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barney captain
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WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:38 pm

It's seems the A220 was never seriously considered, putting to rest all the speculation.
“Southwest acknowledged the merits of the A220, but there was no competition” for a commercially-based bid, LNA is told.

https://leehamnews.com/2021/04/05/ponti ... us-to-bid/
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ty97
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:47 pm

This seemed obvious from day 1. It was just a bargaining chip to help with negotiation for the MAX.
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:48 pm

This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.
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Scarebus34
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:52 pm

Anyone who thought WN was seriously contemplating the A220 is a fool.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:53 pm

Is this tread really necessary???

Long discussion and merits here:
viewtopic.php?f=3&t=1459259
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:58 pm

EMBSPBR wrote:
Is this tread really necessary???

Long discussion and merits here:
viewtopic.php?f=3&t=1459259


Different discussion. This article puts 75% of that thread to rest.
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 6:59 pm

Antarius wrote:
EMBSPBR wrote:
Is this tread really necessary???

Long discussion and merits here:
viewtopic.php?f=3&t=1459259


Different discussion. This article puts 75% of that thread to rest.


Same stuff !
 
2eng2efficient
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:01 pm

Scarebus34 wrote:
Anyone who thought WN was seriously contemplating the A220 is a fool.


Did Boeing? Or did they call WN’s bluff?
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:14 pm

Antarius wrote:
This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.

With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:14 pm

Antarius wrote:
EMBSPBR wrote:
Is this tread really necessary???

Long discussion and merits here:
viewtopic.php?f=3&t=1459259


Different discussion. This article puts 75% of that thread to rest.


I disagree with your first point it being a different discussion. This thread can be combined. But I agree with your second point.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:16 pm

smartplane wrote:
Antarius wrote:
This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.

With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.


Yet, WN didn't even ask for a bid. Which means the price wasn't the deciding factor. No one is disputing that credits made the MAX7 order cheaper, but this article shows that it didn't come down to Airbus not being able to compete on price.

WN evaluated the cost of having a second fleet to be more than the efficiency gain of the second fleet. And that was the end of the evaluation.
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:20 pm

Antarius wrote:
smartplane wrote:
Antarius wrote:
This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.

With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.


Yet, WN didn't even ask for a bid. Which means the price wasn't the deciding factor. No one is disputing that credits made the MAX7 order cheaper, but this article shows that it didn't come down to Airbus not being able to compete on price.

WN evaluated the cost of having a second fleet to be more than the efficiency gain of the second fleet. And that was the end of the evaluation.
Seems all logical, good idea to make the separate thread! :)

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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:31 pm

Antarius wrote:
smartplane wrote:
Antarius wrote:
This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.

With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.


Yet, WN didn't even ask for a bid. Which means the price wasn't the deciding factor. No one is disputing that credits made the MAX7 order cheaper, but this article shows that it didn't come down to Airbus not being able to compete on price.

WN evaluated the cost of having a second fleet to be more than the efficiency gain of the second fleet. And that was the end of the evaluation.


I don't see that you can draw that conclusion - WN could have worked out on their own that Airbus were never going to want to match the price they knew they could extract from Boeing. Just as Airbus know they are never going to match Ryanair's price aspirations for an Airbus order.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:39 pm

This is the third blog post written by Scott Hamilton about Southwest choosing the 737 over the A220 in the last two weeks. I wonder where his anonymous sources came from? Was Leeham news’ source from Airbus trying to provide fodder for why Boeing won?
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 7:56 pm

DartHerald wrote:
Antarius wrote:
smartplane wrote:
With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.


Yet, WN didn't even ask for a bid. Which means the price wasn't the deciding factor. No one is disputing that credits made the MAX7 order cheaper, but this article shows that it didn't come down to Airbus not being able to compete on price.

WN evaluated the cost of having a second fleet to be more than the efficiency gain of the second fleet. And that was the end of the evaluation.


I don't see that you can draw that conclusion - WN could have worked out on their own that Airbus were never going to want to match the price they knew they could extract from Boeing. Just as Airbus know they are never going to match Ryanair's price aspirations for an Airbus order.


