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Whiteguy
Posts: 1500
Joined: Sat Nov 29, 2003 6:11 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 5:39 pm

TObound wrote:
ACCS300 wrote:
Air Canada. 1/4 of their narrowbody fleet at present. Their A220s can't come soon enough and their 320's are on their last legs and some of the oldest flying. AC's massive mistake to go for the MAX over the NEO will haunt them for years to come if the MAX isn't back soon.


Luckily for AC, their prime competitor is an all-Boeing operator.....

txkf2010 wrote:
capitalflyer wrote:
Ummm...how about WN? All Boeing fleet that is not getting any younger. MAX suspension brings any growth plans to a screeching halt.


Same goes for WestJet.



Westjet was late enough on their deliveries that they are oddly less dependent on the MAX at this time than Air Canada. But long term this is a much bigger issue for them than AC.


I think it’s actually hurting AC more then WS overall...

WS being an all Boeing fleet has meant a reduced cost overall for crews. Pilots is particular are just flying the NGs with reduced schedules and some leaves being given out every month. Where it is hurting is the MAX scheduled flying, Europe in the summer and Alberta/Hawaii in the winter. Plus any planned route expansion is on hold.

For AC, they had 24 aircraft on property, compared to 13 at WS. Almost 40 aircraft planned by the end of the year. Cost wise they’ve had to retain many older aircraft with MTC costs, B763, A320s and E190s. On top of that they have 400 pilots sitting around getting paid and not flying. Some went back to their previous aircraft but not many. The grounding is costing more for AC but I’m sure most of that will come back to costing Boeing.
 
rheinwaldner
Posts: 1856
Joined: Wed Jan 02, 2008 4:58 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 5:43 pm

Has any airline, which has ordered the MAX not been mentioned in this thread so far?
Many things are difficult, all things are possible!
 
yzfElite
Posts: 36
Joined: Sun Apr 10, 2016 5:14 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 5:53 pm

ACCS300 wrote:
Air Canada. 1/4 of their narrowbody fleet at present. Their A220s can't come soon enough and their 320's are on their last legs and some of the oldest flying. AC's massive mistake to go for the MAX over the NEO will haunt them for years to come if the MAX isn't back soon.


AC has been lucky that it seems the existing fleet has been able to perform without any major complaints. Usually word gets out fast and it seems that 320/763 dispatch reliability has been good so far. One has to wonder how much longer the 320 fleet can keep going. If they can get through March, presumably the pressure is off until the summer flying season.
 
capitalflyer
Posts: 626
Joined: Tue Nov 16, 2010 2:43 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:08 pm

rheinwaldner wrote:
Has any airline, which has ordered the MAX not been mentioned in this thread so far?


AA has limited exposure but has had to make some cancellations, which have been extended to April 2020. UA has even less exposure. I haven't heard anything about them cancelling flights, so they may have enough wiggle room to make up for the gap with swaps/substitutions.

Just to note, DL has zero MAX so they are not affected.

Interesting summary article.

https://www.reuters.com/article/us-boei ... SKBN1YL0CP
 
Waterbomber2
Posts: 1146
Joined: Mon Feb 04, 2019 3:44 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:17 pm

Spicejet has inducted about 40 B737NG's since the MAX grounding started, a majority from defunct 9W.
Vistara have also inducted several 9W B737NG's.

Air Transat has been seizing opportunities in the wake of the Thomas Cook UK insolvency.

What a mess.
Last edited by Waterbomber2 on Tue Dec 17, 2019 6:19 pm, edited 1 time in total.
 
MoreMiles
Posts: 33
Joined: Fri May 26, 2017 5:04 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:19 pm

I believe AC is unique. To maintain their MAX Pilot certification, AC has to get permission from Transport Canada for its pilots to fly the B737MAX as AC does not have any B737NG. I believe majority of the other carriers at least has B737NG for their pilots to fly to maintain their MAX Pilot certification. WN, AA, AC, CZ, DY, CA, are probably the most affected based on the number of 737MAX they have already delivered. It will interesting to see the breakdown of the numbers of 737MAX which are awaiting delivery. WN, AA, AC had quite a few planes painted and stored waiting delivery. So as these planes have not been delivered, they have to keep their older aircraft flying as well.
 
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spinotter
Posts: 767
Joined: Wed May 27, 2015 1:37 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:25 pm

CobaltScar wrote:
capitalflyer wrote:
Ummm...how about WN? All Boeing fleet that is not getting any younger. MAX suspension brings any growth plans to a screeching halt.

BTW, thank you for starting a new thread rather then just adding to the bloated MAX thread. Much easier to track topical discussions with separate threads!!


I second this on both points, the bloated MAX thread is nearly useless except for a few enthusiasts following every word from the FAA.

I want to hear about WN. They are the largest operator of MAX in the USA and have a huge order book for them. They are smaller than the big 3 and with the big 3 getting their act together in the domestic game and the small ULCC eating scraps like piranha around the WN route map, what is WN to do????

I've stopped obessing over rumor mergers, but this situation seems like the perfect storm to allow WN to:

a) acquire (kill off) a competitor.
b) gain valuable slots and gates and presence in regions they are woefully lacking currently (North-East, Caribbean)
c) currently in contract negotiations with the FAs and pushing hard to allow other fleet types
d) finally getting different fleet types so they can send the right planes to the right markets
e) blame it ALL on Boeing and gain sympathy with the government and the flying public to facilitate them gobbling up a smaller airline

You all know who fits the bill for this. jetBlue. Southwest can kill a whole flock of bluebirds with one stone provided by Boeing, the max issue. Every month that goes by in 2020 without a MAX solution = exponentially greater chance this happens. How can it not??


Do you think such a merger would be allowed by the regulatory agencies? Like repeat of airTran?
 
CobaltScar
Posts: 623
Joined: Thu Mar 23, 2017 2:30 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:44 pm

spinotter wrote:
CobaltScar wrote:
capitalflyer wrote:
Ummm...how about WN? All Boeing fleet that is not getting any younger. MAX suspension brings any growth plans to a screeching halt.

BTW, thank you for starting a new thread rather then just adding to the bloated MAX thread. Much easier to track topical discussions with separate threads!!


I second this on both points, the bloated MAX thread is nearly useless except for a few enthusiasts following every word from the FAA.

I want to hear about WN. They are the largest operator of MAX in the USA and have a huge order book for them. They are smaller than the big 3 and with the big 3 getting their act together in the domestic game and the small ULCC eating scraps like piranha around the WN route map, what is WN to do????

