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There's more to real news than a news release.

Boeing was “hungry” for deal, says Allegiant CEO

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By Scott Hamilton

Jan. 6, 2022, © Leeham News: Allegiant Airlines CEO Maury Gallagher said Boeing was “hungry” and the carrier “got a good deal all the way around” with its first order from the manufacturer.

In an interview with LNA yesterday, Gallagher confirmed that early delivery positions from Boeing were also important in placing an order for 30 737-7 and 20 737-8-200 MAXes. Deliveries begin in 2023 and continue through 2025.

Allegiant currently is exclusively operating Airbus A319ceos and A320ceos. Airbus didn’t have enough delivery slots for the A220-300 to cover the smaller end of Allegiant’s needs. Additionally, the A220-300 hasn’t yet been certified for its maximum potential capacity of 160 passengers. Nor was Airbus willing to provide any assurances that a larger A220-500 would be launched. The A220-300 also has a shorter time to maintenance checks than the 737, reflecting the new aircraft type vs the 737-7’s derivative status.

There were no slots for the larger A320neo family until 2026-2038, Gallagher said.

Fleet transition support from Boeing also was a key element of the order, which includes options for 50 more airplanes.

Good deals are a key component

“A key component is we get good deals,” Gallagher said. “Boeing was hungry. Overall, we did a very fair deal for ourselves, and Boeing was cooperative.”

Allegiant’s new aircraft will fly with the carrier until retirement in 25 or more years, he said. Acquiring used aircraft that are 10 to 15 years old have a much less useful life for Allegiant. Integrating them into the fleet means the airline must reconfigure them, run them through maintenance and sometimes lease them. The supply chain and MRO companies have been adversely impacted by the COVID pandemic.

Buying a new aircraft allowed Allegiant to negotiate better engine prices than had it bought used aircraft and negotiated MRO contracts separately. The Boeing deal includes a wide range of support from Boeing Global Services.

Airbus remains in the fleet

But, Gallagher said, the Airbus aircraft will remain in the fleet for years to come. Allegiant will continue to source used A320s in the market. However, A320ceos are aging and there are few A320neos yet in the used market. Gallagher said that pricing, despite used aircraft, may not be as attractive as buying new.

The carrier’s stock fell $17.05 (8.83%) to $176.12 yesterday on the news of the deal. Airline analysts worried that introducing a new fleet type will add costs. Boeing’s fleet transition support will mitigate some of these costs. Long-term, two fleets mean training for two sets of flight and cabin crews, complexity for mechanics expertise, parts, and other costs.

Even so, Gallagher said now Airbus and Boeing will compete for follow-on orders, driving capital costs down.

Investors call

Allegiant has an investor call today at noon Eastern time to explain the deal to analysts. The call will be a webcast here.

 

 Category: Airbus, Boeing

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136 Comments on “Boeing was “hungry” for deal, says Allegiant CEO”

  1. Well, Boeing was certainly hungry for the *PR* associated with the deal: after all, it lost 3 airlines to Airbus in 2021 (Jet2, Qantas, KLM).
    Mind you, Allegiant is a different caliber of airline: it’s generally at the bottom of the list of USA carriers…

    https://www.forbes.com/sites/laurabegleybloom/2021/07/19/ranked-the-best-and-worst-airlines-in-america-in-2021-according-to-new-report/?sh=19052e5d72c3

    However, once again: in terms of *revenue*, super-discounted deals do little/nothing to shore up a weak balance sheet…so there’s not much hunger satisfied there.

    *************

    Scott, may we assume that the sudden Allegiant fleet expansion has something to do with the new JV with Viva Aerobus?

    https://paxex.aero/allegiant-viva-aerobus-joint-venture/

    • Hello Bryce,

      Re: “Mind you, Allegiant is a different caliber of airline: it’s generally at the bottom of the list of USA carriers…”

      Along with the USA’s other ULCC’s (Spirit and Frontier). Here is The Points Guy ranking list that was the subject of the Forbes article you gave a link to.

      1. Delta Air Lines
      2. Southwest Airlines
      3. United Airlines
      4. Alaska Airlines
      5. American Airlines
      6. JetBlue Airways
      7. Hawaiian Airlines
      8. Spirit Airlines
      9. Frontier Airlines
      10. Allegiant Air

      Fancy white tablecloth restaurants with $20 to $50 entrees get higher ratings in restaurant reviews than McDonald’s or Burger King; however, there have been a lot more McDonald’s and Burger Kings than there fancy white tablecloth restaurants everywhere I have lived. Some are willing to pay higher prices for higher quality or more service, others seek out the lowest possible price. I have been both, when I was a graduate student Southwest was the only airline I could afford to fly home for Christmas, 3o years later my career has gone well I am not interested in any airline that doesn’t offer good First Class service.

      Regarding the theory, popular on this blog, that passengers care a lot about who made the airplane they are flying in, I think it is interesting to note that all 737 Southwest in #2 on the list, mostly 737 Alaska is #4 on the list, while all Airbus Spirit, Frontier, and Allegiant are the 3 lowest ranked airlines on the list, at #8, #9, and #10. Personally, I think the reason for this has little to do with what type of plane each of these airlines flies, and a lot to do with each airlines customer service model and corporate culture , i.e. full service at high prices (the US Big 3), vs. balance of customer service and price (Southwest), vs. low price is more important than anything else including service (Spirit, Frontier, Allegiant).

      • @AP

        Fast food outlets have to provide quick service and consistently good product.

