Airbus cancels Skymark A380 order

MaverickM11 · Tue Jul 29, 2014 12:36 pm

Quoting AviationAware (Reply 92):
Skymark was never in the game for international slots in HND and couldn't have used them either as Haneda doesn't allow the A380 during reasonable hours.

I don't believe they ever planned to fly longhaul from anywhere other than NRT. Slots were the least of Skymark's problems re: longhaul ambitions.

Quoting AviationAware (Reply 92):
Delta will not be getting any A380s. Period. I find it rather unbelievable that despite Delta saying they wouldn't get A380s if hell froze over, there are still loads of people here suggesting that they are just waiting for scraps. No.

Logic seems to exit the runway when the 380 is involved.

Quoting AviationAware (Reply 99):
This order was always highly specualtive, the prospects for Skymark's business plan were dim to say the least and I would expect Airbus to notice that. Why those planes ever went into final assembly can only be explained by collective failure in both companies.

There is just no business case for the 380 at Skymark, or Hong Kong Airlines...or DL for that matter. I suppose Airbus bares some culpability but I also imagine they had a water tight contract with multiple confirmations. If I were Airbus I'd have zero sympathy in enforcing the penalties though.

neutronstar73 · Tue Jul 29, 2014 12:42 pm

Quoting astuteman (Reply 72):
At least it would have been if they'd actually called the reason for this failure correctly.
But they didn't. They just lucked out

Dude, you just cannot admit others were right with anything negative about Airbus or anything contrary to your view? I mean, people said that Skymark wouldn't take theaircraft, but they weren't right because they didn't say specifically the pinpoint reason(s) they wouldn't or when they wouldn't? Come on..that's ridiculous.

Quoting MaverickM11 (Reply 77):

You were right and called it before, irrespective of what some may say. I was with you in the beginning. I hoped for the best for them, but I didn't see great odds for success, either.

KarelXWB · Tue Jul 29, 2014 1:17 pm

Quoting MaverickM11 (Reply 105):
I don't believe they ever planned to fly longhaul from anywhere other than NRT.

They could perhaps get a few night slots at HND but that would be far from an ideal situation for connecting passengers.

airbazar · Tue Jul 29, 2014 1:22 pm

Quoting MaverickM11 (Reply 104):
There is just no business case for the 380 at Skymark, or Hong Kong Airlines...

Regarding Skymark today that's true. But at the time they ordered the A380 I saw a business case. They were owned by one of the largest if not the largest tour operator in Japan. They would have easily been able to fill a high density A380 to leisure destinations. It was the plane to have for that purpose, IMO. The problem is that somewhere along the way, "ownership" changed hands and the new majority shareholder decided to turn Skymark into a premium airline. In that context, there is absolutely no business case for an A380.

KarelXWB · Tue Jul 29, 2014 1:28 pm

In the meantime, the CEO of Skymark Airlines sharply criticized the cancellation, saying it's unilateral:

http://twitter.com/vguillermard/status/494109853821194240

Quoting zeke (Reply 97):
This has got a lot more detail, my guess (and that is all, no inside info), is they were due to a progress payment on the first aircraft when it started flying.

Then why not delaying the first delivery until Skymark addressed the financial issue instead of canceling the whole order?

Quoting airbazar (Reply 107):
The problem is that somewhere along the way, "ownership" changed hands and the new majority shareholder decided to turn Skymark into a premium airline. In that context, there is absolutely no business case for an A380.

Why would that be, mainly all A380 customers bought the A380 for the premium space it offers.

jetfuel · Tue Jul 29, 2014 1:32 pm

With Skymark refusing a partnership, Mr Nishikubo said, Airbus wanted an "outrageous" cancellation fee "beyond the realm of common sense".

Skymark said it had been in discussion with Airbus since Apr-2014 about changing the order due to "the deteriorating management environment from weak yen and harsh competition

Negotiation is not making good progress," Mr Nishikubo said, explaining, "It is mainly because Airbus proposes a condition for us to go under wing of a major airline company in order to change the contract of aircraft order. Otherwise the aircraft maker needs us to pay outrageous amount of penalty beyond our common sense." The reference to "go under the wing of a major airline company" likely refers to a partnership, joint venture or alliance, which CAPA has supported in the past. Delta, for example, does not have a trans-Pacific partner and was likely interested in working with Skymark but has lost interest and is now pursuing Korean Air.