I've stopped obessing over rumor mergers, but this situation seems like the perfect storm to allow WN to:

a) acquire (kill off) a competitor.
b) gain valuable slots and gates and presence in regions they are woefully lacking currently (North-East, Caribbean)
c) currently in contract negotiations with the FAs and pushing hard to allow other fleet types
d) finally getting different fleet types so they can send the right planes to the right markets
e) blame it ALL on Boeing and gain sympathy with the government and the flying public to facilitate them gobbling up a smaller airline

You all know who fits the bill for this. jetBlue. Southwest can kill a whole flock of bluebirds with one stone provided by Boeing, the max issue. Every month that goes by in 2020 without a MAX solution = exponentially greater chance this happens. How can it not??


Do you think such a merger would be allowed by the regulatory agencies? Like repeat of airTran?


Yes of course, why not? Look at Sprint and T-Mobile
 
Avgeek21
Posts: 95
Joined: Mon Mar 04, 2019 5:44 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:48 pm

Around the Middle East mostly Oman Air and flydubai are affected. flydubai is I think one of the biggest worldwide MAX customers too. 30% of their fleet currently consists of the MAX. The main difference between them and Oman Air would be that Oman had a small MAX fleet when the grounding happend and most of their MAX's have come of the production line since. In flydubai's case most were being operated so overnight that was nearly a 30% drop in available aicraft. They also had no other fleet to fall back onto. Oman Air kept their small Embraer fleet in service longer and uses their 787's to combine previous frequencies and offer a similar daily seat count to a few destinations. flydubai has extended NG leases, introduced the Split Scimitar Winglets and now uses the wet-lease option for busy periods. Also having big brother Emirates helps shifting people around between the two.
 
Whiteguy
Posts: 1500
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Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 6:54 pm

MoreMiles wrote:
I believe AC is unique. To maintain their MAX Pilot certification, AC has to get permission from Transport Canada for its pilots to fly the B737MAX as AC does not have any B737NG. I believe majority of the other carriers at least has B737NG for their pilots to fly to maintain their MAX Pilot certification. WN, AA, AC, CZ, DY, CA, are probably the most affected based on the number of 737MAX they have already delivered. It will interesting to see the breakdown of the numbers of 737MAX which are awaiting delivery. WN, AA, AC had quite a few planes painted and stored waiting delivery. So as these planes have not been delivered, they have to keep their older aircraft flying as well.


Not quite. AC crews have been flying in the sim to maintain qualifications on the MAX, not the actual aircraft. There were a few flights operated for mtc and training for some check pilots in the training department. Other then that the planes haven’t been flown and most are now parked in the desert.
 
morrisond
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Joined: Thu Jan 07, 2010 12:22 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 7:16 pm

dc855 wrote:
morrisond wrote:
mjoelnir wrote:

So Icelandair is benefiting from the grounding of the MAX. It would be interesting how you read that out of the statement that you quote.

the quote starts with: The third quarter results show improvements in the Company’s underlying operations despite the unprecedented impact of the suspension of the MAX aircraft,

Is "unprecedented impact" something difficult to understand? Yes Icelandair tries to make the best out of a bad situation.


No - I can read a financial statement - it looks like they are doing better with the grounding than they probably would without - look at the financial results.


Sorry, but do you always only just consider information that fits your preconceived notions? There is obviously another factor in play here.


Then please show how they are financially being hurt by this. What is the other factor? I presented financial information and statements that suggest that they are doing quite alright.

I'm sorry that it refutes your preconceived notion that the MAX grounding is destroying the airline industry.

Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.
 
426Shadow
Posts: 210
Joined: Tue Sep 11, 2007 8:13 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 7:29 pm

CobaltScar wrote:
capitalflyer wrote:
Ummm...how about WN? All Boeing fleet that is not getting any younger. MAX suspension brings any growth plans to a screeching halt.

BTW, thank you for starting a new thread rather then just adding to the bloated MAX thread. Much easier to track topical discussions with separate threads!!


I second this on both points, the bloated MAX thread is nearly useless except for a few enthusiasts following every word from the FAA.

I want to hear about WN. They are the largest operator of MAX in the USA and have a huge order book for them. They are smaller than the big 3 and with the big 3 getting their act together in the domestic game and the small ULCC eating scraps like piranha around the WN route map, what is WN to do????

I've stopped obessing over rumor mergers, but this situation seems like the perfect storm to allow WN to:

a) acquire (kill off) a competitor.
b) gain valuable slots and gates and presence in regions they are woefully lacking currently (North-East, Caribbean)
c) currently in contract negotiations with the FAs and pushing hard to allow other fleet types
d) finally getting different fleet types so they can send the right planes to the right markets
e) blame it ALL on Boeing and gain sympathy with the government and the flying public to facilitate them gobbling up a smaller airline

You all know who fits the bill for this. jetBlue. Southwest can kill a whole flock of bluebirds with one stone provided by Boeing, the max issue. Every month that goes by in 2020 without a MAX solution = exponentially greater chance this happens. How can it not??


In reference to point D are you saying Jetblue should get some 737's? What about other mostly or all Airbus fleets. Should they mix it up as well?
We are all just fanboys, our opinions don't make or break businesses.
 
goosebayguy
Posts: 705
Joined: Fri Sep 25, 2009 1:12 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 7:40 pm

[quote="lots". Also RR issues don't help.

RR hs nothing to do with the MAX.
 
CobaltScar
Posts: 623
Joined: Thu Mar 23, 2017 2:30 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 7:54 pm

426Shadow wrote:
d) finally getting different fleet types so they can send the right planes to the right markets

In reference to point D are you saying Jetblue should get some 737's? What about other mostly or all Airbus fleets. Should they mix it up as well?



jetBlue already has their eggs spread across three baskets, airbus, bombardier (don't care they slapped a airbus sticker on it, was still designed and made by bombardier) and E190.

Its Southwest that is extremely vulnerable with their all or nothing one fleet type strategy. See case in point.
 
VSMUT
Posts: 4000
Joined: Mon Aug 08, 2016 11:40 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 8:14 pm

Waterbomber2 wrote:
Vistara have also inducted several 9W B737NG's.

Air Transat has been seizing opportunities in the wake of the Thomas Cook UK insolvency.

What a mess.


Not really relevant to the MAX though. Vistara is after a quick temporary expansion until the A320neo's are all delivered and Air Transat has no MAX' on order.
 
dc855
Posts: 28
Joined: Sat Jul 16, 2016 12:41 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 8:21 pm

morrisond wrote:
dc855 wrote:
morrisond wrote:

No - I can read a financial statement - it looks like they are doing better with the grounding than they probably would without - look at the financial results.


