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boefan
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Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 9:17 am

Leeham news/Bloomberg news revealed that Air France-KLM will defer the deliveries for 10 B77W due 2015-2016 because of poor financial results and low fuel prices

Quote:
The carrier had earlier planned to take about 10 Boeing 777s in 2015 and 2016 and will now look to postpone those deliveries, the CFO said. One reason the airline can afford not to take the new planes is that the lower oil price reduces any gains from having more fuel-efficient aircraft.

The news comes after Boeing secures 6 more B777 orders from an unidentified customer .

I believe there is a good and a bad side here after this decision because it frees very early slots but also reveals that now that the fuel price felt down the need for more fuel efficient aircraft isn't the first priority .

We will see how many airlines will follow AF/KLM and how many will grab the chance of taking new aircraft very soon

http://www.businessweek.com/news/201...r-earnings-forecast-for-third-time

http://leehamnews.com/2014/12/18/air...financial-results-low-fuel-prices/

Thoughts ?
 
mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 9:46 am

Quoting boefan (Thread starter):
I believe there is a good and a bad side here after this decision because it frees very early slots but also reveals that now that the fuel price felt down the need for more fuel efficient aircraft isn't the first priority

What early slots? AF / KLM are deferring B777-300ER as Boeing is struggling to fill the line until the EIS of the B777X in 2020. Furthermore that is a deferral of a money maker, while Boeing has not made money on the B747-8 nor on the B787 up to now,
 
boefan
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 9:53 am

Quoting mjoelnir (Reply 1):
What early slots?

the production list for 2015 has already been fixed and its showing the Air France and the KLM B77Ws that will be assembled . So now that this birds most likely won't be assembled it frees these slots for other airlines
 
TC957
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 9:55 am

Hasn't KLM got a couple due next spring ? If so , they must be in the early production stages by now.
However, I guess Boeing must be pleased with any 2018/2019 77W delivery slots they can get as production winds down prior to the 77X.
 
mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 9:59 am

Quoting boefan (Reply 2):
the production list for 2015 has already been fixed and its showing the Air France and the KLM B77Ws that will be assembled . So now that this birds most likely won't be assembled it frees these slots for other airlines

Boeing is as it is struggling to fill those lines and how does one call slots in the last years of production of an model "early slots"?
 
boefan
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:02 am

Quoting mjoelnir (Reply 4):
Boeing is as it is struggling to fill those lines and how does one call slots in the last years of production of an model "early slots"?

Sorry for the wrong phrase i meant "early" = less that a year for delivery not as "early"=first slots in the production line

i should have said short-term my bad  

[Edited 2014-12-19 02:03:19]
 
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SEPilot
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:02 am

I think any airline that figures these oil prices are a long term thing are making a risky bet; but I can see AF's predicament. If you do not have the money you have to do what you can to reduce expenditures, and delaying delivery of new planes is one way. I can see that low oil prices may encourage other carriers that would have replaced 744's with 77W's may hold out for the 77X. So this may help push Boeing to cutting the 777 production rate.
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KarelXWB
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:05 am

Quoting boefan (Thread starter):
also reveals that now that the fuel price felt down the need for more fuel efficient aircraft isn't the first priority .

What aircraft were those remaining 777s on order supposed to replace? Are we sure they were not meant for growth?

Quoting mjoelnir (Reply 1):
Furthermore that is a deferral of a money maker

It means someone else can take the slots in 2015/2016.
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scbriml
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:07 am

Quoting TC957 (Reply 3):
However, I guess Boeing must be pleased with any 2018/2019 77W delivery slots they can get as production winds down prior to the 77X.

Assuming they eventually take them.
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mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:10 am

Airlines deferring B777-300 ER is bad news for Boeing, the next step is than conversion to B777X and the B777 line is getting empty until the B777X EIS. We could see prodcution rate reductions for Boeing's "money maker".