I've never met an interested party that doesn't invite a bid.

The key point in the article is that WN liked the A220 and it's better economics but didn't want the downsides of a second fleet type. That fundamentally renders any second fleet type bid moot.
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 8:05 pm

Antarius wrote:
The key point in the article is that WN liked the A220 and it's better economics but didn't want the downsides of a second fleet type. That fundamentally renders any second fleet type bid moot.


Well, no. At some point - for every rational operator - the savings become big enough that you learn to deal with the complexities. Purchase price has to be part of the ROI calculation.

Some carriers manage fleet complexity better than others. Some are finally coming around to recognizing possible costs of those complexities (uh, DL pilot crewing, as Exhibit A; AS dumping 319s and 320s as Exhibit B).
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 8:09 pm

Does this take WN off the list for Airbus, just like Raynair is? No use to invest time in.
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 9:13 pm

MIflyer12 wrote:
Some carriers manage fleet complexity better than others. Some are finally coming around to recognizing possible costs of those complexities (uh, DL pilot crewing, as Exhibit A; AS dumping 319s and 320s as Exhibit B).

Why would AS keep the A321 if you want to reduce complexities?
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 9:14 pm

Dutchy wrote:
Does this take WN off the list for Airbus, just like Raynair is? No use to invest time in.


Until WN buys an Airbus operator, yes. That's just a matter of time.

Weatherwatcher1 wrote:
Leeham news’ source from Airbus trying to provide fodder for why Boeing won?


Leeham often seems to be little more than an Airbus PR agency so...

MIflyer12 wrote:
Well, no. At some point - for every rational operator - the savings become big enough that you learn to deal with the complexities. Purchase price has to be part of the ROI calculation.


It's not clear the savings could have realistically overcome the potential cost of foregone revenue. B6's A220-300 will carry 140 passengers; it's not clear whether a hypothetical WN configuration would seat 140 or 145. The MAX 7 will have 150 seats at WN which represents 3.3 to 6.7% more capacity. It's unlikely WN would be able to get a lower rate from its pilots for the A220, so you're looking at the same labor costs with either choice. The overall reduction in fuel burn may not lower operating expense enough given the rest of their costs would be fixed -- and, of course, there are all the expenses involved in operating multiple fleet types.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 10:28 pm

I wonder how that one poster (Revelation?) feels after he/she just coudlnt stop getting down on Southwest for not getting this sale despite other posters pretty much saying what is said in this article.
 
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Re: WN - A220 vs MAX "Never A Competition"

Mon Apr 05, 2021 11:39 pm

ScottB wrote:
Dutchy wrote:
Does this take WN off the list for Airbus, just like Raynair is? No use to invest time in.


Until WN buys an Airbus operator, yes. That's just a matter of time.



I think so. BCA were obviously in something of jam WRT the credits for the MAX 7. But they also knew WN were not about to overhaul their operations overnight —at least to the point they can accommodate more fleet types. I think they need to get WN to a point where they are paying something a little closer to list.

I also think they will get to a point where they are merged with some AB operator, but that is not necessarily soon. This order is a very clear signal that that is the most likely way to see an AB in WN colors. This is well indicated by the fact that even though they had interest in the A223s, AB did not send a bid.
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 12:41 am

ScottB wrote:

Weatherwatcher1 wrote:
Leeham news’ source from Airbus trying to provide fodder for why Boeing won?


Leeham often seems to be little more than an Airbus PR agency so...


Leeham may be acting as Airbus’ PR firm. Given three articles in two weeks and “anonymous sources” it feels like Airbus may be trying to get the word out that they didn’t get to compete for the Southwest order in case anyone is comparing the 737-7 and A220 for future orders. There is no shortage of consultants out there who read all the blogs and want to know why southwest ordered the planes that they did. But who knows. It’s just speculation about anonymous sources.
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 12:59 am

I don't really know about that.

Boeing isn't going to make the 737 forever, and definitely won't create a new re-engine variant especially after the fiasco with the Max. Eventually Southwest will have to decide what aircraft type it will wish to adopt as its workhorse, which means that for sometime it will have two types in the fleet as the 737 is slowly retired. This easily could have been the starting point for that process, moving to an a220-only fleet, long-term.

