them are they? If they decide not to take the A350s, which is what I think is the most likely decision according to what I read in most of the above replies, then they should discuss with Airbus for a swap to additional A330-200s to add to the current fleet of 15 units, as well as additional A321NEOs to replace the remaining 757s as well as the oldest 738s which will turn 20 soon.

They have to make a decision this year 2018. They can't keep deferring and think for ever. If they decide not to take the A350s, one of the following will happen:
Either they say frankly: "No we don't want the A350s anymore, we have decided not to buy anymore Airbus widebodies" and they pay the penalties to Airbus, or they work out a deal with Airbus to swap with additional A330s or A321NEOs or both.

This is the widebody future fleet that would make the most sense to me:

A330-200 again additional units ordered to add to the current 15 units, in lieu of the 22 A359s. By working out such a deal, Airbus might lower or even waive the canceling penalties.
77E to be eventually be replaced by additional 789s, they'll start showing their age by the start of next decade.
77W I'm sure the last one won't leave the fleet before 2035.
787-8 not sure they'll pick up additional 8s even if they convert options.
787-9 additional options to be converted to firm order.
787-10 maybe, for routes to Asia where high capacity might be needed, for example LAX-HKG and LAX-NRT.
777-9 maybe, for high premium routes such as JFK-LHR, LAX-LHR and MIA-GRU.

That scenario, it leaves three types in the wide body fleet, A330, 777 and 787.

A330-300 gone
767 gone, even if Boeing resumes the 767-300ER production in pax layout.
A350 canceled (yes DP may be an Airbus lover, but he is not the only one to make that decision, a lot of managers at AA are leaning towards additional 787s)

This is the narrowbody future fleet that would make the most sense to me:
A319
A321
A321NEO/NEOLR
738
738MAX
737-9/10MAX I don't think so, although you never know.

A320 gone (I don't think they'll go for the 320NEO, although you never know, 319NEO...I don't think so).
757 gone (maybe Icelandair will be interested in picking up additional used 757s, if they want to expand to more leisure markets)
MD-80 gone
E190 gone

Regional fleet, most likely to be:
E145
E170
CR7
CR9

CR2 gone
E135 gone
E140 gone
DH8 gone
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seabosdca
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 6:25 am

The dogma here by the no-A350 side is a bit oppressive.

What AA is doing seems pretty clear if you actually have a look at their fleet.

First, some context. They are midway through a huge narrowbody renewal that happened in a huge hurry. They have had very high capex for a few years and incurred significant ongoing obligations as a result. And they're not out of the woods yet: they are going to be taking 737 MAX and then A321neo for the next four years. So even if they wanted to turn over the whole widebody fleet at once, that is likely not an option.

In that situation, they are focusing on the planes that need to go first. That's 767-300ERs, steadily being replaced by 787s. The A330-300s are not part of the long-term strategy and will go too, also replaced by 787s. The A350 makes more sense as a 772 replacement, but they can put off the 772 replacement for a few more years. Perhaps in their wildest dreams they'd prefer the 787 for all of their 772 replacement, but it's hard to see how that works in the real world. The A350 is a fine and very cost-effective 772 replacement, and canceling the A350s would be expensive. They already have 200 new narrowbodies on order and don't really need more for a while, so an A320neo/A321neo conversion doesn't make sense either.

I think they will defer the A350s until 2021ish, when they've finished absorbing the 787s on firm order, and then begin taking them. Since the current number of 787s and A350s on order won't replace the 772 fleet entirely, I'd expect an exercise of options for either 787 or A350 around the same time. The 787-10 would probably be ideal for the missions that won't be flown by the A350s already on order, but on the other hand a few more A350s would probably make the type more cost-effective.
 
marcelh
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 6:53 am

seabosdca wrote:
The dogma here by the no-A350 side is a bit oppressive.

What AA is doing seems pretty clear if you actually have a look at their fleet.

First, some context. They are midway through a huge narrowbody renewal that happened in a huge hurry. They have had very high capex for a few years and incurred significant ongoing obligations as a result. And they're not out of the woods yet: they are going to be taking 737 MAX and then A321neo for the next four years. So even if they wanted to turn over the whole widebody fleet at once, that is likely not an option.