[Edited 2014-12-19 02:23:40]
 
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KarelXWB
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:16 am

Quoting mjoelnir (Reply 9):
Airlines deferring B777-300 ER is bad news for Boeing

But it opens the opportunity to sell them to someone else, availability is quite often an important factor for sale campaigns.

And as mentioned above, Boeing booked 6 new 777 orders this week. The first slots might have been sold already.
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boefan
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:17 am

Quoting KarelXWB (Reply 7):
What aircraft were those remaining 777s on order supposed to replace?

for Air France i think they will replace the B744 . For KLM 3 B747-400M are due to be phased out in 2015 and another 3 in 2016 .
 
mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:31 am

Quoting KarelXWB (Reply 10):
And as mentioned above, Boeing booked 6 new 777 orders this week

Do they have a date of delivery? I think there is no problem with getting slots rather with filling slots.
There are unfilled slots in the Boeing B777 production line in 2016 to 2020 at the current production rate of 8.3 frames a moth.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 11:29 am

Quoting boefan (Thread starter):
Leeham news/Bloomberg news revealed that Air France-KLM will defer the deliveries for 10 B77W due 2015-2016 because of poor financial results and low fuel prices

Because the fuel price has dropped so much now keeping the B747 flying is not that bad, this planes were ordered when fuel prices were very high and the forecast was not that good.

Quoting boefan (Reply 11):
for Air France i think they will replace the B744 . For KLM 3 B747-400M are due to be phased out in 2015 and another 3 in 2016 .

I think they will delay this retirements.

Quoting KarelXWB (Reply 10):
And as mentioned above, Boeing booked 6 new 777 orders this week. The first slots might have been sold already.

it looks like someone was very happy to get that early slots, who could be?? I think EY, QR or TK would be very happy to get planes asap.

Quoting mjoelnir (Reply 9):
Airlines deferring B777-300 ER is bad news for Boeing, the next step is than conversion to B777X and the B777 line is getting empty until the B777X EIS. We could see prodcution rate reductions for Boeing's "money maker".

it is bad for Boeing if they can´t fill up the gaps, but if can sell the slots of every conversion it should not be a problem, i´m sure before allowing anyone to convert to B777X boeing will be sure of they can see that slot to anyone else, then converting to B777X is not bad, that way they will make sure that particular customer stays with the B777 and doesn´t move to A350.
Bad would be if any customer cancel the remaining planes.

When are the B777 and A330 going to start getting the new cabin interiors?? the new one I have seen in the pics looks very nice.
 
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hilram
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 11:37 am

Where these planes meant to replace 777s or 747s ?
Does this mean that they will operate their 747s longer?
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 12:19 pm

Quoting mjoelnir (Reply 9):
Airlines deferring B777-300 ER is bad news for Boeing,

Airbus are in the same position with the A330CEO but strangely you keep quiet about that, especially in a week where A330CEO orders have decreased by 15.
 
mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 12:19 pm

Quoting migair54 (Reply 15):
it is bad for Boeing if they can´t fill up the gaps, but if can sell the slots of every conversion it should not be a problem,

There were free slots in 2016 anyway.

Quoting migair54 (Reply 15):
i´m sure before allowing anyone to convert to B777X boeing will be sure of they can see that slot to anyone else, then converting to B777X is not bad, that way they will make sure that particular customer stays with the B777 and doesn´t move to A350.
Bad would be if any customer cancel the remaining planes.

When AF / KLM wants to convert, they will convert. Boeing will not run the risk of them cancelling the frames or move to the competition. From 2017 Airbus will offer with the A350-1000 a frame of the same size and lower operating cost.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 12:22 pm

Quoting fcogafa (Reply 17):
Airbus are in the same position with the A330CEO but strangely you keep quiet about that, especially in a week where A330CEO orders have decreased by 15.

Feel free to start a thread about the "A330 production gap". This thread is about AF/KL deferring 777s.
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:04 pm

Not a problem for Boeing, but a sign of trouble at AF/KLM.
 
