Page 4 of 4

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 12:01 am
by Planesmart
EBT wrote:
lightsaber wrote:

Wait... HNA owns 52% of Avolon which owns CIT
CIT: 15 A339 orders
Avolon: 15 A339 orders, plus financing a number of TAP's A339s.


More correctly, HNA Capital owns a major stake in Bohai Capital, which is the parent company of Avolon. The leasing company continues to operate, take delivery of aircraft, finance them and lease them to a number of airlines around the world. The HNA link is placing a small amount of upward pressure on their debt pricing, but there is no evidence that it is affecting Avolon's liquidity or day-to-day operations. Last year it structured some debt capital so that it could not be funneled back to HNA, which should signal that it is prepared to stand on its own, if necessary.

Widebody leasing is doing fine, and benefitting from the huge amounts of capital that remains in the aircraft finance market coming not only from China but also Japan, Korea, hedge funds and other emerging markets. Narrowbody leasing is cutthroat with so many players in that market, and some lessors are seeing better returns from deploying capital into widebodies. It is different as the lease terms are longer, and the return conditions need to be a lot more watertight, but it's doable for those who know what they are doing.

BOC Aviation and Air Lease Corp (Steven Udvar-Hazy's company) are both backing the A330neo, and while it could be a bad bet, they will lead the market and others will follow. BOCA in particular has been very vocal about how most of the future capital going into aircraft deliveries - by dollar value - is shifting to favour widebodies.

AerCap have overall been selling down their portfolio, as they see returns at the moment are better in buying up their own stock rather than expanding. GECAS is in a similar boat with it selling down jets (including 737 Maxes recently), mostly because they can profit from it due to high prices.

The leasing industry has been growing strongly since the GFC, thanks in large part to strong passenger growth and low interest rates. Yes, the latter are going up but nowhere near as quick as needed to soak up the cash that is out there, and seeking assets to be deployed against.

Airbus got burned when they offered residual guarantees on the last product that needed it (A340-500s) so they're not going to jump in unless absolutely necessary. In the meantime, there are plenty of channels and a lot of money looking to go into aircraft, and I expect that will see it go to A330neos as needed.

Don't forget there are contingent liabilities in the form of buybacks on some A380's.

And Boeing is not immune, with buybacks on some 748i's and early build 787's. Plus BC offers a lender of last resort role.

Both A & B are supporting companies with ambitions to keep older aircraft commercially viable, and new aircraft in new ways. There will be a big increase in 'on demand' and hourly leases, and aircraft sharing. How soon before we see A & B house colours flying commercial services?

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 2:26 am
by lydh
c933103 wrote:
lydh wrote:
DJ/XJ can order all the planes it wants, but it's still a trash airline. I tried their "business class" for the first time last week, and while the seat was more comfortable than I expected, their service is absolutely deplorable.

First and foremost their premium product isn't a business class product


That's why I put it in quotes.

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 6:28 am
by c933103
lydh wrote:
c933103 wrote:
lydh wrote:
DJ/XJ can order all the planes it wants, but it's still a trash airline. I tried their "business class" for the first time last week, and while the seat was more comfortable than I expected, their service is absolutely deplorable.

First and foremost their premium product isn't a business class product


That's why I put it in quotes.

I mean then you should understand they will not offer product that would be comparable to business class of other airlines.

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 8:03 am
by lydh
The seats are angle-flat, and are the same as what OZ, KE, TG, etc. offer on some Asia routes in J. I knew the food service wouldn't be on the same level, but I was amazed at just how awful it was. They actually served the entire economy cabin before bringing anyone up-front our food! And there wasn't a single FA left up front to help anyone, even in case of emergencies!

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 9:38 am
by astuteman
lightsaber wrote:
Eyad89 wrote:
This makes AirAsia X the largest A330 operator in the world, and I guess this is the largest single A330 order ever.

Yes. Tony has now bet AirAsia's future on the type. I speculate the deal was good enough to be low risk. We will see a third of A330NEOs flying for AirAsia.