Skymark's partnerships are limited to an extremely simple and one-way arrangement with Delta Air Lines whereby Delta frequent flyer members in Japan can redeem miles for Skymark tickets. Skymark could potentially receive domestic feed from international carriers, building a small but nice business

http://centreforaviation.com/

mffoda · Tue Jul 29, 2014 1:39 pm

Quoting KarelXWB (Reply 78):
Fuel prices have doubled or perhaps even tripled since they placed the order.

According to the following link, fuel prices at the time of the first (4 A/C) order was $2.32 and $3.05 for the follow on (2 A/C) order. As of July 21, 2014 it is $2.80 per gallon. That's hardly 2 or 3 times... No?

http://www.eia.gov/dnav/pet/hist/Lea...x?n=pet&s=eer_epjk_pf4_rgc_dpg&f=m

Quoting KarelXWB (Reply 78):
Quoting mffoda (Reply 32):
In the following article, they say one of the A/C is partly customized.
Quoting Stitch (Reply 33):
That may refer to things like galley / lavatory hookups and IFE runs.

That's nearly impossible, the aircraft never entered an outfit hangar in XFW.

And then there is this piece from centreforaviation.com.

"Highly customised A380s will need a new home

This raises the question of where the aircraft will go, assuming a compromise is not achieved.

Two of Skymark's six A380s are in production although it is unclear to what extent the interior has been outfitted. At the very least, core infrastructure to support the cabin would be in place even if seats, galleys and the like are not. Each airline's customised A380 cabin makes it difficult, but not impossible, to accept frames meant for another customer.

Skymark eventually planned to outfit its A380 in a two-class all-premium configuration of 280 premium economy seats and 114 business class seats. This low-density configuration of 394 seats, favoured by some in the early days of A380 deliveries, potentially makes it hard to sell to another airline.

Turkish Airlines for example has expressed interest in acquiring A380s in the short term, but its 777-300ERs already seat 337, meaning there is a large cost to bear to gain only 57 seats (and potentially less cargo room)."

http://centreforaviation.com/analysi...mmends-an-umbrella-solution-179903

KarelXWB · Tue Jul 29, 2014 1:42 pm

Quoting mffoda (Reply 110):
That's hardly 2 or 3 times... No?

For some reason, I thought they had placed the order years earlier.

Quoting mffoda (Reply 110):
And then there is this piece from centreforaviation.com.

Quoting mffoda (Reply 110):
Each airline's customised A380 cabin makes it difficult, but not impossible, to accept frames meant for another customer.

Quoting mffoda (Reply 110):
it is unclear to what extent the interior has been outfitted

Let me answer that question: the cabin has not been installed at all.

Revelation · Tue Jul 29, 2014 1:51 pm

Quoting jetfuel (Reply 109):
With Skymark refusing a partnership, Mr Nishikubo said, Airbus wanted an "outrageous" cancellation fee "beyond the realm of common sense".

Since the quote says they started talking in April, it seems the a/c were well on their way to being built, so it's not unreasonable for Airbus to require a very large cancellation fee. They've put a lot of time and money into building those a/c, time and money that could be applied to frames that could be sold at the going rate.

Quoting jetfuel (Reply 109):
Skymark's partnerships are limited to an extremely simple and one-way arrangement with Delta Air Lines whereby Delta frequent flyer members in Japan can redeem miles for Skymark tickets. Skymark could potentially receive domestic feed from international carriers, building a small but nice business

Small but nice businesses aren't able to fly the world's largest airliner profitably.

jetfuel · Tue Jul 29, 2014 1:58 pm

Quoting Revelation (Reply 112):
Quoting jetfuel (Reply 109):
Skymark's partnerships are limited to an extremely simple and one-way arrangement with Delta Air Lines whereby Delta frequent flyer members in Japan can redeem miles for Skymark tickets. Skymark could potentially receive domestic feed from international carriers, building a small but nice business

Small but nice businesses aren't able to fly the world's largest airliner profitably.

I am reading into this that Airbus may have tried to help Skymark find a ready market (and an arrangement that the financiers would accept) for these planes and perhaps operating them with a code-share or wet lease deal with DL may have been part of that. Just maybe this is where the DL rumours came from. Clearly Skymark does not want to take the risk

mffoda · Tue Jul 29, 2014 2:05 pm

Quoting KarelXWB (Reply 111):
Let me answer that question: the cabin has not been installed at all.

