Southwest maybe considering an Airbus order

DenverTed · Sun Oct 25, 2020 4:32 pm

Could WN and Alaska operate the E175E2 since they do not have the same scope clause contract on weight as UA, AA, and DL?

DLHAM · Sun Oct 25, 2020 5:50 pm

I think the E195 E2 would fit Southwest even better because I dont think they would really need the range of the CS300 or even MAX7 for 95% of the routes. On these shorter routes the E2 seems even more efficient and its closest to 737-700 capacity, and Embraer would make them a hell of a deal, I am absolutely sure about that.

JoseSalazar · Sun Oct 25, 2020 7:41 pm

DenverTed wrote:
Could WN and Alaska operate the E175E2 since they do not have the same scope clause contract on weight as UA, AA, and DL?

For Alaska, Horizon can, but SkyWest can’t (without losing all
their DL flying due to DL's scope). WN can fly whatever they want, as can any airline, so long as it is not a regional doing contracted flying to a major. UA/DL/AA/WN/B6/NK/F9/HA/G4 could all fly E175-E2s. Don’t think anyone besides AS (via horizon) can outsource it though, currently anyway.

SEPilot · Sun Oct 25, 2020 8:21 pm

Any business strategy has both advantages and risks, and smart managers will not lose sight of this when one of the risks bites them. Having only one airliner type has served WN very, very well for a long time; they are the only large old time US based airline that has not gone through bankruptcy, and has been more consistently profitable than any, and perhaps any in the world. Their strategy of only having one airliner type has been a big part of it, and I don’t think they are going to depart from it. If they become fed up with Boeing I believe they will never buy from them again and keep buying from Airbus until their fleet is all Airbus. I do not believe they want a subfleet of a smaller type; they had that when they bought AirTran and quickly dumped it. So I do not see the A220 in their plans. It will be the A320 or 737 until Boeing comes out with the NSA. I am hopeful that Boeing has learned their lesson and will be able to convince WN of that fact; if not, I think the future of Boeing is bankruptcy. If they cannot hold their most loyal and prolific customer then they will not be able to hold any. Boeing will not disappear, but maybe they need to go bankrupt, be bought out by someone else and get all new top management. But that is a perilous route as well; look what happened to Douglas. And what happened to Douglas may well be what has brought Boeing to the sorry state they find themselves in now. If their top management had not been infected by so many MD people this might not have happened.

lightsaber · Sun Oct 25, 2020 8:32 pm

DLHAM wrote:
I think the E195 E2 would fit Southwest even better because I dont think they would really need the range of the CS300 or even MAX7 for 95% of the routes. On these shorter routes the E2 seems even more efficient and its closest to 737-700 capacity, and Embraer would make them a hell of a deal, I am absolutely sure about that.

The issue is it is E2-195 needs 6,463 ft at MTOW vs.
A223 at 6,200 ft.

As you note, the A220 has surplus range, so will offload more weight in fuel.

SNA: 5,701 ft
MDW: 6,522 ft

With rain, winds, and other reductions, I am concerned that the E2-195 does not have the field performance WN requires.

It is possible the E2 could win. I do not believe the E2-190 per seat costs will work in the US market. The E2-175 would only work on a regional pay scale and work rules, not at SouthWest.

This competition is versus the 737-7.

I take SouthWest talking to Airbus for the A220 seriously. Smart companies switch strategies. If SouthWest changes, I fully expect a large order, as many as 200, but no less than a hundred.

This would make the E2. As WN buys many used aircraft, as does DL, whatever they buy will be bought by other airlines in future years. No one gets fired for buying what SouthWest will buy used.

WN will still buy MAX.

However, if they go A220, that means two of the top used aircraft buyers are onboard and that opens up new sales even more than DL's purchase. For WN+DL+LH+AF starts to become an impressive bench of MRO support and demand.

This could be a non-event or a huge deal. Not much more to say until a contract is signed, or not.

Lightsaber

texl1649 · Sun Oct 25, 2020 8:59 pm

Revelation wrote:
TTailedTiger wrote:
Jetport wrote:
I would think the E195-E2 would be a better fit for LUV if they want to go smaller. Price and availability would be much better than the A-220 and LUV's route network doesn't need the extra range of the A-220.

I think if management and pilots could have a come to Jesus meeting and work out a fair payscale to fly the E175, it would be a done deal. That is the size of aircraft they need to make some city pairs work long-term.

I remember when we thought the same thing about 717 they acquired via the AirTran acquisition. They were getting them with relatively junior crews so making less money, and were still economically competitive with the NG. It was going to be a way for WN to capture a lot of smaller city pairs. Well, they gave it a try and it did not work. Their operation depends on interchange of aircraft and crew. Increasingly the 717s got shunted off into sub networks mainly the big one focused at ATL, then they just threw in the towel.

The only way I see a second aircraft type is if the WN upper management has lost faith in Boeing to the point they feel they must have a second aircraft type and can suffer the huge financial consequences of doing so. I doubt we're there at this point in time. I also realize there won't be a follow on to MAX so eventually there will need to be a second aircraft type to transition to, but it doesn't make sense to take the big hit that will entail till it absolutely has to be done. It especially doesn't make sense to make the decision under duress due to the covid situation. How can you convince the unions to make sacrifices just to see the money spend on new aircraft? It makes a lot more sense to ride out the MAX for its natural life time and revisit things in the 2030 time frame when everyone should have a much better idea of what the next generation engines and airframes are going to look like.

I believe the 717 issue is misunderstood. SWA still does some things uniquely (turn times, galley arrangements, standardized crews), but it’s also true the airline is different today than it was even just 10-15 years ago, let alone 30. Integrating AirTran was a big process at the time, and the leased planes were...unique in many regards.