In that situation, they are focusing on the planes that need to go first. That's 767-300ERs, steadily being replaced by 787s. The A330-300s are not part of the long-term strategy and will go too, also replaced by 787s. The A350 makes more sense as a 772 replacement, but they can put off the 772 replacement for a few more years. Perhaps in their wildest dreams they'd prefer the 787 for all of their 772 replacement, but it's hard to see how that works in the real world. The A350 is a fine and very cost-effective 772 replacement, and canceling the A350s would be expensive. They already have 200 new narrowbodies on order and don't really need more for a while, so an A320neo/A321neo conversion doesn't make sense either.

I think they will defer the A350s until 2021ish, when they've finished absorbing the 787s on firm order, and then begin taking them. Since the current number of 787s and A350s on order won't replace the 772 fleet entirely, I'd expect an exercise of options for either 787 or A350 around the same time. The 787-10 would probably be ideal for the missions that won't be flown by the A350s already on order, but on the other hand a few more A350s would probably make the type more cost-effective.


Well said.
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 9:53 am

Boeing778X wrote:
But AA becoming an A350/787 airline is really almost a fantasy for a lot of the Airbus fans.


Only as much as it seems to be an unthinkable nightmare scenario for others.
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 11:58 am

Boeing778X wrote:
You have to also understand AA did not order the A350. US did.
Hahahahaha!

Put it this way, the airlines merged to become a single entity so in effect part of the now AA ordered the A350. Whether that part which ordered the A350 was called AA or US or BM of KK or JJ is really of no consequence. Part of what is now AA ordered it.
scbriml wrote:
Only as much as it seems to be an unthinkable nightmare scenario for others.
Is it weird that I find these threads fun to watch?

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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 12:21 pm

Boeing778X wrote:
Well, you’d be incorrect again in your assumptions.


Perhaps it is you that may be incorrect in your assumptions?

Not that you'd ever be able to admit that - exhibiting that obnoxious tribalistic mentality that is so prevalent these days... :crazy:

AA will choose the best aircraft for their needs. That may, or may not include the A350. Time will tell.
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 3:47 pm

It always amazes me to see how personal folks on here take an airline’s choosing of an aircraft manufacturer. How do people take that so seriously and personally that they get upset about it? :roll:

I tend to agree with seabosdca in how and when aircraft replacements will happen. The 787/350/777 combo is a very effective fleet. It would also not surprise me to see AA take 350-1000 down the line to replace 77W.
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 4:59 pm

Newbiepilot wrote:
This order has a lot of history to it, so it is hard to know how much flexibility AA has negotiated into it over time. This started as an order for 20 of the original never built A350s in 2005 set for 2011 delivery. Then in 2007 was converted for 18 A350-800s and 4 A350-900s in 2007. It was then converted to 22 A350-900s in 2013. It was then delayed in 2016. With so many iterations including Airbus dropping the airplane that US Airways ordered twice, I think that is why some think AA has a lot of flexibility here. I seriously doubt that Airbus was able to get some of the more strict cancellation and deferral clauses that they have now during the negotiations in 2007 or 2013, since both of those negotiations were partially in response to Airbus cancelling the version that US/AA had ordered. I doubt AA management would have agreed to more limiting cancellation or deferral terms.

I don't know what AA will do, but I expect this order to either grow or get cancelled. 22 planes doesn't make much sense in AA's vast fleet.

Thanks for the refresher on the history of the order.

It's interesting how many (but certainly not all) accept that VS and QF are not going to take A380s that have been on firm order over a similar time frame, yet people can't accept that AA might walk away from their A350 firm order.

The only recent info we have from AA said is this order is "under review" and that they feel 22 is too small a fleet to be sustainable, so we should expect the order to be cancelled or enlarged.

