British Airways order

achace · Post by **achace** » 02 Sep 2007, 03:31

The Times of London,quoting informed insiders at BA suggest that the awaited order due this month is likely to be split between Boeing and Airbus.

They suggest that they perceive the 787 and the A350 as being more complementary to each other than competitors.

This could see BA being an early 787-3 customer, as it would suit their European services, and perhaps the A350-9 or-10 for longer routes with more pax.

It also suggests that the A380 will be ordered, with no mention of the 748.

Cheers
Achace

David747 · Post by **David747** » 02 Sep 2007, 07:14

Isn't the 787-3 forgoing European certification? As to the 787 complementary to the A350, I just don't see it. The A350 according to the specifications of Airbus will cater to a market that is above the 787-8 and 787-9...

Edit:

Here is the link to that story: http://tinyurl.com/25wazb

CX · Post by CX » 02 Sep 2007, 07:59

787 complementary to A350, they are in (kind of) two different markets, so why dont' you see they can be complementary models?

I thought they are replacing some 747s and a batch of 767s now? 787 would surely be the closer alternative to 767.
Actually might some airlines be waiting for the A380 stretch? The A380-900(?) will come in and enter a brand new market, it won't be replacing 747s, it could be replacing A380-800s, or is the A380 stretch like 10years or so away?

teach · Post by **teach** » 02 Sep 2007, 12:13

As to the 787 complementary to the A350, I just don't see it.

Well, you gave the answer yourself:

The A350 according to the specifications of Airbus will cater to a market that is above the 787-8 and 787-9...

...and that's exactly why they're complementary. SQ, SU and QR have already ordered both, so apparently they see it too. QF has also said they're looking at the A350, despite their large 787 order.

lcc · Post by **lcc** » 02 Sep 2007, 13:55

Plus i think one of the reason is also the discount offers by both manufacturers
Today, split the orders by two makes that the reduction generates by discount on acquisition costs is greater than the reduction of costs generated by a unique manufacturer fleet (savings on maintenance costs, pilots certification etc)
It explains one more and more airlines choose to split their orders

Buzz · Post by **Buzz** » 02 Sep 2007, 14:50

lcc wrote:Plus i think one of the reason is also the discount offers by both manufacturers
Today, split the orders by two makes that the reduction generates by discount on acquisition costs is greater than the reduction of costs generated by a unique manufacturer fleet (savings on maintenance costs, pilots certification etc)
It explains one more and more airlines choose to split their orders

The more units you buy, the bigger the discount. Splitting an order negates that and you'll get LESS discount iso. more...

lcc · Post by **lcc** » 02 Sep 2007, 15:20

Buzz wrote:The more units you buy, the bigger the discount. Splitting an order negates that and you'll get LESS discount iso. more...

That was the rule 5 years ago

You have the choice:
You buy 10 A350, you have 10% discount, you buy 20 A350, you have 13% discount
If you buy 10 B787, you have 10% discount, you buy 20 B787, you have 13% discount.

Well, the calculation is easy: I'll take 10 A350 and 10 B787 for a discount of 20% rather than a discount of only 13% if I choose one manufacturer

The only things that can me choose 20 of the same manufacturer is the extra costs to have the two types of A/C in my fleet.

But talk with Airbus lads and you will understand that today, acquisition costs discount is much more important that comonality savings.

CX · Post by CX » 02 Sep 2007, 15:25

lcc wrote:
Buzz wrote:The more units you buy, the bigger the discount. Splitting an order negates that and you'll get LESS discount iso. more...
That was the rule 5 years ago

You have the choice:
You buy 10 A350, you have 10% discount, you buy 20 A350, you have 13% discount
If you buy 10 B787, you have 10% discount, you buy 20 B787, you have 13% discount.

Well, the calculation is easy: I take 10 A350 and 10 B787 for a discount of 20%

Talk with Airbus lads and you will understand that today, acquisition costs discount is much more important that comonality savings

How does that work? I get 10% discount for buying product A for 10% discount, and product B for 10% discount, the total discount of the whole sum is still 10% isn't it?

lcc · Post by **lcc** » 02 Sep 2007, 15:38

CX wrote:How does that work? I get 10% discount for buying product A for 10% discount, and product B for 10% discount, the total discount of the whole sum is still 10% isn't it?