        Allegiant is ranked at the bottom for on-time performance in 2020 according to DOT.

          • @Thomas

            How come HAL (ranked the best), DAL (2nd) and NKS (3rd) don’t suffer the same fate?? Lol.

            May be AAY doesn’t have the right MRO.

        • AP:

          Well written as usual.

          I am glad your career is going well. I always flew laborer class! (well, I got Business class for a company trip back from the Philippines)

          It was painful to arch through the Gulf of Alaska onto Seattle and then catch a flight back to Anchorage though!

      • @AP

        It’s important to look at the methodology rather than regurgitate the ranking.

        Airlines / Top-performing areas / Lowest-performing areas

        1) Delta / Involuntary bumps, Lounges / Affordability

        2) Southwest / Customer satisfaction, Bag/change fees, Award availability / Lounges

        3) United / Route network, Frequent flyer / Affordability

        10) Allegiant / Involuntary bumps, Baggage, Wheelchairs/scooters / Timeliness, Cancellations, Family, Frequent flyer

      • It’s kinda funny. I always thought, for years, that spirit was “the bottom of the barrel”. I envisioned its pilots walking through airline terminals with paper bags over their heads (with the little eye cutouts), wanting anonymity! (LOL)

    • I’d be about as likely to fly on an airline called ‘Allegiant’
      as I would be to buy a car at ‘Integrity Motors’, or to eat at a place called ‘Mom’s’..

      That name sounds like one of those fly-by-night Finance companies from the 70s.

      • You better write the FAA and have them investigate them!

        They put Bellingham Washington the map which is cool (well warm for the Canadians fleeing South in the winter).

        • Funny. Made me think, for some reason, of that ancient SNL skit involving “two wild and crazy guys”! (One was Steve Martin, and the other I can’t remember. They were supposed to be East Europeans, I think. But Canadian immigrants would probably “work” too.)

        • Lower mainland has about the same weather as Bellingham WA. 😂

  2. It’s aircraft to build. Any which shape or form it comes. It’s good business and that’s what Boeing needs right now. Yes they got a nice deal but there were other merits involved which won’t get the attention but that’s understandable.

    Congratulations Boeing. You need to fill your slots so fill them.

  3. Sounds like a good deal for Allegiant and the story behind the decision seems rational. This will drastically reduce their MRO costs this decade and improve capacity with the 737-8s. Hopefully they struck a good PbH deal with GE too.

    What I read elsewhere is Allegiant has a relative low fleet utilization and many
    medium long flights. So they probably fly a long time with the new fleet.

    For Boeing restoring cash flow and monetizing resources likely played a big role. The slots planning must be messy and needs to be stabilized.

    • 30-40% of the aircraft today have 10+ hrs of utilization. The rest are 7-8 hrs, compared with 5-6 hr in the MD80 days.

      • That level of utilization, and the high dispatch reliability of the industry, continue to amaze me.

  4. Up here in snowy Montana, I’ve gotta wait about a year on my new 4WD Ford Bronco I ordered on 12/31. (No big deal, given I’m driving a pretty reliable, nice ‘18 AWD Audi Q3.) My Ford salesman mentioned in passing last week used car prices are up about 40% or so in the last year. Two things then immediately jumped to mind re aircraft and this order: 1) might as well order new, given the price and scarcity of used; and 2) might as well order “domestic” given service and support. (2.5 hours, SEA to LAS.); Lastly, Scott, do they throw in a free Max simulator as a transitional “deal sealer”? (LOL)

    • You’re assuming that the secondhand plane market is comparable to the secondhand car market, but:
      – Prices of secondhand cars are going up because of a shortage of new cars (supply chain issues).
      – Prices of secondhand planes are going down because of plummeted demand — partly due to the pandemic, partly due to a switch to newer types.

      • There’s certainly a glut of wide bodies…but narrow bodies? I don’t think so. If so, Allegiant would probably have just kept on buying used.

        • I won’t rule out BA/CFM are desperate after losing major orders to Airbus’ A320/321/220.

          BA’s WN offer was sooo good the customer didn’t bother to ask Airbus for a bid; BA gave UA massive discount to stop it from defecting for BBD’s C-series. Desperate times call for desperate measures.

        • The article explains why buying secondhand units was relatively unpalatable for Allegiant…they’ve evidently had a change of heart.

          • @TW
            Having difficulty reading again?
            Here is the relevant quote from the article above — specially for you:

            “Acquiring used aircraft that are 10 to 15 years old have a much less useful life for Allegiant. Integrating them into the fleet means the airline must reconfigure them, run them through maintenance and sometimes lease them”

    • -> ” … given the price and scarcity of used;”

      Nope. There’s a glut of parked jets.

      • Parked doesn’t mean “For Sale”

        When things abate, airlines are going to need those jets.

        As well, at $5-7 million a pop, in conversion costs – if they got their Max 7’s and 8’s at SWA pricing (plus a bit more), they did well

          • WN has a sizable MAX fleet and BA had to pay a compensation, not Allegiant. 🙄

            That’s why I say BA must be desperate!!

          • Not sure about saying “RyanAir”…but we can certainly say “Ryanair” 😉

            Ryanair is looking for the MAX-10 — a plane that is still years away from certification/production/delivery.
            On the other hand, the lines for the MAX-8 and -7 are running as we speak — but BA is worrying low on short-term demand for these lines. Hence the willingness to give huge discounts — just to keep the fires stoked.