But, the Max is still fairly new and WN is still taking very many deliveries, so to replace the Max with an a220 would have been premature anyways. Maybe in the future it would consider replacing its Max with an a220 NEO when that ever happens.
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 4:32 am

Does anyone else get sick of the inevitable a.net allegations that "Leeham is an Airbus mouthpiece" every time they write something mildly inconvenient for Boeing?

Personally I find it a little amusing how the people who normally say that any deal will happen at the right "business is business" suddenly turn around and say that there was never a chance of a CSeries sale.

Personally, I'm a little sad that noone such as Southwest, COPA, Frontier or Spirit has made a big order for E195E2s for their 737-700/A319 size replacement.
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Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 4:40 am

zkojq wrote:
Does anyone else get sick of the inevitable a.net allegations that "Leeham is an Airbus mouthpiece" every time they write something mildly inconvenient for Boeing?


How is this article even remotely inconvenient for Boeing? Some real projection going on.

The only people scratching their heads are those on a.net who were convinced that the A220 was in the cards. The rest of us, Boeing, WN and Airbus were more grounded in reality.
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 11:11 am

The jet southwest orders next will be whatever Boeing uses to replace the MAX. And that jet will have MAJOR input from southwest, Ryanair, United etc. Southwest knows they cannot last with the 737 forever. But when the day comes they want to be very well prepared and informed. So they will an integral part of what that next jet does and what it ought to be able to do, especially the 180-200 seater variant
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 11:19 am

I am sure Airbus is pleased by WN's confirmation that the A220 beats the 7-MAX on economics, other things being equal.

Airlines less wedded to 737 single-type operations than WN will surely take note!
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 11:55 am

He means A220 discount is not attractive
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 12:39 pm

JerseyFlyer wrote:
I am sure Airbus is pleased by WN's confirmation that the A220 beats the 7-MAX on economics, other things being equal.

Airlines less wedded to 737 single-type operations than WN will surely take note!

That was never really in dispute. It’s well known that the A220 beats the Max 7 and A319neo in economics all else being equal.

The problem of course is all else is never equal, whether the airline is a single type operator (737 or A320 it doesn’t matter) or a multi type operator. The cost to purchase the plane and integrate it into the fleet (since the A220 is a brand new type for all potential operators) always has to be considered. And right now the A220 has a lot of headwinds in achieving competitive 737/A320 pricing. Hence why Southwest opted to add more 737-7s. Or why Spirit opted for A319neos.
 
bond787
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 1:25 pm

Realistically, would Airbus be able to supply enough A220's in the time frame required by WN?
 
Lootess
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 1:45 pm

Not surprising, you know someone probably presented a slide in the board room of what the airline costs would be like if they actually considered the A220 to their line-up vs all-Boeing.
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 1:58 pm

chunhimlai wrote:
He means A220 discount is not attractive


No reason to discount the A220.
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 2:27 pm

MrBren wrote:
chunhimlai wrote:
He means A220 discount is not attractive


No reason to discount the A220.


And they can't discount it due to the cost structure and make money.

There was no reason for Airbus to sell the A220 at a loss here.
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 2:55 pm

smartplane wrote:
With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.

Boeing made a good business decision to use purchase credits for compensation wherever possible. It helped keep customers loyal. It gave airlines a good reason to order MAX regardless of the bad press due to the tragic events. Note how all the press around the WN MAX7 deal was about the economics.

maverick4002 wrote:
I wonder how that one poster (Revelation?) feels after he/she just coudlnt stop getting down on Southwest for not getting this sale despite other posters pretty much saying what is said in this article.

That doesn't represent my point at all, so I'm not sure who you are referring to.

We've had threads going back at least the last four years here on a.net touting CS/A220's prospects at WN and it was me saying that they just didn't understand WN's business model and the value it placed on single fleet operations. I kept providing direct quotes from WN's CEO about how much they valued the 737 family and single fleet operations and they were portrayed as negotiating posture to get a better price on A220!

