Plato90s

They don't do it very well. That's why Southwest makes more money than they do.

So basically you are saying that easyJet plan to go all-Airbus, because a mixed fleet would be a violation of all the advantages of the Southwest model.

If that's the direction easyJet wants to go, I think they'll fail because other discount airlines will stay with the 737 and grab an even bigger share during the transition period. But at least it makes more sense than a mixed fleet.

BTW, easyJet has far more than 26 737's. With its acquisitions, they now have 64 Boeing jets.

[This message has been edited by Plato90s (edited 10-14-2002).]

ScottC

No, what I am saying is that the need to make a decision now on what to do, they know they need 240 aircraft and it's time to decide... this is a decision that will have a huge impact on the firm so they have to make the right choice, price is just one aspect, I seriously doubt a 4 BILLION euro purchase will be influenced by anything other than common sense and a **** good price.

ScottC

Sorry, my mistake, their website isn't up to date...

ScottC

An Excellent insight into the choices:


EasyJet Selects Airbus for a Big Plane Order

LONDON -- EasyJet Monday said it has chosen Airbus Industrie as its preferred supplier for 120 new aircraft over the next five years, with an option for an additional 120 planes later on.

The deal is a blow to Boeing Co., which has long been the preferred supplier to low-cost operators in Europe and the U.S. The transaction is subject to a contract being signed in 45 days and shareholder approval.

For Airbus, which is 80%-owned by European Aeronautic Defense & Space Co. and 20%-owned by BAE Systems PLC, the deal may have come at a price. EasyJet said it will pay about 30% less for the airplanes than it paid for Boeing 737s almost four years ago after adjusting for inflation. This suggests a deep discount to the catalog price, which is about $52 million for both models.

"There is some sort of discount in the contract ... but we never sell aircraft at a loss," an Airbus spokesman said Monday.

The discount on the order for 120 A319 jets applies -- until 2012 -- to the option for a further 120 planes. This includes flexibility for easyJet to upgrade to larger Airbus A320s and A321s at pre-agreed prices.

The manufacturer will also provide "extensive support" so the introduction of its planes won't be any more expensive than the Boeing 737-700 in the first two years.

EasyJet said the A319s, which will each have 150 seats, will have a 10% lower operating cost base than its Boeing 737s, measured per available seat kilometer.

But despite these advantages easyJet's shares fell on the news, since running a mixed fleet is seen as more expensive than operating a single model.

In late afternoon trading in London, easyJet shares were down 13 pence, or 4.6%, at 265 pence ($4.14 or €4.20). EADS shares were down 5% at 602.5 pence and BAE Systems shares were up 1% at 202 pence.

Boeing's shares were down 80 cents, or 2.5%, at 31.20 in midday trading on the New York Stock Exchange, as investors took in the disappointing news.


Boeing's Struggles


Boeing has been struggling to keep its order levels up in recent months, as the U.S. airline industry suffers from a dropoff in business and pleasure travelers in the wake of the Sept. 11 attacks.

The company has shied away from predicting how many deliveries it will make in 2004, and senior executives have hinted in recent weeks that, at best, the deliveries figures will remain flat with 2003's. Alan Mulally, Boeing's commercial-airplanes unit chief, said the outlook for "2004 is cloudier" than it was a few months ago and that production is "going to probably be down longer than we thought."

Boeing says it still is on track to deliver about 380 planes this year, which would be down 28% from 527 deliveries in 2001. Next year, the Chicago-based manufacturer expects to deliver from 275 to 300 aircraft, but some suppliers say they wouldn't be surprised if that number drops to as low as 250, particularly if more airlines are forced to seek bankruptcy-court protection.

"A lot of the predictions we all made were based on the belief that the airlines would start to break even in 2003. Now we're not sure they'll get there even in 2004," said an executive at a major supplier to Boeing and Airbus.

Both Boeing and Airbus have scaled back operations and delayed delivery schedules in the last year to cope with the slowdown.

Boeing Chairman and Chief Executive Phil Condit is expected to give investors an update Wednesday with the release of the company's third-quarter earnings. People familiar with the situation say it is unlikely Boeing will talk about specific delivery figures for 2004 until early next year. "There are too many variables. Lately, anything further out than a month or two qualifies as long-term planning," said a person familiar with discussions inside Boeing.


Making the Choice


EasyJet is only the second low-cost carrier, after Jetblue Airways in the U.S., to order Airbus planes.

The airline already owns 44 Boeing 737s and is awaiting delivery of a further 14. Chief Executive Ray Webster said the dual-model fleet should be in operation by 2006 or 2007.