          • @TW

            You comment like a three year old. Hint: when would RYR’s MAX be delivered?? Do I have to tell you one plus one equals to two??

            Miss the forest for the tree, AGAIN.

        • I beg to differ.

          -> Cheap Used Planes and Deep Pockets Help Airline Startups …

          The availability of used narrowbody jets— Boeing Co.’s 737 and Airbus SE’s A320 family, both popular for short-haul and regional routes—has more than doubled since the onset of the pandemic, and most startup airlines are looking for such aircraft, says Rob Morris, the global head of consulting at Ascend by Cirium.

          https://www.bloomberg.com/news/articles/2021-10-28/ample-workers-cheap-used-planes-fuel-a-boom-in-airline-startups

          I believe AAY is late to the party. Worry not, there’s still leftovers.

          • I think Allegiant is still taking 10 – A320’s they are getting on long term lease, in 2022.

        • @ Frank
          At the time, you derived from SWA financial filings that the airline had paid an average of about $36 million per airframe. This corresponds to a (more than) 65% discount, and leaves essentially no margin for BA.

          That was just after the un-grounding, when BA was optimistic that it would get a flood of orders. However, after the initial bargain hunting by US carriers and Ryanair, the well quickly went dry: apart from the 72-unit Indian LCC (Akasa) order, there’s been nothing in the meantime. That must be breeding despair (or “hunger”, as the article above calls it) — inevitably resulting in more steep discounts! That implies very little (or no) earnings for BA…but at least it keeps the line alive, and helps appease suppliers.

          • Yah, I think you are right.

            Others touched on the whole ‘get some cash now, worry about profits later’ idea, which has some merit.

            Thing is – how long can you keep kicking the can down the road?

    • Why the wait? Heavy customisation? Supply chain (eg chip issues). Waiting 1 year to buy a car sounds like what they had in communist east Germany or USSR before 1970 (USSR got their wait down to a few weeks) Or maybe Argentina when it had high trade tariffs. It probably is high trade tariffs since the US truck industry is protected by a 25% Tariff for the EU chicken wars, applied to all imports not just EU.

    • Ford had its own production issues.

      The roof has caused Ford to delay production of the Bronco, twice!!

  5. Breaker on the side — excellent to see this type of firm reaction:

    “Partying passengers stuck in Mexico after airlines decline to fly them home”

    “(CNN) — Some members of a rowdy group shown dancing, drinking and vaping maskless aboard a flight to Cancun find themselves stranded in Mexico after their return flight to Canada was scrubbed and other airlines have declined to fly them home.”

    https://edition.cnn.com/travel/article/airline-passengers-partying-canada-sunwing/index.html

  6. Ok, so Allegiant could not get the A220 in the configuration they wanted nor a promise for the 500.

    They don’t rate high enough for Airbus to cut out aircraft to get them A320 sooner (see previouis Airbus winds for former Boeing customers)

    And they got a screaming deal.

    Me thinks they got a decent deal. Not as good as SW.

    Boeing turned down RyanAir for really large order.

    Is this we are Number 2 and trying harder? Maybe, have to see.

    Boeing actually has a good core for the number 2 mfg in the world.

    China is a generation behind with the C919 and Russia, hmmm, exports are going to be hard to come by and the lack of support and lost orders t for the SU-35 is telling on their failure to support product (China has that issue as well).

    • Yeah, well, I somehow suspect that Scott’s analysis is a little more “informed” 😏

      Allegiant is the TKMaxx of Airlines: they’re not going to switch their entire business model unless they get a hell of a financial enticement.

      • Bryce:

        Scott looks at things from his perspective and I look at them from mine.

        He is known to quote someone but not question them.

        He also presents the facts, so you have to pick through facts from what someone says.

        I was a Mechanic/Technician/Engineer for 35 years. You don’t take what anyone says unless the facts back it up. I have been right far more often than I was wrong.

        So in this case, a CEO is defending his actions (the stock dropped) and we have the facts of A220 type he wanted not available nor did Airbus offer him A320 when he wanted them.

        He is looking at fuel prices fairly high, he is looking at post Covid recovery and he wants to update his fleet.

        So he takes the best deal he can get. And like any CEO he will spin it.

        He got a better deal now than he would latter, but it was not a screaming deal.

        RyanAir used to get screaming deals. Boeing is being more prudent now.

        I believe the facts not the spin. But then sensationalism or wishful thinking never fixed a machine that was not working. Figuring out the facts to find the problem did, each time, every time. I never failed.

        • Another way to look at this is

          Boeing CEO says something.

          Do we believe him?

          No, he has a really awful (and that is being polite) track record.

          In this case the former CEO is criticizes the current (well yea)

          O’Keefe said a long of things and it was all baloney.

          So, yes, its a costly deal over used (if you can get them) and older (no warranty and conversion costs) and he wants to keep his job. So yes he says he got a great deal.

          Did he get a better deal than recent Boeing bids? Hmmm.

          Airbus can’t supply him with anything he wants when he wants it?

          Uh yea.

          • Boeing would not sell airplanes for a loss, especially when Airbus is sold out like they are. Just reiterating the benefits of a Duopoly.

        • Why don’t you start your own site and charge for a fee??? 😂

          Actions speak louder than words. That’s what matters in this world, not EMPTY talk.