We had all kinds of suggestions that Airbus would use A220 as a strategic weapon, undercut Boeing to get A220 into the biggest fleet of aircraft in this size class in the world, use the resulting production volume to lower costs for the entire backlog, allow the A225 to be introduced, allow Airbus to cede the 175 seat and below market to A220 and focus on 175 and above for future A320 family members, yada yada.

If anything this order shows there are some operators who are going to cling to A319/A320 stronger than many here presumed. IMO it also shows A220 simply doesn't have the production volume and thus cost base to compete for orders the size of WN's. I think A220 is a lot further back on its ramp up than some posters here project.

It also shows to me that the post-Leahy, post-bribery scandal version of Airbus isn't going to fight tooth and nail to win major Boeing customers. They have a huge backlog and their focus is on converting that backlog to profit rather than winning more market share, which IMO is a sensible if less entertaining strategy.

DarkSnowyNight wrote:
I think so. BCA were obviously in something of jam WRT the credits for the MAX 7. But they also knew WN were not about to overhaul their operations overnight —at least to the point they can accommodate more fleet types. I think they need to get WN to a point where they are paying something a little closer to list.

I also think they will get to a point where they are merged with some AB operator, but that is not necessarily soon. This order is a very clear signal that that is the most likely way to see an AB in WN colors. This is well indicated by the fact that even though they had interest in the A223s, AB did not send a bid.

Even a merger with an AB operator doesn't guarantee a future mixed fleet. We've seen WN buy FL and keep the 737s but pay DL to take the 717s off their hands.

I think it would have been great timing for an A220 win at WN. The lack of flying at WN due to covid means there are lots of manpower resources that could be used to induct A220s available. The improved trip economics also matter more when there is less flying. Boeing is weakened due to covid and mcas and losing WN to A220 would have been quite destabilizing to MAX's future and thus Boeing's future. For AB it would have meant losing money in the short term but making more in the long term. Yet it's clear whatever they were prepared to offer wasn't good enough to convince WN to go to a mixed fleet and that A220's manufacturing side is still not close to being ramped up enough to provide the production volume and cost needed to compete for this order. Now we have WN and other large MAX customers with orders locked in through the end of this decade and in a position to partner on Boeing's next generation aircraft, whatever they end up being.

Antarius wrote:
And they can't discount it due to the cost structure and make money.

There was no reason for Airbus to sell the A220 at a loss here.

I think there were lots of reasons, mainly strengthen A220 production volume and critically weaken Boeing at a very vulnerable time. Yet I also think we see the A220 program is in not as good a place as some projected/suggested over the years and the current Airbus management team is not as combative as previous teams were.

Keep in mind Airbus executives have been quoted in the aviation media as saying the reason they invested in the A320neo was to crush BBD and the C Series.

Seems this generation is less interested in crushing competitors and more interested in the quarterly results.
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 3:17 pm

zkojq wrote:
Does anyone else get sick of the inevitable a.net allegations that "Leeham is an Airbus mouthpiece" every time they write something mildly inconvenient for Boeing?

Personally I find it a little amusing how the people who normally say that any deal will happen at the right "business is business" suddenly turn around and say that there was never a chance of a CSeries sale.

Personally, I'm a little sad that noone such as Southwest, COPA, Frontier or Spirit has made a big order for E195E2s for their 737-700/A319 size replacement.


No, and I subscribe to it just get the latest news on Airbus because he does lean toward an Airbus PR. Just read their comment section, it will tell you which way they lean. Nothing wrong with that, his preference.

As regards the subject of this post. I think SWA has been on the "Ryanair" list with Airbus for years, its only here Anet that would be a "revelation" 8-) (see what I did there?) . I seriously want to know how many A320 models left by Airbus Sales does SWA have in the closet?
 
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william
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 3:39 pm

Revelation wrote:
smartplane wrote:
With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.