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par13del
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:18 pm

When I see airlines cancelling / deferring deliveries of narrow body a/c then I will believe that the low fuel cost is the primary driver.
Long haul a/c are not sold in as great numbers and the purchase of such a/c has a much greater hit on the balance sheet than a new build narrow body, imagine the amount of money being saved on all the short runs that those a/c perform on a daily basis.
 
mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:33 pm

Quoting fcogafa (Reply 17):
Quoting mjoelnir (Reply 9):
Airlines deferring B777-300 ER is bad news for Boeing,

Airbus are in the same position with the A330CEO but strangely you keep quiet about that, especially in a week where A330CEO orders have decreased by 15.

Have a look at the A330 thread. Yes the A330 has the same problem and any deferral or cancellation of a A330ceo is bad news for Airbus bringing more unfilled slots. And yes Airbus is talking about reducing the build rate. But does one have to be so political correct that one has to mention that in a thread about deferrals of B777-300ER?
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:34 pm

Quoting SEPilot (Reply 6):

I think any airline that figures these oil prices are a long term thing are making a risky bet

As migair states below, the conventional thinking when the plane were ordered was that oil was heading towards $150 and perhaps even higher (many thought so). We now have the fundamentals in place that oil won't break $100 in the future.

Quoting migair54 (Reply 15):
planes were ordered when fuel prices were very high and the forecast was not that good.
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TheSonntag
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:41 pm

The end is near for the B777. Time to start the "Boeing considers ending the B777 production" thread.

Sorry, couldn't resist.
 
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par13del
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 1:59 pm

Quoting planemaker (Reply 23):
We now have the fundamentals in place that oil won't break $100 in the future.

The key here will be the cost of acquisition which sometimes get little rift, no question a more economical frame will earn more money than a lesser one, however, if the cost of financing is a much greater offset........
In the USA for example, interest rates have been flat and near zero, but the USA carriers until recently have not been the ones purchasing the majority of the new frames, so the rate of financing elsewhere is the key.
If it is anything like what we see here from our multi-national banks, interest rates in the developing and third world are maintained at a high rate to offset the lower rates in their home countries.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 2:03 pm

Quoting boefan (Thread starter):

Leeham news/Bloomberg news revealed that Air France-KLM will defer the deliveries for 10 B77W due 2015-2016 because of poor financial results and low fuel prices

The LOW FUEL PRICES is huge. This may be the first move in fleet plan related to fuel.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 3:41 pm

Quoting enilria (Reply 26):
The LOW FUEL PRICES is huge. This may be the first move in fleet plan related to fuel.

Now that the airlines have indoctrinated the flying public with ancillary fees (I honestly couldn't believe the $50 "offer" of advanced seat seat selection on a recent online ticket between Phoenix and Tampa) and are making decent profits, when the almost 50% drop in oil from the summer works it way through the supply chain, airlines are going to be making out like gangbusters... unless they start an ol' fashion pricing war.
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kl911
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 3:41 pm

Quoting seahawk (Reply 20):
Not a problem for Boeing, but a sign of trouble at AF/KLM

Indeed, Dutch news reported today that AF-KL will decrease investments for the next two years.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 3:59 pm

People fail to see the otherside of this issue.

AFKL has serious financial issues and at the same time yesterday announced further revision of EUR 200mil reduction in forecast earnings.
Enterprise must better manage cost reductions in coming years, and defer deliveries of such large and expensive aircraft is very good method to reduce capital outlay during short term.
Decision really has nothing to do with opinion of 777, but instead to do with timely opportunity to reduce budget.
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 4:23 pm

Quoting mjoelnir (Reply 22):
Have a look at the A330 thread. Yes the A330 has the same problem and any deferral or cancellation of a A330ceo is bad news for Airbus bringing more unfilled slots. And yes Airbus is talking about reducing the build rate. But does one have to be so political correct that one has to mention that in a thread about deferrals of B777-300ER?