          • Pedro:

            Et Tu Brutai (yes I know I butchered it)

        • @ TW
          “He is known to quote someone but not question them”

          I’m sure Scott must be amused to read that — it seems you “know” him better than he knows himself.
          Please enlighten us: How can someone conduct an interview without asking questions? You did notice that this article was based on an interview, didn’t you? Just in case, here’s a relevant quote from the text of the article:
          “In an interview with LNA yesterday…”

          Further, you should really try to do something about the coherency of your comments: most of them are just random assemblages of disjoint text fragments (often self-contradictory), which essentially makes them largely illegible. Regardless of the point that you’re trying to make, surely you can at least try to present that point in a cogent manner? You do, after all, claim to be an “engineer” — which pre-supposes certain minimal communicative skills.

    • -> Boeing turned down RyanAir for really large order.

      Not comparable, miss the forest for the trees!

      • Pedro:

        Ok, break it down in some semblance of logic.

        Or is this, give me your money and you will do it?

        Make a presentation WHY its different.

        Otherwise its just spewing words.

        • You bet I would give you money for your half “analysis” /half rant?? Is this a joke??

          See my post above. You have to dig into the details, e.g. delivery slots vs. production, also take a step back to look at the whole picture.

          @Bryce explained it. Apparently you ignored what he said.

          It’s not a competition of who posts the most. Nice weekend.

    • Faury can tap dance all he wants on the A220-500.

      Customers are not stupid. Time to put up or shut up.

      • Not really.

        Customers are not stupid.

        This is correct – they understand that Airbus owns only 75% of the program and before making further investments, they want to own it outright.

        Secondly, they are not going to steal orders from a current cash cow program they have (A320Neo) with a backlog of over 2,300 airframes to be delivered, especially when BA is in such dire straights.

        When you own such a dominant position in an industry, you work on increasing production to the maximum capacity you can, without huge increases in capex (suppliers willing) and trimming production inefficiencies.

        BA has nothing in the space to compete. They need to spend $15-20 billion on a new clean sheet design to get there. Money they don’t have.

        Airbus don’t have to do a damn thing…

        • With A321 sales going over 50% or production, Airbus can begin the shit to making more A321 and sooner.

          Opens up large number of slots, more Boeing customers to be had!

          Those who still want the A320 can get it, those that want the A220-500 advantages are happy campers.

      • Allegiant won’t be paying top dollar for the A220-500. AB knows which are their best customers. AAY will stay at the back of the line unless they are willing to pay more!

        How about Boeing’s B777X freighter? So many here insisted it’s been ready for awhile.

        • Pedro:

          Now you are contradicting yourself.

          You believe what the CEO says on the great deal but not when he says he wanted the A220 and could not get it.

          Which is it? Looks like you are trying to Cherry pick to suit your agenda.

          • It’s all about supply and demand in a free market, don’t you know?? 😂 There are sellers market (A321/A220-500) and buyers market (hmmm you know which one I’m talking 🙂)

            If you have no idea how free market works [strong hint from your posts], aren’t there used ECO 101 textbook on ebay? Or check out your local library if you doesn’t want to pay.

            AB knows its customers well. MOL? Not a chance.
            How about BA? Beggars can’t be choosers.

    • I’ve shared the table with Chinese industry a few times. I must say, their determination is impressive. Also impressive is realizing big stuff we (I) thought was impossible within timeframes. And not giving up during long delays.

      While sometimes I see people look down at Chinese accomplishments, maybe it’s just comforting ourselves. If we see the total portfolio of civil / military aircraft that have been realized by the various suppliers over the last 15 years, it’s mind boggling by out standards..

      • I can assure you that, in Europe, “we” don’t look down on the Chinese at all.

        Regarding TW’s stance that the C919 is “a generation behind”, it’s always good to realize that the MAX — with its pre-historic cables and pulleys — is also “a generation behind”: it’s now the only in-production non-FBW mainline narrowbody left — a true dinosaur in that regard.
        Things can always be looked at from different angles 😉

        • Will answer both comments in one.

          My folks were saved out of a complete breakdown in a mud hole by an Alaskan Native (ie indigenous). They never failed to stop and visit when we were in his area. I have been invited to a number of Native gatherings and ceremonies.

          In my early 20s I was invited to an all black party of around 25. My friend simply told me, conduct yourself politely and you will be fine (and there are 5 of us who will take care of anyone who gets out of line)

          I have enforced diversity laws at my workplace. I told them, first, this is company policy and your conduct is actionable Worse for you, I fully believe in company policy not just follow it. One more of those comments and you will rue the day.

          Am I perfect, no where close. I still have issues with a certain Asian group that attacked Pearl Harbor and did their best to kill my father. But I do interact with them from time to time and am polite.

          What the accusation here clearly is anti Chinese . I am not. No more than I am anti German (and my family has direct roots back to German). I do loathe the Nazi regime and what it did. I do not buy the We Did Not Know. I do buy, there was not a damned thing we could have done about it but get shot.

          I am anti Chinese government. Like Russia, they are a threat to peoples everywhere.

          What they are ampping up in the reverse of their own Imperial Aggression of which the US was a participation in their country as one time.

          The EU types need to be reminded they have their own history of Imperialism and sub human treatment of Native Populations.

          It was not the US that carved the world up into artificial chunks that now are warring factions.

          And equally refusing to deal with Nazi Germany when it was possible (Belgium neutrality anyone?) – which turned loose the worst on the world of which the US was the key ally that snuffed out what they allowed to get loose in the world.

          Look in the mirror of Fascist Spain. Look at yourselves.

