DJ looking at new NB order

[BradR]

Interesting that DJ are discussing a new narrow-body order. Given they seem to have their hands full with V Australia you would have thought they may hold off but maybe they believe the next year or so will be a great time to get some good prices.

Brad

http://www.flightglobal.com/articles...-aircraft.html

[Andrew McLaughlin]

Originally Posted by BradR

Interesting that DJ are discussing a new narrow-body order. Given they seem to have their hands full with V Australia you would have thought they may hold off but maybe they believe the next year or so will be a great time to get some good prices.

It's a buyer's market at the moment!

[Will T]

Large scale fleet orders (for start-up, growth or renewal) at the bottom of the market are an essential feature of a successful low cost airline model, and certainly underpinned the successes of Ryanair and Easyjet in Europe. With much of the low-hanging fruit gone in the LCC arena, and the market saturated, fleet financing (price and arrangements) can be the key cost differentiator. Although DJ have adopted a 'new world' strategy, in reality this is underpinned by retaining the lowest available cost base within their target market(s), and this compels them to buy at the bottom of the aircraft market almost regardless of their current funding situation.

Closer to home, Qantas's taking over of the post-September 11 American Airlines 737-800 order book - at an amazing price - has underpinned the success of that fleet for QF.

[Mike W]

Originally Posted by Will Tidmarsh

Large scale fleet orders (for start-up, growth or renewal) at the bottom of the market are an essential feature of a successful low cost airline model, and certainly underpinned the successes of Ryanair and Easyjet in Europe. With much of the low-hanging fruit gone in the LCC arena, and the market saturated, fleet financing (price and arrangements) can be the key cost differentiator. Although DJ have adopted a 'new world' strategy, in reality this is underpinned by retaining the lowest available cost base within their target market(s), and this compels them to buy at the bottom of the aircraft market almost regardless of their current funding situation.

Closer to home, Qantas's taking over of the post-September 11 American Airlines 737-800 order book - at an amazing price - has underpinned the success of that fleet for QF.

Nice answer Will and very well explained. I didn't realise how tactical this could be.

[D Chan]

what you said is true Will but I think the crisis of September 11 and today's financial crisis are quite different. While Sept 11 was more about terrorism, security and the downturn in pax numbers, today's problem is about the financial system and financial institutions. I wonder if it will be difficult to finance aircraft at a time like this when financial institutions are reluctant to lend each other money etc. and how this may affect aircraft financing I have no idea. And what about the airline's credit rating?

Though it is a good time to buy because the aircraft will probably be ready when the economy improves.

[Michael Morrison]

Originally Posted by D Chan

I wonder if it will be difficult to finance aircraft at a time like this when financial institutions are reluctant to lend each other money etc. and how this may affect aircraft financing I have no idea. .

I presume more govt backed borrowing will be in place.

I beleive the VA 777's are financed through a US govt back lender.

[Bernie P]

Just wondering, will this be for simply a mix of more 737-700/800 or IF the purchase of the 737-900 or even the 737-900ERwould be a good fit into the fleet? Is there any issues with regards to fleet commanality, (assuming this would not be the case) and would the additional range AND seats be of any benifit for the long haul to WA and or Bali for Pac Blue?

Also, will they include into the fleet numbers possinilty for expansion, or will it be on a 1 for 1 replacement??

[BradR]

Originally Posted by Bernie P

Also, will they include into the fleet numbers possinilty for expansion, or will it be on a 1 for 1 replacement??

As Godfrey referred to leases coming due, I assume this is largely replacement. DJ wants to market that it has a young fleet so it would make sense that some of the older 738s are replaced in the timeframe suggested. WIth the economy in the doldrums the case for capacity expansion at the moment would be almost non-existent.

Brad

[NickN]

How long has the 738 been in service for? By modern terms isn't it still a young aircraft?

[Marty H]

Originally Posted by NickN

How long has the 738 been in service for? By modern terms isn't it still a young aircraft?

Young yes but in the case of VB, QF, JQ these are high cycle aircraft, therefore checks come up quicker, also once you go beyond 5 yrs you are looking at costly C and D checks which involves the aircraft being out of service for long periods of time and millions being spent.