On your second point (“if the WN upper management has lost faith in Boeing”) I just disagree. I think businesses evolve and change strategies, sometimes yearly. Though it’s great the ‘single type’ plan has worked for them for so long, and it’s ingrained in their plans in many ways, I also think it’s inevitable that at some point it will change. I don’t think “we are going to be mad at Boeing for 10 years over the MAX” for instance is...likely their plan driving the board/mgt team’s planning to hit their goals. If anything...the concessions for instance have probably been a plus to WN. But you’re right then; I really don’t know how they manage the union dynamics over the next few years. My suspicion has been the (US4) airlines will have more leverage than in the past, due to the furloughs/layoffs etc., but I’m the first to admit union tactics/positions are an enigma to me.

strfyr51 · Sun Oct 25, 2020 9:16 pm

flipdewaf wrote:
eraugrad02 wrote:
What say you guys?

1. They definitely will get it, it’s the lowest CASM machine around and WN are sick of being screwed and want to teach Boeing a lesson because of the MAX.
2. They have to demonstrate to the shareholders that they are showing due diligence and have approached airbus as a way to extract the best price from Boeing, they will never leave Boeing.

Delete as appropriate.

Fred

Sent from my iPad using Tapatalk

I think thats kind of strange since Boeing did all that Funny Stuff Just FOR Southwest. But? If that's the case? Then WN should Never have any input into any Boeing design and Boeing should build their Airplanes on a "take it or Leave it" attitude.

Revelation · Sun Oct 25, 2020 9:20 pm

texl1649 wrote:
On your second point (“if the WN upper management has lost faith in Boeing”) I just disagree. I think businesses evolve and change strategies, sometimes yearly. Though it’s great the ‘single type’ plan has worked for them for so long, and it’s ingrained in their plans in many ways, I also think it’s inevitable that at some point it will change. I don’t think “we are going to be mad at Boeing for 10 years over the MAX” for instance is...likely their plan driving the board/mgt team’s planning to hit their goals. If anything...the concessions for instance have probably been a plus to WN. But you’re right then; I really don’t know how they manage the union dynamics over the next few years. My suspicion has been the (US4) airlines will have more leverage than in the past, due to the furloughs/layoffs etc., but I’m the first to admit union tactics/positions are an enigma to me.

Thing is, we don't have any evidence that the single fleet strategy is not working and needs to change, other than the concern of a fleet grounding which is a low probability event, and even lower now that EASA has independently certified the MAX's flight controls and instruments. We do have evidence that a two fleet approach did not work. We also have evidence that WN has seen results improve as they have shifted to larger planes such as the -800 and -8.

As I've written in other threads, I feel it's more likely WN's next new plane is most likely MAX-10 rather than any A220 or EMB family aircraft. This isn't very likely due to COVID, but IMO the A220 never was too likely. The only 'new' variable is WN's board potentially convincing itself it must have a second fleet in case of a future grounding, which IMO also has a low probability because the cost vs benefit tradeoff is poor.

FATFlyer · Sun Oct 25, 2020 10:05 pm

I do not see it posted in this thread, just the news summaries and opinions.

Here is the portion of the transcript of the conference call with WN exec's comments about looking at the A220. Better to see the full discussion and actual words.

Joseph DeNardi -- Stifel Financial Corp. -- Analyst

Thanks. Good afternoon. Gary, you spoke pre-COVID about the desire to have a more economical, smaller gauge airplane and talked a little bit about the 220. I'm wondering if the opportunities to gain share as a result of COVID, whether that makes the case for the 220 more compelling.

When you think about playing offense and gaining share, how much more of an opportunity would there be if you had a plane like the 220?

Gary Kelly -- Chairman of the board and Chief Executive Officer

Well, I'm just reflecting on your pre and post, the nature of your question. I don't -- Mike, I don't know that the pandemic in and of itself changes things, except that -- I mean, let's just -- we've shrunk the airline. So -- and Tammy was referring earlier to our Boeing commitment, and we don't know when we're going to grow. And we have a surplus of aircraft.

So the only thing that I would willingly admit is that if there were ever a scenario for us to consider making a change in aircraft type, it would be now because we're not desperate to grow the airline and may not be for a long time. That doesn't really address the essence of your question. I think what Mike and Tammy are working on is to make sure that we're comfortable that we're going to have the best 150-ish seat narrow-body airplane in the world in terms of performance, in terms of economics, in terms of fit into our system. And it just makes, -- if we have to make a change, it just -- again, I'm just admitting that the environment lends itself to the time that would be required for us to make that kind of an investment.

Absent that, Mike, I don't know -- or Tammy, I don't know that there's anything that's really different in addressing that question. We've been very forthcoming that we're talking about -- to Boeing about a variety of things, and obviously, we're talking to them about the 737 MAX 7. That's a component of these -- a major component of these conversations. But Tammy, Mike, anything you all would add to that?

Mike Van de Ven -- Chief Operating Officer

The only thing I would add, Joseph, is in our network, there's definitely a need for, what I would say, 140, 150-seat airplane versus 175-seat airplane. Today, at the present time, we're mostly focused on the MAX 8, the 175-seat airplane. And the A220 and the MAX 7, they are the two players in the marketplace, and both of those airplanes have their strengths and their disadvantages. And we've been looking at both airplanes.

We'll continue that evaluation. We're just not at a point in our network. We don't really need to make those decisions until probably 2025 and beyond time frame. So today, we're just really focused on the MAX, getting them back into service, making sure that we have the right delivery schedule with Boeing.

Gary Kelly -- Chairman of the board and Chief Executive Officer

Yes. I'll just emphasize the point that Mike made, which is -- and this may be in the essence of your question, we absolutely still need the smaller airplane prospectively. We have a ton of 737-700s that are coming up for retirement over the next five to 10 years. And we will absolutely want to replace them.

But we're certainly not thinking that we want all 175 seaters. We'll want -- and I hesitate to guess today, but I mean, if you assumed it's half and half, that's probably as good a guess as anybody's right now about what the future is there, but we'll need a large number of the smaller gauge.

Tammy Romo -- Executive Vice President and Chief Financial Officer

And the only thing I would just chime in on is, yes, the MAX 7 and the 220 are both fine airplanes. I think both of them certainly serve the mission, and obviously, as always, just the economics, of course, come into play. And we have long been an all-Boeing carrier. And there are certainly efficiencies that come with that.