          Don’t paint me with your brush of arrogance. Don’t tell me how I feel about people.

          And keep in mind, when you ignore Putins Hitler like threats of limited Imperialism in China you are allowing history to repeat itself. You may not suffer the price, someone is going to.

          • None of which has anything to do with the ability of the Chinese nation to pull off remarkable technological and industrial feats.

            Still, it’s always amusing to see how some minds work 😏

          • Venture into … what … a political rant, AGAIN??

          • No, its a comment and and details of a view that is not anti Chinese per the accusation.

            Its also a great example of Germany cam roaring back and then we had WWII.

            Its the whole picture not cherry picking out how wondrous the Chinese are.

            As the Uyghur the price they are paying. Or people in China starving to death in the whole sale lock-downs. Or the Imprisoned peoples of Hong Kong.

          • Cont’d down the hole with another rant.

            Analysis comes from cool heads. Emotion like hate blinds you.

          • @ TW
            Once again: none of that has anything whatsoever to do with China’s industrial/technical prowess in the context of its budding aviation industry.

            You continually violate reader comments by going on completely unnecessary and increasingly heated political rants. The rest of us are talking about COMAC as a company — but you have to interject with ramblings about Uyghurs and “the imprisoned peoples of Hong Kong”.

            Spare us, will you?

          • Fig leaf.

            I’m doubtful DJT remembers or cares where his ancestor came from.

            In GA, three, including an *ex-police officer*, were convicted of murder.

  7. It is telling to me that an American airline could get such a deal while european airlines (e.g. jet2) obviously couldn’t. Makes me think of the united A220/737 contest in which ultimately Boeing cried foul.

    I do believe this order to be a good thing though. A healthy duopoly is better for aviation and innovation in the long term…

    • Boeing seems to be stronger in the widebody sector by far so Airbus need to do better in narrow bodies. Despite problems Boeing had with the MAX and is having with the B777-9 and B787 production it still remains stronger in that area and Airbus remains burdened by the A400M and early termination of the A380 program.

      • It’s kinda funny. I always thought, for years, that spirit was “the bottom of the barrel”. I envisioned its pilots walking through airline terminals with paper bags over their heads (with the little eye cutouts), wanting anonymity! (LOL)

      • I’ve gotta be “fair” here, and note AB has a winner in the A350-900 (XWB?), although I’m still a little puzzled as to where exactly AB is in the “profitability game” with it!

      • @ William
        Tense is important.
        BA *was* stronger in the widebody sector. However:
        – It hasn’t shipped a 787 is more than a year, and Stan Deal said just this week in the Seattle Times that he doesn’t know when deliveries will resume.
        – It just can’t seem to make progress on the certification of the 777X — a program with meager sales prospects, at best.

        It’s therefore currently earning its widebody bread and butter from older-model freighters, and that ends when the new ICAO regulations kick in.

        If it doesn’t get its sh#t together soon, it will also lose its widebody lead.

      • If you take out military jets and freighters, true picture emerges and BA is almost dead even with AB in WB.

        • Why take out freighters? Even AB has realized the huge market it’s been missing in tankers. Hence, the new A350F!

          • Because they’re only a small fraction of the total commercial aviation market.

          • Historical figures reflect the past.

            Look back in ten years to see if BA “is” stronger in WB as claimed.

    • >Makes me think of the united A220/737 contest in which ultimately Boeing cried foul.

      “Dumping” is selling for less in a foreign market than in the home one. In the case of the A220 complaint Boeing alleged Delta was paying less than AirCanada and hence it was dumping.

      No rules agains selling below cost, or selling for less in your home market than the foreign one. This means Boeing can offer discounts in the US that would risk a WTO complaint elsewhere.

      • WTO has nothing to do with dumping.

        Is a Domestic US law

        • Hence his use of the word “elsewhere”.

          Do you make any attempt at all to read accurately?

        • From the WTO site:

          “Article VI of the GATT provides for the right of contracting parties to apply anti-dumping measures, i.e. measures against imports of a product at an export price below its “normal value” (usually the price of the product in the domestic market of the exporting country) if such dumped imports cause injury to a domestic industry in the territory of the importing contracting party.”

          In other words if Boeing were to sell into the EU for less than the domestic price they risk retaliatory measures. But domestically they can sell for any price they like.

          As an aside low prices for Aliegent will provide some cover for low prices in foreign markets giving Boeing flexibility.

  8. It must be difficult for an airline to get price a competitive price on the A220 given Airbus is losing money on the program.

    • Well – other airlines/lessors are ordering the type, so they seem happy with the product/price equation, but from a philosophical perspective I offer this:

      1) In life, you generally get what you pay for.

      The Max is cheap for a reason.

      2) Some customers aren’t worth taking on.

      The old 80/20 rule. Allegiant may be very nice, but something didn’t add up for AB. Because they are a US carrier the 220’s would have to be made in ‘Bama. My source tells me that they are on a slow ramp up there and staffing is an issue.

      3) If you have a plan and it’s working, stick to it.

      Airbus has found a way forward to profitability on the program by 2025. Worth noting is that, even at it’s gradual production, delivery slots were said to be full. “These are the slots we have, this is the pricing we can offer” seems to be the party line.