Sorry, but do you always only just consider information that fits your preconceived notions? There is obviously another factor in play here.


Then please show how they are financially being hurt by this. What is the other factor? I presented financial information and statements that suggest that they are doing quite alright.

I'm sorry that it refutes your preconceived notion that the MAX grounding is destroying the airline industry.

Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


As I have already pointed out, it is the fall of WW which is pretty much the only reason that Icelandair is doing ok. I would expect everybody to understand that the fall of the main competitor is going to be massively helpful to any company. The MAX groundings have forced Icelandair to lease expensive planes and keep old expensive 757's in service that were supposed to be scrapped by now. The CEO of the company has repeatedly complained about how the MAX groundings have been hurting the bottom line. So what you are saying has very little factual basis.
 
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ACCS300
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Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 10:10 pm

yzfElite wrote:
ACCS300 wrote:
Air Canada. 1/4 of their narrowbody fleet at present. Their A220s can't come soon enough and their 320's are on their last legs and some of the oldest flying. AC's massive mistake to go for the MAX over the NEO will haunt them for years to come if the MAX isn't back soon.


AC has been lucky that it seems the existing fleet has been able to perform without any major complaints. Usually word gets out fast and it seems that 320/763 dispatch reliability has been good so far. One has to wonder how much longer the 320 fleet can keep going. If they can get through March, presumably the pressure is off until the summer flying season.


At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.
 
MoreMiles
Posts: 33
Joined: Fri May 26, 2017 5:04 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:10 pm

ACCS300 wrote:
yzfElite wrote:
ACCS300 wrote:
Air Canada. 1/4 of their narrowbody fleet at present. Their A220s can't come soon enough and their 320's are on their last legs and some of the oldest flying. AC's massive mistake to go for the MAX over the NEO will haunt them for years to come if the MAX isn't back soon.


AC has been lucky that it seems the existing fleet has been able to perform without any major complaints. Usually word gets out fast and it seems that 320/763 dispatch reliability has been good so far. One has to wonder how much longer the 320 fleet can keep going. If they can get through March, presumably the pressure is off until the summer flying season.


At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.


Aren't they supposed to have a fleet of about 40 B737MAX by end of 2019 before the grounding. That will definitely hurt the traffic. A220 will help. I am not sure if they will pick up used A321s for the mainline?
 
MoreMiles
Posts: 33
Joined: Fri May 26, 2017 5:04 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:11 pm

Whiteguy wrote:

Not quite. AC crews have been flying in the sim to maintain qualifications on the MAX, not the actual aircraft. There were a few flights operated for mtc and training for some check pilots in the training department. Other then that the planes haven’t been flown and most are now parked in the desert.


Thank you for correcting me. Did not realize this.
 
morrisond
Posts: 2645
Joined: Thu Jan 07, 2010 12:22 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:22 pm

dc855 wrote:
morrisond wrote:
dc855 wrote:

Sorry, but do you always only just consider information that fits your preconceived notions? There is obviously another factor in play here.


Then please show how they are financially being hurt by this. What is the other factor? I presented financial information and statements that suggest that they are doing quite alright.

I'm sorry that it refutes your preconceived notion that the MAX grounding is destroying the airline industry.

Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


As I have already pointed out, it is the fall of WW which is pretty much the only reason that Icelandair is doing ok. I would expect everybody to understand that the fall of the main competitor is going to be massively helpful to any company. The MAX groundings have forced Icelandair to lease expensive planes and keep old expensive 757's in service that were supposed to be scrapped by now. The CEO of the company has repeatedly complained about how the MAX groundings have been hurting the bottom line. So what you are saying has very little factual basis.



Other than the actual financial statements that they can't lie about or Boeing giving them comp to offset those higher costs. Yes I can see that nothing factual in those two things....
 
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ACCS300
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Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:30 pm

MoreMiles wrote:
ACCS300 wrote:
yzfElite wrote:

AC has been lucky that it seems the existing fleet has been able to perform without any major complaints. Usually word gets out fast and it seems that 320/763 dispatch reliability has been good so far. One has to wonder how much longer the 320 fleet can keep going. If they can get through March, presumably the pressure is off until the summer flying season.


At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.


Aren't they supposed to have a fleet of about 40 B737MAX by end of 2019 before the grounding. That will definitely hurt the traffic. A220 will help. I am not sure if they will pick up used A321s for the mainline?


Yeah I counted about 40 as well, would have been enough to replace every 320, one-for-one by now. All the used WOW 321s have gone to Rouge so far, I'm sure AC would love to get their hands one some additional 321s. Be interesting to see what happens to Transat's fleet post merger-approval, some nice new 321s there.
 
beechnut
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Joined: Wed Apr 21, 2004 12:27 am

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:47 pm

ACCS300 wrote:
At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.


I imagine the Air Transat deal will also conclude in 2020; they have some 6 A321s and some A321LRs, some delivered, some coming total of 15 on order supposedly, that may allow them to swap capacity. AC did say Air Transat would run as a separate entity, would anything prevent AC from from shifting capacity around with Transat?

AC also has been quietly adding A321s, with 5 new build CEOs for Rouge about 4 years ago, and a number of second hand ones including ex-WOW (for Rouge), for a total of 15 at mainline and 14 at Rouge. They could also shrink Rouge and move more of Rouge's flying back to mainline (or conversely "rouge" more mainline flying), and pick up Rouge's 320s and 321s. These are all stop-gap measures, eventually the MAX 9 was supposed to replace them. If the MAX does die, then a long-term solution will be needed.

I wonder if a "plan B" for a post-MAX world couldn't be: exercise more A220-300 options, which covers the E190/A319 replacements and some expansion, and more A321s/LRs/XLRs, achieving a similar overall capacity as they had planned with the MAX in the fleet. And perhaps pressure Airbus for the A220-500 which would be nearly 1:1 A320 replacements.

AC had already indefinitely deferred the MAX 9 even before the MAX debacle so I think they were already planning to hang on to the A321s for quite some time.

I'm sure there must be some very interesting discussions going on these days in AC's Montreal HQ. Until recently I thought the odds of a permanent MAX grounding were small, but I'm sure any fleet planner worth his salt is at least taking that possibility seriously and quietly putting together a plan "B".

As some have said AC's A320s are among the oldest and highest time still flying, and they won't have a choice but to retire the older ones as they run out of time/cycles. Retirements have already started. The oldest one (MSN #59) is still flying; the next 4 following it are already retired. They did pick up a few used ones recently for Rouge.

