The A350 order

donvito99

So Aer Lingus have 9 A359s to be delivered between 2015 and 2018. We all know they were ordered at a time when things were great here, but even in that economic climate, 9 XWBs for EI would not have worked.

The current Long haul fleet is 7, this means doubling the fleet. EI recently passed on the idea of reopening SFO. The CEO (who has acknowledged that the 350 is the wrong plane for EI) seems reluctant to do anything but cost cut and restructure, which is fine. But with this delivery coming down the line, maybe now is the time for Tatl expansion?

During the boom, EI operated JFK, BOS, ORD, SFO, LAX, IAD and infamously DXB. We also now have MCO. If all those routes were reopened, would 9 A359s still be justified? IMO, no.

So what will EI do? It has been muted on other forums that if, hypothetically, EI was taken over by BA and IAG, that 787s would come from BA to EI, and some 359s would go to London, as BA are interested in that type, apparently. The 787 seems like the perfect aircraft for EI, easy to fill for routes like SFO, LAX, maybe even Vancouver or Montreal. I think Mannion was forced to go with the mix of 359s and 330s at the time because Boeing wouldn't give him a good price (they should've recruited Mo'L!) which is unfortunate.

Could we in the future see more IAD-MADs to make use of the excess metal, or is that route too contentious in the eyes of United workers? Or perhaps a similar arrangement with BA?

Or will a whole swathe of the 350s be leased out immediately, never to be seen again?

To me, this seems like a massive burden for EI, like the Pension debacle.
What kind of deposit would EI have paid for these new aircraft, and what would the cost of cancelling the order be?

BTW, I have no clue how this industry work, just an outside opinion. I just can't help but feel that with Mueller procrastinating, effectively, the company will suffer an e-voter, Metro North style waste of money.

Stinicker

I wonder could they open a route to Asia - Bangkok or Kuala Lumpur and serve Australia and New Zealand from there. There is huge numbers of people travelling to Australia and New Zealand which are passengers Aer Lingus could capture and with Etihad and Emirates on the UAE routes the market is clearly there and given the option most people would avoid going through Heathrow if the likes of Aer Lingus was plying the routes and not astronomically expensive. Alot of European carriers fly to Asia so I couldn't see why Aer Lingus shouldn't try it and compete with out there.

Jamie2k9

I just can't see EI having 9 A350 in fleet. 4/5 mabye. I expect them to sell there orders to other operators who want them sooner. EK, EY etc

Those aircraft are way to large for routes from DUB. They will need to have a lot more connecting traffic to fill them if they do keep 9.

bk

Sorry, I know it is off topic, but IMO it is mad that EI don't have a single route to the West coast of the US.

I know they aren't supposed to be really government run anymore and therefore make decisions on an economic base. But it really hurts the Irish economy that we don't have any direct flights to SFO, what with all the large US IT companies now based in Dublin.

I find it hard to believe that Shannon to Boston/NY is more profitable then a Dublin to SFO route. Particularly with all the business class seats they would sell on such a route.

Perhaps someone here knows why?

brock landers

Stinicker wrote: »

I wonder could they open a route to Asia - Bangkok or Kuala Lumpur and serve Australia and New Zealand from there. There is huge numbers of people travelling to Australia and New Zealand which are passengers Aer Lingus could capture and with Etihad and Emirates on the UAE routes the market is clearly there and given the option most people would avoid going through Heathrow if the likes of Aer Lingus was plying the routes and not astronomically expensive. Alot of European carriers fly to Asia so I couldn't see why Aer Lingus shouldn't try it and compete with out there.

Always wondered that, seems strange they've always only focused on the US for long haul sectors(with the exception of DXB),when there is obviously a market for the Asia/Pacific

donvito99

EI will probably launch SFO next year. EI have said that an Asia route won't work for them, they quoted some minisule figure for traffic to Oz and NZ (C. 50 pax per day)

brock landers wrote: »

Always wondered that, seems strange they've always only focused on the US for long haul sectors(with the exception of DXB),when there is obviously a market for the Asia/Pacific

I think EI should follow Iceland Air and create a product for North American routes only, attracting passangers from the continent throught DUB to NA and vice versa. Icelandair fly to Denver and a whole host of rather obscure destinations in the USA. The difference is they chose a great a/c for themselves, the 757. If EI had gone with 787s when they made this order a few years ago, we could have seen EI in a different position in a few years time, with a unique product serving pax between NA and Europe, really benefiting Irish passangers.

....oh well :rolleyes:

bladeruner

Jamie2k9 wrote: »

I just can't see EI having 9 A350 in fleet. 4/5 mabye. I expect them to sell there orders to other operators who want them sooner. EK, EY etc

Those aircraft are way to large for routes from DUB. They will need to have a lot more connecting traffic to fill them if they do keep 9.