      In addition;

      Once again, the not so ugly Spectre (the other Scott will love that) of the A220-500 comes into the conversation. More than once, we have heard airlines inquiring about it. Airbus are about one third of the way through the A320Neo backlog. How long before Airbus cannot hold back the tidal wave of demand and is forced to launch it? C’mon Quebec, just sell it to them, already…

      Furthermore – As of May 2017 AB had 5,052 orders for the Neo family : 49 A319neos (1%), 3,617 A320neos (72%) and 1,386 A321neos (27%)

      That has now shifted to:

      A320Neo 3,748 & A321Neo 3,958, as customers are migrating to the larger/further flying variant.

      The playbook is starting to take shape: A220-100, A220-300, A220-500, A321Neo, A321Neo LR, A321Neo XLR

      IMO – Airbus are also holding back the -500 as a response to anything Boeing launches. They’re waiting for BA to make an (expensive but necessary) move, which they counter with an (already capex design funds spent) variant.

      • You’ve more than raised the spectre of “the problem” for AB with the A220-500: serious cannabalization of the A320neo line. No question of what an available A220-500 would do to the neo. But this also really raises a serious question: Is AB really any different than BA in the end: “Looking out for number one.”

        • Well, Airbus has had it share of bumps and bruises along the way, no? They are still smarting from the A380, the A330Neo isn’t selling as well as they’d like it to and the A350 has paint issues.

          Why take risks when you are not forced to? What happens if they launch the A220-500, invest money in it – and the next covid variant is as transmissible as this one, but deadlier?

          They can afford to wait. Work on fixing the A350 problems, getting the A220 to profitability, working with airlines to ride out the pandemic…there’s enough on their plate.

          Being cautious isn’t always a bad thing…

          • Don’t forget: AB is also working on LH2 aviation.
            And it’s doing the A321XLR and A350F.

          • Airbus can is selling the A220 below proeucion costs, that is why they are loose 400 milllon a year.

            But just like Boeing, they are looking at the long term and that is the way aircraft are sold. They are a huge cost to develop.

            What you do is estimate your market, and assess how fast your production cost come down (direct says the first 787 wold cost you 20 billion).

            At some point you reach break even, your production costs are the same as your sales price.

            Long term you make a profit but you have to pay back the cost to develop. X amount is set aside in the math calcs for that.

            You can adjust the model by factoring in the profits from support.

            One of BBD issues was they were asking high trying to recoup cost faster due to the financial peril. Airbus can play the long game.

            Boeing does that with Program accounting which is a tax dodge. The profits went into stock buy back and dividends.

          • @TW

            “Airbus can is selling the A220 below proeucion [sic] costs, that is why they are loose [sic] 400 milllon a year.”

            Lol no, it’s different, it may or may *not* be selling below production cost. Poor grasp of facts for outsiders.

            BA once incurred over $30 *billion* deferred program cost on B787. Truly mind boggling!! Your head is full of memory holes.

            => Don’t focus on the speck in your brother’s eye while ignoring the log in your own eye. Let him who is without sin cast the first stone …

          • Pedro:

            Most amusing. Helps at -15 deg F.

            Airbus got the A220 for nothing (sort of). They are loosing 400 million a year. Just the price you pay to get something free (there is no free lunch)

            But go on with your own spin on it.

            I think Airbus got a great aircraft and a great future, but it is not free of costs (or issues with how to merge into the 500 version vs the A320) .

          • @TW

            Sit down and take a cup of hot tea. Sigh.

            Do you know if your “loose” amount include SG&A? How about R&D?

            If you have never gone thru a financial statement, how about today?
            Time for humility, do you have any??

          • @TW

            In relation to the estimated $400 million losses;

            Airbus have said that they are going to bring the program to profitability by increasing production.

            What does that tell you?

            Generally, the variable costs of production aren’t enough to cover the fixed costs, but with more being made – it will be.

            It also means that they are making a margin on the plane – just not enough.

            Yes, you’ve mentioned that there may be bloated contracts given to suppliers that hamper the margin and that may be another portion, but anytime you can produce your way to profitability, means that the product itself can be made with a positive margin.

            As I mentioned above, if Airbus can walk away from Allegiant and not open up new production slots to accommodate them, to me it means that they’ve found a way forward and aren’t going to change the plan for them.

            There’s a lot of moving parts involved in ramping things up – especially, but not limited to, getting stuff from the subs. If GE can’t make those GTF’s to match increased demand, there’s no use in promising more aircraft to customers.

            Production is just one piece of the pie. There’s a whole army of people sitting in offices, doing things not related to churning out a product. Some of them add value….some not so much.

            I know a few… (seems everyone around here knows someone who either works for or has family who works/worked for BBD. Air Canada even moreso)

            Hey Scott – my guy tells me that hamburgers have gone up to $8.25 in the caf. He’s terribly upset. (He’s kind of a cheapskate as well, but I thought you’d need this important piece of information!)

          • A220 : 400m losses per year ( last year, 2021?).
            43 frames delivered : -9,3m per frame.
            10% of list value.

        • > what an available A220-500 would do to the neo

          I think this canibalization is less of an issue than others think:
          1. There are not enough A32oneo’s slots to start with. So AB can probably sell 10 -500/month plus all the A32xneos they can make.
          2. Airlines flying A319, A320, A321 will not be that eager to add a new type so that market will be less impacted.
          3. A -500 will take time to ramp up, until that happens there is not much threat to the A320.
          4. AB has a choice of who they sell the -500 to in the initial years. They could restrict it to the pure A220 airlines like Baltic or Breeze. Or in places where the airline has an option on a -300 letting them swap for a -500

          • While overall true, I don’t see the issues.

            Airbus needs to make more A321 as its over subscribed.

