Originally Posted by
Brillo
I am fairly certain we got a smoking deal on those 787's. I remember Vasu Raja (VP of Network) discussing something like this on a "Tell me why" last year. Not the exact verbiage, but it was a question along the lines of why don't we replace worn out, less efficient 767's with a more efficient plane like a 787. His answer was that even though the older plane was less efficient, it was paid for. When you look at costs, there's day-to-day operating cost, and there's the initial purchase cost. Too much of one could offset the other. Then several months later we announced that we are replacing 767's with 787's. That makes me believe (hope) that the initial price we paid was so low as to make it worth putting these new planes on those routes.
But I'm just a pilot. It does what it's told.
The terms you are looking for are "direct" and "indirect" operating costs. Monthly lease and insurance are all indirect costs and are fixed. Direct costs are things like fuel/oil/parts etc are direct operating costs that are variable depending on how much you fly.
Our 767's were just under 20 years old when they signed the 787 order. At 20 years, metal airframe upkeep costs start to skyrocket exponentially. This isn't a problem for freight carriers because the purchase price is so low and they don't fly them much, so they have low indirect costs. (You might notice they cycle out most of our aircraft at 20 years)
Vasu said they needed to spend $20m on each 767 just to retrofit the interiors and bring them inline with the rest of our int'l product offerings. Now add in the increased inspection costs as time went on, plus potentially higher operating costs (on longer routes) and combine that with used 767 prices in an upward trend due to Amazon (and others) expanding their air freight fleet, combined with Boeing desperate to kill off Airbus orders....basically a perfect storm. IIRC the estimated cost of our 787s was in the neighborhood of $100m a copy...so for 20% of the purchase cost just sunk into retrofits (plus the airframe had value - I have no idea but at least $10m) we could have a brand new airplane.
Canceling the A350 cost them $50 million in cash. They bought the 787-9s and leased the 787-8s.
These newer aircraft with carbon fiber fuselages don't have the same airframe longevity issues as do the metal ones. Think about a fiberglass boat - it can be left in the sun for decades and still retains its strength.