Sept. 2, 2019, © Leeham News: It’s time to catch up on Odds and Ends.
In its second quarter earnings call and 10Q Securities and Exchange Filing, Alaska Airlines said it was returning one Airbus A319 and two A320s off lease this year and next.
These airplanes are from its Virgin America acquisition, which introduced the Airbus family into the all-Boeing Alaska mainline operations.
Alaska officials have said several times they are evaluating whether to phase out all Airbuses and return to an all-Boeing fleet, or keep the Airbuses and operate a mixed fleet indefinitely.
I wondered if this was the start of the phase out.
“We are planning to return 1 A319 this year and 2 A320s next year at normal lease expiration,” Brandon Pederson, EVP and CFO of the company, wrote LNA. “This is not part of a broader fleet decision, nor a phase out of the smaller Airbus aircraft. Leases on the remaining 50 A319/A320 aircraft in the fleet have varying maturities through 2025.”
Additionally, Alaska now has the A321neo in its fleet, also a residual of the Virgin deal. Virgin ordered 12 of these, which are being taken on a lease arrangement with GECAS. These are 12 year leases , which extend to the end of the next decade.
I’m told Alaska really likes the operation and economics of these aircraft.
Virgin has 30 A320neos on order, with the first due in 2022. But these may be canceled with forfeiture of monies already paid. Alaska hasn’t decided what to do about these orders.
The A319/320ceos aren’t as capable as the Boeing 737-800s but the neos added range. Still, Alaska already ordered nearly 40 737-8/9 MAXes. The first was to be delivered in June, but has been caught up in the grounding.
From a fleet planning standpoint, it doesn’t make much sense to me for Alaska to have a mix of 737-8s and A320neos but it makes sense to have a fleet of A321neos, especially with the LR and XLR options now available. Alaska would do well to swap the A320neo orders to the larger A321neo.
The XLR gives Alaska the ability to expand services into South America and Hawaii and Alaska deeper into the US mainland. The extra capacity of the A321neo over the -9 MAX provides better revenue opportunities, especially in slot-constrained airports like Chicago O’Hare and New York JFK.
Alaska’s first MAX was seen in full livery recently, thanks to Twitter’s @Woodsaeroimages. It has the long-standing “Proudly All Boeing” line on the nose. I asked Pederson about this, too, since Airbus is very much a part of the mainline fleet.
“We have a long partnership with Boeing and that wording has been part of our standard Boeing livery for many years,” he wrote. “We just didn’t want to remove it until we make a final fleet decision. That shouldn’t be interpreted as having any bias one way nor another.”
Aside from the lawsuits from the families of victims in the two MAX accidents, customers have claims, too. Some were quick to say they would expect compensation from Boeing for the grounding and the undelivered aircraft. A Russian lessor last week sued to cancel its order for 35 MAXes. It sought $115m in damages and an unspecified amount in punitive damages.
One pair of law firms appears to be gearing up for a fight.
“We act for a large number of airlines/customers with grounded MAX,” Paul Briggs of Bird & Bird in London wrote LNA in response to our inquiry.
“We cannot discuss any part of the claims–but we can tell you that Boeing seem[s] to be making a lot of commercial promises but are then failing to follow up with actual help.
“All our clients want a long term relationship with Boeing–but need to take whatever steps are needed to stay solvent and get back to plan.”
Bird & Bird is co-counsel with Lane Powell, which has a Seattle office.
Embraer will deliver its first E195-E2, to Brazil’s Azul Airlines, on Sept. 12.
This sub-type is the largest passenger airplane Embraer has designed: 146 seats in single-class, high density configuration. It’s actually slightly longer than the Boeing 737-8—136 ft vs 130 ft) and slightly shorter than the 737-9 (138 ft).
The E-Jets are far more comfortable with its 2×2, 18-inch seats than the 737’s 3×3 17.2 inch wide seats. The Airbus A320 has the same seat width (unless, as some airlines do, seat width is reduced for a wider aisle), but with 3×3 seating. I find the E-Jet more comfortable than the A320 as a result.
We seem a few months away from the return to service of the Boeing 737 MAX. The big marketing question, how will Boeing and the airlines restore confidence in the airplane?
Will the aircraft be rebranded? Boeing has been a little ambiguous about this.
In the past, all before social media, of course, grounded or troubled airplanes didn’t see much in the way of name changes.
The Martin 202, Douglas DC-6 and Lockheed Constellation, all post-World War II aircraft, were grounded due to safety defects. All returned to service retaining their names.
The de Havilland Comet, the pioneering jetliner, was grounded for four years after metal fatigue caused two jets to blow apart at cruising altitude. It was called the Comet IV upon redesign and reentry into service in 1958. The name, however, appeared more of a sequential series of Comet advances than a rebranding, much like the Douglas DC-7 evolved into the DC-7B and DC-7C.
The Lockheed Electra propjet wasn’t grounded after two fatal accidents in 1959 and 1960 but press coverage (for the era) was severe. The airplane had structural modifications and was renamed the Electra II.
The McDonnell Douglas DC-10 suffered high-casualty fatal accidents. After an engine separated on take-off from an American Airlines departure from Chicago O’Hare, rolled over and crashed, killed all on board and a few on the ground, the FAA grounded the aircraft.
It turned out the fault lie with American’s maintenance and erroneous emergency procedures—the pilots flew by the book but still lost the airplane.
The DC-10 name remained, although American expunged it from the side of its aircraft, calling it only the “Luxury Liner.”
American had this odd habit of adopting its own name for airplanes. The British Aerospace Corp. BAC-111 became the BAC 400 (after the series designation, BAC-111-400) in American’s nomenclature. The McDonnell Douglas MD-80 was named Super 80 by American, after the original MD-80 designation, DC-9 Super 80.
The last airliner to be grounded was Boeing’s 787 in 2013. It was on the deck for three months and Boeing stuck with the 787 Dreamliner name.
So where does this leave the MAX?
Does Boeing stick with the MAX brand or rename it MAX Advanced, Super MAX or MAX II, for example? Does it drop the MAX name and just go with the designators, 737-7, -8, -9 and -10? In the extreme, does it adopt an entirely new name?
A photo showed a Ryanair MAX 200 renamed 737-8200, but the airline’s CEO said this wasn’t a rebrand.
I have my own views. Let’s see what the readers think.
Here’s a poll; you only get to vote once.