Boeing made a good business decision to use purchase credits for compensation wherever possible. It helped keep customers loyal. It gave airlines a good reason to order MAX regardless of the bad press due to the tragic events. Note how all the press around the WN MAX7 deal was about the economics.

maverick4002 wrote:
I wonder how that one poster (Revelation?) feels after he/she just coudlnt stop getting down on Southwest for not getting this sale despite other posters pretty much saying what is said in this article.

That doesn't represent my point at all, so I'm not sure who you are referring to.

We've had threads going back at least the last four years here on a.net touting CS/A220's prospects at WN and it was me saying that they just didn't understand WN's business model and the value it placed on single fleet operations. I kept providing direct quotes from WN's CEO about how much they valued the 737 family and single fleet operations and they were portrayed as negotiating posture to get a better price on A220!

We had all kinds of suggestions that Airbus would use A220 as a strategic weapon, undercut Boeing to get A220 into the biggest fleet of aircraft in this size class in the world, use the resulting production volume to lower costs for the entire backlog, allow the A225 to be introduced, allow Airbus to cede the 175 seat and below market to A220 and focus on 175 and above for future A320 family members, yada yada.

If anything this order shows there are some operators who are going to cling to A319/A320 stronger than many here presumed. IMO it also shows A220 simply doesn't have the production volume and thus cost base to compete for orders the size of WN's. I think A220 is a lot further back on its ramp up than some posters here project.

It also shows to me that the post-Leahy, post-bribery scandal version of Airbus isn't going to fight tooth and nail to win major Boeing customers. They have a huge backlog and their focus is on converting that backlog to profit rather than winning more market share, which IMO is a sensible if less entertaining strategy.


DarkSnowyNight wrote:
I think so. BCA were obviously in something of jam WRT the credits for the MAX 7. But they also knew WN were not about to overhaul their operations overnight —at least to the point they can accommodate more fleet types. I think they need to get WN to a point where they are paying something a little closer to list.

I also think they will get to a point where they are merged with some AB operator, but that is not necessarily soon. This order is a very clear signal that that is the most likely way to see an AB in WN colors. This is well indicated by the fact that even though they had interest in the A223s, AB did not send a bid.

Even a merger with an AB operator doesn't guarantee a future mixed fleet. We've seen WN buy FL and keep the 737s but pay DL to take the 717s off their hands.

I think it would have been great timing for an A220 win at WN. The lack of flying at WN due to covid means there are lots of manpower resources that could be used to induct A220s available. The improved trip economics also matter more when there is less flying. Boeing is weakened due to covid and mcas and losing WN to A220 would have been quite destabilizing to MAX's future and thus Boeing's future. For AB it would have meant losing money in the short term but making more in the long term. Yet it's clear whatever they were prepared to offer wasn't good enough to convince WN to go to a mixed fleet and that A220's manufacturing side is still not close to being ramped up enough to provide the production volume and cost needed to compete for this order. Now we have WN and other large MAX customers with orders locked in through the end of this decade and in a position to partner on Boeing's next generation aircraft, whatever they end up being.

Antarius wrote:
And they can't discount it due to the cost structure and make money.

There was no reason for Airbus to sell the A220 at a loss here.

I think there were lots of reasons, mainly strengthen A220 production volume and critically weaken Boeing at a very vulnerable time. Yet I also think we see the A220 program is in not as good a place as some projected/suggested over the years and the current Airbus management team is not as combative as previous teams were.

Keep in mind Airbus executives have been quoted in the aviation media as saying the reason they invested in the A320neo was to crush BBD and the C Series.

Seems this generation is less interested in crushing competitors and more interested in the quarterly results.


Not saying Airbus is getting lazy, but instead enjoying the gains from the past years. Years of backlogs are good (A320/A321), now its time to turn it into money and more importantly profits. Like you stated, whats the point of winning an order if you are going to loose major money on every unit with no hope of recovery even with services sold. And again, Airbus knew SWA was not serious.
 
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Revelation
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 3:40 pm

william wrote:
As regards the subject of this post. I think SWA has been on the "Ryanair" list with Airbus for years, its only here Anet that would be a "revelation" 8-) (see what I did there?) . I seriously want to know how many A320 models left by Airbus Sales does SWA have in the closet?