Personally I think A350 was a good fit for US's aspirations in the 2005 time frame yet 787 is a better fit for the current AA network, but of course I don't know what fiscal arrangements binds AA to the contract (especially given that Airbus helped finance US's bankruptcy) so it's a total crap shoot as to what the final outcome will be.
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 5:10 pm

flipdewaf wrote:
Put it this way, the airlines merged to become a single entity so in effect part of the now AA ordered the A350. Whether that part which ordered the A350 was called AA or US or BM of KK or JJ is really of no consequence. Part of what is now AA ordered it.

While that is true, the fact that it was a product of a merger does effect the reasoning behind why an aircraft was chosen. You can't, for example, say AA ordered the A350 because they view it as a superior 77E replacement than the 787 because AA never selected the A350 over the 787 in a RFP to replace LAA's 77Es. All you can say is that they inherited the order and have viewed keeping it as a superior option to cancelling/converting it to something else thus far.

Lets be honest, if US had remained independent the A350 order would have certainly been converted to the A330neo once that plane was launched and the A358 officially dead. US had zero need for 22 A359s.
 
itchief
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 5:39 pm

TranscendZac wrote:
It always amazes me to see how personal folks on here take an airline’s choosing of an aircraft manufacturer. How do people take that so seriously and personally that they get upset about it? :roll:

I tend to agree with seabosdca in how and when aircraft replacements will happen. The 787/350/777 combo is a very effective fleet. It would also not surprise me to see AA take 350-1000 down the line to replace 77W.


Too many on this board have opinions on AA replacing the 77W. AA has 20 frames that are all less than 5 years old. The replacement cycle for these frames will not start before the 2030's. By that time the A350-1000 will not be a new aircraft.

Talking about the replacement of the 77W at this time would be the same as talking about the replacement of the 787 for AA. AA took it's first 787 on 1-1-2015 and at that time they had not even finished the deliveries of the 77W.
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 5:40 pm

Boeing778X wrote:
ehaase wrote:
Why don't 22 planes work for AA when Delta is fine with 15 A359's in its vast fleet?


Um, DL ordered 25x units. They might even take more in the years ahead!


DL also has very few 777s, no 787s, and a ton of old A330s and 767s.

Of the US3 (excluding WN), AA is the most dependent on narrowbodies and has the biggest ratio of narrowbody : widebody aircraft. This is why I think 50x A321LR would be what AA wants the most and Airbus may be negotiable due to aforementioned A350 order changes and AA being one of their biggest customers. If Airbus refuses, they might even push AA to convert to the A338 just to boost that program.

It's not Boeing fanboyism, the order stays with Airbus anyway, just not A350.
Last edited by Swadian on Thu Dec 21, 2017 5:48 pm, edited 1 time in total.
 
bgm
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:15 pm

Boeing778X wrote:
bgm wrote:
Boeing778X wrote:
Well, you’d be incorrect again in your assumptions.


Perhaps it is you that may be incorrect in your assumptions?

Not that you'd ever be able to admit that - exhibiting that obnoxious tribalistic mentality that is so prevalent these days... :crazy:

AA will choose the best aircraft for their needs. That may, or may not include the A350. Time will tell.


Very constructive post. Even more asinine :banghead:


You're most welcome. I look to your posts for inspiration.
 
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:27 pm

American 767 wrote:
Either they say frankly: "No we don't want the A350s anymore, we have decided not to buy anymore Airbus widebodies" and they pay the penalties to Airbus, or they work out a deal with Airbus to swap with additional A330s or A321NEOs or both.

Help me to understand this one, if AA decides not to take the A350 it means that they will not order Airbus wide body a/c anymore?
I was ok with your post until you decided to throw that last part in, regardless of whether one is an Airbus or Boeing fan it just does not sit well.

As for cancelling the A350 order, not sure why the penalties on that one is so high or such a big event, as Revelation noted in another post, a number of carriers have cancelled A380's and announced they would not be taking up their order and the A.Net Financial Times has not even blinked, is that because the flagship a/c of the Airbus product line was being given away for free?
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:33 pm

I’d not be surprised if AA did a UA and delay the order, increase it in size and use as a 772 replacement, for which it would be well suited, as UA have decided.
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:42 pm

par13del wrote:
American 767 wrote:
Either they say frankly: "No we don't want the A350s anymore, we have decided not to buy anymore Airbus widebodies" and they pay the penalties to Airbus, or they work out a deal with Airbus to swap with additional A330s or A321NEOs or both.

