ZK-NBT wrote:Zkpilot wrote:All this talk of getting rid of 77E and bringing forward 78J Tallis just nonsense.
1) Cheapest fuel in over a decade (fuel efficiency isn’t so important).
2) sale value - 77E are almost worthless to sell now.
3) purchase price of 78J - hundreds of millions which NZ won’t want to be spending anytime soon.
4) finance costs - 77E are fully depreciated etc they basically only cost their maintenance and very cheap leases now vs interest (was it 9%?) and/or lease costs on hundreds of millions.
Nope sorry but with everything that’s going on they aren’t going to bring them forward. They might drop a couple of planes that are surplus but they’re trying to conserve cash.
I’m no expert but you have to see the seriousness of the situation. I agree we don’t know yet what that is and anything we say is pure speculation, which I enjoy a bit of in this context.
1. Yes fuel is cheap, aircraft aren’t so having multiple aircraft parked for to long might not be an option so they may offload more than you think, they might not as well.
2. Benefits of mix of owning and leasing, parking some owned frames could be an option, as you say they won’t be worth anything. Trying to end leases early, it maybe more cost effective to keep flying them and park owned frames.
3. Simplify the fleet sooner, park entire 777 fleet and use the 781 to grow, yes as you say fuel is cheap but there are other savings. There may be financing they can get that will benefit the 781 coming earlier.
4. There will be benefits to keeping the 772s as well I agree If they are needed.
Conserving cash yep, but they also have to look at how to best move forward long term.
You say “you have to see the seriousness of the situation” then advocate spending over a billion dollars on new planes to replace ones that are still adequate for the job (especially in a low priced oil market).... Yes the 77E may go, but they won’t be bringing forward 78J orders (unless there is a rapid turnaround in events - ie treatment/vaccine for Covid19 and V shaped recovery).
Let me put it another way for you, the interest costs on a fleet that is worth $80m at most (probably more like $40m now) at 9% is $7.2m pa. The interest costs for a new fleet ($1B at the very least) is $90m pa. Then you have costs to train crew, extra spares, extra sims etc etc vs everything already set up.
Literally the only things you save money on are fuel and maintenance. In the current environment, fuel cost differences are negligible, while maintenance differences don’t come close to making up the $81m pa delta.
Only way I see the 78J coming in earlier is if Boeing trades in NZ’s 777 for them and offers a better deal.