When is a 737 not a 737? When company pundits want to claim one is an apple and one is an orange I guess.
AA's decision to buy new 738s to replace fuel-hog MD-80s is AApples; WN's decision to not buy new 737s to expand its fleet is Oranges. You highlighted WN's decision to not buy expansion 737s as somehow more responsible than AA's decision to buy new 738s in order to replace old, inefficient MD-80s. I suspect that if WN had 224 MD-80s in its fleet right now, it would have been buying new 737s to replace them, just as AA has been doing for the past two years.
AA is not pulling one MD-80 out of service for each 737 they are getting. So some of those brand new 737s are fueling increased capacity.
The first part is certainly true. The second part, not completely. Since 12/31/08, before any of the recent 738s arrived, AA flew 77 older 738s and had 279 active MD-80s. In the two years since then, as of 12/31/10, AA has taken delivery of 76 new 738s and has parked 55 MD-80s, so there are 21 new 738s more than the MD-80 retirements over that period. But those 21 738s don't represent expansion. Recall that in late 2008 and early 2009, AA permanently parked 34 AB6s and that many of the routes were backfilled with 763s and 757s and 738s. So there are 21 more 738s than MD-80 retirements but there are also 34 fewer AB6s. My WAG is that the new 738s are more fuel efficient than the AB6s per ASM. You can call those 21 additional 738s "increased capacity" if you want, but they're really backfilling some of the capacity of the 34 AB6 retirements.
Using todays oil prices are a little unrealistic, with consumption down over the long term oil will likely get cheaper, especially if it has to compete with other government subsidized forms of energy. So the payback is likely to be much longer, add in all the fees that are attached to the money they are borrowing, along with the interest, and the fact that carriers never seem to actaully realize the fuel savings promised, and I suspect that you have an interest in selling airplanes. Perhaps you own Boeing Stock or have some money tucked away in the various institutions that provide financing, who knows, who cares?
Oil will likely get cheaper over the long term? Seriously? You may be right, but most of the industrialized world is betting the other way. For years, we've heard that China represents most of the potential market for new expansion aircraft and if true, China's consumption of jet fuel is going to explode. GM now sells more cars in China than it does here - those cars and all other makes sold in China represent a huge increase in gasoline conumption as the affluent in China buy more and more cars. Same thing in India, which also has four times the US population, just like China. Between just those two countries, there are eight USAs in population. The USA has five percent of the world's population but consumes one-fourth of the world's energy output. As people in the less-developed world begin using energy like we have, energy prices will have to increase.
The people in N America and Europe and parts of S America will probably not increase their consumption of oil at the high historical rates, but the people of China, India, the former USSR, Africa and much of Asia will probably increase their oil consumption over the long term as they increase their air travel and their auto ownership rates.
As for Boeing stock - I suspect that many mutual funds own Boeing; I also suspect that many pension funds (my own included) own Boeing stock, benefitting many union members. Over the long term, Boeing has tended to produce profits - you'd have to be an idiot to NOT own Boeing stock if you manage money for other people. Same thing for oil companies - high oil prices and high oil company profits are good for retirement funds.
Didnt Borman get EAL into a lot of trouble by saddling EAL with a lot of debt by buying airplanes that were supposed to save enough in fuel costs to pay for themselves? Same story, different faces. "Its not a Ponzi Scheme Its a Pyramid Investment Club!"
Sure, but didn't EAL have plenty of other issues as well? As
eolesen pointed out, fuel prices didn't increase all that much from the time EAL ordered the A300s until EAL went out of business - so fuel cost savings were minimal. That COULD happen at AA, but IMO, fuel will go up in the future - it won't stay flat or go down in price.
Would a new car pay for itself in fuel savings? Very doubtful, main reason being that I have the ability to perform all the maintenance and repairs myself. So keeping the old car still makes economic sense even if it sucks to drive. Why do I live so far? Because thats what I had to do at the time to get something a little more affordable.
I agree with you that gasoline savings generally will not pay for a new car. More than 30 years ago, I had colleagues rationalize their decision to buy new diesel Rabbits and Honda Civics because they would burn half as much gas (or even less) than their old cars. Problem was, they'd have to drive their new cars 12-18 hours a day to save enough money on gas (as gas was approaching $1.00/gal) to make their new car pay for itself. Most of them drove 5-10 miles each way to work every day and thus, fuel savings contributed very little to their new (large) car payments. But if you could cut your gasoline consumption from 200 gallons a month to 100 gallons, the new car might be a wise investment today, unless, of course, you're right about the future direction of oil prices. I happen to disagree with you about the direction of future oil prices, but not spending tens of thousands of dollars on a new car right now hoping that gas savings pay for the new car is probably the wise decision.
This is a subject where the various unions at AA are not on the same page. In this thread, you're criticising managment for buying new fuel efficient airplanes even though AA is not profitable. The APFA has publicly criticised management for NOT buying enough new 738s early enough - which is exactly the same as my criticism of managment. AA's delay in ordering new 738s cost AA at least a billion or perhaps two billion dollars in extra fuel cost over the past few years - and that's money that didn't buy new planes or pay for raises. AA has nothing to show for it and the employees have nothing to show for it. Money down the drain. Had AA ordered these new 738s in 2004 or 2005, AA would at least have more new efficient airplanes to show for it and would have significantly lower fuel cost - making it more likely that AA could increase wages for all work groups.
The cynical view, of course, is that the APFA is really excited about the new 738s not for their fuel efficiency but because they represent a 33% increase in APFA staffing levels (four FAs v three FAs).
eolesen said:
FWAAA, WN was talking about growth aircraft, but following Friday's decompression event, they might want to accelerate the retirement of the remaining 79 733's left in the fleet....
Exactly. That was the point of the final paragraph of my ealier post. WN might be joining AA in ordering new 737s in the short term, not necessarily to expand their fleet, but to replace some older 733s.
