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seat38a
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Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Thu Mar 05, 2020 11:07 pm

Well with air travel demand in a freefall due to the Corona Virus, I can't help but think that airlines must be secretly glad right now that the MAX is grounded. If the airlines that ordered the MAX had them right now, wouldn't they be in a bigger financial trouble if they had to make payments on those planes?

What do ya'll think? Do airlines like Southwest and Ryanair really still need the MAX right here right now? The ones who ordered the NEO are still going to have to take them will they not regardless of the negative travel situation?
 
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AirKevin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 12:49 am

seat38a wrote:
Do airlines like Southwest and Ryanair really still need the MAX right here right now?

Wasn't Southwest planning to use them for their Hawaii flights? If so, I'm guessing they would have preferred to use them.
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An767
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 1:45 am

Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

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flee
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 1:54 am

I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.
 
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par13del
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 2:01 am

flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.

So the compensation has a formula of how many flights per day with load factor, what about fares, if the virus causes a drop in fares does Boeing also get to use that in their negotiations?
 
seat38a
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 2:11 am

An767 wrote:
Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

An767


Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.
 
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Coronado990
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 2:54 am

Well, at least they will be the most sterile aircraft in the sky once they start flying again.
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DeltaB717
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 3:24 am

seat38a wrote:
An767 wrote:
Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

An767


Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.


Because it's actually a case of flying older, less efficient half-empty planes and having the newer, more efficient, cheaper to operate planes parked, versus parking your older planes and having lower operating costs for the planes you are flying.
 
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PacoMartin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 7:06 am

flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.


Huh! You really don't think this is a factor in the compensation.

American had 24 of the Boeing 737 Max planes at the time of the grounding last year and 76 on order. American estimates the grounding cost it $540 million in pretax income last year.

Personally, I think AA is overstating it's loss to begin with, I doub thtat they will deduct much for coronovirus. They only earned $504 million in 3rd qtr of 2019. I don't see how they could lose that much money with 24 jets.
 
Virtual737
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 7:22 am

DeltaB717 wrote:
Because it's actually a case of flying older, less efficient half-empty planes and having the newer, more efficient, cheaper to operate planes parked, versus parking your older planes and having lower operating costs for the planes you are flying.


I would imagine it's a lot more complex than that. The outgoing planes would have an expected resale value (assuming non-lease) and that value would also be down (potentially to pretty much zero right now). Even if that wasn't a factor, the reduced fuel burn savings would need to match the increased payments on the newer aircraft for the airlines to be NET zero.

I'm sure a bean counter could produce figures that supported either scenario.
 
Strato2
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 7:26 am

flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.


Why would it?
 
Scotron12
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 8:01 am

Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


One other factor to consider, with airlines dealing with the Wuhan virus, is the effort airlines would expend assuaging the flying public the plane is safe.

And of course, only those airlines that fly the MAX.
 
seat38a
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 12:09 pm

Strato2 wrote:
flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.


Why would it?


Not sure how it is now, but when the Prius first came out, the cost differential would have taken something like close to 10 years to recoup even during the high gas prices just before the great recession. There was a slogan back then along the lines of $5000.00 + interest, if financing, buys A LOT of gas or something like that. I'm just not sure how long fuel savings on a MAX vs Next Gen would take to recoup the added cost of paying for a brand new plane.
 
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 12:10 pm

Strato2 wrote:
flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.


Why would it?


There are lots of ways to determine appropriate compensation for MAX groundings and delivery delays - and very little of that analysis is likely to make its way into the public domain. However, one frame of reference is foregone revenue (and the marginal or average profit margin that goes with it). If AA (to use an example) parks 50 midsize mainline aircraft in the middle of COVID-19 cutbacks it's hard to argue it really needed MAX capacity.
 
seat38a
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 12:13 pm

AirKevin wrote:
seat38a wrote:
Do airlines like Southwest and Ryanair really still need the MAX right here right now?

Wasn't Southwest planning to use them for their Hawaii flights? If so, I'm guessing they would have preferred to use them.


Their CEO has already said that drop in demand feels like it was after 911. The MAX is probably the last thing he wants right now.
 
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ojjunior
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 3:35 pm

Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.

And yes, Boeing is very happy with all of it but will obviously never assume.
 
FGITD
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 4:46 pm

ojjunior wrote:
Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.

And yes, Boeing is very happy with all of it but will obviously never assume.