The fate of the plane is tied to one airline. Airbus should have been more agressive selling as I'm sure the deal favored AirAsia.

Lightsaber


There's a couple of statements in here that I'll admit to not understanding.

"We will see a third of A330NEOs flying for AirAsia"
Well, we'll see a third of A330NEO's ordered so far flying for Air Asia.
It's highly unlikely that this will continue for the life of the programme - unless you're speculating that there will be no more sales. Are you?

"Airbus should have been more aggressive selling as I'm sure the deal favored AirAsia."
I don't understand this one either as we have no idea how aggressive or otherwise Airbus were.
We know Airbus did not have a strong hand.
They were in breach of contract conditions due to delays
The Air Asia order was a huge chunk of the order book
Boeing we know are being aggressive on pricing
I'm not really sure how aggressive they could actually be.

I do know these things though.
They are now back inside contract conditions with Air Asia So this time the order WILL stick
They have also added 34 planes to the A330NEO backlog, plus another 8 ordered at Farnborough.
This takes the backlog over 260
There are rumours of another big order to come soon.
The above give Airbus more scope now to address the 330NEO's biggest issue - production rate.

We all know that Boeing have been aggressive on price.
They have challenged their supply chain hard.
There's nothing stopping Airbus from doing likewise (and they are).
They are investing in ALM to reduce cost ($3m they hope). This is being sold forward in 787 pricing now.
There's nothing stopping Airbus from doing likewise (and they are).

Boeing have increased the rate on the 787 strongly.
It's my belief that this is currently the biggest driver behind the 787's competitive pricing.
There's a "top-dead-cenre" Airbus have to get over on the A330NEO rate in order to turn a vicious circle into a virtuous one.
The reinforcement of this order and its growth is a strong step in that direction - even more so if the "rumour" comes to fruition.

There's also a reality that most of the 787's recent successes against the A330NEO have been in an arena where Boeing can bring the "dumping" card into play by being super aggressive on price. I think it will become increasingly noticeable that outside the jurisdiction of the USA, Boeing will find that harder to do.
Especially with orders that are large numbers, Like air Asia

Coming back to "aggression", there's no question that ultimately Airbus HAD to have their eye on the marathon I describe above rather than the sprint to get an extra 2% on the sale price.
Securing 100 orders is far more significant to the A330NEO than aiming for 2% extra margin on that sale and losing the sale as a consequence. :yes:

Rgds

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 12:03 pm
by juliuswong
The agreement for 34 A330neo is conditional.

And AirAsia X is planning massive restructuring, details here. https://www.theedgemarkets.com/article/ ... ent-airbus

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 12:07 pm
by ap305
juliuswong wrote:
The agreement for 34 A330neo is conditional.

And AirAsia X is planning massive restructuring, details here. https://www.theedgemarkets.com/article/ ... ent-airbus


It is obvious they signed the agreement on June 14 and announced it later after they got the board approval. It would not have gone into Airbus's book otherwise. Edit: Or perhaps it has to await the next board meeting. :oops:

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 12:21 pm
by Planesmart
juliuswong wrote:
The agreement for 34 A330neo is conditional.

Pretty much every commercial aircraft order starts life as conditional.

The Boeing 777X order book is 100% conditional at present.

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 12:25 pm
by lightsaber
astuteman wrote:
lightsaber wrote:
Eyad89 wrote:
This makes AirAsia X the largest A330 operator in the world, and I guess this is the largest single A330 order ever.

Yes. Tony has now bet AirAsia's future on the type. I speculate the deal was good enough to be low risk. We will see a third of A330NEOs flying for AirAsia.

The fate of the plane is tied to one airline. Airbus should have been more agressive selling as I'm sure the deal favored AirAsia.

Lightsaber


There's a couple of statements in here that I'll admit to not understanding.

"We will see a third of A330NEOs flying for AirAsia"
Well, we'll see a third of A330NEO's ordered so far flying for Air Asia.
It's highly unlikely that this will continue for the life of the programme - unless you're speculating that there will be no more sales. Are you?