I tend to agree with you, can't see what routes they would put them on.
The 787 is a better aircraft for Aer Lingus.

bladeruner

bk wrote: »

Sorry, I know it is off topic, but IMO it is mad that EI don't have a single route to the West coast of the US.

I know they aren't supposed to be really government run anymore and therefore make decisions on an economic base. But it really hurts the Irish economy that we don't have any direct flights to SFO, what with all the large US IT companies now based in Dublin.

I find it hard to believe that Shannon to Boston/NY is more profitable then a Dublin to SFO route. Particularly with all the business class seats they would sell on such a route.

Perhaps someone here knows why?

100 + tonnes of fuel is very expensive with oil at $100 a barrel.
Boston is a hell of a lot closer.

donvito99

bladeruner wrote: »

100 + tonnes of fuel is very expensive with oil at $100 a barrel.
Boston is a hell of a lot closer.

Also Irish + Americans know Aer Lingus as a brand in Boston.

I should think that American business men would go with UA, AA or another well known American carrier via LHR etc. Aer Lingus aren't known for their marketing across the Atlantic. SFO is a high risk route to start (as are all NA destinations), but this is definetley the first Tatl route that they will start...we won't be waiting to long hopefully, so long as we don't get a double dip recession or some other curveball from Greece!

Bessarion

donvito99 wrote: »

So Aer Lingus have 9 A359s to be delivered between 2015 and 2018.......
....The CEO (who has acknowledged that the 350 is the wrong plane for EI) seems reluctant to do anything but cost cut and restructure, which is fine. But with this delivery coming down the line, maybe now is the time for Tatl expansion?

So what will EI do? ........ The 787 seems like the perfect aircraft for EI, easy to fill for routes like SFO, LAX, maybe even Vancouver or Montreal......

To me, this seems like a massive burden for EI, like the Pension debacle.
What kind of deposit would EI have paid for these new aircraft, and what would the cost of cancelling the order be?

I see your point and would agree looking at the current situation.

I would however like to point out that the EI CEO has clarified his comments recently, he says that the A350 is "over specified" for the EI route network, rather than 'wrong'. He says that as the A350 is optimised for long haul flying it is 'more aircraft than EI needs'. However this situation is the same for the B787, another very longhaul designed aircraft. The EI network is a medium haul rather than long haul set up.

Now saying that the B787 is smaller than the A350 so less seats to fill. The A350 shall have more capacity than the A330 than EI currently use. But perhaps if EI increase their use of DUB as a transit hub then those extra seats on the A350 will be filled. (I too think the IcelandAir example is a great way for EI to go) On the other hand the cost efficiency of the A350 along with the additional seats would allow EI to lower the average fare while carrying more pax. (This is not counting any cost saved from having a single manufacturer longhaul fleet)

Looking at the A350 order, they have 4 due in 2015, 2 due in 2016 and then a further 3 due 'not sooner than 2017'. In the most recent investor presentation the CEO commented on how they plan to operate a mix of A330/A350 rather than convert to an all A350 fleet. This staggered delivery allows EI 4-5 years to generate the market demand to suit the EIS of their first 2 A350 in time for Summer 2015.

You mentioned the deposits and costs involved to EI of this order. According to EI financial figures these aircraft are already financed. EI have over E900M in cash reserves, almost 2/3 of this is earmarked to cover leasing payments for current and future fleet units. (EI have stated they have over E340M is 'free float cash')

Cancelling the order would result a penalty and then EI would have to order B787's which would put then at the back of the queue. EI were one of the original orders for the XWB, before they altered the design. (EI had originally expected to be the European launch customer,that will now be Finnair) So EI have prime delivery slots which they may be willing to bargain to other airlines. (Already they have changed and deferred 3 A330 slots with no penalty) So yes, I could see the A350 order opening the doors to sub-leasing. Thus the A350 which they are locked into at the moment could end up being a good thing.

You also mentioned the IAD-MAD operation. I believe the UA staff are strongly opposed to this and apparently the CO mgmt don't like it. I could guess that the route will be switched to a (pre merger CO) B752 sometime next year. This would free up an EI A332 which could then operate a West Coast/Canadian route after that.

Looking at some of the USA carriers operating into Ireland you can see the market niche of the B752. If EI had of ordered them (many years ago) we could be seeing EI B787's on our horizon.


So at the end of this essay I would like to offer my opinion that while the A350 is a increase in capacity/capability for EI I would disagree that it is the 'wrong' aircraft. It is probably the 'wrong' aircraft for EI in 2012 but we could see a few network/business model changes before its arrival in 2015/2016. Over the last year we have seen how EI have altered their Tatl pax demographic from 30% transfer pax in late 2009 to over 60% as per the Sep 28th investor presentation in London

cuterob

whats the difference between the 787 and a350? cant you get a smaller a350 with the same capacity as the 787?