Actually yes - sometimes these things reflect industry wide influences. I could recount at least half a dozen a-netters hot topics with A and B wars which begged for a discussion of what was really happening. Which was all airframe manufacturers getting battered by the same trends.
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KarelXWB
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 4:40 pm

Quoting fcogafa (Reply 17):
Airbus are in the same position with the A330CEO but strangely you keep quiet about that, especially in a week where A330CEO orders have decreased by 15.

Why can't we have a discussion without pointing out to the competitor?
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hooverman
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 5:06 pm

Another article stated that KLM-AF have not benefited of low fuel prices due to fuel hedging.
 
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Revelation
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 5:17 pm

Quoting par13del (Reply 21):
When I see airlines cancelling / deferring deliveries of narrow body a/c then I will believe that the low fuel cost is the primary driver.
Long haul a/c are not sold in as great numbers and the purchase of such a/c has a much greater hit on the balance sheet than a new build narrow body, imagine the amount of money being saved on all the short runs that those a/c perform on a daily basis.

Yet narrow bodies are used on short routes, which means they are less sensitive to the price of oil. That's why DL is doing just fine flying lots of MD-xx aircraft yet ordered all-new A330neo and A350 for wide bodies.

Quoting TheSonntag (Reply 24):
The end is near for the B777. Time to start the "Boeing considers ending the B777 production" thread.

Yet Boeing is investing billions of dollars in 777x and has hundreds of orders even though it won't EIS till 2019. A380, not so much...

Quoting planemaker (Reply 27):
Now that the airlines have indoctrinated the flying public with ancillary fees (I honestly couldn't believe the $50 "offer" of advanced seat seat selection on a recent online ticket between Phoenix and Tampa) and are making decent profits, when the almost 50% drop in oil from the summer works it way through the supply chain, airlines are going to be making out like gangbusters... unless they start an ol' fashion pricing war.

Now you will see why DoJ allowing all the consolidation to happen was a BAD thing for consumers.

Quoting mercure1 (Reply 29):
AFKL has serious financial issues and at the same time yesterday announced further revision of EUR 200mil reduction in forecast earnings.

  

Not looking so good for their "other" wide body orders either...
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mjoelnir
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 5:55 pm

Quoting frmrCapCadet (Reply 30):
Actually yes - sometimes these things reflect industry wide influences. I could recount at least half a dozen a-netters hot topics with A and B wars which begged for a discussion of what was really happening. Which was all airframe manufacturers getting battered by the same trends

The argument I was replying to was that the deferral would free up slots and that would be a good thing. But it is not a good thing when the producer has anyway enough unfilled slots. And I did not see you writing about the bad slot situation of the B777-300ER in a thread about the A380 dying tomorrow.
 
migair54
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 5:59 pm

I don´t know why are you talking about the end of the B777 when the sucessor is the B777X, B779 and B778.

Quoting KarelXWB (Reply 31):
Why can't we have a discussion without pointing out to the competitor?

we are already use to this, but you are right, no need to talk about Airbus in this thread, unless strictly necessary.

Quoting planemaker (Reply 27):
Now that the airlines have indoctrinated the flying public with ancillary fees (I honestly couldn't believe the $50 "offer" of advanced seat seat selection on a recent online ticket between Phoenix and Tampa) and are making decent profits, when the almost 50% drop in oil from the summer works it way through the supply chain, airlines are going to be making out like gangbusters... unless they start an ol' fashion pricing war.

Usually airlines are very fast to introduce fees and fuel surcharges, but I don´t think they will drop prices so easily.

Quoting enilria (Reply 26):
The LOW FUEL PRICES is huge. This may be the first move in fleet plan related to fuel.

the first one was ordering the B77W to replace quads and old planes, now this one is like second though about the same issue.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 6:00 pm

Quoting seahawk (Reply 20):
Not a problem for Boeing, but a sign of trouble at AF/KLM.

