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MrHMSH
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 10, 2022 6:00 pm

william wrote:
"Allegiant’s Anderson said the airline is banking on the jets’ favorable price, which he didn’t specify, as well as a 12-year maintenance agreement with engine provider CFM International Inc., to help lower operating costs. The Max will have more seats per plane and reduce fuel consumption by 20% compared with the airline’s oldest Airbus planes."

https://www.bloomberg.com/news/articles ... rbus-fleet

We do not know what Pratt offered or not offered.


I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.
 
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william
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 10, 2022 6:27 pm

MrHMSH wrote:
william wrote:
"Allegiant’s Anderson said the airline is banking on the jets’ favorable price, which he didn’t specify, as well as a 12-year maintenance agreement with engine provider CFM International Inc., to help lower operating costs. The Max will have more seats per plane and reduce fuel consumption by 20% compared with the airline’s oldest Airbus planes."

https://www.bloomberg.com/news/articles ... rbus-fleet

We do not know what Pratt offered or not offered.


I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.


True, its a package deal, availability, price per aircraft and engines. Just a different part of the package not many have discussed. If the A220 was chosen, would the NEO be Pratts or CFM? While G4 was kind enough to provide to provide a flashy Powerpoint on the reasons for their decision. It makes one wonder what did Pratt offer? Did CFM, having a known customer help seal the deal? No doubt G4 would want some concessions from Pratt to make the A220 numbers work.
 
Weatherwatcher1
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 10, 2022 6:33 pm

WayexTDI wrote:
FluidFlow wrote:
mjoelnir wrote:
If Boeing has free delivery slots for the 737-7 and the 737-8-200 in 2023, that looks pretty bad for Boeing and the already sold 737MAX frames.

Why are there open slots in 2023 with 4,115 737MAX frames in backlog? Who has deferred their frames, to open up those slots? What other customers are not prepared to take their ordered 737MAX in the near future?


Thats not something bad, I am pretty sure Boeing (&Airbus) do not sell out every production slot. If they have 600 slots a year they probably tell they are sold out when they sold 550-575. It is always important to keep a certain wiggle room, especially if you can make a good sell because you have this room. It would be stupid to actually be 100% sold out. Of course because of the long lead times I would say 2022 is fully sold out but further out Boeing will keep some slots open just to have leverage. Airbus will do the same. This is standard business practice. You do not want to stand there with your pants at your ankles if a client shows up and wants to order 100+ aircraft with the option that the first should be on property in 1.5+ years.

Airbus (or Boeing) will not want to have a single unsold slot; as that's lost revenue. Leaving a little wiggle room a year or two out makes sense, but it will have to be closed up at some point.
I doubt that Airbus has "reserved" any slot for 2022 "just in case"; those available 2022 slot are just unsold, or else they'd be sold by now.


I agree 2022 slots are likely not reserved.

I fully expect Airbus to have slots open up in 2022. There are key milestone payments that need to be made. In these times, airlines can have difficulty securing funds and contracts for progress payments. Both Airbus and Boeing have worked to reduce variability among airplanes so they can swap out customers up to about 6 months before delivery dates. While seats still tend to be a hold up, I expect that some slots will open up. Airbus and Boeing usually have customers ready to take advantage of open slots and move up deliveries so they may not go to brand new orders.

Airbus was able to offer KLM 2023 delivery slots.
 
AndoAv8R
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 10, 2022 9:18 pm

Earlier in the post someone asked if the Max8-200 still is available with built in airstairs and I was just reading a trip report with photos and yes the 8-200 does indeed come available with airstairs built in.
 
morrisond
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 10, 2022 9:52 pm

Weatherwatcher1 wrote:
WayexTDI wrote:
FluidFlow wrote:

Thats not something bad, I am pretty sure Boeing (&Airbus) do not sell out every production slot. If they have 600 slots a year they probably tell they are sold out when they sold 550-575. It is always important to keep a certain wiggle room, especially if you can make a good sell because you have this room. It would be stupid to actually be 100% sold out. Of course because of the long lead times I would say 2022 is fully sold out but further out Boeing will keep some slots open just to have leverage. Airbus will do the same. This is standard business practice. You do not want to stand there with your pants at your ankles if a client shows up and wants to order 100+ aircraft with the option that the first should be on property in 1.5+ years.

Airbus (or Boeing) will not want to have a single unsold slot; as that's lost revenue. Leaving a little wiggle room a year or two out makes sense, but it will have to be closed up at some point.
I doubt that Airbus has "reserved" any slot for 2022 "just in case"; those available 2022 slot are just unsold, or else they'd be sold by now.


I agree 2022 slots are likely not reserved.

I fully expect Airbus to have slots open up in 2022. There are key milestone payments that need to be made. In these times, airlines can have difficulty securing funds and contracts for progress payments. Both Airbus and Boeing have worked to reduce variability among airplanes so they can swap out customers up to about 6 months before delivery dates. While seats still tend to be a hold up, I expect that some slots will open up. Airbus and Boeing usually have customers ready to take advantage of open slots and move up deliveries so they may not go to brand new orders.

Airbus was able to offer KLM 2023 delivery slots.


Good point and if Boeing pushes the rate to say 47 mid 2023 that's another 30 frames in 2023 which Allegiant's 10 could come from and a further increase to 52 at the beginning of 2024 means an extra 120 frames in 2024 vs Rate 42, where Allegiant's 24 2024 frames could come from.
 
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lightsaber
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 4:29 pm

Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber
 
CX747
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 10:15 pm

MrHMSH wrote:
william wrote:
"Allegiant’s Anderson said the airline is banking on the jets’ favorable price, which he didn’t specify, as well as a 12-year maintenance agreement with engine provider CFM International Inc., to help lower operating costs. The Max will have more seats per plane and reduce fuel consumption by 20% compared with the airline’s oldest Airbus planes."

https://www.bloomberg.com/news/articles ... rbus-fleet

We do not know what Pratt offered or not offered.


I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.


Who would be offended?

Boeing won the order because their product was deemed better and the package they offered better met the customer's requirements. Same thing happened but for Airbus's proposal with AF/KLM.
 
StTim
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 10:24 pm

CX747 wrote:
MrHMSH wrote:
william wrote:
"Allegiant’s Anderson said the airline is banking on the jets’ favorable price, which he didn’t specify, as well as a 12-year maintenance agreement with engine provider CFM International Inc., to help lower operating costs. The Max will have more seats per plane and reduce fuel consumption by 20% compared with the airline’s oldest Airbus planes."

https://www.bloomberg.com/news/articles ... rbus-fleet

We do not know what Pratt offered or not offered.


I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.


Who would be offended?

Boeing won the order because their product was deemed better and the package they offered better met the customer's requirements. Same thing happened but for Airbus's proposal with AF/KLM.


I am not sure any statement has said that the product is better per see. It is very clear that the cost of acquisition is lower and the overall package put together is better for Allegiant.
 