Help me to understand this one, if AA decides not to take the A350 it means that they will not order Airbus wide body a/c anymore?
I was ok with your post until you decided to throw that last part in, regardless of whether one is an Airbus or Boeing fan it just does not sit well.

As for cancelling the A350 order, not sure why the penalties on that one is so high or such a big event, as Revelation noted in another post, a number of carriers have cancelled A380's and announced they would not be taking up their order and the A.Net Financial Times has not even blinked, is that because the flagship a/c of the Airbus product line was being given away for free?


No that's not what I said. I didn't say they would stop ordering wide bodies from Airbus if they decided to not to take the A350. I was mentioning a possibility for them to take additional A330s. As others have said, time will tell what they will decide to do.
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mig17
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:52 pm

By the way I think that right now, not even AA management knows if they are going to cancel the A350 order. For now, they must be in discussion with Airbus on several options and will make a choice when ready. If they were, we would know.

And if they don't know yet, it is because the optimum solution could not be easy to find or to reach.
Last edited by mig17 on Thu Dec 21, 2017 7:53 pm, edited 1 time in total.
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:52 pm

Agree, not sure why the A330 option is not mentioned more, even if they take additional CEO models, especially if Airbus is not willing to convert to narrow body a/c.
I still would like to know what makes cancellation of these so major and of the A380 no big deal, at least as of right now.
 
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 7:57 pm

I think in AA situation, if they decide to go with additional 787's to cover the 7777-200/ER replacements, they could procure in smaller numbers over an extended period of time, that option may be more difficult logistically and financially if they use the A350 as a replacement. The number they have on order is not large enough, and making incremental orders for a frame not yet in-house may not be ideal, so the order would have to be increased to get the best bang for the buck, so as with UA, increase the order rather than cancel, or switch to the -1000 which we would expect to be a much smaller sub fleet.
 
mig17
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 8:01 pm

par13del wrote:
Agree, not sure why the A330 option is not mentioned more, even if they take additional CEO models, especially if Airbus is not willing to convert to narrow body a/c.
I still would like to know what makes cancellation of these so major and of the A380 no big deal, at least as of right now.

A380 is now a not so new aircraft which is not so easy to operate. Airlines like Qantas knows the numbers and may be ready to pay the cancellation fees because the are able to predict a true ROI of not having the frames and flying another model instead. In AA's cases, the ROI of paying for not having the A350 is more controversial.
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 8:12 pm

I assume the A380 cost more than the A350 and in terms of raw numbers the cancellation fee would be greater. If the cost has to be booked regardless, why would the A350 be controversial, in the financial market, its just money.
I am more inclined to believe they are willing to hold on to the order to see how things shake out in the next few years, unfortunately, they put themselves in this position by having this issue "hanging" over their heads after Chpt.11, when it should have been dealt with. Now it just has everything in limbo, fleet decisions, finances, A..Net support, etc etc etc.
 
neutronstar73
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 8:15 pm

Wow, so many Airbus-boosters absolutely apoplectic about and airline merely thinking about its options for the pampered princess A350. It's like they don't know that AA has an a**load of A320-series (and more coming) and A330s flying in AA colors. Why, they're so upset at mere talk, they throw out stuff like "they'll do a UA and order more to replace 777s!" or "they'll cancel and buy A380s!"

Come on.....so what if they cancel? It ain't like production of the A350 is ending in 3 years and they better buy them now.....
 
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 8:35 pm

ba319-131 wrote:
I’d not be surprised if AA did a UA and delay the order, increase it in size and use as a 772 replacement, for which it would be well suited, as UA have decided.


Be careful. You're being rational one here, as well. It's not welcome by boeing cheergirls on these forums...
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 9:30 pm

neutronstar73 wrote:
It's like they don't know that AA has an a**load of A320-series (and more coming) and A330s flying in AA colors.