Let me respond to your anwser: "At the very least, core infrastructure to support the cabin would be in place even if seats, galleys and the like are not."

It appears the "Core infrastructure" is the real issue when outfitting cabins. At least, that's what suggested by the author.

KarelXWB · Tue Jul 29, 2014 2:13 pm

Quoting mffoda (Reply 114):
Let me respond to your anwser: "At the very least, core infrastructure to support the cabin would be in place even if seats, galleys and the like are not."

I wonder what the author means with core infrastructure? Even the basic cabin stuff like cables are installed in XFW.

mffoda · Tue Jul 29, 2014 2:18 pm

Quoting KarelXWB (Reply 115):

Quoting mffoda (Reply 114):
Let me respond to your anwser: "At the very least, core infrastructure to support the cabin would be in place even if seats, galleys and the like are not."

I wonder what the author means with core infrastructure? Even the basic cabin stuff like cables are installed in XFW.

Can't say for certain... But maybe, airline specific wiring, ducting and pluming??

Flyglobal · Tue Jul 29, 2014 2:22 pm

Quoting jetfuel (Reply 109):
With Skymark refusing a partnership, Mr Nishikubo said, Airbus wanted an "outrageous" cancellation fee "beyond the realm of common sense".

Skymark said it had been in discussion with Airbus since Apr-2014 about changing the order due to "the deteriorating management environment from weak yen and harsh competition

Negotiation is not making good progress," Mr Nishikubo said, explaining, "It is mainly because Airbus proposes a condition for us to go under wing of a major airline company in order to change the contract of aircraft order. Otherwise the aircraft maker needs us to pay outrageous amount of penalty beyond our common sense." The reference to "go under the wing of a major airline company" likely refers to a partnership, joint venture or alliance, which CAPA has supported in the past. Delta, for example, does not have a trans-Pacific partner and was likely interested in working with Skymark but has lost interest and is now pursuing Korean Air.

Skymark's partnerships are limited to an extremely simple and one-way arrangement with Delta Air Lines whereby Delta frequent flyer members in Japan can redeem miles for Skymark tickets. Skymark could potentially receive domestic feed from international carriers, building a small but nice business

So negotiating makes no good progress- I imagine-

Basically: It is Skymark who wants to change the contract.

2 Frames are completed, so that only the inerior installation may not be completed yet.

Not sure how much of Plane 3 and 4 has been started yet.

So for plane 5+6 (not yet started) they could probably find an alternative deal: buy 4 A330 instead of Plane 5&6. It would not be nice for the announcement but manageable.

For plane 3&4 , probably in parts preparation phase - there could be a solution with some reasonable penalty and an exchange in different planes.

But for the Planes 1 & 2: Skymark's negotiation position is a very low one. So Airbus would have the position: You have to pay what you have ordered and some year ago you gave us the ‘build authority’ when we started the frames.
I think Skymark wanted a better deal then it was fixed in the contract and Airbus doesn’t agree with it.
Airbus (I guess practical) proposals for solution are hard points for Skymark’s independence strategy and Ego – so the parties do not come together.

Probably the payment Airbus already got is enough to compensate conversion costs to other customers and other expenses – so that Airbus decided: enough now- It up to Skymark now to make the move.

Regards

Flyglobal

PS: Somehow I remember the Suzuki/ Volkswagen conflict 2 years ago – also two parties and two egos with different expectations of a deal

KarelXWB · Tue Jul 29, 2014 2:30 pm

Quoting flyglobal (Reply 117):
Not sure how much of Plane 3 and 4 has been started yet.

Plane 3 is already in pre-FAL. Plane 4, 5 and 6 were never allocated.

http://docs.google.com/spreadsheet/p...JcFE&single=true&gid=0&output=html

Polot · Tue Jul 29, 2014 2:51 pm

Quoting KarelXWB (Reply 108):
Why would that be, mainly all A380 customers bought the A380 for the premium space it offers.

Yes, but those are established premium airlines that are also willing to put Y seats in the plane too. If you are a small domestic Y class only LCC who suddenly has ambitions of flying extremely competitive long haul flights in an all premium class configuration I'm not sure jumping directly to the A380 is the smartest thing to do.