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zkojq
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 10:34 pm

SEU wrote:
its not a witch hunt, its the factual situation Boeing finds themselves in after some of the worse crisis's a company can go through. G4 is the definition of an airline that doesn't buy new planes at high prices. They got a huge discount on these Max's and their CEO even said it was an opportunistic order, that isn't a dig at Boeing. Boeing has to try and sell an inferior product, with worse reputation, and get cash flow pumping through the company again. This order does this for them and is a massive order. The aftermarket sales as well will be a huge bonus.


:checkmark:

astuteman wrote:
With that said, I think it's important not to lose sight of the fact that Boeing wouldn't enter into the contract if it wasn't beneficial to them in some way too.
It may well be that margins were pushed from the more traditional ones - I don't know.
But I'm pretty confident that Boeing's finances are better off for this deal, not worse.....


Exactly. The deal being quite a low margin one and Boeing benefiting from it aren't mutually exclusive. Not sure why anyone would try to pretend otherwise. Even if there was zero margin in it (and I'm not suggesting there is) it keeps the production line ticking over, gives better economies of scale for their suppliers etc.

astuteman wrote:
Remember all the "Airbus give A320's away" comments, at the time when the A320 profits essentially paid for the huge overruns on the A380 all on its own?
Same thing, really.

Rgds


I remember it well. The truth is that, up until 2013ish, this site's narrative was that any time Airbus sold a plane it was either because "they gave it away" or "it was political". Those tropes still occur on this site today but thankfully are far less pervasive.
 
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MrHMSH
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 10:54 pm

CX747 wrote:
MrHMSH wrote:
william wrote:
"Allegiant’s Anderson said the airline is banking on the jets’ favorable price, which he didn’t specify, as well as a 12-year maintenance agreement with engine provider CFM International Inc., to help lower operating costs. The Max will have more seats per plane and reduce fuel consumption by 20% compared with the airline’s oldest Airbus planes."

https://www.bloomberg.com/news/articles ... rbus-fleet

We do not know what Pratt offered or not offered.


I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.


Who would be offended?

Boeing won the order because their product was deemed better and the package they offered better met the customer's requirements. Same thing happened but for Airbus's proposal with AF/KLM.


There's been a little bit of wailing that Boeing offered lower prices and had the availability advantage. I don't see why anyone would be annoyed in the slightest, but that's the way the cookie has crumbled.
 
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DarkSnowyNight
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 11:36 pm

MrHMSH wrote:

There's been a little bit of wailing that Boeing offered lower prices and had the availability advantage. I don't see why anyone would be annoyed in the slightest, but that's the way the cookie has crumbled.


Especially considering that not only did G4 allocute to that, but they made an entire graphic for public consumption. I do not see how how anyone can pretend anything other either.


zkojq wrote:
Not sure why anyone would try to pretend otherwise. Even if there was zero margin in it (and I'm not suggesting there is) it keeps the production line ticking over, gives better economies of scale for their suppliers etc.


Right. They could easily have sold these for less than actual construction costs and still have had it been worth the effort. It is easy to forget two things, but that seems to happen here a lot.

1. BCA make a lot of their money on back end support. MX & spares, particularly where Variant/MSN Effectivity is an issue, will, over the lifetime of these aircraft, bring revenue back to BCA. I am not certain what the margin on that is, but it is not nothing and can easily eclipse a short term production loss.

2. CFM. BCA's issues with the MAX family at large have halted both production and operations/line support for the LEAPs for nearly a year. The last I looked into it was before the pandemic, but GE/Safran lost already somewhere in the neighborhood of 1.4b owing solely to that issue. Those prices are negotiated separately from airframes, and it would not be out of line for them —CFM— to have more production space for the 1Bs than 1As, even accounting for capacity reductions there. They would not go out much cheaper —if at all— than the 1Bs available for NEO, but again, production slots play a part there too. In any case, there is no doubt that they will bring significant pressure against BCA to make a sale happen, even if it does not immediately profit BCA to do so in the most immediate term.
 
CX747
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 11:50 pm

StTim wrote:
CX747 wrote:
MrHMSH wrote:

I hope no one will be offended that earlier availability and a good price on each MAX were key in securing the deal. G4 saw an opportunity and got a deal that was good for them for a product that fulfills their needs better, not much more drama needs to be created.


Who would be offended?

Boeing won the order because their product was deemed better and the package they offered better met the customer's requirements. Same thing happened but for Airbus's proposal with AF/KLM.


I am not sure any statement has said that the product is better per see. It is very clear that the cost of acquisition is lower and the overall package put together is better for Allegiant.


I'll rephrase.

The Boeing 737 variants, that Allegiant bought, are superior for Allegiants needs than the Airbus offerings. Just as the A32X family members bought by AF/KLM were superior in that carrier's thought processes for their needs in comparison to the Boeing offering.
 
WayexTDI
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Tue Jan 11, 2022 11:59 pm

DarkSnowyNight wrote:
zkojq wrote:
Not sure why anyone would try to pretend otherwise. Even if there was zero margin in it (and I'm not suggesting there is) it keeps the production line ticking over, gives better economies of scale for their suppliers etc.


Right. They could easily have sold these for less than actual construction costs and still have had it been worth the effort. It is easy to forget two things, but that seems to happen here a lot.

1. BCA make a lot of their money on back end support. MX & spares, particularly where Variant/MSN Effectivity is an issue, will, over the lifetime of these aircraft, bring revenue back to BCA. I am not certain what the margin on that is, but it is not nothing and can easily eclipse a short term production loss.

Funny thing is, so does Airbus. So, "back in the days", even if Airbus sold planes below actual construction costs, it would still have been financially positive overall. But, a.net has a fuss when Airbus does something and find it totally acceptable when Boeing does the same thing; go figure.
 
sxf24
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 1:57 am

DarkSnowyNight wrote:
MrHMSH wrote:

There's been a little bit of wailing that Boeing offered lower prices and had the availability advantage. I don't see why anyone would be annoyed in the slightest, but that's the way the cookie has crumbled.


Especially considering that not only did G4 allocute to that, but they made an entire graphic for public consumption. I do not see how how anyone can pretend anything other either.


zkojq wrote:
Not sure why anyone would try to pretend otherwise. Even if there was zero margin in it (and I'm not suggesting there is) it keeps the production line ticking over, gives better economies of scale for their suppliers etc.


Right. They could easily have sold these for less than actual construction costs and still have had it been worth the effort. It is easy to forget two things, but that seems to happen here a lot.

1. BCA make a lot of their money on back end support. MX & spares, particularly where Variant/MSN Effectivity is an issue, will, over the lifetime of these aircraft, bring revenue back to BCA. I am not certain what the margin on that is, but it is not nothing and can easily eclipse a short term production loss.

