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Exeiowa
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Fri May 22, 2020 7:30 pm

There problem might be as we open up the middle east simply gets bypassed as smaller planes with sufficient range take what passengers there are.
 
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PepeTheFrog
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Fri May 22, 2020 7:47 pm

Opus99 wrote:
Well...

STC says the 380 is staying in and has a place in Emirates. He expects to be flying his full fleet in 2022. He says only retirements happening are the 3 380s going out and the 9 777s also going out this year. He says this hub model has worked for 35 years and they wish to continue it.

https://www.ft.com/content/3f13edfe-e7a ... f2eb0a36f4


That should put an end to the rumour.
Good moaning!
 
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Fri May 22, 2020 10:33 pm

Exeiowa wrote:
There problem might be as we open up the middle east simply gets bypassed as smaller planes with sufficient range take what passengers there are.

I've noted almost my whole time on a.net is the wsy to defeat the ME3 is to bypass them. For a short time, slots in Europe should be available. So short term, there will be more competition.

However, I do not expect most airlines to react fast enough. Too much of Africa and India is not yet a mature enough market for Africa to Asia nor India to Europe. There is still a need for hubs.

Now India is building new airport capacity, but the high fuel taxes reduce the competitiveness for long flights.

The larger concern is the 3rd runway at IST opening at the end of June. That will allow a previously constrained competitor to grow quickly. Istanbul has high O&D traffic. It also reduces costs (less taxi time).

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peterinlisbon
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Fri May 22, 2020 11:23 pm

I think Avatar Airlines could take advantage of this situation and change it's business plan from a 747-800 fleet to the A380. They could get 100 of them cheap and create a hub and spoke network based in Oklahoma.
 
emiratesdriver
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 1:53 am

Revelation,

You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.
Revelation wrote:
Airlinerdude wrote:
I don't think this necessarily supports the justification of A380s being quick to return, but rather that if there's a business model which might be favourable to have a quick rebound when international air travel returns, it could be the one EK has adopted.

Thanks for your well thought out reply.

There is so much unknown.

I think the one thing people say consistently is A380 needs to be close to full to make money. I also think 77W is of the same generation of development more or less as A380 and have read reports from leeham and others saying its per seat advantage over A380 is slim to none.

So EK will have some real issues navigating the near to mid term future. They've been taking new 77Ws up till a few months ago and are still taking new A380s so are still paying a lot and neither deliver state of the art performance and both need solid load factors to make money. 77W is somewhat advantaged in it has lower trip costs and one of the articles in this thread says EK will use it the most during the recovery. Yet it will be facing competitors who fly 787 and A350, and customers who will want to avoid transferring at a hub because that involves a lot more risk of exposure to COVID-19.

No one knows what will be next. Maybe we'll have a workable vaccine soon and a nice linear or super-linear return to high levels of air travel, or maybe we will have a 2nd wave or 3rd wave of COVID-19, or maybe it will mutate or something else will emerge from the now open wet markets and we'll be dealing with COVID-20 or COVID-21.
 
DUSZRH
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 2:59 am

PepeTheFrog wrote:
Opus99 wrote:
Well...

STC says the 380 is staying in and has a place in Emirates. He expects to be flying his full fleet in 2022. He says only retirements happening are the 3 380s going out and the 9 777s also going out this year. He says this hub model has worked for 35 years and they wish to continue it.

https://www.ft.com/content/3f13edfe-e7a ... f2eb0a36f4


That should put an end to the rumour.


I wouldn't be so sure. If he says 40% of the 380s will go, resale market will absolutely crash. Basically, EK is the market. Then it would make things worse in the negotiations with the lessors.

We will see, what will happen. In my eyes, intercontinental demand will remain minuscule for the rest of the year. Also there is a way longer lead-time for bookings. So it will take some time after trust is regained, so that travel will reappear.
 
Vladex
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 1:27 pm

You know that you have serious case of A380 derangement syndrome when you are arguing with Tim, Clarke about what Tim Clarke is saying and when you argue that Emirates should not be Emirates anymore in order to be Emirates
 
Vladex
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 1:36 pm

emiratesdriver wrote:
You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.


Yet Emirates is number 1 air cargo operator in the world and air cargo was growing very little over a decade compared to consistent passenger growth.
https://www.icao.int/annual-report-2018 ... -2018.aspx
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Vladex
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 2:46 pm

JayinKitsap wrote:
Up thread there were comments that us A nutters know nothing, we should observe the professional managers at the airlines. Well the most profitable airlines have tended to be the all 737 or all A320 airlines running a tightly managed network - Ryanair, WN, Alaska, and the like. Then the full market majors like LH, SIA, KLM, BA, AA, United, and Delta that have a full spectrum of planes ranging from RJ's to VLA's. Delta has no need for VLA's because their network does not need both the range and capacity of a VLA, use of 787 and A350's as their largest plane makes economic success.

In this EK is almost the only example that is exclusively the largest planes on the market. It almost ensures that load factor's will be squirrely, because many destinations cannot fill a 777, much less an A380. It makes lots of economic sense to down gauge the plane to fit the typical loads. Yield is always best if all seats can be sold, as those last seats can be sold at a profit vs loss leader.

The first step for EK to rationalize their fleet is to reduce the A380 count and add in the 787 and A350's for the smaller markets. So some A380s (about 1/3) will be out to the desert, a third into short term storage, and a third expected to be flying in the next few months.