"Airbus should have been more aggressive selling as I'm sure the deal favored AirAsia."
I don't understand this one either as we have no idea how aggressive or otherwise Airbus were.
We know Airbus did not have a strong hand.
They were in breach of contract conditions due to delays
The Air Asia order was a huge chunk of the order book
Boeing we know are being aggressive on pricing
I'm not really sure how aggressive they could actually be.

I do know these things though.
They are now back inside contract conditions with Air Asia So this time the order WILL stick
They have also added 34 planes to the A330NEO backlog, plus another 8 ordered at Farnborough.
This takes the backlog over 260
There are rumours of another big order to come soon.
The above give Airbus more scope now to address the 330NEO's biggest issue - production rate.

We all know that Boeing have been aggressive on price.
They have challenged their supply chain hard.
There's nothing stopping Airbus from doing likewise (and they are).
They are investing in ALM to reduce cost ($3m they hope). This is being sold forward in 787 pricing now.
There's nothing stopping Airbus from doing likewise (and they are).

Boeing have increased the rate on the 787 strongly.
It's my belief that this is currently the biggest driver behind the 787's competitive pricing.
There's a "top-dead-cenre" Airbus have to get over on the A330NEO rate in order to turn a vicious circle into a virtuous one.
The reinforcement of this order and its growth is a strong step in that direction - even more so if the "rumour" comes to fruition.

There's also a reality that most of the 787's recent successes against the A330NEO have been in an arena where Boeing can bring the "dumping" card into play by being super aggressive on price. I think it will become increasingly noticeable that outside the jurisdiction of the USA, Boeing will find that harder to do.
Especially with orders that are large numbers, Like air Asia

Coming back to "aggression", there's no question that ultimately Airbus HAD to have their eye on the marathon I describe above rather than the sprint to get an extra 2% on the sale price.
Securing 100 orders is far more significant to the A330NEO than aiming for 2% extra margin on that sale and losing the sale as a consequence. :yes:

Rgds

My friend, the A330NEO has struggled. If Airbus was previously agressive selling, than there is an issue I'm not aware of.

What matters to leasing companies and their investors is there is not an obvious healthy secondary market for the A330NEO. So guarantees will have to be made.

Lightsaber

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 12:49 pm
by oslmgm
ap305 wrote:
juliuswong wrote:
The agreement for 34 A330neo is conditional.

And AirAsia X is planning massive restructuring, details here. https://www.theedgemarkets.com/article/ ... ent-airbus


It is obvious they signed the agreement on June 14 and announced it later after they got the board approval. It would not have gone into Airbus's book otherwise. Edit: Or perhaps it has to await the next board meeting. :oops:

June 14 seems to refer to an agreement from 2007 about A330CEOs..? I assumed that the 2007 agreement has now been modified, but it's a bit confusing.

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 1:01 pm
by mjoelnir
lightsaber wrote:
astuteman wrote:
lightsaber wrote:
Yes. Tony has now bet AirAsia's future on the type. I speculate the deal was good enough to be low risk. We will see a third of A330NEOs flying for AirAsia.

The fate of the plane is tied to one airline. Airbus should have been more agressive selling as I'm sure the deal favored AirAsia.

Lightsaber


There's a couple of statements in here that I'll admit to not understanding.

"We will see a third of A330NEOs flying for AirAsia"
Well, we'll see a third of A330NEO's ordered so far flying for Air Asia.
It's highly unlikely that this will continue for the life of the programme - unless you're speculating that there will be no more sales. Are you?

"Airbus should have been more aggressive selling as I'm sure the deal favored AirAsia."
I don't understand this one either as we have no idea how aggressive or otherwise Airbus were.
We know Airbus did not have a strong hand.
They were in breach of contract conditions due to delays
The Air Asia order was a huge chunk of the order book
Boeing we know are being aggressive on pricing
I'm not really sure how aggressive they could actually be.