Tenger

cuterob wrote: »

whats the difference between the 787 and a350? cant you get a smaller a350 with the same capacity as the 787?

Not really. They both target a slightly different market niche.
These seat numbers are based on a 3 class config, single class would mean more seats.

B787-8 = 210 seats.
B787-9 = 250-290 seats.
B787-10 = 290-310

A350-800 = 270 seats.
A350-900 = 314 seats.
A350-1000 = 350 seats.

(To compare- B752= <200 seats, B763=218, A333=295, B772=300, B773=365, B744=416, A380=525, all in 3 class config)

EI have ordered the A350-900. This is the baseline version better fuel burn performance figures than the -800. So ordering the smaller vesrion would be taking a fuel efficiency penalty. I would guess they will have more than 314 seats as they do not offer 3 classes. (According to wiki the A359 in 2 class will be 315-366 seats)

The B787-10 is not officially confirmed yet,and the wait would be quite a while.

So while the B787-9 overlaps the A358 both models are somewhat tailored for a different market.


As an aside- Airbus says that the A350-900 will have a decrease of 30% decrease in block fuel per seat and 25% better cash operating cost than the Boeing 777-200ER. Not sure what the figures are in comparison to the A330's currently operated by EI. Knowing this would allow us to say if the A359 is right or wrong for EI.

donvito99

Bessarion wrote: »

I see your point and would agree looking at the current situation.

I would however like to point out that the EI CEO has clarified his comments recently, he says that the A350 is "over specified" for the EI route network, rather than 'wrong'. He says that as the A350 is optimised for long haul flying it is 'more aircraft than EI needs'. However this situation is the same for the B787, another very longhaul designed aircraft. The EI network is a medium haul rather than long haul set up.

Now saying that the B787 is smaller than the A350 so less seats to fill. The A350 shall have more capacity than the A330 than EI currently use. But perhaps if EI increase their use of DUB as a transit hub then those extra seats on the A350 will be filled. (I too think the IcelandAir example is a great way for EI to go) On the other hand the cost efficiency of the A350 along with the additional seats would allow EI to lower the average fare while carrying more pax. (This is not counting any cost saved from having a single manufacturer longhaul fleet)

Looking at the A350 order, they have 4 due in 2015, 2 due in 2016 and then a further 3 due 'not sooner than 2017'. In the most recent investor presentation the CEO commented on how they plan to operate a mix of A330/A350 rather than convert to an all A350 fleet. This staggered delivery allows EI 4-5 years to generate the market demand to suit the EIS of their first 2 A350 in time for Summer 2015.

You mentioned the deposits and costs involved to EI of this order. According to EI financial figures these aircraft are already financed. EI have over E900M in cash reserves, almost 2/3 of this is earmarked to cover leasing payments for current and future fleet units. (EI have stated they have over E340M is 'free float cash')

Cancelling the order would result a penalty and then EI would have to order B787's which would put then at the back of the queue. EI were one of the original orders for the XWB, before they altered the design. (EI had originally expected to be the European launch customer,that will now be Finnair) So EI have prime delivery slots which they may be willing to bargain to other airlines. (Already they have changed and deferred 3 A330 slots with no penalty) So yes, I could see the A350 order opening the doors to sub-leasing. Thus the A350 which they are locked into at the moment could end up being a good thing.

You also mentioned the IAD-MAD operation. I believe the UA staff are strongly opposed to this and apparently the CO mgmt don't like it. I could guess that the route will be switched to a (pre merger CO) B752 sometime next year. This would free up an EI A332 which could then operate a West Coast/Canadian route after that.

Looking at some of the USA carriers operating into Ireland you can see the market niche of the B752. If EI had of ordered them (many years ago) we could be seeing EI B787's on our horizon.


So at the end of this essay I would like to offer my opinion that while the A350 is a increase in capacity/capability for EI I would disagree that it is the 'wrong' aircraft. It is probably the 'wrong' aircraft for EI in 2012 but we could see a few network/business model changes before its arrival in 2015/2016. Over the last year we have seen how EI have altered their Tatl pax demographic from 30% transfer pax in late 2009 to over 60% as per the Sep 28th investor presentation in London

Thanks for the detailed reply Bessarion. Maybe these A350s could be a good thing, but if EI are to make a hub out of DUB, there'll need to be some short haul fleet re-jigging to get pax from UK/Europe to DUB in time for the Long Haul services. Apparently EI will be using the A319 as a feeder a/c for this very purpose? Or will we see an order for Bombardier C series a/c in the future? Or am I reading too much into this ?