They need to take it slow with the A330s first and do a gradual build up. Get your name and product out there first, no point in running before you can walk.

KarelXWB · Tue Jul 29, 2014 3:02 pm

Quoting KarelXWB (Reply 78):
Deposits are in the millions

$255 million pre-payments, it seems.

http://www.reuters.com/article/2014/...der-idUSKBN0FY05C20140729?irpc=932

Quote:
Skymark is unlikely to recover 26 billion yen ($255 million) in installments it has paid to Airbus, Nishikubo said.

That doesn't even include all other costs, like pilot training and the purchase of the simulator.

Stitch · Tue Jul 29, 2014 3:21 pm

Quoting mffoda (Reply 32):
In the following article, they say one of the A/C is partly customized.

Quoting Stitch (Reply 33):
That may refer to things like galley / lavatory hookups and IFE runs.

Quoting KarelXWB (Reply 78):
That's nearly impossible, the aircraft never entered an outfit hangar in XFW.

I am assuming the plumbing and electrical runs for the galleys and lavatories are done at TLS.

Quoting AviationAware (Reply 102):
Sure, but if it forces the company into default, it might be worth rethinking if producing the frame(s) was the right choice in the first place.

Per Reuters, Skymark was making their progress payments to Airbus on their first two airframes so Airbus had no reason not to start production on them.

Quoting KarelXWB (Reply 108):
Then why not delaying the first delivery until Skymark addressed the financial issue instead of canceling the whole order?

I see this as a pre-emptive move by Airbus because they felt Skymark would not be able to come up with the remainder of the monies owed on the first two frames, much less the next four. If they fully completed those first two frames and Skymark subsequently defaulted, that would make it that much harder for Airbus to re-market them.

KarelXWB · Tue Jul 29, 2014 3:24 pm

Quoting Stitch (Reply 121):
Per Reuters, Skymark was making their progress payments to Airbus on their first two airframes so Airbus had no reason not to start production on them.

They also paid 90 million euros for the last 4 A380s.

FltAdmiralRitt · Tue Jul 29, 2014 3:35 pm

If there is third Skymark AC in component pieces, there should be no problem offering an early slot
to somebody.

If the second bird has wiring and plumbing systems installed (w/o cabin outfitting) customized for skymark,
then it's probably feasible to change them out, but at some loss ( SWAG guess 15MEur)

But if you do that you leave the one bird ready for delivery AC as an orphan type, that few would
consider buying except at extreme discount. (SWAG pricing a bit lower than 77-ER might get a sale)

Since there are no buyers for A380 freighters, I see no exit there either. Maybe someone with
a bit of money want's a do to a start-up freighter business, then it might make sense at the right price.

Stitch · Tue Jul 29, 2014 4:00 pm

Quoting FltAdmiralRitt (Reply 123):
...

It sounds like the first and second airframes have basic cabin connections for plumbing, electrical and bleed air in place so conversion to another customer specification should not be too difficult provided the customer is not, say, Emirates (due to the showers and bar) or Etihad (due to the customization for their First Class cabin).

A passenger to freighter conversion is not going to happen as I can't see anyone paying for the STC.

Honestly, I could see these two planes being assigned to Amedeo should they can secure a customer.

Prost · Tue Jul 29, 2014 4:46 pm

So...again, do you folks see these going to an existing customer or for a new customer?

If they go to an existing customer (I'm going to pick British Airways just as an example), how long would it take Airbus to get the two frames in the BA configuration, and do they have the spare capacity in their facilities for that? I know it takes a lot of work and infrastructure to introduce a new fleet to an airline, and that is a reason why the talks of TK being interested in these frames seems farfetched, especially if we're talking one year from ordering to delivery.

KarelXWB · Tue Jul 29, 2014 4:48 pm

Quoting Stitch (Reply 124):
Honestly, I could see these two planes being assigned to Amedeo should they can secure a customer.

I'm not yet convinced:

Quoting flyglobal (Reply 117):
Airbus (I guess practical) proposals for solution are hard points for Skymark%u2019s independence strategy and Ego %u2013 so the parties do not come together.