Now now, we all know that the USA is protectionist and only orders and operates Boeing a/c......oh wait

Hope I did that right
 
itchief
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 10:26 pm

BlueSky1976 wrote:
ba319-131 wrote:
I’d not be surprised if AA did a UA and delay the order, increase it in size and use as a 772 replacement, for which it would be well suited, as UA have decided.


Be careful. You're being rational one here, as well. It's not welcome by boeing cheergirls on these forums...


Putting on my Boeing cheergirl hat, I thought UA was using the A350 as a 744 replacement. Both DL and UA are using the A350 to replace the 744 fleets. AA's 772s are younger than UA's 772s and UA has a number of 772A's to replace.
 
777PHX
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 10:52 pm

Classic a.net....

30 different responses from 30 different people and no one has any clue what they're talking about....
 
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PW100
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 11:12 pm

Boeing778X wrote:
Here's what's happening.

AA has...what, 58x 787 options? To say AA isn't going to exercise even a portion of those is ludicrous. Wasteful. .


So not taking delivery of future OPTIONS is ludicrous/wasteful, while taking delivery of actual FIRM ORDERS is not going to happen? Right.
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fightforlove
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 11:31 pm

AA placed that order for 42 x 58 787 Dreamliners in like 2009, 2010? They could only firm 42 because of limited financial resources at that time. Been some years, but clearly they had a vision that the Dreamliners would become the dominant workhorse of their widebody fleet. What routes is the 77E "overemployed" on? What routes is it just right, or underemployed for? There is your answer to the fate of the A350. FWIW AA get their highest cargo yields out of Latin America, less pax/cargo yields out of Asia and Long-Thins to Europe. Their route system is more complex that many in this thread would like to boil it down to. It's a foregone conclusion that AA will exercise more 787 options, but not out of the question for them to hold the A359 order and deploy the plane on routes where additional pax and particularly cargo revenue may be prized. Not to mention the A359 has the larger wing and additional power that make it a bit more efficient for those hot-and-high airports in South America.
 
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Ab345
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Re: Is AA going to cancel their A350 order?

Thu Dec 21, 2017 11:55 pm

4 months ago I opened up a thread about this:

viewtopic.php?t=1369585

Back then it was reported that AA was indeen in discussions with Airbus on converting to the A338 which would be a win win situation for all. AA gets out of buying a plane they don't, seemingly, need. They already fly the A330ceo so they are familiar with the type. Airbus has a blue chip client establish the plane, free up A350 slots and keep a widebody order.

But I agree with most that at this point the order will either be enlarged(and probably pushed back) or converted. At this specific point they seem to not need the specific model. The only scenario I don't see Airbus agreeing to is convertion the A32xNeo family.
 
Planesmart
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Re: Is AA going to cancel their A350 order?

Fri Dec 22, 2017 2:32 am

par13del wrote:
Agree, not sure why the A330 option is not mentioned more, even if they take additional CEO models, especially if Airbus is not willing to convert to narrow body a/c.
I still would like to know what makes cancellation of these so major and of the A380 no big deal, at least as of right now.

Contract T&C's, and especially enforcement, have markedly hardened since 2014. The process started when the Boeing board requested a review of every current order and option, which tracked the chronology from option to order, including changes (such as composition, deferrals, model hops, contract amendments, plus permitted and enforced penalties).

Based on action since, it presumably revealed the OEM was too flexible and cheap, and customers had learn't to expect maximum flexibility, at little or no cost.

Airbus triggered a similar review the same year, with the initial focus on the A380 and A320.

Delays to the A380 programme pre-dated general contract hardening and enforcement. With the exception of those customers that took compensation value upfront, contract T&C's would have been rolled, untouched, or even relaxed.

By default, those with orders on the book, still have skin in the game (equals serious dollars on the line).

As to the AA order. Everything is negotiable. AA is a Boeing Tier 1 customer, and will definitely be the equivalent at Airbus, so cancellation, deferral and model hopping fees will be at the lower end of the spectrum, offset (usually) by the generosity of the unit price and bundling agreed, times volume.

Has AA deferred the entire order, or so far, only the units for delivery to say the end of 2018?
 
itchief
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Re: Is AA going to cancel their A350 order?