Thanks for the tip of the hat (I think!).

I haven't seen any indications that relations between AB and WN are anything but cordial. I think we have seen indications that relations between AB and FR are strained at best. That's the impression I get from reading the aviation media.

We did have the Ostrower report that GE was holding up some aspect of the WN MAX7 deal which was accompanied by at least a mild threat to consider A220. I wonder if we'll ever learn what that was all about.

WN clearly has evaluated the A220 but that's something all airlines do out of due diligence. It pays to know what competitors will be gaining by buying A220. However in the end its clear they don't think A220 was a big threat otherwise they would have been buying them instead of MAX7.
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ILNFlyer
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 3:45 pm

Antarius wrote:
smartplane wrote:
Antarius wrote:
This should put to end the "gave away the MAX7 for free" argument too.

Fundamentally, this was a case of single type benefits outweighing multiple fleet types, despite the Opex advantages of the new potential fleet type.

And that's it.

With volume credits (Tier 1), and two compensation-related (Tiers 2 and 3), no way Airbus would get close to Boeing pricing.

Credits are event and timing conditional, never disclosed, or even attributed publicly to orders, let alone specific tranches and units.

MAX 7 not free. Cash flow positive yes. Profitable at delivery - unlikely. Profitable by end of life - yes.


Yet, WN didn't even ask for a bid. Which means the price wasn't the deciding factor. No one is disputing that credits made the MAX7 order cheaper, but this article shows that it didn't come down to Airbus not being able to compete on price.

WN evaluated the cost of having a second fleet to be more than the efficiency gain of the second fleet. And that was the end of the evaluation.


IIRC the issue was engine pricing from GE, not the price from Boeing.
 
bob75013
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 3:47 pm

JerseyFlyer wrote:
I am sure Airbus is pleased by WN's confirmation that the A220 beats the 7-MAX on economics, other things being equal.

!


That and $5 will net $5 to the order book.
 
travaz
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 4:21 pm

I personally never thought that WN was going to order the A220. A large nut to crack for Airbus was the credits and compensation that Boeing and WN had negotiated. When it comes time for Boeing to clean sheet an airplane in the 150-220 seat class, WN will be consulted and WN will be looking for a way to have a common type rating like the Max and NG.
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 5:31 pm

Revelation wrote:
Antarius wrote:
And they can't discount it due to the cost structure and make money.

There was no reason for Airbus to sell the A220 at a loss here.

I think there were lots of reasons, mainly strengthen A220 production volume and critically weaken Boeing at a very vulnerable time. Yet I also think we see the A220 program is in not as good a place as some projected/suggested over the years and the current Airbus management team is not as combative as previous teams were.

Keep in mind Airbus executives have been quoted in the aviation media as saying the reason they invested in the A320neo was to crush BBD and the C Series.

Seems this generation is less interested in crushing competitors and more interested in the quarterly results.


I'm not sure that's a very good reason. Selling a bunch of planes at a big loss when you own a dominant position in the market is like cutting off your nose to spite your face. Airbus was the underdog for many years and therefore needed to scrap it out to grow. Now that they're half the duopoly, sacrificing margin for a little more market share would be a poor financial decision.

I think all parties walked away happy here.
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Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 5:33 pm

Polot wrote:
JerseyFlyer wrote:
I am sure Airbus is pleased by WN's confirmation that the A220 beats the 7-MAX on economics, other things being equal.

Airlines less wedded to 737 single-type operations than WN will surely take note!

That was never really in dispute. It’s well known that the A220 beats the Max 7 and A319neo in economics all else being equal.


And airlines have access to all this data before making a decision. The battle was lower opex vs commonality, all well known.
Militant Centrist
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FluidFlow
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 6:02 pm

WN will have looked at the A220 and the A320 family and they will have made an internal study which one is fitting better. They will also have gotten quotes. If not the board will be in for a rough ride if a shareholder will press them on why the MAX-7 was choosen. Especially if they cant show why the MAX-7 was overall cheaper for WN.
You face a potential law suite if you cant present facts for your decisons and the facts have to prove that you made the best decision for your business.
 