2. CFM. BCA's issues with the MAX family at large have halted both production and operations/line support for the LEAPs for nearly a year. The last I looked into it was before the pandemic, but GE/Safran lost already somewhere in the neighborhood of 1.4b owing solely to that issue. Those prices are negotiated separately from airframes, and it would not be out of line for them —CFM— to have more production space for the 1Bs than 1As, even accounting for capacity reductions there. They would not go out much cheaper —if at all— than the 1Bs available for NEO, but again, production slots play a part there too. In any case, there is no doubt that they will bring significant pressure against BCA to make a sale happen, even if it does not immediately profit BCA to do so in the most immediate term.


Engines prices for the 737 are not negotiated separately. It’s one price for a Boeing.
 
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bikerthai
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:03 am

Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt
 
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DarkSnowyNight
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:14 am

bikerthai wrote:
Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt


It is a good point, but keep in mind that G4 tend to keep planes a very long time. I agree that their utilization rates are lower, so that may forestall some cost there, but unless G4 decide not to take all of their purchased frames, it is likely BCA will make something off this, even if not much.


sxf24 wrote:
Engines prices for the 737 are not negotiated separately. It’s one price for a Boeing.



Unless BCA have changed the way they do business in the past six months, that is not true. You are probably confusing brokering with authorizing.

Powerplant OEMs can and do sell/lease engines separately, with agreement requirements independent of framers. In fact, this is true of most BFE items on a greenframe. Simply having a powerplant exclusivity agreement between OEMs has zero bearing on how these purchases are made.

If CFM senses that G4 —to use this case— will not make a purchase for a price BCA float, but one CFM are happy with, they absolutely will do what they have to to make that happen.

WayexTDI wrote:
Funny thing is, so does Airbus. So, "back in the days", even if Airbus sold planes below actual construction costs, it would still have been financially positive overall. But, a.net has a fuss when Airbus does something and find it totally acceptable when Boeing does the same thing; go figure.



Yep. The fact that this thread exists, with people asserting the possibility that these planes somehow did not go out for firesale prices is largely a continuation of that bias. We have an airline that literally said price and delivery alone are why they bought these things... but, c'est la vie, I suppose.
 
bigb
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:22 am

bikerthai wrote:
Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt


So planes do not need routine maintenance or parts required for that routine maintenance?
 
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zkojq
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 3:26 am

Polot wrote:
StTim wrote:
Perhaps the trick Airbus missed here was offering the A220 in the first place. Offering the A319/A320/A321neos may have got them closer but they would still have lost on delivery schedule and I expect cost as well - not as hungry as Boeing for this business.

Allegiant is not interested in planes the size of the A321neo.


And yet their chart lists "up-guage optionality" as a plus for the MAX...it lists four variants for the MAX but only two variants for the neo. If they weren't interested in the A321neo, they'd have listed only one variant in the A320neo column; they already excluded the A319neo despite it being available so clearly have no problem with excluding from the chart planes that they're not interested in. The suggestion that the 230 seat 737-10 is of interest but the 240 seat A321neo is a bridge too far seems laughable.

Image

astuteman wrote:
I thought it was interesting that the slides unequivocally stated that the A320NEO had higher acquisition costs as well as lower availability.
That seems to clearly point out that Boeing were more aggressive on pricing.
Given the current, and proposed delivery scenarios, it's unlikely (almost unfeasibly so) that the MAX currently has the luxury of lower production costs than the A320.
It seems pretty clear Airbus don't feel they need to be keen on razor sharp pricing on the NEO at the moment. With the current backlog that's not surprising.


It certainly flies in the face of the suggestion earlier in the thread that narrowbody OEMs can't command a pricing premium. :lol:

At the end of the day, the airline that pays the most for an airframe is the one who is set to make the most money from it. The amount of money that KLM/Qantas will make/save by replacing certain mid to long-haul A330-200 frequencies (or -300s in the case of someone like SAS) with A321neoXLRs is certainly going to be greater than the amount that a low-utilization ULCC is going to make from it. Especially one who has much of their fleet idle two days a week. Airbus will make their offers accordingly.

MrHMSH wrote:
There's been a little bit of wailing that Boeing offered lower prices and had the availability advantage. I don't see why anyone would be annoyed in the slightest, but that's the way the cookie has crumbled.


:checkmark: You win some, you lose some. The key is to try and ensure that the ones you win are the most profitable and strategic. Case in point selling A220-300s to Qantas today opens up the possibility of offering them A220-500s at some point in the future and having a better range of value propositions to the airline. The same wouldn't necessarily be the case for someone like SAS or Lufthansa who already have plenty of A320neos in the fleet and would see comparatively little benefit in having an A220-500s also.
 
sxf24
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 4:14 am

DarkSnowyNight wrote:
bikerthai wrote:
Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt


It is a good point, but keep in mind that G4 tend to keep planes a very long time. I agree that their utilization rates are lower, so that may forestall some cost there, but unless G4 decide not to take all of their purchased frames, it is likely BCA will make something off this, even if not much.


sxf24 wrote:
Engines prices for the 737 are not negotiated separately. It’s one price for a Boeing.



Unless BCA have changed the way they do business in the past six months, that is not true. You are probably confusing brokering with authorizing.

Powerplant OEMs can and do sell/lease engines separately, with agreement requirements independent of framers. In fact, this is true of most BFE items on a greenframe. Simply having a powerplant exclusivity agreement between OEMs has zero bearing on how these purchases are made.

If CFM senses that G4 —to use this case— will not make a purchase for a price BCA float, but one CFM are happy with, they absolutely will do what they have to to make that happen.

WayexTDI wrote:
Funny thing is, so does Airbus. So, "back in the days", even if Airbus sold planes below actual construction costs, it would still have been financially positive overall. But, a.net has a fuss when Airbus does something and find it totally acceptable when Boeing does the same thing; go figure.



Yep. The fact that this thread exists, with people asserting the possibility that these planes somehow did not go out for firesale prices is largely a continuation of that bias. We have an airline that literally said price and delivery alone are why they bought these things... but, c'est la vie, I suppose.


Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.
 
cbphoto
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 4:43 am

sxf24 wrote:
DarkSnowyNight wrote:
bikerthai wrote:
Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt


It is a good point, but keep in mind that G4 tend to keep planes a very long time. I agree that their utilization rates are lower, so that may forestall some cost there, but unless G4 decide not to take all of their purchased frames, it is likely BCA will make something off this, even if not much.


sxf24 wrote:
Engines prices for the 737 are not negotiated separately. It’s one price for a Boeing.



Unless BCA have changed the way they do business in the past six months, that is not true. You are probably confusing brokering with authorizing.

Powerplant OEMs can and do sell/lease engines separately, with agreement requirements independent of framers. In fact, this is true of most BFE items on a greenframe. Simply having a powerplant exclusivity agreement between OEMs has zero bearing on how these purchases are made.

If CFM senses that G4 —to use this case— will not make a purchase for a price BCA float, but one CFM are happy with, they absolutely will do what they have to to make that happen.