According to the interview with Mr. Nishikubo (CEO), Skymark Airlines is upset with the cancellation and would still want to fly those A380s. So what's the next move here, will Skymark crawl back and accept the Airbus proposals as described by flyglobal in post #117?

[Edited 2014-07-29 09:50:00]

Maersk737 · Tue Jul 29, 2014 4:54 pm

Quoting KarelXWB (Reply 126):
According to the interview with Mr. Nishikubo (CEO), Skymark Airlines is upset with the cancellation and would still want to fly those A380s. So what's the next move here, will Skymark crawl back and accept the Airbus proposals?

I can´t understand why Mr. Nishikubo is upset.... If he doesn't have the money to pay for the A380's? But maybe he was under the impression that Airbus would deliver anyway?

Cheers

Peter

KarelXWB · Tue Jul 29, 2014 4:58 pm

Quoting Maersk737 (Reply 127):
I can´t understand why Mr. Nishikubo is upset.... If he doesn't have the money to pay for the A380's? But maybe he was under the impression that Airbus would deliver anyway?

He asked Airbus to delay the first deliveries, probably to 1) focus on the (bumpy) A330 introduction first and 2) to secure financing. He did not want to cancel at all. And deferrals happen all the time, so why would Airbus cancel the order?

And apparently, Skymark already paid $255 million in deposits. Someone is financing those airframes. How is money suddenly becoming an issue?

[Edited 2014-07-29 10:02:24]

aviationaware · Tue Jul 29, 2014 5:11 pm

Quoting Maersk737 (Reply 127):
I can´t understand why Mr. Nishikubo is upset.... If he doesn't have the money to pay for the A380's? But maybe he was under the impression that Airbus would deliver anyway?

He was planning to pay from profits, which fell through as the economic environment became more difficult (new LCC competition in Japan); and leasing options apparently fell through.

That being said, they could still have been paid for at least partially by debt; Skymark is currently debt free so getting financing would not have been an issue.

Prost · Tue Jul 29, 2014 5:17 pm

It makes no sense not to utilize debt if you've already sunk $250+ million dollars, unless the debt markets were completely closed to you. I'd think a higher interest rate short term note would have been available to a debt free enterprise that could always be renegotiated with a new note after the airline proves it can utilize the fleet in their operations.

Apparently the banks were privy to something the rest of us aren't, or Skymark refused to shop the debt markets. All in all, it's strange to just blow $250+ million in capital. I can't imagine how uncomfortable the meetings with Skymark and Airbus are in dealing with their A330 fleet are.

KarelXWB · Tue Jul 29, 2014 5:18 pm

Quoting AviationAware (Reply 129):
That being said, they could still have been paid for at least partially by debt; Skymark is currently debt free so getting financing would not have been an issue.

Indeed. Therefore I'm not entirely buying the money issue.

Maersk737 · Tue Jul 29, 2014 5:19 pm

Quoting KarelXWB (Reply 128):
And apparently, Skymark already paid $255 million in deposits. Someone is financing those airframes. How is money suddenly becoming an issue?

Maybe the finance is no longer available? Or maybe Airbus have another buyer in the horizon? Even though I think that is unlikely.

Cheers

Peter

DTWPurserBoy · Tue Jul 29, 2014 5:21 pm

Quoting KarelXWB (Reply 118):
http://docs.google.com/spreadsheet/p...JcFE&single=true&gid=0&output=html

Impressive spreadsheet, Karel. Thanks. Boy that is a lot of metal!

I wonder if Transaero would be interested in early delivery? They are growing by leaps and bounds.

As far as the simulator goes, Skymark could sell it or lease the time out to other carriers without much difficulty. Frankly, with a fleet of 6 frames I am surprised they bought it. I would have expected them to contract the training out.

I still cannot understand how Emirates keeps filling these monsters up!

It would be nice to see some new carriers names on the list. I thought KLM might be interested as they phase out their -400 fleet and being a major part of the Skyteam Alliance (and Air France already operating it) they would have a lot of infrastructure in place. The last time I was in AMS that last gate waaaaay at the end of the Echo Concourse was A380 equipped. Done many a "bag drag" up and down that thing.

A very spirited debate going on this thread--nice job, folks! Interesting reading and it is always fun to speculate.

mffoda · Tue Jul 29, 2014 5:23 pm

Quoting Prost (Reply 125):
So...again, do you folks see these going to an existing customer or for a new customer?