I do know these things though.
They are now back inside contract conditions with Air Asia So this time the order WILL stick
They have also added 34 planes to the A330NEO backlog, plus another 8 ordered at Farnborough.
This takes the backlog over 260
There are rumours of another big order to come soon.
The above give Airbus more scope now to address the 330NEO's biggest issue - production rate.

We all know that Boeing have been aggressive on price.
They have challenged their supply chain hard.
There's nothing stopping Airbus from doing likewise (and they are).
They are investing in ALM to reduce cost ($3m they hope). This is being sold forward in 787 pricing now.
There's nothing stopping Airbus from doing likewise (and they are).

Boeing have increased the rate on the 787 strongly.
It's my belief that this is currently the biggest driver behind the 787's competitive pricing.
There's a "top-dead-cenre" Airbus have to get over on the A330NEO rate in order to turn a vicious circle into a virtuous one.
The reinforcement of this order and its growth is a strong step in that direction - even more so if the "rumour" comes to fruition.

There's also a reality that most of the 787's recent successes against the A330NEO have been in an arena where Boeing can bring the "dumping" card into play by being super aggressive on price. I think it will become increasingly noticeable that outside the jurisdiction of the USA, Boeing will find that harder to do.
Especially with orders that are large numbers, Like air Asia

Coming back to "aggression", there's no question that ultimately Airbus HAD to have their eye on the marathon I describe above rather than the sprint to get an extra 2% on the sale price.
Securing 100 orders is far more significant to the A330NEO than aiming for 2% extra margin on that sale and losing the sale as a consequence. :yes:

Rgds

My friend, the A330NEO has struggled. If Airbus was previously agressive selling, than there is an issue I'm not aware of.

What matters to leasing companies and their investors is there is not an obvious healthy secondary market for the A330NEO. So guarantees will have to be made.

Lightsaber


Load of rubbish. You talk about a secondary market for a frame that has no even been delivered yet. There is of course no secondary market. There would be no frames for sale feeding a secondary market. There is hardly a secondary market for the 787. Far to early in the cycle to talk about it. There is a very healthy secondary market for the A330ceo.

Airbus should not be bothered with the production rate of the A330. There should be low fixed costs. The production facilities should be amortised. A big factor compared to a new frame like the 787 with new production facilities, where depreciation is a big part of the fixed production cost.
So in the case of the A330 low production rates have less impact on the whole production cost. But increasing production rate, has due to the low fixed cost, also less influence in decreasing production cost.
Up to a rate of about 8.5 frames a month for the A330 Airbus should need no additional investments. The only fly in the ointment could be that Airbus uses part of the A330 lines for the A350. The new completion centre in TSN should help there.

Boeing has tried to kill off the A330neo with going very low on some offers for the 787. I believe Boeing went well below cost with those offers. It did not work. The A330neo has got a good number of orders this year and quite a few commitments that could turn into orders during this year. The A330neo is healthy and living.

The indication for me, that Boeing has not been able to decrease the production cost on the 787 as some people believe here, is the fact, that producing a NMA, MOM or 797 the same way as the 787, would kill that project.

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 1:55 pm
by lightsaber
mjoelnir wrote:
lightsaber wrote:
astuteman wrote:

There's a couple of statements in here that I'll admit to not understanding.

"We will see a third of A330NEOs flying for AirAsia"
Well, we'll see a third of A330NEO's ordered so far flying for Air Asia.
It's highly unlikely that this will continue for the life of the programme - unless you're speculating that there will be no more sales. Are you?

"Airbus should have been more aggressive selling as I'm sure the deal favored AirAsia."
I don't understand this one either as we have no idea how aggressive or otherwise Airbus were.
We know Airbus did not have a strong hand.
They were in breach of contract conditions due to delays
The Air Asia order was a huge chunk of the order book
Boeing we know are being aggressive on pricing
I'm not really sure how aggressive they could actually be.

I do know these things though.
They are now back inside contract conditions with Air Asia So this time the order WILL stick
They have also added 34 planes to the A330NEO backlog, plus another 8 ordered at Farnborough.
This takes the backlog over 260
There are rumours of another big order to come soon.
The above give Airbus more scope now to address the 330NEO's biggest issue - production rate.