Delta has 10 hubs , Emirates has only 1 and they all have to make up with they have. Delta business model is based on monopoly of its hubs while Emirates business model is based on pleasing outside passengers. Based on these simple facts Emirates has to get the most passengers with the least amount of airplanes while Delta has to get the most number of airplanes to fill its hubs and to prevent any outside competitor. Emirates has a problem of filling its airplanes and Delta has problems with uniformity, identity, renewing fleet and a big problem of dealing with downturns. They can't be more different as far as airlines go and to say that they should have the same airplanes probably demeans both and definitely Emirates. I would take Emirates model myself as its far better to facing downturns as no one can force it to fly on empty and they have some identity.
 
fcogafa
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 3:46 pm

STC has said a lot of things opposite to what has actually happened so you can't take statements at face value
 
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Revelation
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 3:59 pm

emiratesdriver wrote:
Revelation,

You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.

Fair enough, I did not give 77W credit for its cargo capabilities. As someone joked, you may fly in comfort on the A380, but your bag may end up on the next 777 flight.

We should also consider that many competitors will have 787 and A350, both of which are quite good at cargo. EK doesn't have a great fleet when it comes to down sizing. STC's turn around on the A380 came way too late, IMO. No one could predict the pandemic, but EK was already heading in the wrong direction.
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brilondon
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 4:58 pm

Scotron12 wrote:
atlflyer wrote:
Demand will eventually return. Even in the epicenter of the coronavirus in NYC, people are getting out again and phase I of the reopening hasn’t even begun yet here. People are beginning to think about summer travel plans and Emirates will eventually need the 777-9 because they have ONE very congested hub.


Key word is eventually...but not right now. Recent remarks by airline heads are recovery around 2023/24...IAGs Walsh even saying could be 2026 before traffic is back to 2019 levels.

Even if the traffic numbers reach 2019 levels, the way people want to fly may change. The 787 and a350 have such great range and economics, the VLA days seem numbered. The 747 will be around in a cargo capacity as it was originally intended but the A380 has seen its day.
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Sokes
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 5:03 pm

Revelation wrote:
Fair enough, I did not give 77W credit for its cargo capabilities. As someone joked, you may fly in comfort on the A380, but your bag may end up on the next 777 flight.

Did it ever happen?
Would it be possible to convert the main deck to cargo and keep the upper deck for passengers?
Why can't the world be a little bit more autistic?
 
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Revelation
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 5:06 pm

Revelation wrote:
emiratesdriver wrote:
Revelation,

You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.

Fair enough, I did not give 77W credit for its cargo capabilities. As someone joked, you may fly in comfort on the A380, but your bag may end up on the next 777 flight.

We should also consider that many competitors will have 787 and A350, both of which are quite good at cargo. EK doesn't have a great fleet when it comes to down sizing. STC's turn around on the A380 came way too late, IMO. No one could predict the pandemic, but EK was already heading in the wrong direction.

Another interesting point from https://www.forbes.com/sites/michaelgol ... dc7d5c489c

A third major issue with the long-term prospects of the A380 are its costs of operation, typically among the highest in the airline industry. One report indicated that the A380 cost between $26-29,000 per hour to operate, even higher than the next highest, the aging 747 at $24,000-$27,000, and far higher than the Boeing 777, at about $7400 per hour. Costs include depreciation, interest, fees and charges, insurance crew cost, fuel cost, and engine and airframe maintenance.

If these numbers are anywhere close to accurate, it's easy to see why A380 is so disadvantaged.

Sokes wrote:
Revelation wrote:
Fair enough, I did not give 77W credit for its cargo capabilities. As someone joked, you may fly in comfort on the A380, but your bag may end up on the next 777 flight.

Did it ever happen?
Would it be possible to convert the main deck to cargo and keep the upper deck for passengers?

Anything is possible with enough money, but then the issue becomes: does this aircraft make money? Basically you would have to strengthen the main deck to hold cargo other than ecommerce packages, make a main deck cargo door, add lots of fire suppression equipment, and leave enough staircase space for use at airports without upper deck bridges, and maybe even an elevator for handicapped people. It still has disadvantages of a heavy airframe, two different kinds of aging engines, high cost expectations from pilots and crew, high landing fees, etc. You'd have to find city-pairs that could generate a main deck full of cargo and an upper deck full of pax at the same time, and could turn both around in a fairly quick amount of time, because you won't want such an expensive asset sitting too long. You'd pretty quickly ask yourself if you wouldn't be better off finding an A330ceo to move the pax and a 744F to move the freight and be ahead financially. Both are better at what they do than the hybrid you suggest.
Last edited by Revelation on Sat May 23, 2020 5:16 pm, edited 2 times in total.
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TropicalSky
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 5:12 pm

That's a huge difference in cost ($26k vs $7400) between the A380 & 77W.... that's eye opening


Revelation wrote:
Revelation wrote:
emiratesdriver wrote:
Revelation,

You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.

Fair enough, I did not give 77W credit for its cargo capabilities. As someone joked, you may fly in comfort on the A380, but your bag may end up on the next 777 flight.

We should also consider that many competitors will have 787 and A350, both of which are quite good at cargo. EK doesn't have a great fleet when it comes to down sizing. STC's turn around on the A380 came way too late, IMO. No one could predict the pandemic, but EK was already heading in the wrong direction.