Not sure what marketing angle anyone could take with that. You have to either address that it's sterile because it was deemed unsafe to fly for so long, or basically admit that all your other aircraft are infected. Not to mention, as soon as it carries one load of pax, the chances of the virus having been carried aboard is as good as any other aircraft.

I think it's also a bit shortsighted to think Boeing would be happy. Remember, they still make their money by selling airplanes. Less travel demand= less aircraft demand. A bit like thinking that wrecking your car is a great way to keep its odometer low.
 
DenverTed
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Fri Mar 06, 2020 5:26 pm

It seems like this summer, Boeing could provide a leased aircraft for cheap to replace any delayed new aircraft, which may have not been the case last summer.
 
S0Y
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 4:38 am

Probably good for Boeing. Gives them leverage in the compensation bargaining. Hard for airlines to claim MAX availability is costing them if half the fleet is idle.
 
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PacoMartin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 5:45 am

seat38a wrote:
Not sure how it is now, but when the Prius first came out, the cost differential would have taken something like close to 10 years to recoup even during the high gas prices just before the great recession.


Well that was probably true in 1997, but today the lowest level Prius hybrid engine pays back in less than 3 years.

seat38a wrote:
I'm just not sure how long fuel savings on a MAX vs Next Gen would take to recoup the added cost of paying for a brand new plane.


It is difficult to say. American Airlines has a much younger and more fuel-efficient fleet than United or Delta, yet United and Delta are far more profitable than American.

Airplanes are different than personal automobiles because we largely repair automobiles when they break, whereas airplanes have rigorous maintenance programs scheduled.
 
9Patch
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 6:02 am

ojjunior wrote:
Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.

And yes, Boeing is very happy with all of it but will obviously never assume.

That 'advantage' will be gone after ONE flight.
 
chrisair
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 6:27 am

flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.


Maybe Boeing created this virus to help reduce the compensation payments? Of all the conspiracy theories out there, this makes the most sense you know. :lol:
 
ericm2031
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 6:37 am

The more financially stable airlines would probably prefer to have the MAX's they ordered on property right now. For the more leveraged or very small airlines, they might be the ones a little glad they don't have the added financial burden of paying off a new plane not being flown full right now. Oil is also pretty low at the moment, so that is canceling out some of the fuel burn advantage of the MAX...but there are the costs of extending the NG's to factor in.
 
Busyboy2
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 7:38 am

[twoid][/twoid]
seat38a wrote:
An767 wrote:
Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

An767


Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.


The cost of aircraft acquisition is pretty cheap actually. On a per flight basis, the cost of ownership is only $2000-3000 for a 737 max 8. The fuel is more than the plane so any savings is more than helpful. I'll give you more detailed numbers later if you want. It's way late in most parts of the United States so time for bed.
 
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 8:18 am

There are a couple of pieces to consider here, many of which have been mentioned. Big expansion plans?? Then yes not having to push plans on routes that have a narrow business case will be an advantage.
Standard routes?! At what point do they become a loss?! If you plane has lower costs then you have a lower cost point, you can drop the fare or deal with fewer passengers.
Feeder routes. You start cancelling your feeder routes, or they are uncompetitive. Then your long haul product will suffer too.
You have planes bearing a big D check, or perhaps have to be checked for the pickle forks and then you have more fleet issues.


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homerarity
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 8:33 am

Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.

And yes, Boeing is very happy with all of it but will obviously never assume.

Thakns :)
 
cedarjet
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 9:54 am

Not sure it was a problem even before coronavirus, as someone right here on a.net pointed out last year, a slight contraction in inventory is a revenue planner’s dream
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Sokes
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 1:31 pm

cedarjet wrote:
Not sure it was a problem even before coronavirus, as someone right here on a.net pointed out last year, a slight contraction in inventory is a revenue planner’s dream


Excellent point.

Is the Max meant for capacity increase or as a replacement?

If it's meant for replacement:
Can the old plane fly all desired routes?
Is a D-check due?
Does the old plane approach end of life?
How high is the operating cost of the old plane?
Is the Max supposed to replace a plane with fewer seats?

I believe the answer to your question is "it depends".

Other question:
Are airlines who didn't order the Max glad about the delay?
Why can't the world be a little bit more autistic?
 
SWADawg
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 5:03 pm

seat38a wrote:
AirKevin wrote:
seat38a wrote:
Do airlines like Southwest and Ryanair really still need the MAX right here right now?

Wasn't Southwest planning to use them for their Hawaii flights? If so, I'm guessing they would have preferred to use them.