On the positive side, AC is not totally beholden to a MAX future, unlike Southwest and Westjet. And they have some flexibility with Rouge and the upcoming Transat merger to move metal and/or capacity between the three entities. Short-term though, it's going to hurt, it's going to limit growth, and if the MAX dies it's going to take 5+ years to renew an ageing narrow body fleet.

Beech
 
rabader
Posts: 35
Joined: Mon Jul 08, 2019 4:21 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:53 pm

Aeromexico is in a tough spot. The competition in Mexico is really hard with the ULCCs (Viva and Volaris) driving down the prices and with Interjet wandering around, all three are A320 users. It had to retreat in the MEX-LAX and MEX-JFK where Delta took up most of the flying and it leased three Transavia 738 for the winter and spring seasons. In November Aeromexico reported 20% decrease in international passengers.

Aeromexico has a fleet of approx 45 737NG, it also has 6 MAX grounded and 7 more were expected to be delivered this year including 3 MAX9.

https://finance.yahoo.com/news/aeromexi ... 00143.html
Last edited by rabader on Wed Dec 18, 2019 12:12 am, edited 1 time in total.
 
T4thH
Posts: 881
Joined: Thu Jun 06, 2019 11:17 pm

Re: Most vulnerable MAX operators.

Tue Dec 17, 2019 11:59 pm

MoreMiles wrote:
ACCS300 wrote:
yzfElite wrote:

AC has been lucky that it seems the existing fleet has been able to perform without any major complaints. Usually word gets out fast and it seems that 320/763 dispatch reliability has been good so far. One has to wonder how much longer the 320 fleet can keep going. If they can get through March, presumably the pressure is off until the summer flying season.


At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.


Aren't they supposed to have a fleet of about 40 B737MAX by end of 2019 before the grounding. That will definitely hurt the traffic. A220 will help. I am not sure if they will pick up used A321s for the mainline?

As I know, the A220 will not fly on the MAX routes, they will not replace them.
 
beechnut
Posts: 908
Joined: Wed Apr 21, 2004 12:27 am

Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 12:16 am

T4thH wrote:
As I know, the A220 will not fly on the MAX routes, they will not replace them.


True, that's not the intent. But then, this was stated when AC was still expecting a RTS in a matter of a couple of months. Now the RTS is unknown, and even when it is finally announced, getting all the grounded birds compliant is going to take some more months, so realistically I can't see the MAX back at full strength at AC for another year, and the full fleet of 40, originally scheduled to be for 2020, IMHO will be pushed out 'till at least late 2021.

And of course, the fleet planners now have to think the unthinkable... and that would change the game dramatically.

I'd love to be the fly on the wall when HQ in Montreal discusses the MAX fiasco. They were no doubt self-congratulating themselves for having dodged a bullet when the NEO was having engine issues. I'm sure the mood is rather more sombre now.

Beech
 
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SRQKEF
Posts: 1941
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 12:22 am

morrisond wrote:
dc855 wrote:
morrisond wrote:

Then please show how they are financially being hurt by this. What is the other factor? I presented financial information and statements that suggest that they are doing quite alright.

I'm sorry that it refutes your preconceived notion that the MAX grounding is destroying the airline industry.

Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


As I have already pointed out, it is the fall of WW which is pretty much the only reason that Icelandair is doing ok. I would expect everybody to understand that the fall of the main competitor is going to be massively helpful to any company. The MAX groundings have forced Icelandair to lease expensive planes and keep old expensive 757's in service that were supposed to be scrapped by now. The CEO of the company has repeatedly complained about how the MAX groundings have been hurting the bottom line. So what you are saying has very little factual basis.



Other than the actual financial statements that they can't lie about or Boeing giving them comp to offset those higher costs. Yes I can see that nothing factual in those two things....


https://www.visir.is/g/2019190809841

So you want actual financial statements? Translation:

"Without the effects of the MAX grounding, Icelandair's EBITA would be positive at around 50-70 million USD for the year. However, when the MAX grounding is taken into effect, the airline says it's negative at around 70-90 million USD."

Is a 120-160 million loss good for FI, or am I misreading their financial statement? ;)

Regards,
Sveinn
Nothing compares to taking off in an empty 757 with full thrust!
 
jplatts
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 12:28 am

While AS has some 737 MAX planes on order, AS isn't as adversely affected by the 737 MAX groundings since AS was already operating most of its nonstop routes prior to WN starting 737 MAX operations on October 1, 2017. AS also took delivery of some additional Boeing 737-900ER and Airbus A321 planes since October 1, 2017. AS also likely has enough planes in its fleet to cover its nonstop routes, even with the 737 MAX not in service, with (a) AS dropping some former VX routes in the last 2 years, (b) AS taking delivery of additional aircraft in the last 2 years, (c) AS operating some of the nonstop routes added in the last 2 years on E-175 regional jets, (d) AS having more planes in its mainline fleet than it did on October 2, 2017, and (e) AS dropping some nonstop routes in Q1 2020.

AA is currently facing a narrowbody mainline plane shortage due to the retirement of its last MD-80's and the grounding of the 737 MAX.

While WN currently has more 737NG planes in its fleet than it did on October 1, 2017, WN is still facing a plane shortage due to (a) WN adding service to Hawaii earlier this year, (b) WN adding some new domestic nonstop routes out of DAL, DEN, HOU, OAK, SMF, STL, and SJC since October 1, 2017, (c) WN still having to remove some flights from its flight schedule while the 737 MAX is still out of service, and (d) WN's plans to retire some 737-700's that it inherited from the WN-FL merger.
 
L0VE2FLY
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Joined: Wed Dec 12, 2012 10:54 pm

Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 12:44 am

dc855 wrote:
At this current point in time almost 25% of FI's total fleet was supposed to be MAX airplanes. I doubt that any other airline has as a high a percentage. They made a massive mistake in ordering them instead of the A320 family.


:checkmark: In the case of FI it's not just the MAX grounding, it's also the fact that the A321XLR would've made an excellent replacement for their ageing 757/767 fleet, the XLR will easily be able to fly KEF-Anywhere in North America, something the MAX can't do.
 
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ACCS300
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 1:34 am

beechnut wrote:
ACCS300 wrote:
At the very least they've got about 14-15 220's coming online in 2020 should the MAX debacle continue, perhaps with the additional 220's, they can let the most beleaguered 320's and 763's go.