Thu Jan 25, 2018 6:00 pm

Still no answer from AA on the A350 order in todays earning call.

https://www.flightglobal.com/news/artic ... on-445215/
 
ahj2000
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Re: Is AA going to cancel their A350 order?

Thu Jan 25, 2018 6:37 pm

[photoid][/photoid]
itchief wrote:
Still no answer from AA on the A350 order in todays earning call.

https://www.flightglobal.com/news/artic ... on-445215/

It was however in the fleet plan. See the fleet thread-2018.
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TheRedBaron
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Re: Is AA going to cancel their A350 order?

Thu Jan 25, 2018 9:54 pm

777PHX wrote:
Classic a.net....

30 different responses from 30 different people and no one has any clue what they're talking about....



LOL but we can make some educated assumptions without trying to get into A or B camp.

1) I don't think its sane to argue about cancelation, because NOBODY knows the fees, the penalties or the legal mumbo jumbo on the contracts.
2) Airbus has more than 4000 reasons not to change the order to A32X.... and they don't need to...
3) They could change the order to A330, but the details of it ^see point 1 they could change to A330´s but WILL they? can they get it changed without loosing a lot of $$$$
4) I think AA has the potential to Use a bigger Aircraft, but maybe the logistics and crew training for a small fleet is as much as cancelling the order in the long run... so maybe they are thinking on buying MORE and they want the old price? AGAIN go to point 1.
5) They have 777 so they are no strangers to bigger metal, but again the devil is in the details, maintenance, Engines, crews, training, spares etc...better stick with the devil you know than change it...

Interesting times ahead for AA and the future of their fleet.

Best Regards
TRB

P.D. It would be comic If they cancel the A359 order and instead order 15 A380´s and some Aneters jump out of a window.... (JUST KIDDING- my money is that they will cancel, they are just trying to make it less painful)
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SelseyBill
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Re: Is AA going to cancel their A350 order?

Thu Jan 25, 2018 10:59 pm

Planesmart wrote:
Every time a contract (order) milestone is reached, parts of the contract are negotiable and non-negotiable. Often these are prescribed, in that if neither party can agree, there is a default position, which in 2017 is not the status quo.

No contracts reach a milestone and allow the buyer to defer, cancel, part cancel or model hop without cost. Both Boeing and Airbus now require Board approval for zero cost deferrals. The 'cost' can be reduced future flexibility, unit price adjustment, or even dollars (often deducted from deposits already paid, which must then be topped up within a stated timeframe).

Penalties can be mitigated by only deferring early delivery aircraft, and leaving the balance of the order untouched. But eventually, if deferred often enough, the entire order is affected.

For those who believe if AA has written a sharp enough deal that they can take delivery, and flick them on immediately to a third party, not so. Customers are limited to a single sale leaseback, and can obviously transfer to other owned entities. But no, AA cannot immediately sell to EK and pocket any windfall.

No collusion between A+B where contracts are involved. Both will have seen each other's standard templates through customer sharing, and obviously privy to those large customers who issue their own templates (though may not have seen variations negotiated/agreed by each each OEM). Both have tightened up on contract enforcement since 2013.


Largely agree with this post.

I understand from sources in a/c leasing; that a big portion of cancellation fees with large orders/customers; (such as AA); is the difference per unit between 'deal price' and 'list price'; (and deposits paid up front). (All at the gift of the OEM, and with the agreement of the engine provider).

No-one has any idea about the actual value of the original order for US's A350's and the subsequent bankruptcy considerations, but with a list price of say $250M+, and 30%+ discounts, do the sums yourself, and you'll see why cancelling big orders can be very expensive......
 
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par13del
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Re: Is AA going to cancel their A350 order?

Thu Jan 25, 2018 11:13 pm

So another option, if it is such a financial burden to cancel, could they take the planes and then lease them out to another carrier?

I think something is wrong if they have to take on an a/c they do not want and operate it for 10 to 15 years just because the financial hit from cancellation is so huge. Really should have thought of that when they decided to merge the carriers.

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