Another interesting point from https://www.forbes.com/sites/michaelgol ... dc7d5c489c

A third major issue with the long-term prospects of the A380 are its costs of operation, typically among the highest in the airline industry. One report indicated that the A380 cost between $26-29,000 per hour to operate, even higher than the next highest, the aging 747 at $24,000-$27,000, and far higher than the Boeing 777, at about $7400 per hour. Costs include depreciation, interest, fees and charges, insurance crew cost, fuel cost, and engine and airframe maintenance.

If these numbers are anywhere close to accurate, it's easy to see why A380 is so disadvantaged.
 
mcg
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 5:26 pm

DUSZRH wrote:
PepeTheFrog wrote:
Opus99 wrote:
Well...

STC says the 380 is staying in and has a place in Emirates. He expects to be flying his full fleet in 2022. He says only retirements happening are the 3 380s going out and the 9 777s also going out this year. He says this hub model has worked for 35 years and they wish to continue it.

https://www.ft.com/content/3f13edfe-e7a ... f2eb0a36f4


That should put an end to the rumour.


I wouldn't be so sure. If he says 40% of the 380s will go, resale market will absolutely crash. Basically, EK is the market. Then it would make things worse in the negotiations with the lessors.

We will see, what will happen. In my eyes, intercontinental demand will remain minuscule for the rest of the year. Also there is a way longer lead-time for bookings. So it will take some time after trust is regained, so that travel will reappear.


There is no meaningful resale market for A380's.
 
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Revelation
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 5:47 pm

mcg wrote:
There is no meaningful resale market for A380's.

Same Forbes article I just linked says:

The most recent published list price for the Airbus A380 is $445 million. However, a recent estimate by Valerie Bershova, valuations analyst at Ascend by Cirium, claims actual market value of an A380 now ranges between $77 million for a 2005-build “half-life” aircraft and $276 million for a new 2019-build aircraft in “full-life” condition. And of course, all this was written before the coronavirus ravaged A380 operator Korean Air, reportedly grounding 100 of 145 planes and threatening bankruptcy.

A pair of early production A380s have already been “parted out”, or cannibalized, bringing about $80 million per plane. By 2030, she projects the part-out value of an A380 dropping to just $35 million.

So EK is stuck with a lot of very rapidly depreciating assets. No wonder they don't want the last five. Also no wonder they are saying they will have all the planes in 2022: there is no one else who will take them. AF is smart getting what they can for them now. I suspect EK will cannibalize its own A380s and DWC will become an A380 graveyard over time. STC will continue to make brave statements but there will be no avoiding the harsh economic realities facing the A380 fleet.
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Sokes
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 6:17 pm

Revelation wrote:
Another interesting point from https://www.forbes.com/sites/michaelgol ... dc7d5c489c

A third major issue with the long-term prospects of the A380 are its costs of operation, typically among the highest in the airline industry. One report indicated that the A380 cost between $26-29,000 per hour to operate, even higher than the next highest, the aging 747 at $24,000-$27,000, and far higher than the Boeing 777, at about $7400 per hour. Costs include depreciation, interest, fees and charges, insurance crew cost, fuel cost, and engine and airframe maintenance.

If these numbers are anywhere close to accurate, it's easy to see why A380 is so disadvantaged.


Your Forbes article links as source for the info to this site:
https://www.opshots.net/2015/04/aircraf ... -expenses/
From this site:
"The average fuel consumption per 100 kilometers is 3.035 liters (78.5 mpg) for turbo props, 3.126 liters (76.3 mpg) for regional jets, 2.405 liters (100.5 mpg) for short haul, 2.74 liters (86.8 mpg) for medium haul, and 2.959 (80.84 mpg) liters for long haul."
I wonder what's a short haul flight for them? Do they compare 2h 50min flights with 5h 50min flights? I doubt Lufthansa would agree with their statement.
What about plane size?

I do not consider that source credible. Can you imagine that an A380 has 3,5 to 3,9 times the operating cost of a B777?
Why can't the world be a little bit more autistic?
 
Airlinerdude
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 7:31 pm

emiratesdriver wrote:
Revelation,
You forget that the 77W has between 15-20 tonnes of premium cargo space available on missions 12hrs or less with a full pax load, that is most certainly also the case with the 380 in terms of payload...but not in terms of physical space, it is usually around 5-6 tonnes on a DXB-LHR sector.
Outside of mega hubs, the 77W is significantly more flexible for EK and at least 25-30% more profitable per airframe across the entire fleet.


In the pre-covid world, I'm not sure this was entirely the case. Freight revenue actually declined by 14.2% during the 2019 fiscal year. Freight carried over this period reduced by just about 300,000 tonnes. I don't think freight has the premium that you think it might. In fact, we've actually seen Emirates moving away from the dedicated freight model having phased out 2 777Fs over the last two years, as well as getting rid of those contracted 747Fs.

Additionally, while the freight capacity might exist on the 777 fleet, this doesn't necessarily mean it's being filled and/or profitable for Emirates. When you estimate the capacity of the 777 fleet, weighted for the percentage of flights operated by the 777 fleet (on pg. 67 of the financials), you'll see that the 777 fleet offers about 85% of the airlines' total freight capacity. In reality, the 777 fleet only hauled 74% of the airlines' cargo (again on pg. 67). On a granular level using the numbers you've provided, that means the 77W actually hauls on average closer to about 10 tonnes of revenue freight assuming each 380 is maxing out at 6 tonnes. To me, that suggests a significant amount of over capacity which dilutes yields and in reality means that cargo is probably being carried at prices closer to cost.