I imagine the Air Transat deal will also conclude in 2020; they have some 6 A321s and some A321LRs, some delivered, some coming total of 15 on order supposedly, that may allow them to swap capacity. AC did say Air Transat would run as a separate entity, would anything prevent AC from from shifting capacity around with Transat?

AC also has been quietly adding A321s, with 5 new build CEOs for Rouge about 4 years ago, and a number of second hand ones including ex-WOW (for Rouge), for a total of 15 at mainline and 14 at Rouge. They could also shrink Rouge and move more of Rouge's flying back to mainline (or conversely "rouge" more mainline flying), and pick up Rouge's 320s and 321s. These are all stop-gap measures, eventually the MAX 9 was supposed to replace them. If the MAX does die, then a long-term solution will be needed.

I wonder if a "plan B" for a post-MAX world couldn't be: exercise more A220-300 options, which covers the E190/A319 replacements and some expansion, and more A321s/LRs/XLRs, achieving a similar overall capacity as they had planned with the MAX in the fleet. And perhaps pressure Airbus for the A220-500 which would be nearly 1:1 A320 replacements.

AC had already indefinitely deferred the MAX 9 even before the MAX debacle so I think they were already planning to hang on to the A321s for quite some time.

I'm sure there must be some very interesting discussions going on these days in AC's Montreal HQ. Until recently I thought the odds of a permanent MAX grounding were small, but I'm sure any fleet planner worth his salt is at least taking that possibility seriously and quietly putting together a plan "B".

As some have said AC's A320s are among the oldest and highest time still flying, and they won't have a choice but to retire the older ones as they run out of time/cycles. Retirements have already started. The oldest one (MSN #59) is still flying; the next 4 following it are already retired. They did pick up a few used ones recently for Rouge.

On the positive side, AC is not totally beholden to a MAX future, unlike Southwest and Westjet. And they have some flexibility with Rouge and the upcoming Transat merger to move metal and/or capacity between the three entities. Short-term though, it's going to hurt, it's going to limit growth, and if the MAX dies it's going to take 5+ years to renew an ageing narrow body fleet.

Beech


Fantastic analogy beechnut! I guess AC is fortunate to have Rouge and soon Transat and the flexibilities their respective fleets may provide moving forward. Seems AC maybe moving away from any future Boeing plans with the deferment of the MAX-9s and no longer exercising the 789 options. I see a gradual drifting back to Airbus especially with the accidental relationship the A220 is providing coupled with the MAX debacle.
 
astuteman
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 5:42 am

morrisond wrote:
dc855 wrote:
Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


So to get this straight, all of the airlines that ordered the MAX but don't operate it are now making more money because they're not operating the MAX.

Once the customer airlines wake up to the truth that you have discovered, then I expect to see wholesale cancellations and the termination of the programme.

Why buy the plane when operating it makes you worse off?

I have never feared for the MAX's RTS, but now I do.

Rgds
 
426Shadow
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 5:52 am

CobaltScar wrote:
426Shadow wrote:
d) finally getting different fleet types so they can send the right planes to the right markets

In reference to point D are you saying Jetblue should get some 737's? What about other mostly or all Airbus fleets. Should they mix it up as well?



jetBlue already has their eggs spread across three baskets, airbus, bombardier (don't care they slapped a airbus sticker on it, was still designed and made by bombardier) and E190.

Its Southwest that is extremely vulnerable with their all or nothing one fleet type strategy. See case in point.


You telling me there aren't ANY all Airbus fleets out there? Are they not at risk if something catastrophic happens to the Airbus's they own?
We are all just fanboys, our opinions don't make or break businesses.
 
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SRQKEF
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 12:42 pm

astuteman wrote:
morrisond wrote:
dc855 wrote:
Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


So to get this straight, all of the airlines that ordered the MAX but don't operate it are now making more money because they're not operating the MAX.

Once the customer airlines wake up to the truth that you have discovered, then I expect to see wholesale cancellations and the termination of the programme.

Why buy the plane when operating it makes you worse off?

I have never feared for the MAX's RTS, but now I do.

Rgds


He's just stating some preconceived notion he has with no evidence whatsoever. Of course having new, fuel efficient aircraft sitting for almost a year doesn't make you better off, it just helps in the few cases where the airline has a severe overcapacity problem beforehand (see Norwegian). Others, while making do, are most certainly making less money than they would be with the MAX in their fleet, especially airlines like AC and FI where a large portion of their fleet should be MAXes by now and they're having to postpone retirement of older and less efficient aircraft instead.
Nothing compares to taking off in an empty 757 with full thrust!
 
MoreMiles
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 3:14 pm

beechnut wrote:

I'd love to be the fly on the wall when HQ in Montreal discusses the MAX fiasco. They were no doubt self-congratulating themselves for having dodged a bullet when the NEO was having engine issues. I'm sure the mood is rather more sombre now.

Beech


Almost all the NEO Engine issues were PW ones. AC being CFM operator would have likely gone with the LEAP Engines. So I don't think that was the issue. To AC, MAX made the most sense at that time. Especially with the B787 delay compensation... There was no way Airbus could have matched that.

What I will find interesting will be the A321LR aircraft arriving in the next few months at TS joining the 2 already in operation. These aircraft actually would give AC an opportunity for transatlantic flights from Eastern Canada. I do not see any reduction in Rouge fleet for the foreseeable future as the capacity agreements in place took a lot of negotiations.

With the MAX, the engines will always be fine. They are durable and well tested. I do hope they return to the skies in 2020.
 
Bhoy
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 3:27 pm

MoreMiles wrote:
I believe AC is unique. To maintain their MAX Pilot certification, AC has to get permission from Transport Canada for its pilots to fly the B737MAX as AC does not have any B737NG. I believe majority of the other carriers at least has B737NG for their pilots to fly to maintain their MAX Pilot certification. WN, AA, AC, CZ, DY, CA, are probably the most affected based on the number of 737MAX they have already delivered. It will interesting to see the breakdown of the numbers of 737MAX which are awaiting delivery. WN, AA, AC had quite a few planes painted and stored waiting delivery. So as these planes have not been delivered, they have to keep their older aircraft flying as well.

Icelandair also have no NGs to fall back in for their crews, they just have the dual rated 757/767s in the fleet otherwise.
 
A350
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 7:32 pm

I wonder if we will see D-Checks of old 737NGs and A320CEOs that would have been scrapped in normal times. However, I don‘t know how long before the technical end of life or certification expiry the economic lifetime normally ends.