I would guess existing, But who knows?

AW had this little tidbit in a 747 piece last week (below).

http://aviationweek.com/commercial-a...ion-can-boeing-747-remain-flagship

"An Airbus official made a telling remark last month that got very little notice. “We could find a few more [A380] customers, but we expect mostly reorders,” Kiran Rao, executive vice president for strategy and marketing, said at the Airbus Innovation Days last month. In other words, it seems increasingly improbable to secure orders for more than 1,500 VLAs in the next 20 years. The players and market environment of the pre-deregulation 1970s are long gone and will never be paralleled."

KarelXWB · Tue Jul 29, 2014 5:27 pm

Quoting Stitch (Reply 121):
I am assuming the plumbing and electrical runs for the galleys and lavatories are done at TLS.

Correct, electrical runs are done in TLS.

Stitch · Tue Jul 29, 2014 5:27 pm

Quoting KarelXWB (Reply 126):
According to the interview with Mr. Nishikubo (CEO), Skymark Airlines is upset with the cancellation and would still want to fly those A380s. So what's the next move here, will Skymark crawl back and accept the Airbus proposals as described by flyglobal in post #117?

I would think that Airbus canceling the order is proof enough that Skymark is not in a position to take them, period. If Airbus felt that Skymark could take delivery - if only to fly them direct from Hamburg to Victorville for storage - there would be no reason for Airbus to not do so.

I have to believe that Skymark is in someway in serious Breach of Contract and they are absolutely confident Skymark will default on the delivery, leaving them with two airframes in a low-density configuration that will make them very difficult to resell.

Quoting Maersk737 (Reply 127):
I can´t understand why Mr. Nishikubo is upset.... If he doesn't have the money to pay for the A380's? But maybe he was under the impression that Airbus would deliver anyway?

He's upset because he's out some quarter-billion US dollars in forfeited deposits and progress payments.

But he's also in Breach of Contract with Airbus, otherwise they would not have (claimed to have) unilaterally canceled the purchase contract lest they exposit themselves to legal action by Skymark.

Quoting Prost (Reply 130):
It makes no sense not to utilize debt if you've already sunk $250+ million dollars, unless the debt markets were completely closed to you. I'd think a higher interest rate short term note would have been available to a debt free enterprise that could always be renegotiated with a new note after the airline proves it can utilize the fleet in their operations.

Quoting AviationAware (Reply 129):
That being said, they could still have been paid for at least partially by debt; Skymark is currently debt free so getting financing would not have been an issue.

Quoting KarelXWB (Reply 131):
Indeed. Therefore I'm not entirely buying the money issue.

I'm just speculating here, but I believe that commercial credit sources don't have confidence in Skymark being able to profitably operate the A380 and are likely to default on their debt payments in the future. I also believe that they do not consider a Skymark-configured A380-841 as a "safe" form of collateral. And by that, I mean they feel that they would have a difficult time re-selling those two airframes on the open market should Skymark default on the debt payments.

Taken together, the risk of loaning Skymark the money to complete delivery and begin operation is too high to warrant issuing the debt instruments.

[Edited 2014-07-29 10:29:45]

Prost · Tue Jul 29, 2014 5:28 pm

Quoting DTWPurserBoy (Reply 133):
It would be nice to see some new carriers names on the list. I thought KLM might be interested as they phase out their -400 fleet and being a major part of the Skyteam Alliance (and Air France already operating it) they would have a lot of infrastructure in place. The last time I was in AMS that last gate waaaaay at the end of the Echo Concourse was A380 equipped. Done many a "bag drag" up and down that thing.

These are Rolls Royce powered birds, amd KL/AF operate GP7200 engines. And besides, with KL/AF finances being what they are, I'm not certain they'd be able to add to a fleet of Smart cars right now.

KarelXWB · Tue Jul 29, 2014 5:33 pm

Quoting Stitch (Reply 136):
I'm just speculating here, but I believe that commercial credit sources don't have confidence in Skymark being able to profitably operate the A380 and are likely to default on their debt payments in the future. I also believe that they do not consider a Skymark-configured A380-841 as a "safe" form of collateral. And by that, I mean they feel that they would have a difficult time re-selling those two airframes on the open market should Skymark default on the debt payments.

