AA Deferring 5 787 Dreamliners

FriscoHeavy · Fri Apr 24, 2015 2:57 pm

AA has deferred 5 dreamliners due in 2016. Of these, 4 will now arrive in 2017 and 1 in 2018.

I'm kind of surprised they are doing this, but at least they are just deferred and not cancelled.

Have a good weekend.

BN727227Ultra · Fri Apr 24, 2015 3:04 pm

Well, with UA converting 787s and DL buying 330s and 350s and apparently not answering phone calls from Boeing lately, I was wondering if there was a shoe dropping in Fort Worth.

Wonder if someone made AA an offer they couldn't refuse in order to get earlier slots.

jetblue1965 · Fri Apr 24, 2015 3:07 pm

long haul hasn't been kind to US carriers lately : weakness of the Yen, weakness of Euro, and broad economic woes all over LatAm

so it's a win-win arrangement : Boeing frees up 787 slots for those who really want it, and AA can reduce cash flow expenditure when they don't need the long haul lift

tortugamon · Fri Apr 24, 2015 3:07 pm

Quoting FriscoHeavy (Thread starter):
AA has deferred 5 dreamliners due in 2016. Of these, 4 will now arrive in 2017 and 1 in 2018.

This is most likely due to them changing the mix of their order of 788s/789s and Boeing needing to change their order as a result. Could be a seating issue or it could be that they are receiving 13 788s in 2015 as is so they will be looking for a bit of delay to not have too much additional capacity too quickly.

767 operators seem to be delaying retirement of these aircraft despite receiving 788s. ANA and recently UA are just two examples.

tortugamon

masseybrown · Fri Apr 24, 2015 3:10 pm

Quoting tortugamon (Reply 3):
767 operators seem to be delaying retirement of these aircraft despite receiving 788s.

...recognizing that fuel prices are expected to stay relatively low at least a couple of years.

deltaffindfw · Fri Apr 24, 2015 3:41 pm

Quoting tortugamon (Reply 3):
767 operators seem to be delaying retirement of these aircraft despite receiving 788s. ANA and recently UA are just two examples.

Seems like AA is doing the opposite. Deferring deliveries AND accelerating retirements

"The slower delivery schedule reflects American’s efforts to cut capacity to better match supply with passenger demand, he said. American has also accelerated retirements of McDonnell Douglas MD-80s and Boeing 767s, Kirby said."

http://aviationblog.dallasnews.com/2...-slows-boeing-787-deliveries.html/

Sooner787 · Fri Apr 24, 2015 3:42 pm

I think since AA is running behind on deliveries due to the Zodiac seating issues,
they need more time to intergrate the frames they're receiving in 2015.

Also give Zodiac more time to get their act together for the next batch of frames

ckfred · Fri Apr 24, 2015 3:48 pm

If 767 retirement is being accelerated, and 787 deliveries are being reduced in 2016, then some routes are losing seats or aren't being started.

FriscoHeavy · Fri Apr 24, 2015 3:51 pm

This deferment is NOT due to the seating issue as stated per the article.

cageyjames · Fri Apr 24, 2015 3:51 pm

Quoting ckfred (Reply 7):

If 767 retirement is being accelerated, and 787 deliveries are being reduced in 2016, then some routes are losing seats or aren't being started

Replaced with A321s at higher frequency. International long haul is another beast of course.

glbltrvlr · Fri Apr 24, 2015 4:03 pm

Quoting ckfred (Reply 7):
If 767 retirement is being accelerated, and 787 deliveries are being reduced in 2016, then some routes are losing seats or aren't being started.

From the Dallas Morning News:

American Airlines president Scott Kirby said the delayed deliveries have nothing to do with current problems in getting 787 seats produced on time by manufacturer Zodiac.

The slower delivery schedule reflects American’s efforts to cut capacity to better match supply with passenger demand, he said. American has also accelerated retirements of McDonnell Douglas MD-80s and Boeing 767s, Kirby said.

phillyramp270 · Fri Apr 24, 2015 4:22 pm

Quoting glbltrvlr (Reply 10):

What he really means is that Airbus CEO just got off the phone with Parker and said he can get us 10 A350s in DFW sooner than those 787s for a bargain lol

Stitch · Fri Apr 24, 2015 4:26 pm

The "trigger point" on taking the frame is around 18 months so it sounds like these four frames were coming due and AA would have had to start making progress payments on them and may likely have incurred penalties if they later tried to defer them.