Southwest Airlines, the world's first and most-successful no-frills carrier, runs at least three different models of Boeing 737s, Mr. Webster said. "The technology difference between the 737-200 and the 737-700 is more dramatic than Airbus's and Boeing's current products," he said.

Analysts and industry watchers have long been concerned that easyJet would move to a mixed fleet, but on Monday two said the deal looked very attractive.

"I think easyJet's got an interesting price," Deutsche Bank analyst Jonathan Wober said. "On a seat basis the order is below Boeing's order four years ago and that's adjusted for inflation." He said it will be interesting to see how a low-cost carrier will operate a variety of aircraft with different crews.

In January, Ryanair Holdings, easyJet's Ireland-based rival, said it would buy 100 Boeing 737-800 aircraft in the next eight years and had taken options on 50 more.

mdtony

From today's Wall Street Journal:

You wanna tell me how Airbus plans on making money on these sales? They're a job program for the countries that are part of the consortium, and that's their primary function. Making a profit is not as big of a deal for them as it is for Boeing.

Roger

If I were buying 120/240 units of anything usually sold in singles or handfuls (including airline tickets), I'd require a significant discount!

Er, Go is part of easyJet ...

Plato90s

That's a mistake on my part. I was actually thinking of RyanAir.

In any case, it does seem like Airbus will be subsidizing the transition from a B737 fleet to an all-A319 fleet. Money-maker? I doubt it.

ScottC

Why do you folks think everything over here is a job creation program being paid for by the tax payer? The laws and regulations in Europe for subsidies are strict enough to prevent that. Certainly, when Airbus was founded it started on EU cash grants, something that the EU was founded for in the first place as the current profits are good for almost all member states. Airbus has subcontractors in a lot of EU countries, just like Boeing has contractors in most US states.

I'll just settle at the thought that some of you are jealous Airbus is doing so good, even with the massive discounts it's seemingly something they can afford and we can be ABSOLUTELY POSITIVE that 10 years ago Boeing would have done the same and would have even gone further.

The US manufacturers play at the same kind of games, when Holland was deciding between the Eurofighter or the JSF to replace their F-16 fleet (which were bought after they bribed several political figures) dutch companies were promised all kinds of extra production jobs and the price asked was so much lower than the Eurofighter that it was a logical choice, how they managed to afford the low price is probably by doing the same as Airbus is doing now...

Tango

Let us not forget that it is cheaper to cross train pilots/crew on the airbus family than it is on Boeings. Once an airline has bought into airbus, it is more likely they will continue to buy other airbus planes becuase of the cost savings.

Beckles

The price of the JSF is lower than the Eurofighter, period, no games need to be played to make that happen, I don't think even EADS has tried to dispute that. The JSF is a single engine plane that will be produced in large quantities, while the Eurofighter is a twin engine plane that will be produced in modest quantities, which is why the JSF is less expensive than the Eurofighter.

ScottC

Which proves that EADS DOES NOT use European tax money to subsidise selling it's products. Thank you for making my point clear If EADS were to use my tax money to make countries buy it's products then I'm sure they could have forced the sale of the Eurofighter too.

Don't forget the 760 million dollars of return orders Dutch indistry would get, the price of getting that done over here, shipping it etc is also a hidden subsidy.


[This message has been edited by ScottC (edited 10-14-2002).]

ConcordeBoy

Incorrect... Frontier announced they planned to switch to Airbus long before this order was publically contemplated.

------------------
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
~ConcordeBoy

Try the Unofficial Continental Dictionary

Plato90s

I noticed you haven't addressed the original claim that US defense contractors are selling the JSF at a loss.

The general point of the discussion (in my mind at least) is that Airbus is selling these A319's at a loss in order to secure the order. It could either be a wedge into low-cost airlines or a jobs program.

The JSF is not being sold at a loss, even though it is a jobs program. So what's the parallel with the A319 sale to easyJet?

beergut

According to reports in todays UK Daily telegraph the easy jet chairman claimed that he was paying 30% less per seat than what he paid for Boeings 4 years ago and that the deal would be financed from the group's £400m cash pile .

Airbus have said that it is a " cash positive " transaction and that they won't be out of pocket. They are also to provide " extensive support " to ensure crew training and maintenance do not add to Easyjet's costs.

Stelios ( Easyjet ) claimed that he had met Boeing's President before Christmas and was told " This is the deal of the century, so take it " Stelios told him it wasn't and apparently Boeing then dropped prices " again and again " . As Easyjet said why should they believe Boeing and also they don't want to be held to ransom by one supplier.

Nigel

ScottC

More interesting insights into the choice for Airbus

http://seattlepi.nwsource.com/busine...53_air16.shtml