We all know that Boeing have been aggressive on price.
They have challenged their supply chain hard.
There's nothing stopping Airbus from doing likewise (and they are).
They are investing in ALM to reduce cost ($3m they hope). This is being sold forward in 787 pricing now.
There's nothing stopping Airbus from doing likewise (and they are).

Boeing have increased the rate on the 787 strongly.
It's my belief that this is currently the biggest driver behind the 787's competitive pricing.
There's a "top-dead-cenre" Airbus have to get over on the A330NEO rate in order to turn a vicious circle into a virtuous one.
The reinforcement of this order and its growth is a strong step in that direction - even more so if the "rumour" comes to fruition.

There's also a reality that most of the 787's recent successes against the A330NEO have been in an arena where Boeing can bring the "dumping" card into play by being super aggressive on price. I think it will become increasingly noticeable that outside the jurisdiction of the USA, Boeing will find that harder to do.
Especially with orders that are large numbers, Like air Asia

Coming back to "aggression", there's no question that ultimately Airbus HAD to have their eye on the marathon I describe above rather than the sprint to get an extra 2% on the sale price.
Securing 100 orders is far more significant to the A330NEO than aiming for 2% extra margin on that sale and losing the sale as a consequence. :yes:

Rgds

My friend, the A330NEO has struggled. If Airbus was previously agressive selling, than there is an issue I'm not aware of.

What matters to leasing companies and their investors is there is not an obvious healthy secondary market for the A330NEO. So guarantees will have to be made.

Lightsaber


Load of rubbish. You talk about a secondary market for a frame that has no even been delivered yet. There is of course no secondary market. There would be no frames for sale feeding a secondary market. There is hardly a secondary market for the 787. Far to early in the cycle to talk about it. There is a very healthy secondary market for the A330ceo.

Airbus should not be bothered with the production rate of the A330. There should be low fixed costs. The production facilities should be amortised. A big factor compared to a new frame like the 787 with new production facilities, where depreciation is a big part of the fixed production cost.
So in the case of the A330 low production rates have less impact on the whole production cost. But increasing production rate, has due to the low fixed cost, also less influence in decreasing production cost.
Up to a rate of about 8.5 frames a month for the A330 Airbus should need no additional investments. The only fly in the ointment could be that Airbus uses part of the A330 lines for the A350. The new completion centre in TSN should help there.

Boeing has tried to kill off the A330neo with going very low on some offers for the 787. I believe Boeing went well below cost with those offers. It did not work. The A330neo has got a good number of orders this year and quite a few commitments that could turn into orders during this year. The A330neo is healthy and living.

The indication for me, that Boeing has not been able to decrease the production cost on the 787 as some people believe here, is the fact, that producing a NMA, MOM or 797 the same way as the 787, would kill that project.

Leasing companies estiimating the resale value is rebush? You and I have very different perceptions on aircraft financing.

An aircraft in low demand is difficult or impossible to resell/lease. See 717, A346, A380.

I've seen vendors complaining about reduced payments for 787, so the costs have certainly been reduced. Please see the Boeing quarterly reports, cash flow is now excellent on the 787. $23.5m per Airframe.
https://seekingalpha.com/article/416623 ... on-balance

Lightsaber

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 2:22 pm
by Polot
mjoelnir wrote:
lightsaber wrote:
astuteman wrote:

There's a couple of statements in here that I'll admit to not understanding.

"We will see a third of A330NEOs flying for AirAsia"
Well, we'll see a third of A330NEO's ordered so far flying for Air Asia.
It's highly unlikely that this will continue for the life of the programme - unless you're speculating that there will be no more sales. Are you?

"Airbus should have been more aggressive selling as I'm sure the deal favored AirAsia."
I don't understand this one either as we have no idea how aggressive or otherwise Airbus were.
We know Airbus did not have a strong hand.
They were in breach of contract conditions due to delays
The Air Asia order was a huge chunk of the order book
Boeing we know are being aggressive on pricing
I'm not really sure how aggressive they could actually be.