WayexTDI wrote:
Funny thing is, so does Airbus. So, "back in the days", even if Airbus sold planes below actual construction costs, it would still have been financially positive overall. But, a.net has a fuss when Airbus does something and find it totally acceptable when Boeing does the same thing; go figure.



Yep. The fact that this thread exists, with people asserting the possibility that these planes somehow did not go out for firesale prices is largely a continuation of that bias. We have an airline that literally said price and delivery alone are why they bought these things... but, c'est la vie, I suppose.


Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.


I’m almost 100% certain that was not the case with this purchase. Maury, the CEO discussed in length that Boeing offered a great deal on the 737s, but the engine manufactures were the harder negotiations price wise. Whether Allegiant writes 1 or 2 checks I don’t know, but I do know for a fact negations took place with GE on the engine platform. Not to mention if you don’t negotiate the engines separately, how the heck do you acquire and purchase spares???
 
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bikerthai
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 4:46 am

bigb wrote:
So planes do not need routine maintenance or parts required for that routine maintenance?


A fixed price maintenance contract would take routine maintenance in to account. If their plane are not reliable, with lots of "un-planned" repairs, then they could lose money.

Not saying if this is the case here. Just putting out a scenerio where they could lose money on the back end.

bt
 
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lightsaber
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 4:55 am

bigb wrote:
bikerthai wrote:
Kind of funny the argument that Boeing will make money on the back end.

With these service guarantee service contract, Would Boeing make the most money if their planes do not break down very often. Which means if those planes breaks down a lot, then they may be losing money of the back end.

bt


So planes do not need routine maintenance or parts required for that routine maintenance?

Just to add one more revenue source: predictive maintenance. e.g., are mechanics applying the right amount of lubricant? Instead of having a $15,000 actuator fail with stranded passengers, predictive maintenance finds out 400+ takeoffs ahead of time to properly lubricate the actuator. That is a profit center as there are software licenses and ancillary fees.

Not to mention training...

The new generation of planes seems to have more available ancillary revenue available.

Lightsaber
 
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william
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 5:10 am

cbphoto wrote:
sxf24 wrote:
DarkSnowyNight wrote:

It is a good point, but keep in mind that G4 tend to keep planes a very long time. I agree that their utilization rates are lower, so that may forestall some cost there, but unless G4 decide not to take all of their purchased frames, it is likely BCA will make something off this, even if not much.





Unless BCA have changed the way they do business in the past six months, that is not true. You are probably confusing brokering with authorizing.

Powerplant OEMs can and do sell/lease engines separately, with agreement requirements independent of framers. In fact, this is true of most BFE items on a greenframe. Simply having a powerplant exclusivity agreement between OEMs has zero bearing on how these purchases are made.

If CFM senses that G4 —to use this case— will not make a purchase for a price BCA float, but one CFM are happy with, they absolutely will do what they have to to make that happen.




Yep. The fact that this thread exists, with people asserting the possibility that these planes somehow did not go out for firesale prices is largely a continuation of that bias. We have an airline that literally said price and delivery alone are why they bought these things... but, c'est la vie, I suppose.


Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.


I’m almost 100% certain that was not the case with this purchase. Maury, the CEO discussed in length that Boeing offered a great deal on the 737s, but the engine manufactures were the harder negotiations price wise. Whether Allegiant writes 1 or 2 checks I don’t know, but I do know for a fact negations took place with GE on the engine platform. Not to mention if you don’t negotiate the engines separately, how the heck do you acquire and purchase spares???


Like I said before, maybe G4 didn't like Pratt's price on the A220, and A320NEO engines. And if G4 sticks with CFM, then where does that leave the engines on the A220? Imagine these and numerous other issues made the Boeing package better for G4's needs.
 
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DarkSnowyNight
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 5:27 am

sxf24 wrote:

Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.



At this point, I have to assume that you either remain confused or are deliberately missing the point.

And as a practical matter, no one writes "just one check." Payments are made in a milestone format, typically 1/3 at contract signing, 1/3 at when the 1st metal is bent & 1/3 on delivery. For each airframe. This is, of course, completely out the window in the case of a lease.

If you like, you can sift through this site —here and in Tech/Ops— but there are piles of threads that cover this specific issue.


cbphoto wrote:

I’m almost 100% certain that was not the case with this purchase. Maury, the CEO discussed in length that Boeing offered a great deal on the 737s, but the engine manufactures were the harder negotiations price wise. Whether Allegiant writes 1 or 2 checks I don’t know, but I do know for a fact negations took place with GE on the engine platform. Not to mention if you don’t negotiate the engines separately, how the heck do you acquire and purchase spares???


Correct. So I looked into this some more in the intervening hours, and yes, G4 did in fact negotiate extensively with CFM in this case. They did get a better price than they would have had they gone Airbus & as well, they have also only one Powerplant OEM to deal with vs the two they would have had they gone with a 320/220 combination. It is still likely that the superior operating economics of a 220/320 fleet would have overcome that issue, but not against steep BCA discounts and almost immediate availability.

In a case like this, CFM will have motive to pressure BCA for a sale, as these are more units delivered, vs having to share a 320/220 split with Pratt —best case, that is. If I were CFM, I would also have forced BCA to make this happen. They did the right thing.

william wrote:
Like I said before, maybe G4 didn't like Pratt's price on the A220, and A320NEO engines. And if G4 sticks with CFM, then where does that leave the engines on the A220? Imagine these and numerous other issues made the Boeing package better for G4's needs.


:checkmark:

CFM almost doubles the number of 'plants they sell thru BCA vs the best possible outcome with an Airbus order. They likely did not move much on price with G4 directly, but it is a certainty that they exerted the right pressure in the right places to force BCA to make this happen.

CFM were absolutely motivated sellers here.

To be clear, I am certain it is the same WRT Pratt & Airbus. The difference being that Airbus simply are not as easy for PW to pressure or work with as BCA were for CFM.
 
smartplane
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 6:17 am

DarkSnowyNight wrote:
sxf24 wrote:

Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.



At this point, I have to assume that you either remain confused or are deliberately missing the point.

And as a practical matter, no one writes "just one check." Payments are made in a milestone format, typically 1/3 at contract signing, 1/3 at when the 1st metal is bent & 1/3 on delivery. For each airframe. This is, of course, completely out the window in the case of a lease.

If you like, you can sift through this site —here and in Tech/Ops— but there are piles of threads that cover this specific issue.


cbphoto wrote:

I’m almost 100% certain that was not the case with this purchase. Maury, the CEO discussed in length that Boeing offered a great deal on the 737s, but the engine manufactures were the harder negotiations price wise. Whether Allegiant writes 1 or 2 checks I don’t know, but I do know for a fact negations took place with GE on the engine platform. Not to mention if you don’t negotiate the engines separately, how the heck do you acquire and purchase spares???