Thats good to here about the leasing, I was under the impression that off loading these a'c was going to be a huge financial mill stone.

Stinicker

They could try operating their A350's to Sydney and Auckland via LAX, albeit missing out on the lucrative Holiday business run to Thailand along the way.

dogmatix

Would a service to Bangalore in India using a future A350 be viable? Bangalore is the software capital of India and there are thousands of Indian software professionals working here in Ireland. Also many companies here (mine included) maintain subsidary offices in Bangalore.

Could then Bangalore be used as a stopover/refueling point for an onward route to Australia/New Zealand?

Would it be economically viable to run such a route from Dublin?

Mister Jingles

dogmatix wrote: »

Would a service to Bangalore in India using a future A350 be viable? Bangalore is the software capital of India and there are thousands of Indian software professionals working here in Ireland. Also many companies here (mine included) maintain subsidary offices in Bangalore.

Could then Bangalore be used as a stopover/refueling point for an onward route to Australia/New Zealand?

Would it be economically viable to run such a route from Dublin?

Probably would but not on a daily basis though.

Stinicker

dogmatix wrote: »

Would a service to Bangalore in India using a future A350 be viable? Bangalore is the software capital of India and there are thousands of Indian software professionals working here in Ireland. Also many companies here (mine included) maintain subsidary offices in Bangalore.

Could then Bangalore be used as a stopover/refueling point for an onward route to Australia/New Zealand?

Would it be economically viable to run such a route from Dublin?

I doubt that the traffic would be there unless it was on a small 787 on maybe a weekly or twice weekly flight, there would be minimal tourist passengers as India is not on your typical Irish backpackers radar, business clients would be the main stay and even then I doubt it, Indian tourists to Ireland would be miniscule and for it to be viable Aer Lingus would need to market heavily to draw passengers in from the UK where there is a large minority of Indian expats who would be helping to keep the BA route from Heathrow going as it is I'd reckon. Bengaluru is only linked with Paris, Frankfurt and London directly and I couldn't see it as a runner really.

An Asian hub in Kuala Lumpur or Bangkok would suit Aer Lingus with connections to Auckland. Sydney, Perth and Melbourne using the smallest of the 787's between Bangkok and Australia and the A350 or even A380 if it was a success back to Dublin.

Considering that Ryanair owns 30% of Aer Lingus I can't see why MOL dosen't adapt his model to allow Aer Lingus operate long haul through Dublin and feed the long haul flights from the massive Ryanair network, with the upcoming Aviation tax hikes in the UK it will soon probably be the most expensive place in the world to fly from. This represents an opportunity for Aer Lingus and Ryanair to capture the UK market, base a few EI A350's in Rome at Ryanairs base there also and feed the long haul from there also so as to avoid flying west to go ultimately east.

Tenger

Please note that FR and EI are 2 completely separate airlines.

Yes, FR happen to own 29% of EI stock (which gives them no decision making ability and that they are currently trying to offload in order to recoup some of their losses) but that doesn't mean they will co-operate with EI.

Remember the FR business model involves NO connections, NO hub activity. They offer point to point flights ONLY.


As for Bangalore as a destination, I would say no. If EI go east (which their CEO has more or less ruled out) it will be to a current hub in co-operation with an Asian carrier to offer connections.

Stinicker

Tenger wrote: »

Please note that FR and EI are 2 completely separate airlines.

Yes, FR happen to own 29% of EI stock (which gives them no decision making ability and that they are currently trying to offload in order to recoup some of their losses) but that doesn't mean they will co-operate with EI.

Remember the FR business model involves NO connections, NO hub activity. They offer point to point flights ONLY.


As for Bangalore as a destination, I would say no. If EI go east (which their CEO has more or less ruled out) it will be to a current hub in co-operation with an Asian carrier to offer connections.

None of our pipe dreams above will likely ever come to fruition unless something on a smaller scale as yourself said, however there should be co-operation between Aer Lingus and Ryanair I feel and both airlines could compliment each other, like BA/Iberia/BMI and AF/KLM albeit the those two are far more integrated together.

Tenger

A little update, A350 EIS has now been delayed for a few months:

Airbus have today announced a delay for the expected EIS of the A350-900

EADS Profit Surges; Company Delays Entry of A350 Aircraft

European Aeronautics, Defense and Space Co., reported higher profit for the third quarter and cautioned that the Airbus A350 jet will be delayed by a few months as it grapples with the complexities of new materials.

The Airbus subsidiary now plans to enter the A350 wide-body jet into service in the first half of 2014, compared with a previous plan of entry by the end of 2013.
Source: Bloomberg