Taken together, the risk of loaning Skymark the money to complete delivery and begin operation is too high to warrant issuing the debt instruments.

That's a plausible scenario.

Still, airlines in much worse shape than Skymark are having no problem finding financing.

Stitch · Tue Jul 29, 2014 5:37 pm

Quoting KarelXWB (Reply 138):
Still, airlines in much worse shape than Skymark are having no problem finding financing.

But they're also not financing A380s either for short-haul domestic operations or to start first-time international services, in both cases against significant entrenched competition.

Prost · Tue Jul 29, 2014 5:40 pm

Quoting KarelXWB (Reply 138):
Still, airlines in much worse shape than Skymark are having no problem finding financing.

Probably with aircraft that can more easily be placed in other airlin's fleet. A sub-400 seat configured A380 doesn't fit in to too mamy carriers fleets. I wonder if this whole bouhaha is a cautionary tale for other carriers thinking of expanding beyond their normal base of operations?

KarelXWB · Tue Jul 29, 2014 5:47 pm

Quoting Stitch (Reply 139):
But they're also not financing A380s either for short-haul domestic operations or to start first-time international services, in both cases against significant entrenched competition.

Good point. I guess it's easier to re-allocate 500 Lion Air aircraft than 6 Skymark A380s.

gennadius · Tue Jul 29, 2014 5:58 pm

Quoting DTWPurserBoy (Reply 133):
I wonder if Transaero would be interested in early delivery? They are growing by leaps and bounds.

Well, it has been stated that Transaero will be running their 380s in an extremely high-density configuration, 650 seats, and they are scheduled to take 1 per year from 2015 to 2018 I believe. So, depending on the amount of work it would take to re-configure these frames, it may not really buy them much. Not to mention, if they have structured things to their plan of 1 per year, that may be the more limiting factor.

northstar80 · Tue Jul 29, 2014 5:59 pm

Quoting MeCe (Reply 81):
Regarding to IST A380 readiness, Mr Orhan Birdal told that current cargo terminal will be demolished and some gates will be buld that area which are 380 capable.New cargo terminal is almost comptlete btw. There will be still ground operation issues with 380 but if price is right TK will jump on this.

That is right. The gates which will be built instead of the cargo terminal (3 gates afaik) are going to be A380 capable.

airbazar · Tue Jul 29, 2014 7:57 pm

Quoting KarelXWB (Reply 108):
Why would that be, mainly all A380 customers bought the A380 for the premium space it offers.

All A380 customers that are actually flying A380's are established carriers. Not even VS has been able to make a case for the A380 and they are a far more established, and larger long haul carrier.

Quoting Polot (Reply 119):

Yes, but those are established premium airlines

Skymark is a virtually unknown carrier outside of Japan. They have no premium customer base. They barely have a customer base at all. They have no relevant alliance. Once they changed to become a premium airlines they have to start over. From zero. Not even EK started out with A380's as their first long haul aircraft (or 747 at the time). They started with A310's, IIRC.

PlanesNTrains · Tue Jul 29, 2014 9:02 pm

Quoting StTim (Reply 90):
If true that the Japanese Government backs Boeing to that extent it is worrying. Closes the market to Airbus and would ensure Boeing gets high margins and Japanese airlines and travellers lose the benefits of true competition.

Oh brother....

Quoting AviationAware (Reply 98):
This seems to have been Airbus' ultima ratio and the fact that they pulled it off is not only shedding negative light on Skymark, but on the Airbus management team as well. This order was always highly specualtive, the prospects for Skymark's business plan were dim to say the least and I would expect Airbus to notice that. Why those planes ever went into final assembly can only be explained by collective failure in both companies.

As long as Skymark was paying - and a quarter of a billion USD says they were - why wouldn't Airbus proceed?

Quoting neutronstar73 (Reply 105):
Dude, you just cannot admit others were right with anything negative about Airbus or anything contrary to your view? I mean, people said that Skymark wouldn't take theaircraft, but they weren't right because they didn't say specifically the pinpoint reason(s) they wouldn't or when they wouldn't? Come on..that's ridiculous.

People saying "This'll never work!" isn't a real analysis. Nobody KNEW that Skymark wouldn't take the aircraft - they were guessing/hoping/prognosticating. That doesn't make them "right". For all we know, this could all work itself out over the next six months. Will you come back and apologize to Astuteman for personally attacking him today?