Edit: typo
 
multimark
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 8:05 pm

An article from today's Washington Post on the Max effect on WN going forward. The dangers of being beholden to one a/c type.

https://www.washingtonpost.com/business ... roduction/
 
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PW100
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 9:13 pm

morrisond wrote:
mjoelnir wrote:
So Icelandair is benefiting from the grounding of the MAX. It would be interesting how you read that out of the statement that you quote.

the quote starts with: The third quarter results show improvements in the Company’s underlying operations despite the unprecedented impact of the suspension of the MAX aircraft,

Is "unprecedented impact" something difficult to understand? Yes Icelandair tries to make the best out of a bad situation.


No - I can read a financial statement - it looks like they are doing better with the grounding than they probably would without - look at the financial results.


Does that financial statement mention how much of that doing better is attributed to 1) Max unavailability and 2) Elimination/collapse of their direct competitor?
Immigration officer: "What's the purpose of your visit to the USA?" Spotter: "Shooting airliners with my Canon!"
 
morrisond
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 9:23 pm

PW100 wrote:
morrisond wrote:
mjoelnir wrote:
So Icelandair is benefiting from the grounding of the MAX. It would be interesting how you read that out of the statement that you quote.

the quote starts with: The third quarter results show improvements in the Company’s underlying operations despite the unprecedented impact of the suspension of the MAX aircraft,

Is "unprecedented impact" something difficult to understand? Yes Icelandair tries to make the best out of a bad situation.


No - I can read a financial statement - it looks like they are doing better with the grounding than they probably would without - look at the financial results.


Does that financial statement mention how much of that doing better is attributed to 1) Max unavailability and 2) Elimination/collapse of their direct competitor?


No of course not and as you can see up thread the CEO is swearing up and down they would do so much better with the MAX - of course he would - he is trying to Maximize his comp from Boeing.

But since you bring it up again - I'll provide some analysis of how ridiculous the claims are.
 
morrisond
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 9:26 pm

astuteman wrote:
morrisond wrote:
dc855 wrote:
Just based on the few quarterly statements I looked at - it's quite apparent that the reduction in Capacity has led to higher yields and airlines are doing fine.


So to get this straight, all of the airlines that ordered the MAX but don't operate it are now making more money because they're not operating the MAX.

Once the customer airlines wake up to the truth that you have discovered, then I expect to see wholesale cancellations and the termination of the programme.

Why buy the plane when operating it makes you worse off?

I have never feared for the MAX's RTS, but now I do.

Rgds


No - because of the effect of having 700 frames not flying and not all them being replaced one by one - capacity has effectively been reduced and airlines have been able to charge more and therefore make more money.

The airlines really haven't suffered that much from a financial standpoint however the poor pilots sure aren't getting as many flights so there earnings are down (As well as airline expenses).
 
IADCA
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 9:36 pm

morrisond wrote:
astuteman wrote:
morrisond wrote:


So to get this straight, all of the airlines that ordered the MAX but don't operate it are now making more money because they're not operating the MAX.

Once the customer airlines wake up to the truth that you have discovered, then I expect to see wholesale cancellations and the termination of the programme.

Why buy the plane when operating it makes you worse off?

I have never feared for the MAX's RTS, but now I do.

Rgds


No - because of the effect of having 700 frames not flying and not all them being replaced one by one - capacity has effectively been reduced and airlines have been able to charge more and therefore make more money.

The airlines really haven't suffered that much from a financial standpoint however the poor pilots sure aren't getting as many flights so there earnings are down (As well as airline expenses).


The "therefore" is not a correct syllogism. Revenue per ASM is likely higher, but if the lost incremental capacity would have been flown at a profit (even a lower profit), the overall profit would be higher with the frames flying. Restricting output raises fares, sure, but you have to raise fares quite a bit on a smaller base to cover for lost profits on the incremental capacity. If the incremental capacity is unprofitable or minimally profitable, the story changes somewhat, but that's not really the environment for most carriers these days.
 
morrisond
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 10:04 pm

SRQKEF wrote:
morrisond wrote:
dc855 wrote:

As I have already pointed out, it is the fall of WW which is pretty much the only reason that Icelandair is doing ok. I would expect everybody to understand that the fall of the main competitor is going to be massively helpful to any company. The MAX groundings have forced Icelandair to lease expensive planes and keep old expensive 757's in service that were supposed to be scrapped by now. The CEO of the company has repeatedly complained about how the MAX groundings have been hurting the bottom line. So what you are saying has very little factual basis.



Other than the actual financial statements that they can't lie about or Boeing giving them comp to offset those higher costs. Yes I can see that nothing factual in those two things....


https://www.visir.is/g/2019190809841

So you want actual financial statements? Translation:

"Without the effects of the MAX grounding, Icelandair's EBITA would be positive at around 50-70 million USD for the year. However, when the MAX grounding is taken into effect, the airline says it's negative at around 70-90 million USD."

Is a 120-160 million loss good for FI, or am I misreading their financial statement? ;)

Regards,
Sveinn


That article is totally wrong and is not an financial statement. If it was right that would basically be saying that each MAX would be contributing at least $40 Million of EBITDA every year after all fuel, crew and maintenance expenses - that is a ridiculous amount for something that only costs about $3-4 Million per year to lease. Can we all get in on that deal?

If you look at the actual Financial Statements from Icelandair from their Website (and BTW the Company does note they have already received Partial Compensation from Boeing and it's reflected in the results) you will see that they made $132 Million in EBITDA in Q3 vs $115 Million in EBITDA 2018 Q3 and Year to date they are at $143 Million EBITDA vs $111 Million last year.

The only way that article makes sense to me is the fact that Depreciation and Amortization ( a non cash expense and not related to the grounding) were significantly higher in the first nine months making there taxable income negative. If I recall Iceland has exceptionally high income taxes - so making your taxable income very small or negative isn't necessarily a bad thing. Basically it's good to keep buying new Aircraft.

They don't actually break out in the financial statements what the cost of the MAX grounding is and say so (as almost impossible to know as Revenue is constantly in flux and you don't know that to attribute it to - A Competitor leaving the market or your own reduction in capacity causing fares to go up).

They are doing great and having a good year.

See here https://www.icelandairgroup.is/servlet/ ... 4/item.pdf
 
morrisond
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 10:06 pm

IADCA wrote:
morrisond wrote:
astuteman wrote:

So to get this straight, all of the airlines that ordered the MAX but don't operate it are now making more money because they're not operating the MAX.

Once the customer airlines wake up to the truth that you have discovered, then I expect to see wholesale cancellations and the termination of the programme.

Why buy the plane when operating it makes you worse off?

I have never feared for the MAX's RTS, but now I do.