            Airlines can make their own call on the A220 buy.

            You still have zero cockpit commonality so that is a factor. Not a deal stopper but some will continue to want A320NEO.

            -500 will take ramp up time, no question, but they should start NOW. Other than A350F they have nothign else to take up their time.

            Frankly I think it is a self balancing thing as they have lots of time to adjust.

            You offer the 500, see who goes for it and who stays with the A320NEO and then balance the excess (if any) to making the A321 that you can’t supply enough of.

            South West made that decision on the MAX7 vs the A220 that make more direct economical sense. There are offsets in commonality and availability.

            Each Airline is going to be different in that regard. But as noted, lots of time to see how it balances and adjust and you have a place to shift production to if the A320 falls off into the A321 and provide earlier slots for that bird.

      • Hey! As long as you pay for it – sure you can leave it parked here. We’ll even wash it for you, before you take it away…

          • I got to see one on the Anchorage ramp. Its really a beautiful aircrat and much different in person than pictures which are great but seeing it in person up close really brings it home.

            Its a one for one match up for a MAX or an A320 and far better looking than either.

          • Only because you’re such a good customer.

            @TW

            Glad you like it. Hopefully from a performance/reliability/economy side of things, it delivers to the airlines, over the long term.

            All the beauty in the world is worth zero if there is nothing in behind it.

            Time will tell

  10. Another article on the Allegiant order (first link).
    Interestingly:
    “It will take delivery of 10 of the jets in 2023, 24 in 2024, and 16 in 2025”

    These, of course, are nominal dates: Southwest is already experiencing annoying delays in the certification/delivery of its -7s (second link).

    In that regard, its curious that BA has only *5* pre-manufactured 737-7s sitting on the tarmac, waiting for delivery (third link).

    https://www.metro.us/allegiant-defends-new-boeing/

    https://www.bnnbloomberg.ca/southwest-cites-frustration-over-737-max-certification-delays-1.1694195

    https://www.planespotters.net/production-list/Boeing/737/737-MAX-7

    • Definitely another black eye for BA!

      Existing customers would have second thought about BA’s project mgt / lack of transparency / are they telling the truth, exh. A: TC and others.

      • F.I. are openly skeptical about the co.’s continued success, many are worried about its future and competitive position. Is the co. willing to accept a diminished share in the foreseeable future?

        JPM now expects B787 deliveries won’t resume before 22Q3. Oops.

        Noses are getting longer quarter by quarter.

        Another analyst believes AB is set for a “decade of dominance” in NB, once was BA dominant cash cow. 🤔

        BA’s engineering strength and R&D spending is near 10-year lows, risking its capability to develop a new jet.

  13. First the Qatar thing, then the KC46 a330 MRTT journalism hitpiece, then Boeing dumping planes on Allegiant for a price they cant refuse… not to forget the XLR “safety concerns” raised by Boeing a few months ago

    Seems like 2022 is a year that Boeing tries out every dirty trick to win market shares because they are desperate after KLM and Qantas flipped…….

    • duke:

      Solidly backed up by conjecture and no facts.

      Now you all send me your money, why not? I said it did I not. That by the current standards of proof is perfectly valid and what you should do.

      • “Solidly backed up by conjecture and no facts.”

        You mean like all your waffle above regarding China?

        • Bryce:

          You can point out where you think is a waffle which I am fine with or you continue to play the fool.

          Your choice.

          • That’s easy: the entire comment is waffle — from start to finish.
            Go back and have a look at it: family history, mud hole, native Americans, teenhood parties, diversity laws, Pearl Harbor, Nazis, EU types, imperialism, fascist Spain, Putin — and all that rubbish in response to a comment about COMAC’s industrial abilities?

            If you think Scott should intervene elsewhere to “do something” about alleged anti-Americanism, what do you think he should do about recurrent, structureless, utterly irrelevant ramblings like yours above?

      • How does it feel that you are doing such a good service as a Boeing mouthpiece, but you aren’t even getting paid for it like all the others I have mentioned?

  14. Oh dear, oh dear, oh dear!
    “Boeing keeps giving big money to lawmakers who voted to overturn election; Amazon, Microsoft stopped”

    “Boeing, after a brief pause, has shown no hesitation in supporting the Republican legislators who voted against certifying the presidential election of Joe Biden.

    Boeing actually gave more money to Republican candidates who voted to overturn the results than it did to Republican candidates who voted to accept the results of a free and fair election.

    A new report from Accountable.us found Boeing to be the second largest donor nationally to members of Congress who voted to overturn the election.

    Boeing declined to comment Thursday.”

    https://www.columbian.com/news/2022/jan/07/boeing-keeps-giving-big-money-to-lawmakers-who-voted-to-overturn-election-amazon-microsoft-stopped/

      • Indeed.
        One wonders if LM might somehow be behind this exposé…a way of leveling the playing field in light of the recent series of anti-AB lobbying publications by BA cronies (vis-à-vis the Bridge Tanker bidding)?
        Oh dear: how could the USAF be seen to do business with a company that seems to openly support sedition?

        • Guys:

          Lets stop the nonsense .

          Boeing and all corporations bribe congress (it legal). The do not bribe them for support contracts.

          Corporations bribe reptilians because they are reliable, the stay bought. The danged Democrats keep wanting to balance out with social needs. That is bad for Corporate business (or so they think)

          Boeing wants to keep making F/A-18, so congress inserts more into the budget. That said, the Navy is short its aircraft slots, so they need them, they just don’t want to to pay out of their budget.