Correct. So I looked into this some more in the intervening hours, and yes, G4 did in fact negotiate extensively with CFM in this case. They did get a better price than they would have had they gone Airbus & as well, they have also only one Powerplant OEM to deal with vs the two they would have had they gone with a 320/220 combination. It is still likely that the superior operating economics of a 220/320 fleet would have overcome that issue, but not against steep BCA discounts and almost immediate availability.

In a case like this, CFM will have motive to pressure BCA for a sale, as these are more units delivered, vs having to share a 320/220 split with Pratt —best case, that is. If I were CFM, I would also have forced BCA to make this happen. They did the right thing.

william wrote:
Like I said before, maybe G4 didn't like Pratt's price on the A220, and A320NEO engines. And if G4 sticks with CFM, then where does that leave the engines on the A220? Imagine these and numerous other issues made the Boeing package better for G4's needs.


:checkmark:

CFM almost doubles the number of 'plants they sell thru BCA vs the best possible outcome with an Airbus order. They likely did not move much on price with G4 directly, but it is a certainty that they exerted the right pressure in the right places to force BCA to make this happen.

CFM were absolutely motivated sellers here.

To be clear, I am certain it is the same WRT Pratt & Airbus. The difference being that Airbus simply are not as easy for PW to pressure or work with as BCA were for CFM.

Some Boeing customers negotiate separately with engine OEM's. Pay Boeing the price agreed (Boeing and customer) at each milestone, then receive retrospective credits from the engine OEM. Prevents Boeing from determining the price paid. Engine maintenance can be negotiated pre or post-purchase through Boeing, engine OEM, or 3rd party.

When things go wrong, dealing with Boeing can be an advantage, as customers have two pockets to tap for compensation. RR 787 customers discovered this, though eventually, compensation and confidentiality harmonised.
 
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Polot
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 11:23 am

zkojq wrote:
Polot wrote:
StTim wrote:
Perhaps the trick Airbus missed here was offering the A220 in the first place. Offering the A319/A320/A321neos may have got them closer but they would still have lost on delivery schedule and I expect cost as well - not as hungry as Boeing for this business.

Allegiant is not interested in planes the size of the A321neo.


And yet their chart lists "up-guage optionality" as a plus for the MAX...it lists four variants for the MAX but only two variants for the neo. If they weren't interested in the A321neo, they'd have listed only one variant in the A320neo column; they already excluded the A319neo despite it being available so clearly have no problem with excluding from the chart planes that they're not interested in. The suggestion that the 230 seat 737-10 is of interest but the 240 seat A321neo is a bridge too far seems laughable.

Image


That’s just future flexibility. Right now Allegiant is not interested in something the size of the A321. Hence why they ordered 0 737-10s, are not talking about used A321ceos, and have no A321neos on order. Offering G4 A321neos right now would not clinch any order, because G4 doesn’t want a plane that size right now. And I’m sure Airbus pitched the A321 to the airline.

7 years from now will that still be the case? Who knows. Allegiant doesn’t fully know either hence why they have a column on “flexibility/upgauge optionality”
 
sxf24
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 1:02 pm

DarkSnowyNight wrote:
sxf24 wrote:

Airlines write Boeing a single check for a 737 for a negotiated price that includes engines.



At this point, I have to assume that you either remain confused or are deliberately missing the point.

And as a practical matter, no one writes "just one check." Payments are made in a milestone format, typically 1/3 at contract signing, 1/3 at when the 1st metal is bent & 1/3 on delivery. For each airframe. This is, of course, completely out the window in the case of a lease.

If you like, you can sift through this site —here and in Tech/Ops— but there are piles of threads that cover this specific issue.


cbphoto wrote:

I’m almost 100% certain that was not the case with this purchase. Maury, the CEO discussed in length that Boeing offered a great deal on the 737s, but the engine manufactures were the harder negotiations price wise. Whether Allegiant writes 1 or 2 checks I don’t know, but I do know for a fact negations took place with GE on the engine platform. Not to mention if you don’t negotiate the engines separately, how the heck do you acquire and purchase spares???


Correct. So I looked into this some more in the intervening hours, and yes, G4 did in fact negotiate extensively with CFM in this case. They did get a better price than they would have had they gone Airbus & as well, they have also only one Powerplant OEM to deal with vs the two they would have had they gone with a 320/220 combination. It is still likely that the superior operating economics of a 220/320 fleet would have overcome that issue, but not against steep BCA discounts and almost immediate availability.

In a case like this, CFM will have motive to pressure BCA for a sale, as these are more units delivered, vs having to share a 320/220 split with Pratt —best case, that is. If I were CFM, I would also have forced BCA to make this happen. They did the right thing.

william wrote:
Like I said before, maybe G4 didn't like Pratt's price on the A220, and A320NEO engines. And if G4 sticks with CFM, then where does that leave the engines on the A220? Imagine these and numerous other issues made the Boeing package better for G4's needs.


:checkmark:

CFM almost doubles the number of 'plants they sell thru BCA vs the best possible outcome with an Airbus order. They likely did not move much on price with G4 directly, but it is a certainty that they exerted the right pressure in the right places to force BCA to make this happen.

CFM were absolutely motivated sellers here.

To be clear, I am certain it is the same WRT Pratt & Airbus. The difference being that Airbus simply are not as easy for PW to pressure or work with as BCA were for CFM.


I’ve paid for a number of new 737s. It’s a single price, all-inclusive of the airplane you get at delivery (excluding BFE, which 737 engines are not). Support and spares is negotiated directly with CFM.

Airplanes with multiple engine choices, including the 787, are handled differently and work much as others have described.
 
morrisond
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 1:15 pm

Polot wrote:
zkojq wrote:
Polot wrote:
Allegiant is not interested in planes the size of the A321neo.


And yet their chart lists "up-guage optionality" as a plus for the MAX...it lists four variants for the MAX but only two variants for the neo. If they weren't interested in the A321neo, they'd have listed only one variant in the A320neo column; they already excluded the A319neo despite it being available so clearly have no problem with excluding from the chart planes that they're not interested in. The suggestion that the 230 seat 737-10 is of interest but the 240 seat A321neo is a bridge too far seems laughable.

Image


That’s just future flexibility. Right now Allegiant is not interested in something the size of the A321. Hence why they ordered 0 737-10s, are not talking about used A321ceos, and have no A321neos on order. Offering G4 A321neos right now would not clinch any order, because G4 doesn’t want a plane that size right now. And I’m sure Airbus pitched the A321 to the airline.

7 years from now will that still be the case? Who knows. Allegiant doesn’t fully know either hence why they have a column on “flexibility/upgauge optionality”


7 years from now or earlier one would have to guess the 737-10 could become more capable as well - given PIP's, a thrust bump and possibly a slight increase in MTOW. Apply those potential changes and the 737-10 gear to a 737-9ER and you could have even a more competitive aircraft.

I doubt we have seen the last Variant or sub-variant of the MAX.

Perfect to keep the line humming as the MAX replacement starts to take shape and great for an Airline like Allegiant who may be looking for deals on end of line production.
 