Their CEO has already said that drop in demand feels like it was after 911. The MAX is probably the last thing he wants right now.


I can assure you that Gary Kelly wants the MAX back. Just because Covid 19 is causing future bookings to drop doesn’t change anything from Southwest’s desire to get these planes back in the air. Remember, WN has at least 30-40 -700’s that are coming up on heavy maintenance checks that WN had been planning to retire from the fleet prior to the grounding. With the MAX back in service, WN would have much more fleet flexibility to park older -700’s and deploy new MAX-8’s in their place.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 5:12 pm

SWADawg wrote:
seat38a wrote:
AirKevin wrote:
Wasn't Southwest planning to use them for their Hawaii flights? If so, I'm guessing they would have preferred to use them.


Their CEO has already said that drop in demand feels like it was after 911. The MAX is probably the last thing he wants right now.


I can assure you that Gary Kelly wants the MAX back. Just because Covid 19 is causing future bookings to drop doesn’t change anything from Southwest’s desire to get these planes back in the air. Remember, WN has at least 30-40 -700’s that are coming up on heavy maintenance checks that WN had been planning to retire from the fleet prior to the grounding. With the MAX back in service, WN would have much more fleet flexibility to park older -700’s and deploy new MAX-8’s in their place.
I think they might just park the older things and not take new maxes, due to extreme drop in demand from corona virus.

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F9Animal
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 5:33 pm

I think it brings temporary relief to Boeing and the airlines actually. We all said a 9/11 would never happen again, but this is virus is impacting pretty hard.

I heard oil is diving pretty big too, so that may help a little as well.
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 5:46 pm

I think they might not want to count chickens. There's a decent chance this is going to shut down some regulatory agencies necessary for the re-cert process, meaning they'll still be short planes when the recovery begins.
 
mig17
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sat Mar 07, 2020 6:15 pm

"Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?"
Maybe some are not having paid for useless capacity in those difficult times.
But overall that is bad for everyone. Demand of airtravel is in freefall, some airline will not pull through and some will take years to get back up.
And it can be the coup de grâce to the MAX. Since demand for narrowbody is dropping, large cancellation over the max grounding are more likely now.
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seat38a
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 12:37 am

F9Animal wrote:
I think it brings temporary relief to Boeing and the airlines actually. We all said a 9/11 would never happen again, but this is virus is impacting pretty hard.

I heard oil is diving pretty big too, so that may help a little as well.


True. Remember when oil was high how it was imperative those 767's were retired ASAP with 787's. Well those 767's are still flying strong right now.
 
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 1:58 am

par13del wrote:
flee wrote:
I think Boeing is secretly glad that this is happening - it will help to reduce compensation payments to airlines.

So the compensation has a formula of how many flights per day with load factor, what about fares, if the virus causes a drop in fares does Boeing also get to use that in their negotiations?

the virus won't last forever and the immunization and treatment For the virus is in work. as we speak. If? as it was predicted? The virus might abate as warm weather arrives? then so might the restrictions on ir travel. So? The Max Airplanes will be a welcome relief. As the only company who might not like it? Would be Airbus..
And then Boeing could get back to REAL Business! As they need to get on with building the 797 and derived airplane models.
 
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zkojq
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 2:30 am

seat38a wrote:
An767 wrote:
Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

An767


Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.


You do realise that airlines still have to pay the leases on the MAXs they've taken delivery of, right? Being happy about paying the leases on dozens of planes you cannot earn revenue with makes no sense whatsoever.

Also, to say that Boeing is happy about this is also laughable. While short haul demand might be reducing, long haul demand is in freefall and Boeing needs that sweet, sweet 787 cashflow more than ever.

cedarjet wrote:
Not sure it was a problem even before coronavirus, as someone right here on a.net pointed out last year, a slight contraction in inventory is a revenue planner’s dream


A contraction in capacity from one airline who is constrained, is a dream for it's rival airline who isn't constrained and can add capacity to take market share.
First to fly the 787-9
 
LCDFlight
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 3:27 am

I think this thread is right on. Airlines arguably benefitted from this coordinated reduction in capacity (something airlines are legally prohibited from arranging among each other).

Then, the Coronavirus situation that is biting a huge chunk out of 2020’s peak season in the US. Yes, US airlines WN and AA are undeniably glad about this, and it affects ALL airlines in the market positively. Others such as Icelandair (?) May in fact have their business so disrupted that it is a negative.
 