In a covid world however, the 777 will excel at being a great freight hauler and revenue maker. Particularly if they go ahead with the planned removal of seats on some of the 77W fleet, it'll be a stellar aircraft to bring in revenue during this uncertain period. As I mentioned earlier (and numbers which you may have seen too), EK is bringing in about 70% of normal levels of revenue on account of being able to leverage the tremendous freight capacity of the aircraft.

In a post-covid world, we might see overcapacity return as airlines begin to ramp up their regular bellyhold capacity. But again, that's anyone's guess at the moment.
 
JayinKitsap
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 8:00 pm

Revelation wrote:
Anything is possible with enough money, but then the issue becomes: does this aircraft make money? Basically you would have to strengthen the main deck to hold cargo other than ecommerce packages, make a main deck cargo door, add lots of fire suppression equipment, and leave enough staircase space for use at airports without upper deck bridges, and maybe even an elevator for handicapped people. It still has disadvantages of a heavy airframe, two different kinds of aging engines, high cost expectations from pilots and crew, high landing fees, etc. You'd have to find city-pairs that could generate a main deck full of cargo and an upper deck full of pax at the same time, and could turn both around in a fairly quick amount of time, because you won't want such an expensive asset sitting too long. You'd pretty quickly ask yourself if you wouldn't be better off finding an A330ceo to move the pax and a 744F to move the freight and be ahead financially. Both are better at what they do than the hybrid you suggest.


Up until the reg changes that killed the production of existing combi's (the big thing was the fixed bulkhead that is also a smoke barrier - a needed change) Boeing offered combi's in the 737 and 747. The bulkhead position could be adjusted fairly easily to match up with the loads. So new production of combi's stopped somewhere around 2000 (I didn't look this up so may be off). KLM retired its last 747 combi this year. Alaska stopped its 737-400 combi in 2017.

https://en.wikipedia.org/wiki/Combi_aircraft
 
JayinKitsap
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sat May 23, 2020 8:33 pm

Vladex wrote:
JayinKitsap wrote:
Up thread there were comments that us A nutters know nothing, we should observe the professional managers at the airlines. Well the most profitable airlines have tended to be the all 737 or all A320 airlines running a tightly managed network - Ryanair, WN, Alaska, and the like. Then the full market majors like LH, SIA, KLM, BA, AA, United, and Delta that have a full spectrum of planes ranging from RJ's to VLA's. Delta has no need for VLA's because their network does not need both the range and capacity of a VLA, use of 787 and A350's as their largest plane makes economic success.

In this EK is almost the only example that is exclusively the largest planes on the market. It almost ensures that load factor's will be squirrely, because many destinations cannot fill a 777, much less an A380. It makes lots of economic sense to down gauge the plane to fit the typical loads. Yield is always best if all seats can be sold, as those last seats can be sold at a profit vs loss leader.

The first step for EK to rationalize their fleet is to reduce the A380 count and add in the 787 and A350's for the smaller markets. So some A380s (about 1/3) will be out to the desert, a third into short term storage, and a third expected to be flying in the next few months.


Delta has 10 hubs , Emirates has only 1 and they all have to make up with they have. Delta business model is based on monopoly of its hubs while Emirates business model is based on pleasing outside passengers. Based on these simple facts Emirates has to get the most passengers with the least amount of airplanes while Delta has to get the most number of airplanes to fill its hubs and to prevent any outside competitor. Emirates has a problem of filling its airplanes and Delta has problems with uniformity, identity, renewing fleet and a big problem of dealing with downturns. They can't be more different as far as airlines go and to say that they should have the same airplanes probably demeans both and definitely Emirates. I would take Emirates model myself as its far better to facing downturns as no one can force it to fly on empty and they have some identity.


EK was flying to 145 destinations - it seems quite improbable that all 145 could fill a 77W enough to be profitable year round, nor even 60 destinations that can fill an A380. EK's A380's are 14-76-399, 14-76-427, and 58-577. EK's 77W are 8-42-304, 8-42-310, and 42-385. So a range of sizes from 354 to 489 3 class, 635.2 class. Some destinations require multiple flights per day so capacity steps of 350 and 489. So with 1 or 2 flights per day the capacity steps are 350, 489, 635, 700, 839, and 978.

My point is that certainly 30 destinations are more like 250 pax per day which a B789 or A359 covers well. Also for destinations getting 2 flights per day have capacity steps of 250, 350, 489, 500, 600, 635, 700, 739, 839, and 978 giving much easier yield management. So yes EK has one hub, but it could improve its LF quite well with the addition of smaller planes. The same number of flights and passengers carried but fuller planes throughout the system, and hence more profitable using their same strategy.

EK with a single hub that is not a big origin (far smaller than LHR has) must offer better service and/or lower fares to compete otherwise the passenger would have picked an alternate direct flight or 1 stop. Yes Delta has 10 hubs and a different strategy, but they select the metal that provides the most profit for the airline, they increment from 50 pax up in increments of 25 pax up to around 350 pax.
 
emiratesdriver
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 5:09 am

@Airlinerdude

Additionally, while the freight capacity might exist on the 777 fleet, this doesn't necessarily mean it's being filled and/or profitable for Emirates. When you estimate the capacity of the 777 fleet, weighted for the percentage of flights operated by the 777 fleet (on pg. 67 of the financials), you'll see that the 777 fleet offers about 85% of the airlines' total freight capacity. In reality, the 777 fleet only hauled 74% of the airlines' cargo (again on pg. 67). On a granular level using the numbers you've provided, that means the 77W actually hauls on average closer to about 10 tonnes of revenue freight assuming each 380 is maxing out at 6 tonnes. To me, that suggests a significant amount of over capacity which dilutes yields and in reality means that cargo is probably being carried at prices closer to cost.