And -- but all that gets factored into our valuation. But agree that on smaller gauge aircraft, like the 220 or MAX 7, certainly, our aircraft that we will need to fly those shorter to medium-haul markets. But my only point there is, obviously, the economics are a piece of this, and we'll make sure that we have economics that will serve us well and where we can maintain our long, low cost position.

Mary Schlangenstein -- Bloomberg News -- Analyst

I was just going to say my second question is to Mike. On the discussion of the A220s, you've talked a lot in the past about that. But you said a decision wouldn't have to be made until 2025. And I'm wondering did you mean a decision not until 2025? Or that 2025 would be when you would like to start getting some of the smaller aircraft.

Mike Van de Ven -- Chief Operating Officer

So hey, Mary. It's good to talk to you. Yes. So when I was talking about, we need the airplane on property coming in around that 2025 period.

So obviously, we'll -- we'd have to make a decision before that. So within the next year or so, we're going to have to narrow in on what we're going to go do there and weigh all the pros and cons. As you know, introducing a second fleet type to Southwest Airlines, if we decided to introduce an A220, it's a big undertaking for us, not only with pilot training, but with our systems and our maintenance program. So yes -- so we need to spend the next year or so, really getting into a deep dive on all those kinds of things and then coming up with a decision.

https://seekingalpha.com/article/4380831-southwest-airlines-luv-ceo-gary-kelly-on-q3-2020-results-earnings-call-transcript?part=single

texl1649 · Sun Oct 25, 2020 11:14 pm

Revelation wrote:
texl1649 wrote:
On your second point (“if the WN upper management has lost faith in Boeing”) I just disagree. I think businesses evolve and change strategies, sometimes yearly. Though it’s great the ‘single type’ plan has worked for them for so long, and it’s ingrained in their plans in many ways, I also think it’s inevitable that at some point it will change. I don’t think “we are going to be mad at Boeing for 10 years over the MAX” for instance is...likely their plan driving the board/mgt team’s planning to hit their goals. If anything...the concessions for instance have probably been a plus to WN. But you’re right then; I really don’t know how they manage the union dynamics over the next few years. My suspicion has been the (US4) airlines will have more leverage than in the past, due to the furloughs/layoffs etc., but I’m the first to admit union tactics/positions are an enigma to me.

Thing is, we don't have any evidence that the single fleet strategy is not working and needs to change, other than the concern of a fleet grounding which is a low probability event, and even lower now that EASA has independently certified the MAX's flight controls and instruments. We do have evidence that a two fleet approach did not work. We also have evidence that WN has seen results improve as they have shifted to larger planes such as the -800 and -8.

As I've written in other threads, I feel it's more likely WN's next new plane is most likely MAX-10 rather than any A220 or EMB family aircraft. This isn't very likely due to COVID, but IMO the A220 never was too likely. The only 'new' variable is WN's board potentially convincing itself it must have a second fleet in case of a future grounding, which IMO also has a low probability because the cost vs benefit tradeoff is poor.

I don’t want to be pedantic about it but I think there are a lot of new variables moving forward in 2021. Really, the “more than 1 type” philosophy is well proven to work, as in...basically 95% of the words airlines, and all of the other airlines that are not LCC’s (WN is not one today).

Similarly, WN is now well beyond the Herb days when it was always “KISS” embodied for fleet types. The 738Max is indeed going to be their workhorse for the next 20 years. Their conspicuous lack of a large 737-7Max order has been noted many times, but I think it’s an indication they have been, for the past 5 years (pre-covid), moving to the 200 seat model whenever possible (it’s a huge airline today with mainline labor costs so that’s not surprising).

If their leadership team surveys the topography of US air travel in 2021 and sees (profitable) growth opportunity in...smaller market service again I could see a smaller/lighter type making sense, is all I’m saying. Whether that’s an E2 or A220 variant is certainly debatable. Much again has been written (by Boyd/elsewhere) about how Amarillo/Lubbock/Midland for instance are not the same markets they were 20 years ago, and a lot of markets half that size have seen outsized impacts from the service cutbacks of 2020. I see the issue being one of possible opportunity if in fact travel to places like Dubuque etc. resumes toward 2023 and the other US4 don’t wind up bringing back their ‘money losing’ (or previous) routes/capacity.

https://www.cnbc.com/2020/10/23/coronav ... ports.html

par13del · Sun Oct 25, 2020 11:37 pm

WN presently has 280 or so MAX a/c on order, do we believe that those 280 are sufficient to take up the flying of their existing fleet?
I suspect before the MAX goes out of production WN will have to order additional a/c which could span the entire range from 7 to 10.

https://en.wikipedia.org/wiki/List_of_B ... deliveries

JonesNL · Mon Oct 26, 2020 8:27 am

Revelation wrote:
TTailedTiger wrote:
Jetport wrote:
I would think the E195-E2 would be a better fit for LUV if they want to go smaller. Price and availability would be much better than the A-220 and LUV's route network doesn't need the extra range of the A-220.

I think if management and pilots could have a come to Jesus meeting and work out a fair payscale to fly the E175, it would be a done deal. That is the size of aircraft they need to make some city pairs work long-term.

I remember when we thought the same thing about 717 they acquired via the AirTran acquisition. They were getting them with relatively junior crews so making less money, and were still economically competitive with the NG. It was going to be a way for WN to capture a lot of smaller city pairs. Well, they gave it a try and it did not work. Their operation depends on interchange of aircraft and crew. Increasingly the 717s got shunted off into sub networks mainly the big one focused at ATL, then they just threw in the towel.

The only way I see a second aircraft type is if the WN upper management has lost faith in Boeing to the point they feel they must have a second aircraft type and can suffer the huge financial consequences of doing so. I doubt we're there at this point in time. I also realize there won't be a follow on to MAX so eventually there will need to be a second aircraft type to transition to, but it doesn't make sense to take the big hit that will entail till it absolutely has to be done. It especially doesn't make sense to make the decision under duress due to the covid situation. How can you convince the unions to make sacrifices just to see the money spend on new aircraft? It makes a lot more sense to ride out the MAX for its natural life time and revisit things in the 2030 time frame when everyone should have a much better idea of what the next generation engines and airframes are going to look like.

