Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
- A350-1000 or 777-9? Part 2 April 11, 2024
- Pontifications: Boeing “transparency”–not so much. April 9, 2024
- Airbus charges and write-offs since 1999: more than €33bn April 8, 2024
Some good news for Boeing
Boeing could use some good news, following more revelations last week and this about the wing-body issues of the 787, and this is it.
Southwest Airlines plans a $113m bid for bankrupt Frontier Airlines in an auction next month. In a conference call, WN officials said that Frontier’s fleet of 51 Airbus A320 family members will be phased out in favor of Boeing 737NGs, probably over a two year period. (If WN wins the auction, government approvals will push consummation of the deal to the end of this year or into 1Q10.)
Southwest currently has 10 firm orders for 737-700s in each of 2010 and 2011 with 10 options for 2011. To replace 51 A320s within the 2010-11 (and perhaps spilling into 2012 when WN has 13+10 orders from Boeing), the company will have to convert options. Over the three years, WN has 33 firm orders and 20 options, but it is unknown how many of these are designated for growth in other markets or to replace older 737 Classics.
Regardless, this means some new orders for Boeing–as well as the elimination of an Airbus customer.
Here is a 15 minute podcast by Innovation Analysis Group on the topic.
The interesting thing about this, if it happens, is that it will give WN first hand experience in daily operation of Airbus product, and the Airbus support structure. Once can imagine how much Airbus will be wanting to make a good first impression to WN with an eye to the competition for next gen. narrow body aquisition.
Brian, do you really think Southwest didn’t crunch the numbers on the A320, nor test fly the thing? The industry insiders have access to performance data for all aircraft types. I’m not belittling your point by any means, but with all due respect, I think that ascribing any possibility advantage to Airbus if WN were to takeover Frontier is quite far fetched.
My read of this is that Southwest wants to drive a stake through a competitor’s heart and put the corpse 6 feet under.
Given my point was a minor one, I don’t think it could be belittled very much, thanks. I agree, this is primarily a way to get rid of a competition, and go after UAL in DEN. But, there is a competition for new narrow-body aircraft coming, and it is in WN’s best interest to get, at minimum, the best price from Boeing. If that means talking about how impressed they were by the Airbuses at F9, so be it.
Well, they could also drop Airbus cigarette lighters on the floor during a negotiation. That worked in the past.
They could, as long as it is not the same lighter 😉
“My read of this is that Southwest wants to drive a stake through a competitor’s heart and put the corpse 6 feet under.”
WN was asked this on the conference call and denied it (which, of course, it would have to for anti-trust reasons). We think that in one fell swoop, WN dramatically increases its position in DEN, but more importantly, it gets an IT systems that is more modern than the one it owns, enabling instant international service (Mexico and Canada) capability, assigned seating (should it want it) and more capable code-sharing ticketing, all for a “song.”
WN also gets to try out the regional airline operation (Lynx) without a major investment.
Better news would be 300 plus units of Irish stew err, um 737-800’s courtesy MOL.
I think that’s more or less a given.
Looks like the good news is no more as Frontier won’t be a branch of Southwest but will stay with Republic Airways…