US major airlines ageing fleet proves problematic

[Kurt A]

US major airlines ageing fleet proves problematic

Major US airlines will need to replace ageing fleets, which will see them faced with a potentially crippling bill running to over one hundred billion dollars over the next decade.

Ascend, the world’s leading provider of information and consultancy to the global aerospace industry, reveals that there is no likely quick fix solution to this problem as airlines do not have enough firm orders to upgrade their fleets.

The problems are particularly acute for major US carriers American Airlines, Northwest Airlines and United Airlines. All have significant numbers of ageing aircraft in service that will need to be replaced in the next few years.

The airlines however, face being stuck with old aircraft for years to come due to order backlogs and delays to new aircraft, such as that for the 787 announced by Boeing on Wednesday [9th April 2008].

This means that even if the much needed replacements were ordered today, they would not be delivered until around 2012-2015.

If American Airlines and United Airlines fail to place those orders soon Ascend’s data shows that in 2015 American Airlines’ fleet will be on average 19 to 28 years old whilst United Airlines fleet will be 20 to 26 years old.

The bill for replacing these aircraft alone is likely to come to around $20bn for each airline.
In the case of Northwest its warhorse fleet of around 100 DC9’s is approaching 40 years in service.

“It is far from exaggerating to say we really are at crisis point for these airlines,” says Gehan Talwatte, Managing Director, Ascend. “American, Northwest and United will need huge numbers of new aircraft in the next decade. The difficulty is that without already having the orders in place those aircraft are not going to be delivered any time soon.

But this challenge pales next to the issue of where the financing is going come from. All of the major US carriers, apart from American Airlines, have recently been through Chapter 11 bankruptcy. But the tightening of the credit markets we have seen this year means lenders are much more risk averse. If a lack of financing delays these orders then American, Northwest and United are likely to be facing their toughest challenges yet. It is difficult to see how consolidation of the US market will help to solve this problem, unless there is wholesale rationalisation of services and aircraft.’”

American Airlines, Northwest Airlines and United Airlines may have short term fleet issues to address, but according to Ascend’s analysis all six of the US majors (American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines and US Airways) will need to place substantial orders for replacement aircraft in the next 5 to 10 years.

Ascend estimates that combined, the six airlines have 1420 aircraft currently in service which will be coming to the end of their working like over the next 15 years. the following aircraft in service that over the next 15 years will be coming to the end of their working life: In total, the bill for replacing these aircraft will, at today’s prices, come to over $110bn.

The US majors’ global rivals in Asia and the Middle East already have substantial orders in place for the next generation of aircraft scheduled for delivery in the next few years:
* Emirates Airlines – has 193 new aircraft on order, more than its current fleet of 115. Current average fleet age is just 5 years.
* Qatar Airways – has 145 new aircraft on order. It currently has a fleet of 61 aircraft, with an average age of 4 years.
* Singapore Airlines – has 82 new aircraft on order. Its existing fleet of 97 aircraft has an average age of 6 years.
* China – more than 800 new aircraft are scheduled for delivery to various airlines by 2016.

“What this means for the US majors,” continues Talwatte, “is that without radical change they will continue to fall further and further behind. Carriers like Singapore Airlines and Emirates are already flying younger more fuel efficient aircraft and have more on the way. Newer aircraft are substantially more fuel efficient and require less maintenance.

Add in the soaring price of fuel and it is clear there are big savings for carriers with fleets of the newest, most up to date aircraft. US majors with their ageing fleets simply will not be able to compete.”

-eTravel

[Andrew M]

Yes lots of DC9's and MD running around still after 20-40 years of service.

Now that Delta and Northwest will merge no doubt a bigger order will come shortly.

As for AA & UA and CO - Who knows!