The grounding probably has no influence regarding risk management and choosing an extra fleet to mitigate that risk. The Max grounding was unprecedented in duration. Almost once in an lifetime type of situation where you can not base your strategy on.

I do believe it does depend on the next plane that Boeing is going to develop. The Embrear deal is off and so is the development of an smaller sub 150 plane. The hints that we are getting is that Boeing wants to develop an 250-270 plane first and that probably means that an possible new sub 150 plane from Boeing is 20 years out, at best. Seeing the transcript above shows that the need of WN is primarily a sub 150 on the tarmac from 2025 and onward.

I don't see it happening, but flying 15 years with a less efficient plane is a lot of profit you are leaving on the table...

VV · Mon Oct 26, 2020 8:38 am

How small is the aircraft they want to have?

The 737-7 has grown in size by about 12 seats compared to the 737-700. So it is not so small any more.

The remaining options are A319neo PW, A319neo CFM, A220-300 and E195-E2.

There are four aircraft evaluations to run.

JonesNL · Mon Oct 26, 2020 8:41 am

VV wrote:
How small is the aircraft they want to have?

The 737-7 has grown in size by about 12 seats compared to the 737-700. So it is not so small any more.

The remaining options are A319neo PW, A319neo CFM, A220-300 and E195-E2.

There are four aircraft evaluations to run.

See transcript above from FATFlyer, they seem to be only running the numbers for the A220 and 737-7 MAX.

CRJockey · Mon Oct 26, 2020 9:24 am

I don't know if WN this time is willing to pull the trigger on a two fleet strategy. And I certainly understand their hesitation. One fleet 737 for decades now they are totally operating on known terrain. So from a strategic decision making standpoint, going forward with 737 retains much of that certainty especially regarding cost, while going A220 incurs chance and risk at the same time. Is the (probably) lower operating cost of the A220 worth the risk of going two fleet now or not, is the ultimate decision WN have to take now.

Two points though, that seem to be overstated on all such threads, are in my experience:

- pilot pay is not the deal breaker in economics some state it to be. If you have seen total cost calculation for a flying hour of an aircraft, pilot pay (as opposed to total crew pay) is one rather smaller than larger part of the total equation. Not irrelevant and not something airlines shouldn't watch carefully. But also one of the many factors, not THE factor.
- Single fleet cost and organizational advantages rather quickly get smaller (without totally disappearing) in fleet sizes we are talking for WN.

Personally I feel WN is not ballsy enough this time around but wait for the moment where they have to make a decision away from the 737. But we'll see.

bigb · Mon Oct 26, 2020 9:35 am

DenverTed wrote:
Could WN and Alaska operate the E175E2 since they do not have the same scope clause contract on weight as UA, AA, and DL?

Yes if operated my WN pilots. Southwest has scope clauses. Must be operated by WN pilots.

VV · Mon Oct 26, 2020 9:39 am

JonesNL wrote:
VV wrote:
How small is the aircraft they want to have?

The 737-7 has grown in size by about 12 seats compared to the 737-700. So it is not so small any more.

The remaining options are A319neo PW, A319neo CFM, A220-300 and E195-E2.

There are four aircraft evaluations to run.

See transcript above from FATFlyer, they seem to be only running the numbers for the A220 and 737-7 MAX.

Okay. So they are not looking for "small" aircraft since they're evaluating 737-7 and A220-300.

If I remember well they have some 737-7 on order.
So, it is quite intriguing they would look into A220-300, unless the economics of the A220-300 is significantly better than 737-7 (on per seat basis).

The last time I did a comparison, the 737-7 has similar cost as A220-300 on per seat basis.

If they need small aircraft then it is strange they did not throw E195-E2 into the equation.

JonesNL · Mon Oct 26, 2020 9:59 am

VV wrote:
JonesNL wrote:
VV wrote:
How small is the aircraft they want to have?

The 737-7 has grown in size by about 12 seats compared to the 737-700. So it is not so small any more.

The remaining options are A319neo PW, A319neo CFM, A220-300 and E195-E2.

There are four aircraft evaluations to run.

See transcript above from FATFlyer, they seem to be only running the numbers for the A220 and 737-7 MAX.

Okay. So they are not looking for "small" aircraft since they're evaluating 737-7 and A220-300.

If I remember well they have some 737-7 on order.
So, it is quite intriguing they would look into A220-300, unless the economics of the A220-300 is significantly better than 737-7 (on per seat basis).

The last time I did a comparison, the 737-7 has similar cost as A220-300 on per seat basis.

If they need small aircraft then it is strange they did not throw E195-E2 into the equation.

In the transcript they are not mentioning subtypes, just A220.
Would like to see your calculations, most comparisons point in the favor of the A220-300.

SWADawg · Mon Oct 26, 2020 12:38 pm

JonesNL wrote:
VV wrote:
JonesNL wrote:

See transcript above from FATFlyer, they seem to be only running the numbers for the A220 and 737-7 MAX.

Okay. So they are not looking for "small" aircraft since they're evaluating 737-7 and A220-300.

If I remember well they have some 737-7 on order.
So, it is quite intriguing they would look into A220-300, unless the economics of the A220-300 is significantly better than 737-7 (on per seat basis).

The last time I did a comparison, the 737-7 has similar cost as A220-300 on per seat basis.

If they need small aircraft then it is strange they did not throw E195-E2 into the equation.

In the transcript they are not mentioning subtypes, just A220.
Would like to see your calculations, most comparisons point in the favor of the A220-300.

I don’t believe that the E195-E2 is in the running. My opinion only is that they are considering the A220 because they are also seriously looking into another M&A event with JetBlue and the A220 is likely to be brought on by acquiring JetBlue after all of their training and manuals and infrastructure for this fleet is already in place. WN likes to study others before implementing new strategies like a second fleet type. AirTran already had all of the training and supporting infrastructure in place when WN acquired them. They had the option to keep the aircraft, but at the end of the day couldn’t justify keeping an airplane that was an orphan fleet and no longer in production. This time is totally different. WN is a very different airline than it was with AirTran and the A220 is based on a brand new platform and not a 30 year old design that the 717 was.

