|Quoting N328KF (Reply 50):
As of the end of September, BCA still showed 11 777-200LRs and 5 777-300ERs. Where did you hear this from? And what indication do you have that they are not selling their A340-500s any longer? If it's they have disappeared from sales lists somewhere, perhaps that merely means that the contract has been signed.
|Quoting Widebodyphotog (Reply 51):
And it would be pretty hard for AC to get out of this deal as it involved comitments on restructuring just to get the financing for the 32 plane order. This fleet reorganization plan also featured dramatic reductions in fuel costs as the centerpiece. It makes no sense to keep the A345 which burns 20% more fuel per unit payload than the 777-200LR...
The source is the Air Canada IPO prospectus published by the company this week. See pages 35, 36
Page 35 reads as follows: "Air Canada plans to take delivery of five Boeing 777-300ERs and three Boeing 777-200LRs in 2007, six Boeing 777-300ERs and three Boeing 777-200LRs in 2008."
This is also reflected in the future fleet chart on page 36.
This is the same total number of fins AC
ordered, and I dare say the value of the 777-300ER, as a larger plane, is probably greater than that of the 777-200LR. The deal has conversion rights to allow AC
to switch between variants by fixed dates, which is I presume what they have done. The airline also has ordered two 777-200LRF freighters, but has a conversion right to turn them into either -200LR or -300ER passenger planes before the end of 2006.
has not gotten out of the order, and they have not paid penalties to alter the mix of aircraft as they have liberal conversion rights.
On the issue of the 345, the 345s are now showing in the fleet chart as long-term holds. Earlier versions of the chart have shown these aircraft to be exiting the fleet. Why would AC
keep the 345? One can presume three reasons. 1. They couldn't get a good price for them. 2. They own them outright, therefore there is no cash ownership cost in keeping them; 3. It allows AC
to bias the 777 order towards the larger -300ER with a better seat-mile performance than the -200LR. AC
has many more situations where it can use the -300ER than situations where a ULH aircraft is mandatory. The -300ER is selling exceptionally well, has exceeded expectations, and is a great high capacity aircraft whereas the 777-200LR has been met with less than wild enthusiasm. It is a niche aircraft and may represent the same resale problem for a carrier as the 340-500. Nobody manages the resale value of aircraft more aggressively than SQ, and they have not ordered the -200LR yet, much to the dismay of many a.netters. I suspect that the -200LR, like the 345, does not come across as a good resale value choice compared to the 777-300ER, for which there will be ample market for quite some time as it is likely to be larger than the largest 787 variant.
So why go and order more than you may need of this niche aircraft, when you already have two which you got new for a very cheap price ($87 million each) rather than lay out $150 million apiece for a niche aircraft like the 777-200LR? I suspect AC
has noticed that many airlines are unconvinced about ULH flying, unconvinced there are many very long, thin routes where you can get the kind of volume/yield to justify such flights. Canada doesn't have as many of the opportunities - from Toronto, for example, you can reach virtually all the major capitals of Europe, Latin America and Eastern Asia with a 777-300ER. SQ
may have a market for SIN
, but there is no Canada-Singapore O&D market to speak of. There is no equivalent in the Canadian market to Sydney-Heathrow or Dubai-LAX
. There is Toronto-Mumbai, maybe Toronto-Hong Kong if the 300ER takes a payload penality, and a couple of other routes that could be payroll optimized, but AC
might just as well to wait for the 787 to develop thinner routes like YYZ
for which a 777 would be, at the outset, too large.
Beyond that, AC
has a huge reservoir of pilots familiar with the Airbus cockpit, a stockpile of Airbus rotables and great familiarity with the aircraft systems.
says the 777-200LR has an 11% fuel cost and 12% maintenance cost advantage over the 340-500, but when you own the latter outright and are concerned by the former's resale value, keeping the 340-500 is a decent if not optimal compromise. Why increasing your resale risk?
Resale value is an issue not often factored into the question by a.netters, but it a sophisticated part of the industry, and I would suspect that at this point, the 777-200LR is not doing much better in the appraisal market than the 345.
[Edited 2006-10-21 00:13:50]
[Edited 2006-10-21 00:19:41]