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aemoreira1981
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 3:42 am

Depends on where, really. I doubt Air Canada and Icelandair are too happy, more so Air Canada, as they need to replace very old fleets...Air Canada has 30-year old A320s still flying that will need another heavy check that likely wasn't planned, and Icelandair has 757s flying nearly that old. By this time, I would believe that the A320 would have been completely gone from the mainline Air Canada fleet by now if not for the MAX grounding.
 
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crimsonchin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 10:07 am

ojjunior wrote:
Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.


Yes, I can't wait to see how that amazing marketing idea would pan out. "(Re)Introducing the MAX! It was grounded due to potentially causing the deaths of 300+ people, but as a result of said grounding, no icky passengers have been in this plane, and thus they are cleaner than any other plane flying!". It will definitely get passengers running to the MAX for sure.
 
oschkosch
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 10:52 am

crimsonchin wrote:
ojjunior wrote:
Coronado990 wrote:
Well, at least they will be the most sterile aircraft in the sky once they start flying again.


Excellent point. Haven't thought about that.
If MAX returns flying again soon, airlines could explore it in their Marketing actions. I'm pretty sure many will take this into account.


Yes, I can't wait to see how that amazing marketing idea would pan out. "(Re)Introducing the MAX! It was grounded due to potentially causing the deaths of 300+ people, but as a result of said grounding, no icky passengers have been in this plane, and thus they are cleaner than any other plane flying!". It will definitely get passengers running to the MAX for sure.



Yes! This screams for new marketing claims to be used.

Introducing the 737 max, the most sterile plane ever flown.
Boeing, making a clean plane even cleaner.
Enjoy a maximum sterile atmosphere on our new 737 max.
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seat38a
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 11:25 am

zkojq wrote:
seat38a wrote:
An767 wrote:
Maybe they would rather have them for the economic benefits of lower fuel burn etc, as apposed to early gen jets that cost more. Who knows

An767


Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.


You do realise that airlines still have to pay the leases on the MAXs they've taken delivery of, right? Being happy about paying the leases on dozens of planes you cannot earn revenue with makes no sense whatsoever.

Also, to say that Boeing is happy about this is also laughable. While short haul demand might be reducing, long haul demand is in freefall and Boeing needs that sweet, sweet 787 cashflow more than ever.

cedarjet wrote:
Not sure it was a problem even before coronavirus, as someone right here on a.net pointed out last year, a slight contraction in inventory is a revenue planner’s dream


A contraction in capacity from one airline who is constrained, is a dream for it's rival airline who isn't constrained and can add capacity to take market share.


Really?? Your telling me that Boeing or Airbus builds a lemon, and the airlines still have to pay for it while it is grounded?
 
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PacoMartin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 11:52 am

Yahoo business agrees with the hypothesis in an article devoid of any hard numbers.

Natasha Frost on March 6, 2020 wrote:
https://qz.com/1813657/coronavirus-redu ... yptr=yahoo
Coronavirus means airlines don’t need those grounded Boeing 737 Maxes after all

Two months ago, United Airlines was in a bit of a pickle. The US carrier, which was forced to cancel dozens of daily flights in the wake of the Boeing 737 Max crisis, was looking ahead to months of variously swapping out planes, canceling flights, or finding larger aircraft to work around the shortage of planes.

Today, with the new coronavirus wreaking havoc on the world’s travel plans, the landscape is very different: Consumer demand for travel has plummeted. United has therefore announced plans to cut domestic flights by 10% in April, and international capacity by 20%, with the cuts potentially in place through May. Other US carriers are likely to follow suit.


Before the crisis, says Seth Kaplan, an aviation analyst at Kaplan Research, “many airlines were missing airplanes, relative to what they expected to have, and they weren’t able to fly the schedules they expected to.” Some leased aircrafts; others made do with their less efficient models. With summer on the horizon—peak season for travel—many carriers had already anticipated being squeezed or having to cancel flights.

Now, he says, the opposite is true. “Airlines are finding themselves with too many airplanes, relative to consumer demand.”

No airline would have chosen what happened with the Max, of course, both in terms of the tragedies themselves and the extremely expensive grounding that has followed. But given the reduction in consumer demand, some carriers may see the situation as a silver lining—albeit a slim one. “If you’re United, it’s not such a bad thing that the Maxes haven’t yet been delivered,” says Kaplan. “It’s kind of a blessing in disguise not to be paying for those additional five, 10, 20, 30 airplanes, depending on the airline.” In addition to its 14 grounded Maxes, United had more than 100 on order.