DaCubbyBearBar · Mon Oct 26, 2020 1:24 pm

Could even be a scenario where WN buys both. Say 150 A220-300 AND 200 MAX7. Has WN learned that 1 fleet type is rough when something goes wrong? They are trying to replace approximately 475 planes, so we COULD see both.

william · Mon Oct 26, 2020 2:15 pm

TTailedTiger wrote:
UpNAWAy wrote:
The MAX event has shown having all of your eggs in one companies basket is inherently risky. Just from a good corporate governance and ability to operate no matter what unforeseeable issues occur they would be smart to have a goal of a 50-50 Airbus & Boeing fleet. What if the issues with the MAX and the findings had resulted in all Boeing AC grounded and Boeing having to re-certify as a FAA approved company?

Would you make the same recommendation to Spirit, Frontier, and JetBlue?

I was wandering the same thing.

planecane · Mon Oct 26, 2020 2:43 pm

I think the key question is how many aircraft smaller than the 737-800/MAX 8 does WN really need? Hundreds of the existing 737-700s have over a decade of service life left in them for the short term. Even if it was determined that a fleet of 100 of a smaller frame would be ideal for certain routes, is it that much more ideal to have an A220 subfleet vs. just using slightly less efficient and slightly too big MAX 7s?

Even with the COVID problems and MAX problems, I'm sure Boeing will launch a new single aisle sometime in the next 7-10 years to replace the 737. Wouldn't it make more sense for WN to wait to see what Boeing offers and the Airbus response product and just move towards a common fleet of a new model starting in the early 2030's and just use the 737s (even sub-optimally) until then? Especially given the current fleet size and how many MAXs on order.

WayexTDI · Mon Oct 26, 2020 2:55 pm

TTailedTiger wrote:
WayexTDI wrote:
TTailedTiger wrote:

"Smart business". Would you make this same recommendation to Spirit, Frontier, JetBlue?

That's the second time you're saying this in this thread.
But you seem to forget that JetBlue has E190s on property and A220s on order (who will replace the former); so, they are not tied to a single aircraft type, like Southwest is.

JetBlue will still be tied to just one manufacturer. Not exactly good for competitive bids. And you ignored Frontier and Spirit. I'm asking why is it acceptable to have an all Airbus fleet but not an all Boeing fleet. I've never claimed that either an all A or all B fleet is the wrong way to go. So I'm curious why someone else would think it's an issue. We've had lots of threads about WN and FR needing to introduce a new fleet type. But we don't seem to get those kinds of threads for easyJet, Spirit, Allegiant, etc. So far no one has given me an answer and that leads me to believe that it is based on emotion rather than logic. Especially when phrases like "look how beautiful X would look in that livery" enter the conversation.

I didn't "ignore" Frontier or Spirit since it was going towards your argumentation; you did mention JetBlue, and I countered.
Alaska Airlines is all Boeing, so is Ryanair; no one seem to question them (especially not Alaska).

Talking about introducing new fleet type, Allegiant went through two of them in the past 10 years (757 in 2010 and A320Family in 2013).

When an Airbus operator switches to Boeing, it's all normal for a.net; but when an all Boeing operator switches to Airbus, it must have been due to bribes, airplanes given away, etc... Wanna talk about emotional?

WayexTDI · Mon Oct 26, 2020 2:59 pm

TTailedTiger wrote:
B777LRF wrote:
TTailedTiger wrote:
It's clear that you don't realize that OEM support is an ongoing element throughout the ownership of an aircraft (...) Unless Southwest wants to start manufacturing their own parts (good luck) or turn to the black market like some less than reputable airlines, they'll make no such statement to Boeing.

What's clear is that you don't realise the legal implications. Airliner (and engine) manufacturers have a legal obligation, as defined by aviation regulations, to provide support for their aircraft, regardless of whether the operator tells the manufacturer to "f you and the f-ing horse you rode in on" which, in the case of every Max owner and operator, would be a perfectly logical and understandable position to take. As for obtaining spares, there's a phalanx of legal and perfectly viable options for securing the vast majority of parts from independent sources. And where that's not possible, we're back at the aforementioned legal obligations.

No, they do not. See Airbus and Concorde and Boeing and the MD-80 as examples of that.

A swing and a miss: Airbus stopped supporting Concorde with the agreement of ALL the airlines that were operating it.

WayexTDI · Mon Oct 26, 2020 3:00 pm

mileduets wrote:
Although A-220 models are built in Alabama, they will not be considered US planes by a big part the flying public. Southwest and Alaska built up their marketing image for people with an ingrained "if it ain't Boeing, I ain't going" attitude. Alaska tried it out with a few Airbuses, but might move back to an all Boeing fleet after all, as it seems.

They'll just have a look at the safety card and it'll say "Final assembly of this aircraft was in the US" and won't blink an eye; guess the post 9/11 Patriot Act did not envision this...

WayexTDI · Mon Oct 26, 2020 3:08 pm

AZORMP wrote:
TaniTaniwha wrote:
flipdewaf wrote:
1. They definitely will get it, it’s the lowest CASM machine around and WN are sick of being screwed and want to teach Boeing a lesson because of the MAX.
2. They have to demonstrate to the shareholders that they are showing due diligence and have approached airbus as a way to extract the best price from Boeing, they will never leave Boeing.

Delete as appropriate.

Fred

Sent from my iPad using Tapatalk

Seriously, you think that's how big business works? They want to teach Boeing a lesson....?

Yes, when procurement folks are unhappy with how a company is performing, they are not above giving another company a chance to send a warning to their original supplier. It’s quite common, really.

Exactly. And WN is such an example: we received the repair contract for an LRU since their previous supplier (the NHA OEM, while we were the LRU OEM) did not perform according to their wish.

f4f3a · Mon Oct 26, 2020 3:18 pm

I imagine if wn can get the -7 cheap enough it will offsett the running cost compared with the a220. It's not just airframe but also engine diff if they switch . Although with a massive fleet that wn has .sub type of 50plus prob makes 2 fleet type economics not that different to single

Aptivaboy · Mon Oct 26, 2020 3:31 pm

Nothing to see here, move along.

