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Old Mar 6, 2013 | 6:33 pm
  #48  
grahampros
 
Join Date: Dec 2006
Location: ORD
Programs: AA EXP,2MM, DL Gold,Starwood PLT
Posts: 3,876
Originally Posted by FWAAA
I've read similar claims, but I've never seen them accompanied by data. I'm sure that on some very short flights like DFW-AUS/TUL/OKC etc, the fuel savings aren't all that impressive. I'm also confident that there are significant fuel savings even on 800-1,000 mile segments. It's not just on DFW-SEA or DFW-BOS where the 738s will save significant amounts of fuel. I don't know what AA's current average stage length is for its MD-80s, although it's obvious that it has declined since 2009 as the 738s have been deployed on the longer segments and the MD-80s have been grounded.

The numbers I've quoted are not my numbers - they're AA's numbers, and their constant repetition in press releases, presentations to investors/analysts and even in filings with the SEC (where Sarb/Ox concerns are ever-present) makes me think that the quoted efficiencies probably take into account the short stage lengths as well as the long stage lengths.

Nor are the 737 fuel efficiency claims limited to AA's execs. Here's what Delta and its CEO had to say last year when DL ordered 100 739ERs:



http://news.delta.com/index.php?s=43&item=1428

DL says their new 739ERs will provide 15 to 20 percent improvement in fuel consumption per seat mile compared to 757s, 767s and old A320s. AA has repeatedly said that its 738s are 35% more efficient per seat mile compared to the MD-80s (although those numbers were pre-MCE). It could very well be that the airlines are exaggerating the fuel savings that the 737s will provide compared to the planes they replace. Thing is, those who say that the fuel savings are exaggerated haven't yet posted any data to refute the airlines' (and Boeing's) claimed fuel efficiency improvements. I have some hourly fuel burn stats and that data tends to support the claimed improvements. I'm waiting for someone to post data that contradicts the claimed improvements.

AA's planned wholesale replacement of most of its single-aisle fleet is, of course, a gamble that fuel prices will not decline over the long haul. If oil prices were to collapse, AA's total aircraft costs (lease plus fuel) will be higher than the airlines that did not get rid of older jets as quickly. If oil prices rise over the long-term, then AA will have an advantage over its less-efficient competition.

It's impossible to hedge fuel prices over the long-term (like 20 years). Nobody is willing to take the other side of that bet for a reasonable price. But right now, money is very cheap. And there are counter-parties willing to enter into long-term leases for new planes at fairly low rates.

In effect, a low-interest 20 year lease for a new fuel efficient plane is the next-best alternative since you can't hedge fuel prices now for the next 20 years. AA's gamble might not pay off, but the fact is, airlines do have to periodically replace old planes anyway. So AA might win a huge fuel price gamble, but it is certain to win the maintenance savings - there is no question that the maintenance savings are real and achievable. Plus the new single-aisle planes will fly for 5-6 years (and maybe 7, if the arguments in favor of longer intervals before the first heavy check carry the day) before their first expensive heavy C check must be performed. So AA's new replacements are delivered just prior to an expensive heavy C check on each old plane and that's just more money saved.

For all of Parker's perceived "faults," he has overseen the replacement of many of US East's oldest 737s with new A321s, and he hasn't given any hints that he wants to renegotiate AA's huge orders.
It will be interesting to see how the gamble plays out. The math was i'm sure highly influenced by the great deal and terms given by Airbus to win AA as a customer and their need to sell the slots for the current generation aircraft with the new generation quickly coming.
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