So this way they save some cash and don't risk finding themselves with excess capacity too soon.

Sooner787 · Fri Apr 24, 2015 5:08 pm

That Morning News Article also says AA is taking delivery
of the 3rd 788 today ( 24Apr)

As lousy as the weather is here in DFW today,
they might consider flying their new baby in tomorrow

usairways85 · Fri Apr 24, 2015 5:20 pm

Quoting Phillyramp270 (Reply 11):
What he really means is that Airbus CEO just got off the phone with Parker and said he can get us 10 A350s in DFW sooner than those 787s for a bargain lol

I think this could definitely be it. By deffering some deliveries they give themselves more time to potentially alter the order to acquire an aircraft that better meets the needs of the airline. Just like UA's recent swap for 77Ws.

7673mech · Fri Apr 24, 2015 5:58 pm

Quoting Sooner787 (Reply 13):
As lousy as the weather is here in DFW today,
they might consider flying their new baby in tomorrow

Weather will have no effect on it.
Once it is delivered contractually it will fly to Dallas at an agreed upon time.

KELPkid · Fri Apr 24, 2015 6:16 pm

Quoting 7673mech (Reply 15):
Weather will have no effect on it.
Once it is delivered contractually it will fly to Dallas at an agreed upon time.

Once it is contractually delivered, it is up to AA's pilots to fly it to DFW (usually under part 91). The home office probably has some say in it, but so do the pilots flying it home

ckfred · Fri Apr 24, 2015 6:26 pm

Flightaware.com is now showing AA 9704 departing PAE today at 4pm PT and arriving at DFW at 9:59pm CT.

wrldtvlr · Fri Apr 24, 2015 6:52 pm

I really don't think there's anything to read into about this other than they're being smart with capacity growth. Delta recently announced an international capacity cut, seems like the smart business decision based on the strong USD, which is affecting longhaul ops.

Miami · Fri Apr 24, 2015 9:36 pm

They are taking delivery of N804AN today.

tortugamon · Sat Apr 25, 2015 4:34 am

Quoting ckfred (Reply 7):

They are taking delivery of 13 787s this year. They have plenty of aircraft to cover it.

Quoting Sooner787 (Reply 6):

Quoting Phillyramp270 (Reply 11):

Quoting usairways85 (Reply 14):

Multiple sources now are saying that they are just trying to curb growth in capacity because the strength of the dollar will curb international demand growth and they do not want to fly the added seats. This is similar to DL and UA.

tortugamon

neromancer · Sat Apr 25, 2015 4:57 am

With Air Canada rumoured to be looking at more A330's and 767's for interim lift I wonder if they would consider bumping up some of their 787 orders?

tortugamon · Sat Apr 25, 2015 5:38 am

Quoting Neromancer (Reply 21):

This deferment is so short that I don't think it will open new slots rather just a re-organization. This far in advance I imagine there is wiggle room.

tortugamon

uberflieger · Sat Apr 25, 2015 5:56 am

Quoting tortugamon (Reply 20):
Multiple sources now are saying that they are just trying to curb growth in capacity

According to Kirby in today's earnings call, American is reducing originally planned wide body capacity for 2016 by 2.5% to better match demand.

zkncj · Sat Apr 25, 2015 6:03 am

Quoting Neromancer (Reply 21):
With Air Canada rumoured to be looking at more A330's and 767's for interim lift I wonder if they would consider bumping up some of their 787 orders?

Or even NZ? they are in crazzy expansion mode, and there going to need more planes to the extra 500 f/a they are currently employing. Some of these routes have increased by up to 40% this year.

fishmeal · Sat Apr 25, 2015 2:43 pm

N804AN landed after the storm front passed DFW. They did make one complete circle northwest of Wichita Falls and one obvious jog to the north closer in.

caribair · Sat Apr 25, 2015 2:58 pm

Interesting that AA is pushing back deliveries of some 787s.
Previous schedule: 2015 (12), 2016 (13), 2017 (10), 2018 (7).
New schedule: 2015 (13), 2016 (8), 2017 (13), 2018 (8).