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DarkSnowyNight
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 1:24 pm

sxf24 wrote:

I’ve paid for a number of new 737s. It’s a single price, all-inclusive of the airplane you get at delivery (excluding BFE, which 737 engines are not). Support and spares is negotiated directly with CFM.



That is... fantastic for you?

But it does not having any bearing on CFM's being able to exert pressure to make a sale happen for BCA, nor does it contravene anything I have had to say on it.

sxf24 wrote:


Airplanes with multiple engine choices, including the 787, are handled differently and work much as others have described.


Others being me, yes. Thanks?
 
ItnStln
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:41 pm

lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?
 
sxf24
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:48 pm

DarkSnowyNight wrote:
sxf24 wrote:

I’ve paid for a number of new 737s. It’s a single price, all-inclusive of the airplane you get at delivery (excluding BFE, which 737 engines are not). Support and spares is negotiated directly with CFM.



That is... fantastic for you?

But it does not having any bearing on CFM's being able to exert pressure to make a sale happen for BCA, nor does it contravene anything I have had to say on it.

sxf24 wrote:

Airplanes with multiple engine choices, including the 787, are handled differently and work much as others have described.


Others being me, yes. Thanks?


Generally, direct experience and insight into a topic being discussed would be appreciated. I’m sorry that reality does not align with the claims you made.

While engine OEMs play a role in every sales campaign, engine pricing is treated differently on the 737.
 
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bikerthai
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 2:54 pm

sxf24 wrote:
While engine OEMs play a role in every sales campaign, engine pricing is treated differently on the 737.


Perhaps it's because there is only one engine option available? :scratchchin:

bt
 
smartplane
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 6:39 pm

DarkSnowyNight wrote:
sxf24 wrote:

I’ve paid for a number of new 737s. It’s a single price, all-inclusive of the airplane you get at delivery (excluding BFE, which 737 engines are not). Support and spares is negotiated directly with CFM.



That is... fantastic for you?

But it does not having any bearing on CFM's being able to exert pressure to make a sale happen for BCA, nor does it contravene anything I have had to say on it.

sxf24 wrote:


Airplanes with multiple engine choices, including the 787, are handled differently and work much as others have described.


Others being me, yes. Thanks?

Boeing's official position is we sell the 737 as a turnkey proposition. Which is why Boeing insists on invoicing all milestone payments for the 737, including engines, and why the engine OEM will issue credits.

There are customers, big and smart enough, to deal directly with the engine OEM, especially if packaging cradle to grave pricing, which might affect the split between capital and operating costs, or generate benefits for which the time realised can be altered.

Both right.
 
iamlucky13
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 7:39 pm

ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?


Generally, enough to convey what the topic of the linked page is, and a portion of the key information to help establish how it fits into the discussion, but not a majority of the content.

A fair use excerpt still leaves readers with a reason to view content in its original source, and in that manner still respects their copyrights.
 
MIflyer12
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 8:08 pm

ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?


Even the U.S. Copyright office acknowledges that's a subjective issue!

I appreciate the Mods' work to respect copyrights (and keep the web site out of trouble).

I'm not a lawyer, but in practice Fair Use generally means limited excerpts conveying key ideas, while acknowledging the author (a link is handy) and providing your own transformative comment: expansion of the idea(s), criticism, or parody.

https://www.copyright.gov/fair-use/more-info.html
 
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Wed Jan 12, 2022 8:09 pm

ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?

"Fair use" is a fraction of the article. e.g., limit to 1 paragraph in a 4 paragraph article.

Or paraphrase and link the article for more details.

Lightsaber
 
ItnStln
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Thu Jan 13, 2022 3:51 pm

lightsaber wrote:
ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?

"Fair use" is a fraction of the article. e.g., limit to 1 paragraph in a 4 paragraph article.

Or paraphrase and link the article for more details.

Lightsaber

Thanks for the explanation!
 
ItnStln
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Thu Jan 13, 2022 3:51 pm

MIflyer12 wrote:
ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?


Even the U.S. Copyright office acknowledges that's a subjective issue!

I appreciate the Mods' work to respect copyrights (and keep the web site out of trouble).

I'm not a lawyer, but in practice Fair Use generally means limited excerpts conveying key ideas, while acknowledging the author (a link is handy) and providing your own transformative comment: expansion of the idea(s), criticism, or parody.

https://www.copyright.gov/fair-use/more-info.html

Right, that's why I asked.
 
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Thu Jan 13, 2022 4:40 pm

ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.
Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?


MIflyer12 wrote:
Even the U.S. Copyright office acknowledges that's a subjective issue!
I appreciate the Mods' work to respect copyrights (and keep the web site out of trouble).
I'm not a lawyer, but in practice Fair Use generally means limited excerpts conveying key ideas, while acknowledging the author (a link is handy) and providing your own transformative comment: expansion of the idea(s), criticism, or parody.
https://www.copyright.gov/fair-use/more-info.html


lightsaber wrote:
"Fair use" is a fraction of the article. e.g., limit to 1 paragraph in a 4 paragraph article.
Or paraphrase and link the article for more details.
Lightsaber


I appreciate that you both took the time to explain this to us... I always wondered wear the blurry line between 'word bites' and 'plagiarism' lay.

Back on topic. Glad Boeing is able to move some MAXes. (a couple years of good cash flow will be good for development of the needed replacement)

Peter
 
JayinKitsap
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Thu Jan 13, 2022 8:38 pm

lightsaber wrote:
ItnStln wrote:
lightsaber wrote:
Please limit article quotes to fair use excerpts and put in some discussion.

Lightsaber

What defines a "fair use excerpt" so I don't run into this problem?

"Fair use" is a fraction of the article. e.g., limit to 1 paragraph in a 4 paragraph article.

Or paraphrase and link the article for more details.

Lightsaber


To extend from Lightsaber's post, which is fully correct.

I believe it can be several paragraphs, say separate clips, from a larger article, but any quoted clip must have a citation (a link to the article being clipped.) That is how several news blogs do it. In summary, make the comment about the article, have the clip, and entice the reader to go read the original for more. The original author's work should get more reads rather than less by the excerpt.
 
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 6:28 pm

I do not recall seeing a link to Allegiant's presentation on the MAX purchase (If I missed it, my bad):
https://ir.allegiantair.com/static-file ... 37348c9605

I find slide 8 fascinating in that:
some routes will go from seasonal to year round with MAX economics
A tiny number of added seasonal routes with the MAX
Quite a significant number of new year round routes envisioned with the MAX thanks to the improved economics.

Slide 9 gives us insight into the minimum flying for the MAX. While not explicitly stated, I would envision lines with over 9 hours per day to be preferentially allocated to the MAX, with lower hour lines going to CEOs (see slide 11). Although Slide 10 notes they will operate a single fleet type at each base for simplicity. I'm quite certain the 21 lines of flying that are only 3 hours per day will remain A320CEOs and probably older A320CEOs when possible.