:thumbsup2:

ok, you're right, it is not that easy

lcc · Post by **lcc** » 02 Sep 2007, 15:53

I did a stupid mathematic error

but also, do an order is quiet a long processus, calculations, negociations and optimisations, that is never easy to do

What i would like to say, that's in some cases, above all currently with very high acquisition costs, airlines have an interest to split an airline between both manufacturers, because the acquisition costs discounts is higher than the commonality savings.

Imagine an airline which have an all airbus fleet. Airbus guys will come with the commonality advantage (savings of spare parts, savings on pilots savings etc), but not a big discount on the acquisition price. On the otehr hand, Boeing team will come with a big discount, as they know the airline is potentilly more keen to stay with airbus.
In some cases, split the orders by two allow the airline to benefit for Boeing big discount, and also to minimise the cost of having two aircraft type in their fleet (because only 10 A/C are concerned = less pilot to train that if they took 20 A/C), and this possibility is sometime more interesting that if they choose to stay with the same manufacturer
Of course, the calculation are much more complicated, but I hope that what i am saying now is clearer (and less stupid) that my second post!

FLY4HOURS.BE · Post by **FLY4HOURS.BE** » 02 Sep 2007, 16:49

BA will buy A380's... the question is how many?

-At least 6 will be needed daily to Australia.
-I expect at least 2 for the very succesful LHR-Narita route to keep pace with Air France that will be using its first A380 between Paris and Tokyo.
-4 for JFK
-3 for Hong-Kong
-3 for LAX and SFO (if able to accomodate the A380)
-Mexico City?
-Johannesburg??

My guess is around 25...
Standard price is 300 million bucks a piece... minus discounts they will give BA for the large order, they will probably pay around 6 to 7 billion bucks.

They announced they will order for 15 billion bucks...
That leaves us 8.5 billion bucks...

Good enough for 30 B787's to replace the 757/767 fleet and 30 A350's that will take over the B744 routes the A380 can't fly to (due to lack of airport structures/too low density for A380...) and where the 787 shows to be too small.

They also will buy more A320's, I hope.(expansion+old 737's replacement)

Buzz · Post by **Buzz** » 03 Sep 2007, 00:37

Nothing personal, but most of what you said in your post is just, well..., wrong.

lcc wrote:I did a stupid mathematic error but also, do an order is quiet a long processus, calculations, negociations and optimisations, that is never easy to do

What i would like to say, that's in some cases, above all currently with very high acquisition costs, airlines have an interest to split an airline between both manufacturers, because the acquisition costs discounts is higher than the commonality savings.

As I said before (and you said yourself), that just isn't true. Simple rule: bigger order = bigger discount.

lcc wrote: Imagine an airline which have an all airbus fleet. Airbus guys will come with the commonality advantage (savings of spare parts, savings on pilots savings etc), but not a big discount on the acquisition price. On the otehr hand, Boeing team will come with a big discount, as they know the airline is potentilly more keen to stay with airbus.

I can follow you there. A good example is AirBerlin, who switched from 738 to A320 to 738 again for repeat orders (they did not split the order, they changed with every order to maximise their discount I would guess...)

lcc wrote: In some cases, split the orders by two allow the airline to benefit for Boeing big discount, and also to minimise the cost of having two aircraft type in their fleet (because only 10 A/C are concerned = less pilot to train that if they took 20 A/C), and this possibility is sometime more interesting that if they choose to stay with the same manufacturer

You either choose to go for commodiality, or you take the bigger discount.
I just can't see how you think you can go for both by splitting the order: you won't be taking full advantage of the big discount X offers because you already fly Y planes, and you won't have the commodiality any more.

Having a subfleet of 5 or 15 different aircraft doesn't matter in cost: you will have to have all the extra fixed costs: a training centre, train meccanics and pilots, and also importantly, maintain a complete inventory of spare parts. Having less aircraft (10 iso. 20 as you say) only means these fixed costs are higher per aircraft, iso. lower as you claim.