I do know these things though.
They are now back inside contract conditions with Air Asia So this time the order WILL stick
They have also added 34 planes to the A330NEO backlog, plus another 8 ordered at Farnborough.
This takes the backlog over 260
There are rumours of another big order to come soon.
The above give Airbus more scope now to address the 330NEO's biggest issue - production rate.

We all know that Boeing have been aggressive on price.
They have challenged their supply chain hard.
There's nothing stopping Airbus from doing likewise (and they are).
They are investing in ALM to reduce cost ($3m they hope). This is being sold forward in 787 pricing now.
There's nothing stopping Airbus from doing likewise (and they are).

Boeing have increased the rate on the 787 strongly.
It's my belief that this is currently the biggest driver behind the 787's competitive pricing.
There's a "top-dead-cenre" Airbus have to get over on the A330NEO rate in order to turn a vicious circle into a virtuous one.
The reinforcement of this order and its growth is a strong step in that direction - even more so if the "rumour" comes to fruition.

There's also a reality that most of the 787's recent successes against the A330NEO have been in an arena where Boeing can bring the "dumping" card into play by being super aggressive on price. I think it will become increasingly noticeable that outside the jurisdiction of the USA, Boeing will find that harder to do.
Especially with orders that are large numbers, Like air Asia

Coming back to "aggression", there's no question that ultimately Airbus HAD to have their eye on the marathon I describe above rather than the sprint to get an extra 2% on the sale price.
Securing 100 orders is far more significant to the A330NEO than aiming for 2% extra margin on that sale and losing the sale as a consequence. :yes:

Rgds

My friend, the A330NEO has struggled. If Airbus was previously agressive selling, than there is an issue I'm not aware of.

What matters to leasing companies and their investors is there is not an obvious healthy secondary market for the A330NEO. So guarantees will have to be made.

Lightsaber


Load of rubbish. You talk about a secondary market for a frame that has no even been delivered yet. There is of course no secondary market. There would be no frames for sale feeding a secondary market. There is hardly a secondary market for the 787. Far to early in the cycle to talk about it. There is a very healthy secondary market for the A330ceo.

Airbus should not be bothered with the production rate of the A330. There should be low fixed costs. The production facilities should be amortised. A big factor compared to a new frame like the 787 with new production facilities, where depreciation is a big part of the fixed production cost.
So in the case of the A330 low production rates have less impact on the whole production cost. But increasing production rate, has due to the low fixed cost, also less influence in decreasing production cost.
Up to a rate of about 8.5 frames a month for the A330 Airbus should need no additional investments. The only fly in the ointment could be that Airbus uses part of the A330 lines for the A350. The new completion centre in TSN should help there.

Boeing has tried to kill off the A330neo with going very low on some offers for the 787. I believe Boeing went well below cost with those offers. It did not work. The A330neo has got a good number of orders this year and quite a few commitments that could turn into orders during this year. The A330neo is healthy and living.

The indication for me, that Boeing has not been able to decrease the production cost on the 787 as some people believe here, is the fact, that producing a NMA, MOM or 797 the same way as the 787, would kill that project.

Lessors and financers don’t wait until planes are actually sold on the secondary market to determine resale value. They estimate potential secondary market and value. For example they look at the 787 and go hmmm, if we finance for Airline X and they default and we need to repo, since 700 are in service and the plane is still popular (gardning orders) we can probably place it with Airline Y, Z, A, B, or C etc. A330ceo secondary market is independent of A330neo secondary market. You can’t assume (and the money guys don’t) that a CEO customer is going to want the Neo. A company with 30 A330ceos is probably not going to be interested in taking a single used A330neo that someone defaulted on.

This is why having a wide customer base is important. This is why having solid blue chip customers is important. Financiers or lessors are not relying on the likes of Uganda Airlines, or Air Timbuktu, or Togo Airways or start up Air Flying Dragon etc to reliably pick up and absorb used planes. Being a derivative doesn’t automatically mean the new model shares the same secondary market as the old one.