The numbers you quote don’t show the detail you need to complete a full analysis, it’s not a criticism from me, but merely pointing out that to understand the detail there needs to be a route by route analysis along with a specific daily capacity.
To give you an example, several years ago there were fuel shortages in AKL, that meant tanking fuel and little or no freight, or in JNB recently when due to higher than normal temps freight uplift was severely limited over a number of days. I could go on and on with other examples, but the point remains...the devil is in the detail.
As for overcapacity/cost, my only observation is that as I’ve said numerous times, the A380 has never truly been profitable in EK service, it is a vanity/Wasta project and part of the larger brand Dubai, at best it covers its costs.
 
Airlinerdude
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 6:32 am

emiratesdriver wrote:
The numbers you quote don’t show the detail you need to complete a full analysis, it’s not a criticism from me, but merely pointing out that to understand the detail there needs to be a route by route analysis along with a specific daily capacity.
To give you an example, several years ago there were fuel shortages in AKL, that meant tanking fuel and little or no freight, or in JNB recently when due to higher than normal temps freight uplift was severely limited over a number of days. I could go on and on with other examples, but the point remains...the devil is in the detail.
As for overcapacity/cost, my only observation is that as I’ve said numerous times, the A380 has never truly been profitable in EK service, it is a vanity/Wasta project and part of the larger brand Dubai, at best it covers its costs.


I appreciate that there will always be nuances that don't fit the trend, but overall what the financials show is overcapacity in freight capacity. While the 77W is a vastly superior aircraft at hauling that freight, it doesn't appear that all of that extra capacity was warranted in 2019. When so much excess capacity exists, it will inevitably put downward pressure on prices. The pretty significant decline in freight revenue and the movement away from dedicated freight capacity highlights this well.

I'm not sure what sources you have for that information, but my senior management sources have said otherwise. Logically even, the argument that the 380 isn't profitable in EK operations is hard to argue when nearly half of EK's capacity is operated by the aircraft. What you're saying is that the 777 fleet's profit not only covers the loss of the 380 operations but also nets EK a profit, is a bit of a stretch of the imagination given the massive 380 fleet size. Sure, there will be routes where the 380 doesn't operate profitably, but on the whole, the aircraft can be operated profitably, albeit not universally, in EK's network.
 
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LTU330
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 7:20 am

Revelation wrote:

They've been taking new 77Ws up till a few months ago.


The last B777 delivery was a year and a half ago.
 
emiratesdriver
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 7:35 am

Airlinerdude..
I'm not sure what sources you have for that information, but my senior management sources have said otherwise. Logically even, the argument that the 380 isn't profitable in EK operations is hard to argue when nearly half of EK's capacity is operated by the aircraft. What you're saying is that the 777 fleet's profit not only covers the loss of the 380 operations but also nets EK a profit, is a bit of a stretch of the imagination given the massive 380 fleet size. Sure, there will be routes where the 380 doesn't operate profitably, but on the whole, the aircraft can be operated profitably, albeit not universally, in EK's network.


I’m happy with what Ive said regarding the 380, as I’ve personally seen the numbers first hand, I’m sure your source is also correct on the basis of certain costings and how it’s presented, but I know what I know and the proof is in the fleet numbers going forwards...however implausible that might seem.
As much as it grinds my gears to say it, the 77W makes ostensibly all of EKs operational profit...the 380 covers its costs, as the 380 numbers reduce, that may change, however for now it is what is.
 
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 7:53 am

emiratesdriver wrote:
As much as it grinds my gears to say it, the 77W makes ostensibly all of EKs operational profit...the 380 covers its costs, as the 380 numbers reduce, that may change, however for now it is what is.

With less A380s , B789 and A359 coming in, that won’t be a problem.
 
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flee
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 8:16 am

emiratesdriver wrote:
Airlinerdude..
I'm not sure what sources you have for that information, but my senior management sources have said otherwise. Logically even, the argument that the 380 isn't profitable in EK operations is hard to argue when nearly half of EK's capacity is operated by the aircraft. What you're saying is that the 777 fleet's profit not only covers the loss of the 380 operations but also nets EK a profit, is a bit of a stretch of the imagination given the massive 380 fleet size. Sure, there will be routes where the 380 doesn't operate profitably, but on the whole, the aircraft can be operated profitably, albeit not universally, in EK's network.

I’m happy with what Ive said regarding the 380, as I’ve personally seen the numbers first hand, I’m sure your source is also correct on the basis of certain costings and how it’s presented, but I know what I know and the proof is in the fleet numbers going forwards...however implausible that might seem.
As much as it grinds my gears to say it, the 77W makes ostensibly all of EKs operational profit...the 380 covers its costs, as the 380 numbers reduce, that may change, however for now it is what is.

Doesn't the 777 fleet include its freighters? If so, there should be some contribution from that division.
 
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 2:11 pm

Revelation wrote:
mcg wrote:
There is no meaningful resale market for A380's.