I do find the planned rapid retirement of the oldest a320s (slide 13) very interesting.

Slide 15 really shows how Allegiant is maturing as an airline with much higher utilization.
Slide 19 showing a reduction in fuel per ASM of 30% vs. the A32x (fleet comparison) shows how high utilization flying should go to the new MAXs.

This will be an interesting transition.

Lightsaber
 
Weatherwatcher1
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 6:55 pm

lightsaber wrote:
I do not recall seeing a link to Allegiant's presentation on the MAX purchase (If I missed it, my bad):
https://ir.allegiantair.com/static-file ... 37348c9605

I find slide 8 fascinating in that:
some routes will go from seasonal to year round with MAX economics
A tiny number of added seasonal routes with the MAX
Quite a significant number of new year round routes envisioned with the MAX thanks to the improved economics.

Slide 9 gives us insight into the minimum flying for the MAX. While not explicitly stated, I would envision lines with over 9 hours per day to be preferentially allocated to the MAX, with lower hour lines going to CEOs (see slide 11). Although Slide 10 notes they will operate a single fleet type at each base for simplicity. I'm quite certain the 21 lines of flying that are only 3 hours per day will remain A320CEOs and probably older A320CEOs when possible.

I do find the planned rapid retirement of the oldest a320s (slide 13) very interesting.

Slide 15 really shows how Allegiant is maturing as an airline with much higher utilization.
Slide 19 showing a reduction in fuel per ASM of 30% vs. the A32x (fleet comparison) shows how high utilization flying should go to the new MAXs.

This will be an interesting transition.

Lightsaber


The comparison with Frontier at the end is interesting. While Frontier and Allegiant both compete for leisure travelers, the airlines are quite different in their strategies. Allegiant seems more intentional when reading this presentation
 
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lightsaber
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 8:29 pm

Weatherwatcher1 wrote:
lightsaber wrote:
I do not recall seeing a link to Allegiant's presentation on the MAX purchase (If I missed it, my bad):
https://ir.allegiantair.com/static-file ... 37348c9605

I find slide 8 fascinating in that:
some routes will go from seasonal to year round with MAX economics
A tiny number of added seasonal routes with the MAX
Quite a significant number of new year round routes envisioned with the MAX thanks to the improved economics.

Slide 9 gives us insight into the minimum flying for the MAX. While not explicitly stated, I would envision lines with over 9 hours per day to be preferentially allocated to the MAX, with lower hour lines going to CEOs (see slide 11). Although Slide 10 notes they will operate a single fleet type at each base for simplicity. I'm quite certain the 21 lines of flying that are only 3 hours per day will remain A320CEOs and probably older A320CEOs when possible.

I do find the planned rapid retirement of the oldest a320s (slide 13) very interesting.

Slide 15 really shows how Allegiant is maturing as an airline with much higher utilization.
Slide 19 showing a reduction in fuel per ASM of 30% vs. the A32x (fleet comparison) shows how high utilization flying should go to the new MAXs.

This will be an interesting transition.

Lightsaber


The comparison with Frontier at the end is interesting. While Frontier and Allegiant both compete for leisure travelers, the airlines are quite different in their strategies. Allegiant seems more intentional when reading this presentation

I assume you are discussing slide 18 of the link I provided. It shows the costs of a high fleet turnover strategy, but not the benefits.
Newer fleets have lower maintenance costs. I assume that is why slide 13 shows a decline from 92 A320CEO to 68 in 2025 (estimated).
A319s decline from 35 to 31 (or less, if traffic drops, the fleet could be retired) with a "wildcard" of 22 added aircraft (e.g., we could see 68 A320CEOs in 2025 with no A319s, or as many as 90 A320CEOs with 31 A319s).

It will depend on traffic demand. If demand is high, Allegiant will fly aircraft more hours per day and that favors an airline with a newer fleet (Frontier) and the reduced fuel burn for a high demand environment will have high oil demand (prices).
If traffic/yields are poor in 2025, then Frontier made an expensive bad bet and oil will probably be cheaper.

What fascinates me the most is Allegiant just hedged their fuel by planning to burn 30% less per passenger. As I noted before, they will have many lines flying few hours per day (21 at 3 hours per day on slide 11). Per that same slide, they already have 39 high utilization (11 hour) lines that *need* to be replaced with more fuel efficient aircraft.
21 lines/103 total lines=20.4%
39 lines/103 total lines=37.9%

With 2025 expected to have 118 (worst case) to 171 lines (best case), I definitely see a home for 50 MAXes, in particular a more efficient aircraft will extend the number of lines at 11 hours that make money.

A fascinating time ahead for Allegiant,
Lightsaber

Lightsaber
 
MIflyer12
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 9:30 pm

lightsaber wrote:
What fascinates me the most is Allegiant just hedged their fuel by planning to burn 30% less per passenger. As I noted before, they will have many lines flying few hours per day (21 at 3 hours per day on slide 11). Per that same slide, they already have 39 high utilization (11 hour) lines that *need* to be replaced with more fuel efficient aircraft.
21 lines/103 total lines=20.4%
39 lines/103 total lines=37.9%


That gets to a sentiment I've expressed before: fuel efficient aircraft are their own fuel hedge. It's also the most inflexible fuel hedge you can imagine because you spent all the money upfront and you're getting the payback over 25 years. Sure, you can sell or lease out aircraft, but if the fuel market is such that you don't want them, you're not going to get great prices selling them.

There's nothing inherently wrong with using new aircraft on seasonal routes -- if you have enough routes/frequencies with complementary seasonalities. That's a tough trick twelve months a year - think of January and September when demand falls off a cliff nationwide.

Targeting 11.0 hours a day utilization year-round isn't even that ambitious: Frontier and Sprit have had years on large narrowbodies where they exceeded 13.0 (even 14+).

http://web.mit.edu/airlinedata/www/default.html

Segregating MAX and 319/320 by base should improve reliability and lower reserves/spares costs, but it also adds costs from integer constraints, like the inability to get extra utilization by running a route to xxx (Oops, we can't, that's not a MAX base).

G4 needs to prove they can be successful managing a dual fleet. That will take years. IMHO it's telling that a number of successful ULCCs worldwide with very large fleets don't even try.
 
FATFlyer
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 9:47 pm

lightsaber wrote:
I do not recall seeing a link to Allegiant's presentation on the MAX purchase (If I missed it, my bad):
https://ir.allegiantair.com/static-file ... 37348c9605


That is the same presentation I posted last week on page 7 of this discussion. I just linked to the SEC filing instead of Allegiant's investor site because that was where it was available first.