Quoting airbazar (Reply 107):
The problem is that somewhere along the way, "ownership" changed hands and the new majority shareholder decided to turn Skymark into a premium airline. In that context, there is absolutely no business case for an A380.

Interesting.

Quoting jetfuel (Reply 109):
Negotiation is not making good progress," Mr Nishikubo said, explaining, "It is mainly because Airbus proposes a condition for us to go under wing of a major airline company in order to change the contract of aircraft order. Otherwise the aircraft maker needs us to pay outrageous amount of penalty beyond our common sense."

So Airbus is telling Skymark to work with another carrier or pound sand? I'd take that as more of an effort to support a DL or JAL than I would anything else.

-Dave

PW100 · Tue Jul 29, 2014 9:03 pm

Quoting mffoda (Reply 114):
It appears the "Core infrastructure" is the real issue when outfitting cabins. At least, that's what suggested by the author

Quoting KarelXWB (Reply 115):
I wonder what the author means with core infrastructure? Even the basic cabin stuff like cables are installed in XFW.

Quoting Stitch (Reply 121):
I am assuming the plumbing and electrical runs for the galleys and lavatories are done at TLS

I was wondering about that as well; with how much customization does a frame leave Toulouse? I mean, if it takes 4 - 6 months to install a cabin at Hamburg, surely there can't be too much customization done at the FAL? Even fully developed and engineered cabins likes EK take more than four months to install. To me, that indicates that after leaving FAL there is a lot of customization to be done in terms of cabin connections, plumbing, electrics etc, before the cabin itself is installed. That installation part should not take much more than 3-4 weeks, one would expect?

PW100

Prost · Tue Jul 29, 2014 9:05 pm

The whole aspect of being closer aligned to another carrier as being a condition to proceed seems odd to me.

KarelXWB · Tue Jul 29, 2014 9:06 pm

Quoting PW100 (Reply 147):
Even fully developed and engineered cabins likes EK take more than four months to install.

That is not correct, cabin installation itself takes no longer than 33 days (with 2 working shifts per day).

Quoting PW100 (Reply 147):
That installation part should not take much more than 3-4 weeks, one would expect?

Maximum 33 working days.

[Edited 2014-07-29 14:08:20]

Stitch · Tue Jul 29, 2014 9:11 pm

Quoting PW100 (Reply 147):
To me, that indicates that after leaving FAL there is a lot of customization to be done in terms of cabin connections, plumbing, electrics etc, before the cabin itself is installed. That installation part should not take much more than 3-4 weeks, one would expect?

I imagine a fair bit of it is due to the complexity of the premium cabin seating, especially First Class. In addition to the seat, there is all the cabinetry of the surrounding suite and integrating all the wiring for electrical and IFE into the backbone harnesses running along the floor.

And then you have products like EK's First Class suites, which have a significant amount of wood, leather and gilding. I would not be at all surprised if the installation teams have to go slow when putting those together and working in the cabin to ensure they do not damage the product (scuff the leather, scratch the wood, strip the gilding).

And EK's First Class lavatory is more like one on a biz jet than a commercial airline in size, design and amenities so I expect that takes a fair bit more time than an Economy "box loo".

Quoting Prost (Reply 148):
The whole aspect of being closer aligned to another carrier as being a condition to proceed seems odd to me.

Not if Airbus' concern is that Skymark would default on the airframes prior to delivery, which I am inclined to believe it is. Having an established carrier serve as a "co-signer" would ensure that Airbus gets paid for delivery.

[Edited 2014-07-29 14:17:50]

Prost · Tue Jul 29, 2014 9:17 pm

Speaking of painting, I wonder how long the yellow star will remain on the tail?

Stitch · Tue Jul 29, 2014 9:18 pm

Quoting Prost (Reply 152):
Speaking of painting, I wonder how long the yellow star will remain on the tail?

I expect they'll just cover it up.

KarelXWB · Tue Jul 29, 2014 9:19 pm

Quoting Prost (Reply 152):
I wonder how long the yellow star will remain on the tail?

Both A380s are stored inside a hangar, nobody can see them.

Prost · Tue Jul 29, 2014 9:38 pm

And honestly, who foresaw Airbus refusing a customer their planes?

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