The consensus in most forums is that if a subfleet is bigger than 30-40 planes, the commodiality issue is a non-issue. Flying 50 737's and 50 A320's is not incredibly more expencive than flying 100 A320's or 737's. It still is more complex for scheduling etc., wich is why a single type fleet is preferred.

lcc wrote: Of course, the calculation are much more complicated, but I hope that what i am saying now is clearer (and less stupid) that my second post!

We're all here to discuss and learn

smokejumper · Post by **smokejumper** » 03 Sep 2007, 02:24

Given volume discounts, if I buy 10 units and get a 10% discount and, if I buy 20 and get a 13% discount, how many do I have to buy to get a 100% discount?

Help me, my math is a litle fuzzy!

CX · Post by CX » 03 Sep 2007, 02:39

Hey i thought BA is only replacing a portion of its 744s and 767s in this round of orders, why suddenly we suggest they will get 30 787s and 30 A350s and 25 A380s? I think it will more be like 5 A380s and a bunch of 787s in this order, A350 may not come into play for this round of replacement.

David747 · Post by **David747** » 03 Sep 2007, 03:05

25 A380's to replace half of its 747-400 fleet, would be huge for Airbus, and this will come from a customer that once held the view that the A380 was not in its Long Haul fleet replacement plans. But where did BA say it has expressed interest in 25 A380's?

achace · Post by **achace** » 03 Sep 2007, 05:35

I think 25 A380's is a bit hopeful , but maybe 6 or 8 for starters.

If BA do not buy the 748, does it have any future other than as a freighter?

Boeing dropped the 717 due to lack of numbers, and the Lufthansa order looks a bit lonely.

IMO Emirates will not buy it due to a lack of range.

Cheers
Achace

FLY4HOURS.BE · Post by **FLY4HOURS.BE** » 03 Sep 2007, 06:37

Yeah 25 seems a big nummer I agree, but those B744's need replacement...
They have world's largest fleet of B744's with 57 aircraft, and on many destinations, mainly the hub-to-hub's, they are almost always full.

Even if they order the A380's now, the first delivery slots start in 2010.
They will need to keep half of the B744's till their A350's are delivered, and the first slots start in 2015...
That gives them still plenty of time on their B744's.

25 seems a bit big, but that s my only guess seen the destinations they are flying to and the frequencies.
I expect at least 15 though.
Also, seeing SQ operating the A380 succesfully will inspire many airlines to order this bird and slots will become rare in the next few years. It is BA's chance to secure their slots between 2010 and 2014.

I also wouldn t be surprised to see BA securing the first A389's (stretched version of th A388).

CX · Post by CX » 03 Sep 2007, 07:13

What were the plans for the A380-900? Was it supposed to be an 'improvement'/replacement to the A388 like how the 744 replaced the 743 which replaced 742? Or will they be compliments? When did Airbus say they will have the A389 ready by when the programme was initially launched? Of course I guess nothing is happening now with anything else other than the A388, but what was it SUPPOSED to be?
There is still the A380F, A388R and A389 that Airbus supposingly will build in not too far into the future.

achace · Post by **achace** » 03 Sep 2007, 07:44

I believe the A389 will happen sooner than anyone suspects.
Watch for Emirates negotiating to convert a quantity of their existing 388 orders.

Clark is on record as saying he wants the 389.

Cheers
Achace

FLY4HOURS.BE · Post by **FLY4HOURS.BE** » 03 Sep 2007, 09:46

The A389 is a stretched variant of the A388 that carries 650 pax in a typical 3-class configuration, and up to 960 pax in an all-economy cabin.
The compromise of range over the A388 is as good as nothing as the same wings will be used (with a few reinforcements). The A388 wing is actually "overbuilt" for its capacity and therefore compromises fuel-efficiency.

The A389 is ready to be built at anytime as soon as there is demand for a larger amount of them. The strategy is to let the airlines settle with the A388 and where more capacity is needed, progressively convert to A389's.