No problem, just don't overlook the comments already posted about the presentation earlier in the thread.
 
cbphoto
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Sun Jan 16, 2022 9:51 pm

MIflyer12 wrote:
lightsaber wrote:
What fascinates me the most is Allegiant just hedged their fuel by planning to burn 30% less per passenger. As I noted before, they will have many lines flying few hours per day (21 at 3 hours per day on slide 11). Per that same slide, they already have 39 high utilization (11 hour) lines that *need* to be replaced with more fuel efficient aircraft.
21 lines/103 total lines=20.4%
39 lines/103 total lines=37.9%


That gets to a sentiment I've expressed before: fuel efficient aircraft are their own fuel hedge. It's also the most inflexible fuel hedge you can imagine because you spent all the money upfront and you're getting the payback over 25 years. Sure, you can sell or lease out aircraft, but if the fuel market is such that you don't want them, you're not going to get great prices selling them.

There's nothing inherently wrong with using new aircraft on seasonal routes -- if you have enough routes/frequencies with complementary seasonalities. That's a tough trick twelve months a year - think of January and September when demand falls off a cliff nationwide.

Targeting 11.0 hours a day utilization year-round isn't even that ambitious: Frontier and Sprit have had years on large narrowbodies where they exceeded 13.0 (even 14+).

http://web.mit.edu/airlinedata/www/default.html

Segregating MAX and 319/320 by base should improve reliability and lower reserves/spares costs, but it also adds costs from integer constraints, like the inability to get extra utilization by running a route to xxx (Oops, we can't, that's not a MAX base).

G4 needs to prove they can be successful managing a dual fleet. That will take years. IMHO it's telling that a number of successful ULCCs worldwide with very large fleets don't even try.


To comment on your last sentence, I feel most forget that 5 years ago, G4 had 3 fleet types and still were profitable and successful at finding the niche for the different types. Allegiant likely will base the Max at some of the smaller bases, which will help simplify the operation a bit.

One thing that was mentioned is that the neo would have still complicated the operation in different ways. Obviously crew integration wouldn’t be an issue, but the newer Leaps would have still required different parts, tools and technical expertise to operate and maintain them.
 
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 17, 2022 8:06 am

MIflyer12 wrote:
There's nothing inherently wrong with using new aircraft on seasonal routes -- if you have enough routes/frequencies with complementary seasonalities. That's a tough trick twelve months a year - think of January and September when demand falls off a cliff nationwide.

New aircraft have high fixed costs with reduced variable costs. How they are used should be flexible, but there is no economic justification to buy new until somewhere above about 8 hours a day average utilization. Note: I can only assume the transaction price and the cost of fuel determines how many hours are needed.

I didn't quote it, but I agree new aircraft are an inflexible hedge, but they add flexibility. By reducing the per seat fuel costs by 30%, the quantity of viable routes increases. In no way do I think Allegiant should go all in on new aircraft, but having such a small MAX order presents little risk; even if fuel prices drop, there will be enough high utilization lines at Allegiant to make the purchase have a beneficial return on investment.

There is also the benefit of new, longer range missions. I do not know if Hawaii might return to Allegiant's route map, but the MAX makes that an easy option.

Lightsaber
 
N1120A
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Re: Allegiant nearing deal for 737MAX

Mon Jan 17, 2022 9:20 am

The MAX 7 seems weird at first, but then makes more sense when you think about G4's model. They fly to some really small places and likely can benefit from the lower trip costs of a smaller aircraft when there is just no way they can fill a MAX 8 or MAX 200.

Polot wrote:
wjcandee wrote:
This seems completely-nuts. Has Allegiant had a change of leadership recently? Does Maurice Gallagher have Alzheimer's or some other personality-altering disease? This is a complete-reversal of everything every airline he has been involved with has done. Moving to the A320 raised their reliability enormously, because of the predictive-maintenance/onboard-diagnostics stuff. Presumably, the MAX has something similar, but...seriously??? As if people weren't already worried (perhaps irrationally) about safety with Allegiant -- and they're getting the MAX?

"We digested and are running smoothly with the A320-series. So now we're going to take on a huge project to bring aboard another fleet, with all the training of the entire operation, from agents to maintenance to compliance, to FAs, to pilots." Why? That was so much fun we want to do it again? It's not like the market for used A320CEOs has dried up. Just weird.

But whatever. It's their company, and their fate.

1) A big factor on the better reliability with the A320s is as a whole they are much newer than the MD-80s we’re with better support.

2) The public has long moved past questioning Allegiant safety. That was in the news cycle in what, 2018? They never had a crash to cement it in people’s memory.


They fired a captain for evacuating an airplane that had smoke in the cabin, dispatched an aircraft to a closed airport nearly causing a flame out and had a flight surface fail that should NEVER fail. I will always question their safety.
 
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Revelation
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Re: Allegiant orders 30 737MAX7 and 20 737MAX8-200 plus 50 options

Mon Jan 17, 2022 7:18 pm

lightsaber wrote:
I do not recall seeing a link to Allegiant's presentation on the MAX purchase (If I missed it, my bad):
https://ir.allegiantair.com/static-file ... 37348c9605

No need to apologize. These do appear to be the same slides discussed earlier. Comments start around viewtopic.php?f=3&t=1468829&p=23115551#p23115551 if you or anyone else is interested. I too found them to be very interesting!
 
WaywardMemphian
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Re: Allegiant nearing deal for 737MAX

Mon Jan 17, 2022 7:33 pm

N1120A wrote:
The MAX 7 seems weird at first, but then makes more sense when you think about G4's model. They fly to some really small places and likely can benefit from the lower trip costs of a smaller aircraft when there is just no way they can fill a MAX 8 or MAX 200.

Polot wrote:
wjcandee wrote:
This seems completely-nuts. Has Allegiant had a change of leadership recently? Does Maurice Gallagher have Alzheimer's or some other personality-altering disease? This is a complete-reversal of everything every airline he has been involved with has done. Moving to the A320 raised their reliability enormously, because of the predictive-maintenance/onboard-diagnostics stuff. Presumably, the MAX has something similar, but...seriously??? As if people weren't already worried (perhaps irrationally) about safety with Allegiant -- and they're getting the MAX?

"We digested and are running smoothly with the A320-series. So now we're going to take on a huge project to bring aboard another fleet, with all the training of the entire operation, from agents to maintenance to compliance, to FAs, to pilots." Why? That was so much fun we want to do it again? It's not like the market for used A320CEOs has dried up. Just weird.

But whatever. It's their company, and their fate.

1) A big factor on the better reliability with the A320s is as a whole they are much newer than the MD-80s we’re with better support.

2) The public has long moved past questioning Allegiant safety. That was in the news cycle in what, 2018? They never had a crash to cement it in people’s memory.


They fired a captain for evacuating an airplane that had smoke in the cabin, dispatched an aircraft to a closed airport nearly causing a flame out and had a flight surface fail that should NEVER fail. I will always question their safety.



They are flying LAS/MEM and LAX/MEM daily(sometimes twice daily) this summer. 3 and 4 hour flights right there. I'm sure MAX 7's savings would be greatly appreciated on similar situations as they fight with Spirit, Frontier, Breeze going forward.
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