More generally, the 1,000 or so planes missing from the world’s skies have left the industry smaller than it would have been. Having big expensive aircrafts just sitting around can be hugely costly for airlines, who are under pressure to use these valuable assets as much as they can to make them pay their way.

But no one knows how long this state of affairs will remain the case. “It’s all still very messy,” says Kaplan. And though airlines don’t need as many airplanes today, the situation may be totally different in just a few short months. Either way, for the first time in a while, Boeing isn’t the greatest problem plaguing the industry.
 
AEROFAN
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 12:32 pm

The hysteria will soon abate and travel will bounce back.
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DfwRevolution
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 2:29 pm

No, I don't think anyone at the airlines or OEMs are secretly glad about Coronavirus and falling travel demand. Business executives universally prefer certainty over serendipity. Big over-performance or under-perfromance versus plan betrays the confidence that they are actually in control of the business operations. A drastic deviation in the capital investment plan (e.g. MAX deliveries postponed) and then an even more drastic in travel patterns (everyone staying home because of Coronavirus) makes them look less like leaders and more like a windsock flapping in the breeze of events.
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IADCA
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 2:33 pm

seat38a wrote:

Really?? Your telling me that Boeing or Airbus builds a lemon, and the airlines still have to pay for it while it is grounded?


It would depend on the text of each leasing agreement, but I don't see any reason that's an unlikely outcome. Of the two parties to that agreement, one of them or the other has to accept that particular risk and who ends up with it is a matter of negotiation.
 
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zkojq
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 3:21 pm

seat38a wrote:
zkojq wrote:
seat38a wrote:

Vs saving money by not having to pay for planes that are flying half empty? Not sure how reduced fuel burn would compensate for empty planes that come with payments.


You do realise that airlines still have to pay the leases on the MAXs they've taken delivery of, right? Being happy about paying the leases on dozens of planes you cannot earn revenue with makes no sense whatsoever.

Also, to say that Boeing is happy about this is also laughable. While short haul demand might be reducing, long haul demand is in freefall and Boeing needs that sweet, sweet 787 cashflow more than ever.

cedarjet wrote:
Not sure it was a problem even before coronavirus, as someone right here on a.net pointed out last year, a slight contraction in inventory is a revenue planner’s dream


A contraction in capacity from one airline who is constrained, is a dream for it's rival airline who isn't constrained and can add capacity to take market share.


Really?? Your telling me that Boeing or Airbus builds a lemon, and the airlines still have to pay for it while it is grounded?


Correct. Lease payments are due regardless of whether the plane spent the previous month doing six sectors a day or gathering dust in VCV/OSL/MAN/NAN/EDI. It was enough to bring Air Italy under. Maybe Norwegian too - let's hope not.

And of course if your MAXs are grounded and you want to maintain your previous flying schedule, you'll have to lease/buy additional capacity.
First to fly the 787-9
 
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Revelation
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 5:33 pm

Indeed, I can't think of a single circumstance where the major hit airlines are taking by terrible load factors across their entire fleet is made up for by being able to put less hours on the older airplanes being used to fill in for the grounded MAXes. Airlines make money from butts in seats, there's no way the CV scare is a benefit for them.
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The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
olle
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 5:58 pm

But in this case I would argue that the leasing company is not delivering the product, the airplane.

I I do a leasing for acar and the leasing company cannot deliver I would not pay.

If I take a bank loan for purchasing a car, it would be my problem.
 
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AirKevin
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 8:38 pm

olle wrote:
But in this case I would argue that the leasing company is not delivering the product, the airplane.

I I do a leasing for acar and the leasing company cannot deliver I would not pay.

If I take a bank loan for purchasing a car, it would be my problem.

Except for the fact that the airline already has the plane. Whether the airline can use it or not would be out of the leasing company's hands.
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ukoverlander
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Re: Airlines Secretly Glad For the MAX Delay Now With Travel In Freefall?

Sun Mar 08, 2020 9:25 pm

seat38a wrote:
Well with air travel demand in a freefall due to the Corona Virus, I can't help but think that airlines must be secretly glad right now that the MAX is grounded. If the airlines that ordered the MAX had them right now, wouldn't they be in a bigger financial trouble if they had to make payments on those planes?

What do ya'll think? Do airlines like Southwest and Ryanair really still need the MAX right here right now? The ones who ordered the NEO are still going to have to take them will they not regardless of the negative travel situation?


Sounds like a pretty desperate search for a silver lining to me!

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