Rgds


No - because of the effect of having 700 frames not flying and not all them being replaced one by one - capacity has effectively been reduced and airlines have been able to charge more and therefore make more money.

The airlines really haven't suffered that much from a financial standpoint however the poor pilots sure aren't getting as many flights so there earnings are down (As well as airline expenses).


The "therefore" is not a correct syllogism. Revenue per ASM is likely higher, but if the lost incremental capacity would have been flown at a profit (even a lower profit), the overall profit would be higher with the frames flying. Restricting output raises fares, sure, but you have to raise fares quite a bit on a smaller base to cover for lost profits on the incremental capacity. If the incremental capacity is unprofitable or minimally profitable, the story changes somewhat, but that's not really the environment for most carriers these days.


That's what a lot of them are saying in their notes - paraphrasing here "to make up for lower capacity we reduced frequency or stopped flying on unprofitable routes"
 
IADCA
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 10:50 pm

morrisond wrote:
IADCA wrote:
morrisond wrote:

No - because of the effect of having 700 frames not flying and not all them being replaced one by one - capacity has effectively been reduced and airlines have been able to charge more and therefore make more money.

The airlines really haven't suffered that much from a financial standpoint however the poor pilots sure aren't getting as many flights so there earnings are down (As well as airline expenses).


The "therefore" is not a correct syllogism. Revenue per ASM is likely higher, but if the lost incremental capacity would have been flown at a profit (even a lower profit), the overall profit would be higher with the frames flying. Restricting output raises fares, sure, but you have to raise fares quite a bit on a smaller base to cover for lost profits on the incremental capacity. If the incremental capacity is unprofitable or minimally profitable, the story changes somewhat, but that's not really the environment for most carriers these days.


That's what a lot of them are saying in their notes - paraphrasing here "to make up for lower capacity we reduced frequency or stopped flying on unprofitable routes"


Which means it's not an improvement driven by fare improvement, it's just cutting unprofitable routes. I'm sure that's the case for some carriers, at least in part. But if carriers are operating 25% of their narrowbody fleets at a loss - as some carriers have or expected to have that proportion of MAXes in their fleets by now - then their issues are something far beyond the MAX.

I mean, at the most basic level, if these carriers are all making more money without the MAX than they would be with it, then the plane should have had zero orders, meaning basically everyone was running their businesses wrong.
 
morrisond
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 11:11 pm

IADCA wrote:
morrisond wrote:
IADCA wrote:

The "therefore" is not a correct syllogism. Revenue per ASM is likely higher, but if the lost incremental capacity would have been flown at a profit (even a lower profit), the overall profit would be higher with the frames flying. Restricting output raises fares, sure, but you have to raise fares quite a bit on a smaller base to cover for lost profits on the incremental capacity. If the incremental capacity is unprofitable or minimally profitable, the story changes somewhat, but that's not really the environment for most carriers these days.


That's what a lot of them are saying in their notes - paraphrasing here "to make up for lower capacity we reduced frequency or stopped flying on unprofitable routes"


Which means it's not an improvement driven by fare improvement, it's just cutting unprofitable routes. I'm sure that's the case for some carriers, at least in part. But if carriers are operating 25% of their narrowbody fleets at a loss - as some carriers have or expected to have that proportion of MAXes in their fleets by now - then their issues are something far beyond the MAX.

I mean, at the most basic level, if these carriers are all making more money without the MAX than they would be with it, then the plane should have had zero orders, meaning basically everyone was running their businesses wrong.


Or it's an indication that there is over capacity in the industry. I don't recall anyone not being able to find the capacity they wanted to replace the MAX.
 
MettP
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Re: Most vulnerable MAX operators.

Wed Dec 18, 2019 11:20 pm

Noone has mentioned Smartwings, they have 7 MAX stored and 32 on order, of which at least 15 are already manufactured and could have been delivered. Also OK are greatly affected, as they are a member of the Smartwings group. Especially in the summer, when QS fly many seasonal routes and charters, the puctuality suffers, as well as the quality of service, because they are forced to use their 15-20 years old 738s which should have already been retired.

OK even had to cancel some routes from PRG completely, for example LIS, OPO, BHX, focusing on the most profitable ones with the limited fleet. Now they are even leasing some (likely three) old A320s to prepare for the summer season. I would actually say that OK suffer much more than QS, the plan of the Smartwings group was to transfer some usable NGs to OK, but they just fly for them with QS liveries and crews and the brand equity of Czech Airlines suffers a lot. Also considering the punctuality issues and cancelled routes, it is really an unhappy period for the world’s 5th oldest airline...
 
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SRQKEF
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Re: Most vulnerable MAX operators.

Thu Dec 19, 2019 12:08 am

morrisond wrote:
SRQKEF wrote:
morrisond wrote:


Other than the actual financial statements that they can't lie about or Boeing giving them comp to offset those higher costs. Yes I can see that nothing factual in those two things....


https://www.visir.is/g/2019190809841

So you want actual financial statements? Translation:

"Without the effects of the MAX grounding, Icelandair's EBITA would be positive at around 50-70 million USD for the year. However, when the MAX grounding is taken into effect, the airline says it's negative at around 70-90 million USD."

Is a 120-160 million loss good for FI, or am I misreading their financial statement? ;)

Regards,
Sveinn


That article is totally wrong and is not an financial statement. If it was right that would basically be saying that each MAX would be contributing at least $40 Million of EBITDA every year after all fuel, crew and maintenance expenses - that is a ridiculous amount for something that only costs about $3-4 Million per year to lease. Can we all get in on that deal?

If you look at the actual Financial Statements from Icelandair from their Website (and BTW the Company does note they have already received Partial Compensation from Boeing and it's reflected in the results) you will see that they made $132 Million in EBITDA in Q3 vs $115 Million in EBITDA 2018 Q3 and Year to date they are at $143 Million EBITDA vs $111 Million last year.

The only way that article makes sense to me is the fact that Depreciation and Amortization ( a non cash expense and not related to the grounding) were significantly higher in the first nine months making there taxable income negative. If I recall Iceland has exceptionally high income taxes - so making your taxable income very small or negative isn't necessarily a bad thing. Basically it's good to keep buying new Aircraft.

They don't actually break out in the financial statements what the cost of the MAX grounding is and say so (as almost impossible to know as Revenue is constantly in flux and you don't know that to attribute it to - A Competitor leaving the market or your own reduction in capacity causing fares to go up).

They are doing great and having a good year.

See here https://www.icelandairgroup.is/servlet/ ... 4/item.pdf


That article is based off an announcement Icelandair themselves made, Visir is probably the most reputable source in Iceland.