          There are support contract allocated all the time. Its why US stuff flies and Eurcopters are sitting on the grounds with no support and spare parts.

          So, list all the defense contractors and point out how Boeing got a contract over LM?

          Those usually are competitive bids with the incumbent mfg having an inside track as they know the system in question.

          Boeing just got an upgrade contract for the Japan F-15 fleet.

          You need to learn to separate out the bribes Boeing pays congress (as do all corporations) and contract awards.

          Oshkosh has gotten huge extension on military vehicles they make, no bid (well its a good deal as far as that stuff goes).

          How come you are not talking about Oshkosh? Or LM and the F-35. Or GD and the upgraded M1 Tank? Or, or or

          How about that overpriced CH-53K that does little more than a Chinook (a fine Boeing product product by the way)

          I mean really.

          At least we get and keep stuff in the air unlike the EU.

          • TW: I know little about the commercial side of these issues, but am informed on the military. To my reasonably certain knowledge what you refer to as ‘the EU’ when it comes to ‘keeping stuff in the air’ is in reality merely the Luftwaffe when the coalition governments under Merkel showed minimal to zero interest in funding any military aviation continuing charges. As far as I can tell there is minimal difference between US and other European air forces when it comes to availability – and there has been a massive improvement in Luftwaffe availability since those days – now over a decade ago. Note that the A400 (your favorite bete-noir) is now so reliable and effective that the RAF is dumping all of its C-130 Hercules instead.

          • @ TW
            We’re not talking about bribery…it’s far more subtle (and serious) than that.
            We’re talking about supporting attempted insurrection.

  15. TW: I know little about the commercial side of these issues, but am informed on the military. To my reasonably certain knowledge what you refer to as ‘the EU’ when it comes to ‘keeping stuff in the air’ is in reality merely the Luftwaffe when the coalition governments under Merkel showed minimal to zero interest in funding any military aviation continuing charges. As far as I can tell there is minimal difference between US and other European air forces when it comes to availability – and there has been a massive improvement in Luftwaffe availability since those days – now over a decade ago. Note that the A400 (your favorite bete-noir) is now so reliable and effective that the RAF is dumping all of its C-130 Hercules instead.

    • It’s just his usual, un-informed, anti-EU ranting. There’s no point in trying to counter it with facts — that will just add fuel to the (irrational) fire.

      Nevertheless, your comment is interesting for other commenters/readers here — thank you.

  16. -> “Airbus got the A220 for nothing (sort of). ”

    Another myth repeatedly posted by those with selective memory loss.

    Two years ago, Airbus had to pay over $1 billion to get 25% of the A220 program. Still it’s considered a steal. There’s a discussion among posters here at LNA. Read it.

    • Airbus has spend billions on the A220 program over the years. It’s seen as sound investments.

  17. Interesting Boeing-related discussion on CNBC’s “Halftime Report” last Thursday.
    Jim Lebenthal (Cerity Partners) — who is usually upbeat about Boeing — commented that he had trimmed his holdings of Boeing stock. When asked why he had made this uncharacteristic move, he replied that he was waiting for the following developments before increasing his holdings again:
    (1) Resumed purchases of MAXs by China;
    (2) Resumed deliveries of 787s.

    So, it seems that the topics that we discuss here as aviation commenters are starting to sink in in a wider world.

    Regarding (1): China hasn’t bought any Boeing aircraft of ANY type in 4 years.
    Regarding (2): In the Seattle Times interview published this week, when questioned as to when a resumption of 787 deliveries would occur, Stand Deal said that he didn’t know, and also “I don’t want to rush my regulator”. The man evidently doesn’t think too much about the impression that such remarks make on customers and investors.

    At this rate, BA’s “hunger” will morph into “famine”.

  18. More negative news for Boeing:
    “US appeals court revives investor lawsuit against Boeing over 737 MAX crashes”

    “Washington: The US Seventh Circuit Court of Appeals revived an investor lawsuit against the aerospace company Boeing over two 737 MAX crashes in Indonesia and Ethiopia in 2018 and 2019, according to a court opinion written by Judge David Hamilton.

    “The suit alleges that Boeing officers and board members made materially false and misleading public statements about the development and operation of the 737 MAX in Boeing’s 2017, 2018, and 2019 proxy materials…

    “The court’s decision will allow the lawsuit to move forward, meaning Boeing and its board will face litigation over the allegations that they misled investors about the 737 MAX airplanes prior to the two crashes.”

    https://timesofoman.com/article/111584-us-appeals-court-revives-investor-lawsuit-against-boeing-over-737-max-crashes

    Is Judge Hamilton any relation of Scott? 😉

  19. Big things have small beginnings:

    COMAC is about to deliver its first aircraft to a country outside China: an ARJ21 (the first of an order of 30) is ready for handover to Indonesia’s TransNusa (via an AVIC lease).

    https://www.aviation24.be/airlines/transnusa/indonesian-airline-transnusa-first-non-chinese-airline-to-receive-comac-arj21-700s/

    **************

    Concurrently, Guangzhou Aircraft Maintenance Engineering Company (GAMECO) has announced a P2F conversion line for ARJ21s.

    http://www.smartaviation-apac.com/2022/01/chinas-yto-cargo-airlines-to-be-first-operator-of-arj21-freighters/

  20. Comments are closed. Too many of you have gone so far off topic too many times.

    Hamilton

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