Unfortunately it seems that way. Hopefully they can turn it around otherwise we might see the B787's and A350's also delayed entering their fleet. If they will enter the fleet at all. But I have good hopes that AF/KLM can turn it around and improve their financial position.

Quoting KarelXWB (Reply 31):
Why can't we have a discussion without pointing out to the competitor?

Because we are on A-net here.  
 
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GE9X
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 6:45 pm

Sad news for AF-KL. The merger didn't turn out in KLM's favor, that's for sure. They would be a much better fit with BA or Lufthansa.

I disagree that the referrals are a blow to Boeing. They have plenty of customers lined up, especially once they finally kill the 748 and drop the prices to fill the slots before transition to 777X. The -300ER if configured appropriately is THE most efficient aircraft in the skies, bar none, and unlike the 748 or 388 it doesn't need to be full to make money.

Part of me strongly wishes the 6 new 77W orders from the "unidentified customer," paired with the November order for two additional 77Ws, will result in 8 shiny new slaveships for Air Canada in 2015, using at least some of these deferred slots. Air Canada is printing money off of its dreaded 458-seater and could really stand to replace its 6 comparatively inefficient 77Ls with them (as well as reconfiguring the 349-seaters, which I believe is in the plans.) The 200LR is an aircraft they simply do not need, it costs the same to fly as the 300ER for much less revenue. The longest routes in their system is Vancouver-Sydney and it can be done by the high-density 300ER with barely any freight penalties. Any other ULH route in their growth plan (JNB?) can be handled by the 787-9 on the order book. These deferrals are a perfect opportunity for growth at little risk for a healthy carrier like AC.

Then again maybe I'm just dreaming.
 
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 8:00 pm

It will be interesting to see what effect low oil prices have on airlines choices of new aircraft. If it can be guaranteed that oil prices will remain relatively low for the near future, this could introduce a new dynamic in how airlines evaluate future orders. They may no longer have to go with the most efficient aircraft if a less efficient aircraft has a much lower price.

Hopefully low oil prices will mean more 4 engine aircraft remaining in fleets a lot longer. Of course, this is only from a spotters wish list  
 
BiggerJetsPlz
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 8:08 pm

BRING BACK THE MD11!   
 
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SEPilot
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 8:32 pm

Quoting GE9X (Reply 37):
I disagree that the referrals are a blow to Boeing. They have plenty of customers lined up, especially once they finally kill the 748 and drop the prices to fill the slots before transition to 777X.

I am not so sure of this. My understanding is that they are struggling to fill the line before the production of the 777X starts. And no, the 77W is not the most efficient plane out there; the 787 is right now, very soon to be joined by the A350 (leaving the A380 out of the picture). And it will be hard to convince airlines to buy the 77W instead of waiting for the 777X unless they absolutely need a plane NOW, and I do not think that many airlines are in that position, especially if they are replacing planes instead of expanding. But even expansion can wait. The only thing that can't wait is replacement for a plane that is flown to its limits, and there are few of those. Even when one is facing major heavy maintenance is not a given; it may be still more economical in the long run to pay for the D-check and fly it for a few more years in order to replace it with one that is 15% more efficient.
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 10:58 pm

I agree with others that this is mostly AF/KLM's financial performance. But it does potentially impact fleet planning.

Quoting enilria (Reply 24):
The LOW FUEL PRICES is huge. This may be the first move in fleet plan related to fuel.

This is huge in that suddenly there is a different decision when an out of date plane, say a 744, is facing an expensive maintenance burden, there is a new choice as noted:

Quoting SEPilot (Reply 38):
Even when one is facing major heavy maintenance is not a given; it may be still more economical in the long run to pay for the D-check and fly it for a few more years in order to replace it with one that is 15% more efficient.

   In particular with early (ish) 779 slots still available. The replace now vs. hold on and replace later with a far more economical plane just became more complicated. I am talking about replacing 744s and A330CEOs on routes that could support a 77W.