What SW is doing is putting pressure on Boeing to cut prices, renegotiate, get a better deal on later aircraft, etc. Could it happen? Sure, if the price is rock bottom enough. Will it happen? Highly unlikely. This is gamesmanship, and probably nothing more. Boeing has reportedly been speaking with airlines about the 797 again according to several internet sources (some good, some questionable, but they're all broadly consistent) and SW will doubtless be on Boeing's target list for the plane, especially as SW continues flying longer missions like West Coast - Hawaii. This could also be a way of SW ensuring a very competitive price for the 797 moving forward.

As will things, time will tell. Until Airbus can actually prove that it can produce the A220 in quantity and on time, its more or less academic.

baje427 · Mon Oct 26, 2020 3:40 pm

Wasn't this said sometime last year as well ?

Revelation · Mon Oct 26, 2020 4:01 pm

texl1649 wrote:
I don’t want to be pedantic about it but I think there are a lot of new variables moving forward in 2021. Really, the “more than 1 type” philosophy is well proven to work, as in...basically 95% of the words airlines, and all of the other airlines that are not LCC’s (WN is not one today).

I'm not sure what the relevance of that is. Other airlines are other airlines. Adding a second fleet will mean a huge investment at WN right at the time they have their worst revenue picture ever. The CEO is saying adding a second fleet is easier now because of all the slack in the system. That's the line that got the headlines, but if you read the rest of the transcript you see that's about the only advantage. All the typical disadvantages are there, along with the fact they have record low revenue and are literally shrinking the airline.

Similarly, WN is now well beyond the Herb days when it was always “KISS” embodied for fleet types. The 738Max is indeed going to be their workhorse for the next 20 years. Their conspicuous lack of a large 737-7Max order has been noted many times, but I think it’s an indication they have been, for the past 5 years (pre-covid), moving to the 200 seat model whenever possible (it’s a huge airline today with mainline labor costs so that’s not surprising).

If their leadership team surveys the topography of US air travel in 2021 and sees (profitable) growth opportunity in...smaller market service again I could see a smaller/lighter type making sense, is all I’m saying. Whether that’s an E2 or A220 variant is certainly debatable. Much again has been written (by Boyd/elsewhere) about how Amarillo/Lubbock/Midland for instance are not the same markets they were 20 years ago, and a lot of markets half that size have seen outsized impacts from the service cutbacks of 2020. I see the issue being one of possible opportunity if in fact travel to places like Dubuque etc. resumes toward 2023 and the other US4 don’t wind up bringing back their ‘money losing’ (or previous) routes/capacity.

https://www.cnbc.com/2020/10/23/coronav ... ports.html

AirTran flew 717s to places like Dubuque and it just didn't work out for WN. As you say they have a high cost work force, and their operation is not set up as a network carrier. The US3 serve those places because some people want to go from Dubuque to international destinations and are willing to pay a premium for a through ticket with lots of profit on the longer legs. WN isn't in a position to capture that revenue.

JonesNL wrote:
The grounding probably has no influence regarding risk management and choosing an extra fleet to mitigate that risk. The Max grounding was unprecedented in duration. Almost once in an lifetime type of situation where you can not base your strategy on.

Well said.

I do believe it does depend on the next plane that Boeing is going to develop. The Embrear deal is off and so is the development of an smaller sub 150 plane. The hints that we are getting is that Boeing wants to develop an 250-270 plane first and that probably means that an possible new sub 150 plane from Boeing is 20 years out, at best. Seeing the transcript above shows that the need of WN is primarily a sub 150 on the tarmac from 2025 and onward.

I don't see it happening, but flying 15 years with a less efficient plane is a lot of profit you are leaving on the table...

It's not all profit, it comes with a lot of direct and indirect cost.

SWADawg wrote:
I don’t believe that the E195-E2 is in the running. My opinion only is that they are considering the A220 because they are also seriously looking into another M&A event with JetBlue and the A220 is likely to be brought on by acquiring JetBlue after all of their training and manuals and infrastructure for this fleet is already in place. WN likes to study others before implementing new strategies like a second fleet type. AirTran already had all of the training and supporting infrastructure in place when WN acquired them. They had the option to keep the aircraft, but at the end of the day couldn’t justify keeping an airplane that was an orphan fleet and no longer in production. This time is totally different. WN is a very different airline than it was with AirTran and the A220 is based on a brand new platform and not a 30 year old design that the 717 was.

Well, that's an interesting take. If you're going to break the mold, you might as well shatter it!

B6 comes with a lot of 30 year old designed aircraft, all those A320s.

Gary Kelley just said WN's problem isn't how to grow, it's how to shrink.

It's hard for me to see how you could merge the two and end up with the best of both rather than the worst.

AS and VX merger was not stellar, IMO.

Let us know when it's time to get out the popcorn.

FATFlyer · Mon Oct 26, 2020 4:01 pm

JonesNL wrote:
In the transcript they are not mentioning subtypes, just A220.
Would like to see your calculations, most comparisons point in the favor of the A220-300.

In the transcript they say they need a large number of aircraft using descriptions such as "150-ish seat narrow-body airplane" and "there's definitely a need for, what I would say, 140, 150-seat airplane versus 175-seat airplane".

Basically that explains the subtype of any aircraft they want to examine.

I will also point out for a few others that in the transcript, Gary Kelly says in terms of how many smaller aircraft they are considering

"Yes. I'll just emphasize the point that Mike made, which is -- and this may be in the essence of your question, we absolutely still need the smaller airplane prospectively. We have a ton of 737-700s that are coming up for retirement over the next five to 10 years. And we will absolutely want to replace them.

But we're certainly not thinking that we want all 175 seaters. We'll want -- and I hesitate to guess today, but I mean, if you assumed it's half and half, that's probably as good a guess as anybody's right now about what the future is there, but we'll need a large number of the smaller gauge.

randomdude83 · Mon Oct 26, 2020 4:09 pm

Does anyone know if having the one type only truly benefits SW cost wise?

Meaning, do they find them selves subbing equipment without the need to sub pilots that frequent?