Same Forbes article I just linked says:

The most recent published list price for the Airbus A380 is $445 million. However, a recent estimate by Valerie Bershova, valuations analyst at Ascend by Cirium, claims actual market value of an A380 now ranges between $77 million for a 2005-build “half-life” aircraft and $276 million for a new 2019-build aircraft in “full-life” condition. And of course, all this was written before the coronavirus ravaged A380 operator Korean Air, reportedly grounding 100 of 145 planes and threatening bankruptcy.

A pair of early production A380s have already been “parted out”, or cannibalized, bringing about $80 million per plane. By 2030, she projects the part-out value of an A380 dropping to just $35 million.

So EK is stuck with a lot of very rapidly depreciating assets. No wonder they don't want the last five. Also no wonder they are saying they will have all the planes in 2022: there is no one else who will take them. AF is smart getting what they can for them now. I suspect EK will cannibalize its own A380s and DWC will become an A380 graveyard over time. STC will continue to make brave statements but there will be no avoiding the harsh economic realities facing the A380 fleet.


First of all, comparing against list price is a bit pointless as nobody pays full price.

And secondly, resale value is not an issue for Emirates because they don't own the bulk of the A380s. Emirates will return the aircraft to the lessors. So it' a problem for the lessor, not Emirates.
Good moaning!
 
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 2:45 pm

PepeTheFrog wrote:
And secondly, resale value is not an issue for Emirates because they don't own the bulk of the A380s. Emirates will return the aircraft to the lessors. So it' a problem for the lessor, not Emirates.

Would be interested in definitive info on "they don't own the bulk of the A380s". Someone posted a number here suggesting EK did own a large % of the A380s according to its annual report but I can't find the quote now.

Closest I could find is:

Airlinerdude wrote:
UAEflyer wrote:
No sir, most of EK birds are leased as all knows if the airplane in the air or in the ground the money should be paid regardless, on the other hand the owned aircrafts are purchased through banks and instalments should be paid on time, some might say it is force major the term need legal action and it takes months in the courts to be decided.

53% of EK's fleet is leased. The rest is financed/owned.

Ref: viewtopic.php?p=22233829#p22233583
Last edited by Revelation on Sun May 24, 2020 2:58 pm, edited 1 time in total.
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dtw2hyd
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 24, 2020 2:57 pm

PepeTheFrog wrote:
First of all, comparing against list price is a bit pointless as nobody pays full price.

And secondly, resale value is not an issue for Emirates because they don't own the bulk of the A380s. Emirates will return the aircraft to the lessors. So it' a problem for the lessor, not Emirates.


I am not an expert but, that's not how aviation financing (or) any financing works. Sure list price is useless. Lessors calculate monthly lease based on resale value and risks.

Take 77W example, $135 Million used to be consensus fair price, until few years back. So someone ordered 200 copies at $135 Million to be delivered over 10 years thinking it is a great price. First seven years was great, but market conditions changed, someone bought a 772 shell for $10 Million, someone tried to sell a 77W+ 2 slots for $28 Million, there is glut of wide bodies

The same $135 Million doesn't look great anymore, and financiers will not finance a brand new 77W at that price.

It is the financiers decide which airline can buy frames/engines, not airline managers. Sure they are not immune to dog and pony shows, but only for so long.

I don't think any financier is arranging for A380 welcome ceremonies and writing fresh checks for EK 787-10/A350s.

Resale value is not Emirates problem theory is not valid.
All posts are just opinions.
 
Sokes
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Mon May 25, 2020 1:26 pm

emiratesdriver wrote:
As for overcapacity/cost, my only observation is that as I’ve said numerous times, the A380 has never truly been profitable in EK service, it is a vanity/Wasta project and part of the larger brand Dubai, at best it covers its costs.

In short: the A380 makes sense for Emirates

Image
source: https://en.wikipedia.org/wiki/List_of_t ... s_in_Dubai
Why can't the world be a little bit more autistic?
 
9Patch
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Mon May 25, 2020 6:42 pm

Sokes wrote:
emiratesdriver wrote:
As for overcapacity/cost, my only observation is that as I’ve said numerous times, the A380 has never truly been profitable in EK service, it is a vanity/Wasta project and part of the larger brand Dubai, at best it covers its costs.

In short: the A380 makes sense for Emirates

They sure do love them white elephants!
 
Aither
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Mon May 25, 2020 9:05 pm

emiratesdriver wrote:
Airlinerdude..
I’m happy with what Ive said regarding the 380, as I’ve personally seen the numbers first hand, I’m sure your source is also correct on the basis of certain costings and how it’s presented, but I know what I know and the proof is in the fleet numbers going forwards...however implausible that might seem.
As much as it grinds my gears to say it, the 77W makes ostensibly all of EKs operational profit...the 380 covers its costs, as the 380 numbers reduce, that may change, however for now it is what is.


Considering the network system of Emirates good luck trying to allocate the revenue to a specific aircraft...

And by the way the most profitable aircraft these days is actually the A380 : the ones operated by China Southern. Since frequencies are limited from China they charge up to 10 times the normal price and these A380s are full (= 15 times the revenue of A330/787 during normal days). Add to this cheap oil price and you have the absolute winning combo.
Never trust the obvious
 
A330Inter
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue May 26, 2020 8:29 am

Aither wrote:
emiratesdriver wrote:
Airlinerdude..
I’m happy with what Ive said regarding the 380, as I’ve personally seen the numbers first hand, I’m sure your source is also correct on the basis of certain costings and how it’s presented, but I know what I know and the proof is in the fleet numbers going forwards...however implausible that might seem.
As much as it grinds my gears to say it, the 77W makes ostensibly all of EKs operational profit...the 380 covers its costs, as the 380 numbers reduce, that may change, however for now it is what is.