You do realise though it's not only the leasing cost but the higher fuel cost and especially sky-high leasing costs on subpar wet-leased aircraft at very short notice? I can see your point about overcapacity, but FI is making money this year in big part due to WOW's demise and they would be making much more without their grounding. Plus, they have 6 MAXs already and should have 9 by now (there are 3 sitting at BFI). That's nowhere close to 40M USD per frame.

I understand you've already decided your theory is akin to facts, but I hope you realise me, along with the 3-4 other respected Icelandic members on here that have also replied to you and told you your theory isn't close to matching reality, know what we're talking about when it comes to FI.
Nothing compares to taking off in an empty 757 with full thrust!
 
morrisond
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Re: Most vulnerable MAX operators.

Thu Dec 19, 2019 2:28 am

SRQKEF wrote:
morrisond wrote:
SRQKEF wrote:

https://www.visir.is/g/2019190809841

So you want actual financial statements? Translation:

"Without the effects of the MAX grounding, Icelandair's EBITA would be positive at around 50-70 million USD for the year. However, when the MAX grounding is taken into effect, the airline says it's negative at around 70-90 million USD."

Is a 120-160 million loss good for FI, or am I misreading their financial statement? ;)

Regards,
Sveinn


That article is totally wrong and is not an financial statement. If it was right that would basically be saying that each MAX would be contributing at least $40 Million of EBITDA every year after all fuel, crew and maintenance expenses - that is a ridiculous amount for something that only costs about $3-4 Million per year to lease. Can we all get in on that deal?

If you look at the actual Financial Statements from Icelandair from their Website (and BTW the Company does note they have already received Partial Compensation from Boeing and it's reflected in the results) you will see that they made $132 Million in EBITDA in Q3 vs $115 Million in EBITDA 2018 Q3 and Year to date they are at $143 Million EBITDA vs $111 Million last year.

The only way that article makes sense to me is the fact that Depreciation and Amortization ( a non cash expense and not related to the grounding) were significantly higher in the first nine months making there taxable income negative. If I recall Iceland has exceptionally high income taxes - so making your taxable income very small or negative isn't necessarily a bad thing. Basically it's good to keep buying new Aircraft.

They don't actually break out in the financial statements what the cost of the MAX grounding is and say so (as almost impossible to know as Revenue is constantly in flux and you don't know that to attribute it to - A Competitor leaving the market or your own reduction in capacity causing fares to go up).

They are doing great and having a good year.

See here https://www.icelandairgroup.is/servlet/ ... 4/item.pdf


That article is based off an announcement Icelandair themselves made, Visir is probably the most reputable source in Iceland.

You do realise though it's not only the leasing cost but the higher fuel cost and especially sky-high leasing costs on subpar wet-leased aircraft at very short notice? I can see your point about overcapacity, but FI is making money this year in big part due to WOW's demise and they would be making much more without their grounding. Plus, they have 6 MAXs already and should have 9 by now (there are 3 sitting at BFI). That's nowhere close to 40M USD per frame.

I understand you've already decided your theory is akin to facts, but I hope you realise me, along with the 3-4 other respected Icelandic members on here that have also replied to you and told you your theory isn't close to matching reality, know what we're talking about when it comes to FI.


I was taking $20M per frame ( Going from Positive $70M EBITDA to -$90M EBITDA)at about 8 frames for the six months in the financial results and then annualizing that to get the $40M Per frame number. No one makes that much per frame.

Where is the negative EBITDA in the financial results?

Boeings payments(partial) are also included in the results offsetting some of those sky-high leasing costs and increased fuel burn. There is no way a MAX would be that much better to add $40 Million per frame to the EBITDA line every year, versus something else leased in.
 
IADCA
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Re: Most vulnerable MAX operators.

Thu Dec 19, 2019 2:42 am

morrisond wrote:
IADCA wrote:
morrisond wrote:

That's what a lot of them are saying in their notes - paraphrasing here "to make up for lower capacity we reduced frequency or stopped flying on unprofitable routes"


Which means it's not an improvement driven by fare improvement, it's just cutting unprofitable routes. I'm sure that's the case for some carriers, at least in part. But if carriers are operating 25% of their narrowbody fleets at a loss - as some carriers have or expected to have that proportion of MAXes in their fleets by now - then their issues are something far beyond the MAX.

I mean, at the most basic level, if these carriers are all making more money without the MAX than they would be with it, then the plane should have had zero orders, meaning basically everyone was running their businesses wrong.


Or it's an indication that there is over capacity in the industry. I don't recall anyone not being able to find the capacity they wanted to replace the MAX.


You're talking about two different types of capacity - seats on flights sold to customers versus short-term leases or second-hand planes. On the second one, of course there's a glut. That's what an insanely long period of artificially cheap credit creates.
 
astuteman
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Re: Most vulnerable MAX operators.

Thu Dec 19, 2019 6:41 am

IADCA wrote:
I mean, at the most basic level, if these carriers are all making more money without the MAX than they would be with it, then the plane should have had zero orders, meaning basically everyone was running their businesses wrong.


:checkmark:

There are a number of reasons why the theory doesn't stack up.

But if overcapacity is the issue that is suggested, Airlines would still make more money replacing older frames with more efficient MAXes even if they are cutting capacity. The MAX debacle will have had an adverse impact whichever way you look at it.
The MAX would not exist if this were not true.

If this capacity cut has increased RASM across the narrowbody fleet, then MAX operators are in bigger trouble than might be being suggested.
A320NEO operators are going to experiencing all that extra RASM without having their fleet cut - a substantial competitive advantage over their MAX operating counterparts at this moment in time.

Rgds
 
tomgle
Posts: 137
Joined: Tue Apr 03, 2018 4:20 pm

Re: Most vulnerable MAX operators.

Thu Dec 19, 2019 8:08 am

terefere wrote:
lots wrote:
I'd say LO has a lot of problems due to the grounding (5 grounded and few more not delivered). And being rather small player it's a large chunk of fleet not flying or subbed by ragtag leases - reliability is not there, it only takes one cancelled flight and close to two hundred people are swearing "never again", publicly voicing their displeasure and Your (not so good to begin with) public perception takes another hit. Also RR issues don't help.
Having said that I am curious how Boeing will compensate small but loyal customer.


If I’m not mistaken, by now LO should have 15 Maxes which would be close to 25% of their narrowbody fleet.


Not far off that I think. And the maxes are quite a bit larger than the remaining narrowbody fleet, which is primarily Embraers and several 737s.

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