I feel that we have to keep in mind that despite the MAX issues, the NG 700 and 800s are fairly reliable and made SW what it is.

The Max 7 with its 150 passenger is the perfect 700NG replacement Unless Airbus Counters with a 150 Passenger A220-500....

That would be compiling and i'd say SW would be making a poor decision to turn that down as a A220-500 would have a clear efficiency advantage and airbus is sure to make a great offer to get into the SW fleet.

JonesNL · Mon Oct 26, 2020 4:41 pm

Revelation wrote:
...
It's not all profit, it comes with a lot of direct and indirect cost.
...

Won't the direct and indirect cost be easily compensated by the efficiencies at the scale that WN operates?
Seeing the latest bolded statements in FATFlyer comment WN is talking about half their fleet...

FLALEFTY · Mon Oct 26, 2020 4:43 pm

One possible scenario for WN is that they will agree to start taking the 30 B737-7's they have on firm order after the grounding is lifted. Seven of these types are finished at Boeing, already painted in WN's livery and are ready for delivery (pending the required AD mods). The B737-7's could possibly end up as a sub fleet similar to the 25 B735's they used to have.

Then will come the replacement decision for the rest of the B73G fleet. This is where Airbus will come into the picture since the A223 will likely be a 140-seat aircraft in WN's configuration and closer in size to and more efficient than the heavier, 143-seat B73G's. I expect Airbus will help be a matchmaker for some of the leasing companies who have already ordered the A223, but lost customers due to the pandemic, to work out favorable leases for 50 A223's to allow WN to start making the transition. This will buy Airbus Canada time to get their two A220 FAL's up to full-rate production and work off their backlogs, opening the door to working out a much larger, direct order with WN in the 2021-22 timeframe.

Capricorn · Mon Oct 26, 2020 5:15 pm

planecane wrote:
Even with the COVID problems and MAX problems, I'm sure Boeing will launch a new single aisle sometime in the next 7-10 years to replace the 737. Wouldn't it make more sense for WN to wait to see what Boeing offers and the Airbus response product and just move towards a common fleet of a new model starting in the early 2030's and just use the 737s (even sub-optimally) until then? Especially given the current fleet size and how many MAXs on order.

Could that not also be the exact reason why WN is looking at the A220? In case Boeing's NSA will end up being bigger than the current generation of 737s, which might be too big for replacing all of Was current 737 fleet. Especially since Boeing maybe is thinking about an NSA that can evocatively complete with the A321. In case the NSA does indeed end up being larger then WN has the binary choices of either upgaughing their fleet in the process or order from another plane maker (Airbus or Embraer). In case WN has more insight into what Boeing is actually developing for the future, there might ultimately be some rational in already ordering A220, as it might end up be eventually inevitable to switch to either Embraer or Airbus for replacing their smaller planes.

keesje · Mon Oct 26, 2020 5:16 pm

What if the US build A223 has 15% lower operating costs, is quieter and no other airline in the world wants the 737-7?

Southwest has 500 737-700s but pushed their small 737-7 order out, even before the MAX crashes.

https://www.bloomberg.com/news/articles ... x-7-planes

CarlosSi · Mon Oct 26, 2020 5:34 pm

Nevermind having two types; imagine a whole a220 fleet! Including -300s and maybe the -500. Seems.... very long term though. By the time the MAX is seeing retirements the a220 would already be kinda old too.

ILNFlyer · Mon Oct 26, 2020 6:03 pm

JetBlue "taught Boeing a lesson", but those were different circumstances and a different airline and business model.

JonesNL · Mon Oct 26, 2020 6:27 pm

keesje wrote:
What if the US build A223 has 15% lower operating costs, is quieter and no other airline in the world wants the 737-7?

Southwest has 500 737-700s but pushed their small 737-7 order out, even before the MAX crashes.

https://www.bloomberg.com/news/articles ... x-7-planes

I am not sure the 15% figure holds any ground. Leeham did an extensive write up comparing the A223, A319neo and 737-7 MAX. A223 did ~8% better on trip cost and ~5% better on a cost per seat basis. It might have changed with time but I am guessing not by much. There were/are talks that with PIPs the delta between the A223 and the other two would become bigger...

https://leehamnews.com/2017/10/19/econo ... 737-max-7/

UPNYGuy · Mon Oct 26, 2020 6:31 pm

ILNFlyer wrote:
JetBlue "taught Boeing a lesson", but those were different circumstances and a different airline and business model.

And along this same line, I guarantee some of the C-Suite remember the issues B6 had when they started going 2 fleet. They went to E190 and it didn’t go well. From a pax perspective it became a great plane, once the teething issues were resolved. I have heard it referred to as the E180 several times do to the computer resets.

DenverTed · Mon Oct 26, 2020 6:46 pm

bigb wrote:
DenverTed wrote:
Could WN and Alaska operate the E175E2 since they do not have the same scope clause contract on weight as UA, AA, and DL?

Yes if operated my WN pilots. Southwest has scope clauses. Must be operated by WN pilots.

In which case, perhaps the E190E2 would make more sense with more seats in that scenario.

marcogr12 · Mon Oct 26, 2020 7:37 pm

How come Southwest never maxed its capacity on the 738s to 189pax like all other LCCs/Charter airlines do, to get more revenue out of bums-on-seats? With the 737-700 i'd say the same but it's pretty close (143) to the "standard" 148 config.

seratonin77 · Mon Oct 26, 2020 7:44 pm

SXDFC wrote:
Perhaps someone can educate me on this one. Before COVID, WN only ran the MAXs for four legs a day, typically legs like BWI- LAS, etc. From my understanding the MAXs engines are that durable to do 5+ legs a day. Lastly the economics of some of the shorter routes (LAS- RNO, ISP-BWI, DAL-HOU) favor the A220 as cheaper to operate than a MAX7. Again if someone could educate me on both of those issues, that would be great... Although I’d luv to see a WN A223

I didn't know 737's had a limit/recommendation to how many legs they do a day. Does letting it sit overnight (or whenever after 5 legs) allow for more cycles vs running it 6+ legs a day?

seratonin77 · Mon Oct 26, 2020 7:55 pm

catdaddy63 wrote:
I don't see them ordering anything other than MAX until NSA shows up. Having two pilot pools raises their costs as I doubt the pilots union would allow the pay scale to be any different from the 737 as well as limiting crew and route flexibility. Now a Max-10 order I could definitely see happening.