All the thirteen 2015 deliveries will be 787-8 (+1); and probably the 2016 will be
the original plan of for the four 787-9 and only four 787-8 (-6).
All thirteen 2017 deliveries(+3) and the eight 2018 (+1) deliveries will be 787-9.
Then American will be receiving only seventeen 787-8 (-4) and twenty five 787-9 (+4) in
the original confirmed order of 42 787.

ldvaviation · Sat Apr 25, 2015 5:31 pm

Quoting FriscoHeavy (Reply 8):
This deferment is NOT due to the seating issue as stated per the article.

Zodiac and AA can now reallocate the manufacturing capacity to the 772 seat. I think AA has either stopped or slowed down the 772 refurbishments due to the seating issue.

DocLightning · Sat Apr 25, 2015 5:52 pm

Quoting tortugamon (Reply 20):
Multiple sources now are saying that they are just trying to curb growth in capacity because the strength of the dollar will curb international demand growth and they do not want to fly the added seats. This is similar to DL and UA.

Why does everyone always assume that the company is lying? What would they have to gain from lying about something like this?

Certainly terms for deferment are spelled out in the purchase agreement.

tortugamon · Sat Apr 25, 2015 7:57 pm

Quoting DocLightning (Reply 28):
Why does everyone always assume that the company is lying? What would they have to gain from lying about something like this?

I am not sure what you mean. I don't think the company is lying about the reasons for deferring the 787s. It makes a lot of sense. They are adding aircraft capacity in an environment where there is not increased demand so they would prefer to stretch that out and reduce cash outlays until necessary. American has more cash than they know what to do with so this wasn't a capitalization issue.

tortugamon

ripcordd · Sat Apr 25, 2015 9:18 pm

It dosnt make sense unless they are trying to switch them all over 787-9's cause they can just retire more 767's early and keep them coming

rta · Sat Apr 25, 2015 9:26 pm

Quoting LDVAviation (Reply 27):
Zodiac and AA can now reallocate the manufacturing capacity to the 772 seat. I think AA has either stopped or slowed down the 772 refurbishments due to the seating issue.

Hopefully this is the case. The 772s refurbishments are moving slowly.

usairways85 · Sat Apr 25, 2015 11:23 pm

I'm no expert, I just don't understand using currently market dynamics to influence your capacity in 2+ years. I imagine the current dynamics can help predict what 2016 and beyond might be like, but it's never certain. I don't remember many people back in 2012 predicting that oil would plummet and the USD would make significant gains.

AA should evaluate the TA 752 flights in the winter. Outside of UK/Ireland the 752 flights in the winter are prone to diversions. UA finally realized the frequent 752 diversions hurt their business and subsequently upgraded many of these flights to 767s. AA needs to do the same and the 763/787 are the likely replacements if that's the route they take.

georgiabill · Sat Apr 25, 2015 11:29 pm

I wonder if AA might consider exchanging some for 787-10'S?

enilria · Sat Apr 25, 2015 11:48 pm

Quoting DocLightning (Reply 28):
Why does everyone always assume that the company is lying? What would they have to gain from lying about something like this?

Quoting tortugamon (Reply 29):
I am not sure what you mean. I don't think the company is lying about the reasons for deferring the 787s. It makes a lot of sense.

Because it is quite possible there are parts of their strategy that they just can't be honest about either because they will be poorly received by consumers or because at risk of anti-trust violation.

For example, the wouldn't say, "DL and UA are both reducing international capacity and essentially we must do the same thing rather than taking the opportunity to grow market share despite the relatively strong economy and low oil prices because we all match capacity changes inside the US3".

They also wouldn't say: "By reducing capacity/supply in a firm economy we are able to further increase fares because of the lack of other options for customers due to 80+% capacity share for the US3 and their JV partners on transatlantic and our hopes to establish the same arrangement in the Pacific."

This tick down in capacity growth during the upside part of this cycle is definitely unique to the new world of 3 intl airlines in the USA HQ'd market.

tortugamon · Sat Apr 25, 2015 11:58 pm

Quoting usairways85 (Reply 32):
I'm no expert, I just don't understand using currently market dynamics to influence your capacity in 2+ years. I imagine the current dynamics can help predict what 2016 and beyond might be like, but it's never certain.

Economists believe that the dollar will continue to increase in value relative to the Euro for 1+ year and the US domestic airlines will face head winds as their costs are in dollars but some customers are buying in euros. It is widely believed that this is not just a very short term trend. I tend to agree.

Quoting enilria (Reply 34):

or how about: "we are reducing our capacity so analysts will rate our stock better/higher!"

tortugamon

AA Deferring 5 787 Dreamliners

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