Weatherwatcher1
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 6:42 pm

william wrote:
zkojq wrote:
Does anyone else get sick of the inevitable a.net allegations that "Leeham is an Airbus mouthpiece" every time they write something mildly inconvenient for Boeing?

Personally I find it a little amusing how the people who normally say that any deal will happen at the right "business is business" suddenly turn around and say that there was never a chance of a CSeries sale.

Personally, I'm a little sad that noone such as Southwest, COPA, Frontier or Spirit has made a big order for E195E2s for their 737-700/A319 size replacement.


No, and I subscribe to it just get the latest news on Airbus because he does lean toward an Airbus PR. Just read their comment section, it will tell you which way they lean. Nothing wrong with that, his preference.

As regards the subject of this post. I think SWA has been on the "Ryanair" list with Airbus for years, its only here Anet that would be a "revelation" 8-) (see what I did there?) . I seriously want to know how many A320 models left by Airbus Sales does SWA have in the closet?


Just wondering who the anonymous sources are for Leeham. Were they from Airbus or Southwest? Those are the only two companies that know if there was a legitimate competition. There is nothing wrong having opinions and inputs influencing the blog posts. Just curious if Leeham actually is Airbus’ mouthpiece on this or are there people commenting from inside Southwest. We probably will never know.

Southwest Airlines didn’t ask Airbus to submit a commercial bid for the A220-300, three knowledgeable sources tell Leeham News.


https://leehamnews.com/2021/04/05/ponti ... us-to-bid/

If asking about sources bothers someone, I’m sorry
 
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 7:50 pm

Antarius wrote:
I'm not sure that's a very good reason. Selling a bunch of planes at a big loss when you own a dominant position in the market is like cutting off your nose to spite your face. Airbus was the underdog for many years and therefore needed to scrap it out to grow. Now that they're half the duopoly, sacrificing margin for a little more market share would be a poor financial decision.

IMO, placing the A220 and displacing the 737 at WN would have been a lot more than "a little more market share", it would have been a major market disruption, on the scale of AA taking A320s and forcing Boeing to shelve the NSA and do the MAX. It would have been a major step forward for A220, making it the clear mind share leader in its space. It would have required Airbus to make a major financial and strategic commitment to A220. Now A220 is on its old track as a nice side line for Airbus rather than a major market disruptive force.

As above I'm not sure posters here understood how much WN values the single family concept and it also seems they did project that A220 would have been further along in its ramp up than it now seems to be, and they assumed that Airbus was as committed to disruption as it once was. These things make it so, as the thread title says, it was "never a competition".
Wake up to find out that you are the eyes of the world
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ExMilitaryEng
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 10:05 pm

Really, in order to offset credits / compensation obtained from Boeing, plus the additional costs of introducing a new type - Airbus would have been req'd to sell the A223 at what, $10M each!?
Obviously enough ground for a dumping complaint within days, even if all sourced from Mobile...

Airbus already dominates (60-40?) the narrowbody market.
Winning WN here wouldn't induce much additional sales anyways, when you already command more than 60% of the market.
Worst, it would further enflame the US protectionist agenda - where nobody wins.

It's pretty obvious Airbus had no interests to even bother to get close to match WN's MAX7s net costs. Well, probably did not even get to that stage at all - as per Leeham.

Such a sale would have been a disaster in every aspects.
 
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DarkSnowyNight
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 10:42 pm

Revelation wrote:
DarkSnowyNight wrote:
I think so. BCA were obviously in something of jam WRT the credits for the MAX 7. But they also knew WN were not about to overhaul their operations overnight —at least to the point they can accommodate more fleet types. I think they need to get WN to a point where they are paying something a little closer to list.



I also think they will get to a point where they are merged with some AB operator, but that is not necessarily soon. This order is a very clear signal that that is the most likely way to see an AB in WN colors. This is well indicated by the fact that even though they had interest in the A223s, AB did not send a bid.
Even a merger with an AB operator doesn't guarantee a future mixed fleet. We've seen WN buy FL and keep the 737s but pay DL to take the 717s off their hands.