Considering the network system of Emirates good luck trying to allocate the revenue to a specific aircraft...

And by the way the most profitable aircraft these days is actually the A380 : the ones operated by China Southern. Since frequencies are limited from China they charge up to 10 times the normal price and these A380s are full (= 15 times the revenue of A330/787 during normal days). Add to this cheap oil price and you have the absolute winning combo.


Most of the revenue is split distance based.
If LHR-SYD produces 1,000$ of revenue, LHR-DXB is 30% of the total distance, then the LHR-DXB portion will be accounted at 300$.

I also saw a report showing EK's network performance highlighting higher profitability of the A380 than B777. This was a couple of years back and may have changed with higher leased rates for EK'380s in recent years.
Also it by no mean negatively valued the 777 network, both are designed to complement each other!
In any case I think we can be confident that this aircraft worked well for EK over its life and that may be the most important!
 
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue May 26, 2020 2:40 pm

Aither wrote:
And by the way the most profitable aircraft these days is actually the A380 : the ones operated by China Southern. Since frequencies are limited from China they charge up to 10 times the normal price and these A380s are full (= 15 times the revenue of A330/787 during normal days). Add to this cheap oil price and you have the absolute winning combo.

Yes, and back in the days of regulation and before the Arab Oil Embargo, US airlines bought 747-100s for domestic milk runs. Strange things happen in strange times. Meanwhile our A380 tracking thread says these four are the only four A380s flying regularly, with one or two doing occasional freight or training missions, so it seems CSA's strange circumstances are also unique.
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tayaramecanici
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 31, 2020 5:46 pm

The first of redundancies............https://www.thenational.ae/business/avi ... -1.1027002
''You are as good as your nearest competitor'' Bob Crandall.
 
emiratesdriver
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 31, 2020 8:31 pm

All pilots and crew on initial training courses, so perhaps 800 crew in total of which it’s about 230 pilots evenly split between 380 and 777 new joiners.
 
smartplane
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Sun May 31, 2020 8:56 pm

dtw2hyd wrote:
PepeTheFrog wrote:
First of all, comparing against list price is a bit pointless as nobody pays full price.

And secondly, resale value is not an issue for Emirates because they don't own the bulk of the A380s. Emirates will return the aircraft to the lessors. So it' a problem for the lessor, not Emirates.


I am not an expert but, that's not how aviation financing (or) any financing works. Sure list price is useless. Lessors calculate monthly lease based on resale value and risks.

Take 77W example, $135 Million used to be consensus fair price, until few years back. So someone ordered 200 copies at $135 Million to be delivered over 10 years thinking it is a great price. First seven years was great, but market conditions changed, someone bought a 772 shell for $10 Million, someone tried to sell a 77W+ 2 slots for $28 Million, there is glut of wide bodies

The same $135 Million doesn't look great anymore, and financiers will not finance a brand new 77W at that price.

It is the financiers decide which airline can buy frames/engines, not airline managers. Sure they are not immune to dog and pony shows, but only for so long.

I don't think any financier is arranging for A380 welcome ceremonies and writing fresh checks for EK 787-10/A350s.

Resale value is not Emirates problem theory is not valid.

Financing a new (maiden) aircraft lease, usually has two components, an A and B loan. The A loan is repaid from monthly lease payments, and funded largely, but not exclusively, by the funding participants. The B loan finances the residual value, and is often interest only, with monthly surplus on lease charges funding interest and fees.

The combined value of A & B loans are largely irrelevant. In the 21st century, they are not an indication of the price paid for an aircraft, or even the residual value, because adjustments can and are made for risk, value and application of OEM retrospective credits, front end contributions, calculation of end of lease balloon payments, cash in or out upfront, value and timing of OEM 'last resort' buybacks.............

While leases must be accounted for correctly in accounts, not all leases are subject to public reporting. 'Blind' leases are not uncommon, as these reduce costs.

If EK A380's (and 777's) cannot find new homes at end of lease, the disparity between the B loan outstanding, and actual market value can be mitigated by new leases (replacing say an A380 with 2x new leased A350/A330), EOL top-up payment, activating OEM buyback (higher value if traded for new aircraft as opposed to returning aircraft for credit or cash), and taking EOL as cash payment in lieu of pro rata maintenance, inspections and interior / exterior refurbishment. Boeing may have offered buybacks on some A380's to secure X sales.

Some new aircraft buyers are asking for delivery deferrals, or payment deferrals, or price reductions, or increased buybacks, and a few all of the above. EK future aircraft acquisitions will be influenced by the outcome of A380-related value protection and forgiveness negotiations.
 
xwb777
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Mon Jun 01, 2020 8:25 pm

Sir Tim Clark sees normal operations to return in 2023/24.

96 (77W+77F) flying.

Source: https://www.arabianbusiness.com/transpo ... ummer-2021
 
Scotron12
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue Jun 02, 2020 8:34 am

EK now looking to defer/cancel current orders on 787/777X & 350s.

https://www.bloomberg.com/news/articles ... -orderbook
 
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Revelation
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue Jun 02, 2020 1:46 pm

Scotron12 wrote:
EK now looking to defer/cancel current orders on 787/777X & 350s.

https://www.bloomberg.com/news/articles ... -orderbook

Hmmm:

“All bets are off,” Tim Clark, the Dubai-based carrier’s president, said in a online forum Monday. “We are nowhere near confident enough that the economics, the cash flows, the bottom line will put us in a good position to be able to guess if we’ll buy a hundred of this or a hundred of that.”