Could they hire a new set of pilots to fly the Airbus, paying them less? Then as they get seniority move up to the 737, or is that prohibited in their contract?

Obviously adding the 220 would increase costs, but could flying more efficiently on some routes and getting into smaller markets offset the costs?

I realize this isn't in their playbook but neither was flying into La Guardia or O'hare. Business models change.

OB1504 · Mon Oct 26, 2020 7:58 pm

strfyr51 wrote:
flipdewaf wrote:
eraugrad02 wrote:
What say you guys?

1. They definitely will get it, it’s the lowest CASM machine around and WN are sick of being screwed and want to teach Boeing a lesson because of the MAX.
2. They have to demonstrate to the shareholders that they are showing due diligence and have approached airbus as a way to extract the best price from Boeing, they will never leave Boeing.

Delete as appropriate.

Fred

Sent from my iPad using Tapatalk

I think thats kind of strange since Boeing did all that Funny Stuff Just FOR Southwest. But? If that's the case? Then WN should Never have any input into any Boeing design and Boeing should build their Airplanes on a "take it or Leave it" attitude.

Southwest never asked Boeing for an unsafe airplane and any shortcuts Boeing took to deliver a product that met Southwest’s specifications are entirely the fault of the manufacturer, not the airline.

marcogr12 wrote:
How come Southwest never maxed its capacity on the 738s to 189pax like all other LCCs/Charter airlines do, to get more revenue out of bums-on-seats? With the 737-700 i'd say the same but it's pretty close (143) to the "standard" 148 config.

Southwest is not an ultra-low cost carrier and often commands a fare premium by offering a better base product than the competition. Cramming in seats at sub 30” pitch would make them a lot less attractive to business travelers, for starters.

Revelation · Mon Oct 26, 2020 8:24 pm

JonesNL wrote:
I am not sure the 15% figure holds any ground. Leeham did an extensive write up comparing the A223, A319neo and 737-7 MAX. A223 did ~8% better on trip cost and ~5% better on a cost per seat basis. It might have changed with time but I am guessing not by much. There were/are talks that with PIPs the delta between the A223 and the other two would become bigger...

https://leehamnews.com/2017/10/19/econo ... 737-max-7/

It's a shame this is behind a paywall.

The part we can see:

Summary:
* The A319neo has 126 seats in our normalized domestic cabin, the CS300 132 seats and the 737 MAX 7 138 seats.
* The CSeries is more fuel efficient, both on a trip basis and on a per seat basis, than the smaller A319neo and the larger 737 MAX 7.
* On a total cost basis, the CS300 is the lower cost aircraft (as long as normal net pricing prevails, it's best to add).

... suggests a different config than the WN MAX 7 with 147 seats and suggests the operating cost difference might be made up with aggressive pricing which is something Boeing can move on since it has so much more production volume than A220. Then you need to consider the direct (training, maintenance) and indirect (network inefficiency) cost of a 2nd type and I think Boeing is the likely winner.

morrisond · Mon Oct 26, 2020 8:29 pm

Revelation wrote:
JonesNL wrote:
I am not sure the 15% figure holds any ground. Leeham did an extensive write up comparing the A223, A319neo and 737-7 MAX. A223 did ~8% better on trip cost and ~5% better on a cost per seat basis. It might have changed with time but I am guessing not by much. There were/are talks that with PIPs the delta between the A223 and the other two would become bigger...

https://leehamnews.com/2017/10/19/econo ... 737-max-7/

It's a shame this is behind a paywall.

The part we can see:

Summary:
* The A319neo has 126 seats in our normalized domestic cabin, the CS300 132 seats and the 737 MAX 7 138 seats.
* The CSeries is more fuel efficient, both on a trip basis and on a per seat basis, than the smaller A319neo and the larger 737 MAX 7.
* On a total cost basis, the CS300 is the lower cost aircraft (as long as normal net pricing prevails, it's best to add).

... suggests a different config than the WN MAX 7 with 147 seats and suggests the operating cost difference might be made up with aggressive pricing which is something Boeing can move on since it has so much more production volume than A220. Then you need to consider the direct (training, maintenance) and indirect (network inefficiency) cost of a 2nd type and I think Boeing is the likely winner.

I thought they made the 737-7 longer just so it fit 150 exactly for WN? Was 147 the number they decided to take it too?

JetBuddy · Mon Oct 26, 2020 8:31 pm

Southwest currently has around 495 x 737-700 and 207 x 737-800.

They have ordered 30 x 737-7 MAX and 246 x 737-8 MAX.

They're saying many of the 737-8 MAX will replace older 737-700. But even if every single 737-8 MAX was a replacement for older 737-700, only half the fleet would be replaced. The 737-700 fleet needs to be replaced.

Overhead commonality costs diminish the larger the fleet. If Southwest ordered 100 or more A220, the fleet commonality costs would be minimal compared to the savings of operating a more modern type.

I don't think Southwest will ever stop operating Boeing aircraft. But I think it would be silly to believe they would only operate Boeing aircraft forever.

morrisond · Mon Oct 26, 2020 8:34 pm

I found an article - it may be old - saying they intend to put 143 in it. Is that old info? https://www.cnbc.com/2018/01/03/southwe ... -soon.html

What is the right number?

Revelation · Mon Oct 26, 2020 9:19 pm

morrisond wrote:
I found an article - it may be old - saying they intend to put 143 in it. Is that old info? https://www.cnbc.com/2018/01/03/southwe ... -soon.html

What is the right number?

https://en.wikipedia.org/wiki/Southwest_Airlines_fleet suggests 150 is the right number, and I can't find a more definitive reference.

Unfortunately it doesn't provide an exact reference.

https://thepointsguy.com/news/inside-737-max-7/ suggests you can pack in as many as 172 in a high density config, ugh!

Who is online

Popular Searches On Airliners.net