Certainly. I deliberately omitted that detail as a sacrifice to brevity. Indeed, that is what their history points to. I simply think that this is the only possibility of them operating an AB in the near/mid term. However questionable the odds of even that. . .

Having that been said, yes, as we get further into the future, the odds of WN operating an AB do increase. A220 production will ramp, and apart from the fleet commonality angle, BCA are out of cards to play. The credit scheme was a very smart clutch play, but the expiratory nature effects their offer flexibility too. With a fundamentally better aircraft on offer, even WN's single type fleet costs will not likely match the gains available.



Revelation wrote:
I think it would have been great timing for an A220 win at WN. The lack of flying at WN due to covid means there are lots of manpower resources that could be used to induct A220s available. The improved trip economics also matter more when there is less flying. Boeing is weakened due to covid and mcas and losing WN to A220 would have been quite destabilizing to MAX's future and thus Boeing's future.


This is true. I do have to wonder about labor pooling though. Typically, this is one of the highest expenses an airline incurs, and splitting that for a reduction in capacity may be problematic —as in once thing are up and running— until a scale arrives where the A220's obvious advantages overcome this. I am not sure precisely where that would be in the WN fleet, but it would almost certainly have to be well north of the 200 —out of a fleet total of ~750— ordered/optioned now.

I do totally agree that this would have been a good time however, were they to be going that way now. I just do not think A220 production and BCA MAX credits would allow that tip-over point to occur...


Revelation wrote:
For AB it would have meant losing money in the short term but making more in the long term. Yet it's clear whatever they were prepared to offer wasn't good enough to convince WN to go to a mixed fleet and that A220's manufacturing side is still not close to being ramped up enough to provide the production volume and cost needed to compete for this order.


Like pretty much everyone, I would liked to have seen this happen. But I also think AB made the right decision not to formalize an offer on this. And as I have said before, I really do think BCA need to get with it and start charging companies like WN & FR something closer to list. They keep making it clear that they are not interested in something that is not a 737. Not a lot of reason to incentivize purchases...
Well, you know what they say. Whatever doesn't kill you...
... Must not be an MD-11.
 
iamlucky13
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 10:44 pm

Scarebus34 wrote:
Anyone who thought WN was seriously contemplating the A220 is a fool.


Southwest themselves said it.

https://theaircurrent.com/scoops/southw ... -or-a220s/
https://theaircurrent.com/airlines/sout ... -aviation/

If they made material statements they knew to be false in order to mislead a party they were engaged in business negotiations with, they could end up creating some trouble for themselves.

I probably should pay more careful attention to the exact details when I get my periodic refresher training on the reasons why I'm not allowed to negotiate with suppliers at work, even though I have a more direct role in defining what will be purchased than the person who handles the negotiation, but I do remember that the legal risks if I were to mislead a supplier is one of the reasons.

The overall situation appears to be that Southwest did seriously contemplate the CSeries, but their evaluations ruled it out before it was even necessary to get formal bids from each manufacturer. I would assume they had least rough order of magnitude pricing, however.
 
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DarkSnowyNight
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 10:51 pm

iamlucky13 wrote:

The overall situation appears to be that Southwest did seriously contemplate the CSeries, but their evaluations ruled it out before it was even necessary to get formal bids from each manufacturer. I would assume they had least rough order of magnitude pricing, however.



Indeed. There are some fairly ridiculous suppositions up-thread about AB not communicating a price point to WN. While that flat-out did not happen, it is a near certainty that the price point differences would have had to be double digit percentages for AB & WN to go no further from there.
Well, you know what they say. Whatever doesn't kill you...
... Must not be an MD-11.
 
Antarius
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Re: WN - A220 vs MAX "Never A Competition"

Tue Apr 06, 2021 10:51 pm

DarkSnowyNight wrote:
With a fundamentally better aircraft on offer, even WN's single type fleet costs will not likely match the gains available.


This is wishful thinking at it's finest, as WN found the exact opposite of your conclusion. As the article clearly says, WN elected for a single type as it was more economical than a more efficient second type.
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