When has that ever stopped him before? :biggrin:
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue Jun 02, 2020 2:54 pm

I think after this pandemic is over, we might see Emirates moving away from widebody only model. The will learn so many lessons from this recessions. Tim Clark said that this is the worst recession Emirates is facing in its entire history.

Emirates capacity problems started when they have phased out the A330-200.

COVID-19 is hitting right after EK admitted the A380 had no future and canceled 39 orders and went in the direction of A350 and 787. The timing could not be worse. Now they are stuck with no funds to do the fleet makeover and must stick with a fleet of too-big aircraft with previous generation engines while passengers are very leery of getting on any airplane and ending up being quarantined in a distant land or upon returning to home.

EK did have the chance to decide what direction they wanted to take when they were phasing out A330-200, and it seems they made the wrong choice by not getting an updated substitute. COVID-19 was not predictable but the aviation industry is always vulnerable to occasional upsets such as 9/11, GFC, SARS, etc and things like strong competition and hub bypass have been hurting the bottom line and now EK's being caught out now big time.

Apparently this month is when STC's role changes from President to adviser. It'll be interesting if he continues to dominate the press like he seems to be doing now, or if this is one last hurrah.
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brilondon
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Re: Rumour: Emirates to decommission 40% of A380 fleet

Tue Jun 02, 2020 2:54 pm

DrPaul wrote:
birdbrainz wrote:
Is there any possibility of cutting a freight door only into the main deck of an A380 using it all for freight, and using only the A380 upper deck for passengers? I really doubt it, as the freighter market is going to have tons of planes to choose from, but wanted to at least allow for the possibility. Also, wasn't the freighter market almost dead a year ago with a glut of over-capacity?


Also would not the lower passenger deck need reinforcing before it could be used for freight? And would existing airport equipment allow for freight to be unloaded at the same time as the passengers in the top deck? Otherwise, turnaround times would be rather longer.

I imagine that with the revival of passenger travel likely to be fairly slow, there will be plenty of redundant 747s and 777s that would be much easier to convert should the demand for air-freight increase.

I'm afraid that the Whale is going to be another victim of the current virus.


I believe that is the reason that the A380 is useless as a freighter only aircraft. The floors need to be strengthened.
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xwb777
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Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 5:18 pm

Emirates President, Sir Tim Clark, during today’s webinar which was hosted by Aviation Week, has expressed the interest of Emirates partnering up with a US3 airline, saying that its time to end the long bloody war between the two sides.

Tim Clark has also expressed that he is not a fan of the alliances and prefers strategic alliances loke the one with Qantas which is benefiting both sides.

Quote:
“ “I would like to think that Emirates will get access to US partners … it would make absolute sense if Emirates dealt with one of the ‘Big Three’ [US airlines].””

And

“ Emirates] would deliver a huge amount of business to whichever of the Big Three was selected, working on a commercial basis, because we are the single largest producer in terms of available kilometres coming out of the Middle East spread into the United States.”

I think the right partner for Emirates will be Delta. Given American Airlines is partnering with Qatar Airways, this leaves its older sibling, Delta to partner up with Emirates instead of United.

I know the source might not be a strong credible source, it gives a hint of what went into the conversation during the webinar.

Link: https://simpleflying.com/emirates-us-3-partnership/
 
SEU
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 5:41 pm

Emirates and Delta seem to be a good match.
 
Insertnamehere
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 5:43 pm

Jetblue cries in the corner with their partnership with Emirates.
 
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eta unknown
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 5:49 pm

EK used to have a frequent flyer arrangement with UA, but I doubt revisiting that is on the cards.
 
ShinyAndChrome
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 6:02 pm

No matter how theoretically beneficial some sort of tie up might be, there's no getting around how it would heavily cannibalize US airlines' existing European JVs. I don't see how anyone squares that particular circle.
 
strfyr51
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 6:08 pm

Well of Course Tim would like to bury the hatchet with Delta. They wanted to bury their hatchet as well. Right into Emirates. Water under the Bridge my Foot! they can't generate any Feed on their OWN and don't want to join an alliance. So maybe Delta will? or won't . United won't join with them as they would rather fly TO Dubai on their OWN metal. They're already done it and would do it again so there's no point IN partnering with United or the Star Alliance. JBLU is the one carrier that might benefit from partnering with Emirates.
 
flyby519
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Re: Emirates wants to partner with a US3 airline.

Tue Jun 02, 2020 6:27 pm

strfyr51 wrote:
Well of Course Tim would like to bury the hatchet with Delta. They wanted to bury their hatchet as well. Right into Emirates. Water under the Bridge my Foot! they can't generate any Feed on their OWN and don't want to join an alliance. So maybe Delta will? or won't . United won't join with them as they would rather fly TO Dubai on their OWN metal. They're already done it and would do it again so there's no point IN partnering with United or the Star Alliance. JBLU is the one carrier that might benefit from partnering with Emirates.


JBLU/EK already have a codeshare agreement, albeit rather limited compared to what a US3 could offer. If DL/EK partnered up then I would expect the B6 agreement to wither away and reduce to almost nothing.

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