Quoting fcogafa (Reply 15):
Airbus are in the same position with the A330CEO but strangely you keep quiet about that, especially in a week where A330CEO orders have decreased by 15.

Both are going to hurt during the transition. IMHO, Boeing will have to slow the 777 line to about 36 per year before ramping back up for the 777X. It is almost perfectly analogous to the A330 NEO situation except Boeing has more years to cover.

Quoting mjoelnir (Reply 9):

Airlines deferring B777-300 ER is bad news for Boeing, the next step is than conversion to B777X and the B777 line is getting empty until the B777X EIS. We could see prodcution rate reductions for Boeing's "money maker".

How can the line slowing (even going to one line) be avoided?

Quoting BiggerJetsPlz (Reply 37):

BRING BACK THE MD11!

   Oil would have to drop a bit more.  
Quoting Revelation (Reply 31):
Yet Boeing is investing billions of dollars in 777x and has hundreds of orders even though it won't EIS till 2019. A380, not so much...

That is worth repeating. The issue in the lack of 77W sales isn't shutting down the 777 line, but rather covering production until the 777X. There is no question the 777 line will continue. It is a question of the value of procuring new 77Ws now or waiting for 779s and holding onto other airframes (77E, A330CEO, or 744).

This is interesting. At > $70/bbl, it was get the gas-hog out of the fleet. Now...   

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PW100
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RE: Air France-KLM Defers B777 Deliveries

Fri Dec 19, 2014 11:48 pm

Quoting lightsaber (Reply 39):
It is almost perfectly analogous to the A330 NEO situation except Boeing has more years to cover.

Absolutely. Boeing will have to "work" (much) harder to bridge the period. Of course their rewards should (eventually) be much bigger, as they are taking much more time and putting much more effort and investment to improve the 777. The 777X program should therefore stay relevant quite bit longer than the 330NEO.
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 12:10 am

Quote:

The carrier had earlier planned to take about 10 Boeing 777s in 2015 and 2016 and will now look to postpone those deliveries, the CFO said. One reason the airline can afford not to take the new planes is that the lower oil price reduces any gains from having more fuel-efficient aircraft.

The timing is particularly unfortunate for spotters and real aviation enthusiasts (not pretentious bean counters)   . Had the oil prices plummeted 2-3 years ago, we'd likely would have seen the MD-11 retirement extended to 2018.

Quoting BiggerJetsPlz (Reply 37):

BRING BACK THE MD11!

Amen! Too late though; most of the fleet has already been scrapped. And the few frames remaining would not make viable economies of scale, I am afraid. They are also destined for the scrapper.


Quoting lightsaber (Reply 39):
Oil would have to drop a bit more.  

Typical... and what else, a lack of parts?   

The reason why that's BS is because the last time oil was at $55/barrel KL planned to operate the MD-11 for 8-10 more years... and they did.   

Quoting PW100 (Reply 40):
Boeing will have to "work" (much) harder to bridge the period. Of course their rewards should (eventually) be much bigger,

I agree. It's possible Boeing will need to accept a lull in the end of line 77W and 737NG programs, with dips in production. But it will be short-lived and the company will rebound strongly with 777X and 737MAX EIS.
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 12:29 am

Quoting PW100 (Reply 40):
Boeing will have to "work" (much) harder to bridge the period.

The sooner Boeing can clear their backlog the sooner they can start preparing for the 777X, this applies to the suppliers as well.

Quoting TrijetsRMissed (Reply 41):
It's possible Boeing will need to accept a lull in the end of line 77W and 737NG programs, with dips in production.

If customers are ready for the current a/c a lull in the 777 / 737NG line would allow workers to be allocated to the other programs in need of resources. 787 ramp is still an ongoing concern, the -10 is next, the tanker project has already used up most of its slack, the NSA may also be launched with its largest version, with so many programs going thru changes, the bulk of the 777 line workers should still be employed.