Secondary market transactions just validate (or invalidate) the estimations, and the money guys will adjust their risk (premiums) on future deals to reflect new estimations based on the data. If you want evidence of all this just go look at the estimate value thread posted here just a few days ago. They include estimated value for the newest airframe. Now how can they do that if the newest airframe was not resold?

Believe it or not but aviation enthusiasts on the internet are not the only people who look at and pay attention to new aircraft sales, backlogs, production rates, and sale trajectories.

Re: Air Asia to order more Airbus aircraft?

Posted: Sat Jul 21, 2018 3:45 pm
by mjoelnir
Polot wrote:
mjoelnir wrote:
lightsaber wrote:
My friend, the A330NEO has struggled. If Airbus was previously agressive selling, than there is an issue I'm not aware of.

What matters to leasing companies and their investors is there is not an obvious healthy secondary market for the A330NEO. So guarantees will have to be made.

Lightsaber


Load of rubbish. You talk about a secondary market for a frame that has no even been delivered yet. There is of course no secondary market. There would be no frames for sale feeding a secondary market. There is hardly a secondary market for the 787. Far to early in the cycle to talk about it. There is a very healthy secondary market for the A330ceo.

Airbus should not be bothered with the production rate of the A330. There should be low fixed costs. The production facilities should be amortised. A big factor compared to a new frame like the 787 with new production facilities, where depreciation is a big part of the fixed production cost.
So in the case of the A330 low production rates have less impact on the whole production cost. But increasing production rate, has due to the low fixed cost, also less influence in decreasing production cost.
Up to a rate of about 8.5 frames a month for the A330 Airbus should need no additional investments. The only fly in the ointment could be that Airbus uses part of the A330 lines for the A350. The new completion centre in TSN should help there.

Boeing has tried to kill off the A330neo with going very low on some offers for the 787. I believe Boeing went well below cost with those offers. It did not work. The A330neo has got a good number of orders this year and quite a few commitments that could turn into orders during this year. The A330neo is healthy and living.

The indication for me, that Boeing has not been able to decrease the production cost on the 787 as some people believe here, is the fact, that producing a NMA, MOM or 797 the same way as the 787, would kill that project.

Lessors and financers don’t wait until planes are actually sold on the secondary market to determine resale value. They estimate potential secondary market and value. For example they look at the 787 and go hmmm, if we finance for Airline X and they default and we need to repo, since 700 are in service and the plane is still popular (gardning orders) we can probably place it with Airline Y, Z, A, B, or C etc. A330ceo secondary market is independent of A330neo secondary market. You can’t assume (and the money guys don’t) that a CEO customer is going to want the Neo. A company with 30 A330ceos is probably not going to be interested in taking a single used A330neo that someone defaulted on.

This is why having a wide customer base is important. This is why having solid blue chip customers is important. Financiers or lessors are not relying on the likes of Uganda Airlines, or Air Timbuktu, or Togo Airways or start up Air Flying Dragon etc to reliably pick up and absorb used planes. Being a derivative doesn’t automatically mean the new model shares the same secondary market as the old one.

Secondary market transactions just validate (or invalidate) the estimations, and the money guys will adjust their risk (premiums) on future deals to reflect new estimations based on the data. If you want evidence of all this just go look at the estimate value thread posted here just a few days ago. They include estimated value for the newest airframe. Now how can they do that if the newest airframe was not resold?

Believe it or not but aviation enthusiasts on the internet are not the only people who look at and pay attention to new aircraft sales, backlogs, production rates, and sale trajectories.


If any wide body frame has a wide customer base, than that is the A330. The widest off all wide body frames. Even the new A330neo has a wide customer base compared to other derivatives that have come or are coming on the market.

Re: Updated: AirAsia X orders 34 more A330neo

Posted: Sat Jul 21, 2018 3:49 pm
by SQ22
And even if it is an interesting topic and I also forgot what the thread is originally about, please remember to stay on topic. If someone wants to discuss the A330neo sales prospects after the recent reconfirmation/top up order, feel free to open a new thread.