Backlog may be desirable on paper but when you look at the 787 backlog, the faster they can get those out the better.
 
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 12:48 am

This definitely has to do with financial security rather than the 777 line itself, AF-KL tend to order newer aircraft later and would rather have its performance proven, and could be seen with A350/787 order, Alexandre de Juniac and the board must have done the numbers and realised that postponing these frames would save them more and the capacity isn't needed immediately. The company is going through a lot of streamlining and cutting excess fat without angering the unions again.

[Edited 2014-12-19 16:50:04]
 
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 1:23 am

Quoting seahawk (Reply 18):
Not a problem for Boeing, but a sign of trouble at AF/KLM.

We should get used to deferrals and order reductions.. too many airlines ordered ordered planes for
1) hold a production slot when there was a run on an aircraft type they could use someday
2) anticipated oil remaining high
3) had unreasonable market forecast goals

These are airlines problems.. and one reason the manufacturers are hesitant to keep jacking up production rates.. actually the KL/AF deferrals work to Boeings favor as can slow the line down sooner and maybe accelerate the X..

This trend will not be manufacturer specific but will affect all manufacturers, leasing companies, and the second hand market.
 
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 10:55 am

Quoting par13del (Reply 42):
The sooner Boeing can clear their backlog the sooner they can start preparing for the 777X, this applies to the suppliers as well

I'm not sur ethat is the case. I'd expect that much of the bridging period is not meant to "start preparing", but rather to develop the new techniques and finalize the design. Most of those activities are disconnected from a matured production process.
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 1:11 pm

Quoting SEPilot (Reply 38):
My understanding is that they are struggling to fill the line before the production of the 777X starts.

Despite Boeing's adamant stance that they will not need to reduce 777 production rates, every analyst out there says they will. Most of the argument seems to be to what level, with some predicting as low as three per month.

Quoting par13del (Reply 42):
The sooner Boeing can clear their backlog the sooner they can start preparing for the 777X, this applies to the suppliers as well.

No, they want and need (just like Airbus with the A330) a smooth overlap between old product and new product. The perfect solution would be to maintain current production rate and slowly start slipstreaming the new model into production, then start increasing the proportion of new vs old until all production is the new model. However, the harsh reality is that both will almost certainly have to reduce, then ramp up the new product. Not ideal by any means.
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 1:32 pm

Quoting PW100 (Reply 45):
I'd expect that much of the bridging period is not meant to "start preparing", but rather to develop the new techniques and finalize the design.

I even question some of that since the "new additions" are not really new tech to Boeing like the 787, how much is buying time for the engines?.

Quoting scbriml (Reply 46):
No, they want and need (just like Airbus with the A330) a smooth overlap between old product and new product. The perfect solution would be to maintain current production rate and slowly start slipstreaming the new model into production, then start increasing the proportion of new vs old until all production is the new model.

I agree it's a want, but I'm saying it does not have to be a not a need, with the number of programs ongoing, having one wind down sooner (if customers are willing to accept frames) frees up resources to be re-allocated even temporarily to get production stabilized on their other programs.
The tanker contract for example is fixed price, any overruns must be on Boeings dime, do they want to hire additional staff at additional cost versus re-allocate staff already on the payroll for minimal cost, the same applies to the production of the 787-10 and further ramp up of the 787-9.
The only program that does not appear to have any issues in production is the P8, and I have not even mentioned the MAX.
The number of production facilities concentrated in the region (Washington State) also means that the re-allocation of workers does not mean moving them out of the region with that additional re-allocation expense.
 
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 1:41 pm

Does anyone know what engine option KLM had chosen?
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RE: Air France-KLM Defers B777 Deliveries

Sat Dec 20, 2014 1:55 pm

Quoting lowbank (Reply 48):

Does anyone know what engine option KLM had chosen?

 Wow! Boeing 777-300ER has only one engine option and this is the GE-90-115B
for the B787 KLM has chosen GEnx-1B engines    

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