Any "Latest & Greatest" about Delta?
02-24-2013 | 09:19 PM
Da Hudge
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From: Poodle Whisperer
02-24-2013 | 09:24 PM
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From: New to mother D
If we just make up with Alaska and proceed under the status quo, do we feel secure in substantially expanding our international route structure out of SEA and leaving it dependent on a code share partner over whom we do not have satisfactory influence or control?
I've heard it said a hundred times the we wouldn't move on Alaska unless someone forced our hand. That seems to me to be a defensive strategy. I don't think many industry observers would characterize Delta management as being defensive in the last several years. Is it reasonable to say that maybe Delta is forcing this issue to come to a head now, before we go ahead with big plans for Seattle?
Sailing, you said that you feel that our recently added west coast service indicates that we are currently in a dispute with Alaska. At a minimum, isn't that an indicator that Delta management considers the status quo with Alaska unacceptable?
02-24-2013 | 10:13 PM
Line Holder
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02-24-2013 | 10:27 PM
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From: Light Chop
Here's a thought about 10 new 77Ws vs 11 used 744s rumor, I've got some numbers to play with thanks to the fact these are very popular jets and people love to post data on them.
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each. We're looking at $3,000M for new 77Ws and $440M for 744s. A net difference of $2,560M.
3. Thus, add everything up and with 100% LF and 100% full cargo 100% of the time on 270 round trips per jet per year between ATL-NRT and the 744 fleet makes you about $183M before maintenance is calculated.
4. Drop to 80% LF and 50% full cargo, and 744 fleet makes $378M more in passengers and saves you $307M in rent. The 77W would save you $109M in fuel and make you $243M more in cargo. The net result is the 744 fleet now makes you $332M more than the 77W fleet. That cargo is absolutely needed on the 77W to close the large gap with such different acquisition prices.
So, thats an excel sheet gone mad. But, basically the cost to acquire the 744 fleet saves you hundreds of millions per year.
**If the acquisition cost were the same per copy, the 77W wins by about $10M on a 80% LF and 50% cargo and by $159M if you fill it up every leg. **
Simple estimation. Nothing more. But I'm going to have to say I could believe that Delta would agree to this kind of a deal and that, per previous post, Boeing would offer a trade-in to someone and we'd take their 744s.
Sources:
B773 List Price: Boeing List Prices New
B744 Used Price: Guess
Fleet: Assume .5 77W in maintenance and 1 744 in maintenance making the fleet numbers based on 9.5 77W and 10 744s.
Acquisition Option: Cash. Lease would be approximately 1% of
ATL-NRT: Ticket Price ATL-NRT Ticket Price
ATL-NRT: Daily service. 2 flights per day, assume 1 744 unavailable for maintenance and .5 77Ws unavailable for maintenance.
ATL-NRT: DAL 295 ATL-NRT planned distance. DAL 296 NRT-ATL
ATL-NRT Round Trips Per Year: Based on 13.7 hours west bound, 2 hour turn, 12.0 hours return, 4 hour turn, total 31.7 hours or 276.5 flights per year. Totals 25.7 hours per turn, 7107 hours per year, 19.46 hours per day.
Fuel Price Per Gallon: $3.20/gal based on Delta 4Q 2012 Earnings Call Transcript, Paul Jacobson estimate for March 2013 Fuel Price of $3.15 to $3.20/gal.
Fuel Burn: WB Master Dataset Comparison. Not adjusted for seating, estimated fuel burn on 6000nm ATL-NRT flight is 283,954 lbs for 744 vs 210,996 for 777. Equals 41,961 USG for 744 and 31,180 for 777. Equals 6.99usg/nm for 744 and 5.197 for 777. Equals 0.0186/gal/asm for 744 and 0.0168/gal/asm for 777.
B773 Cargo Capacity: B77W Cargo Capacity page 2, 44 LD3 containers plus bulk.
B774 Cargo Capacity: B744ER Cargo Capacity page 3, LD1/LD3 single fuel tank.
Cargo: 6.7 cu.ft. from averages per passenger estimate from non-sourced data, 10lbs cu.ft. average from same source.
Cargo Price: Delta Winter Cargo Rates. Estimate average of heavy <100kg and > 100kg price for ATL-NRT.
Pricing: Boeing Financing Options
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each. We're looking at $3,000M for new 77Ws and $440M for 744s. A net difference of $2,560M.
What is the opportunity cost on $2,560M in cash if we went that route?
2. Or how long would it take the 10 new 77Ws to best the 11 744s because of better fuel, maintenance and cargo capacity? - Passengers: DAL 744 seats 48J/42Y+/286Y for 376. American 777-300ER is at 8F/52J/30W/220Y for a total of 310 seats. Difference, 66Y class seats. Assume all of the routes of the 744/77W are ATL-NRT in distance, time and price. Assume F/J/W/Y+/Y seating income is the same $2100 average, the difference of 744 x 10 jets x $2100 x 276 round trips = $2,183M vs $1,710M for 9.5 77Ws. A $473M advantage for the B744 "Spackler Jets".
- Maintenance: What if Delta negotiates with Boeing to mitigate the cost difference between the two as much as feasible? Without any data to work with and that possibility there, I call this a push.
- Fuel: Based on this WB Master Dataset Comparison"] I estimate that the 77W would best the 744 on a ATL-NRT type flight with a 25.7% better fuel burn. Or, the 77W would burn 72957lbs/10781gal less fuel at $3.20/gal the 77W saves $34,500 each leg or $19M a year. Multiplied by 9.5 77W and 10 744, the 744 runs $371M in fuel and 77W $262M or the 77W saves $109M in fuel.
- So the 744 at this point would still be up around $364M given its $473M seating advantage but -$109M loss in fuel to the 77Ws superior fuel burn. Note, while the 77W may best the 744 with a 25.7% lower fuel burn, when adjusted for fuel burn per ASM, the 77Ws advantage falls twenty percentage points to 9.8%. The 744 simply has more ASMs to spread the fuel cost over.
- So that leaves cargo. Estimated 7,640 cu.ft. for the 77W and 5,655 cu.ft. per 744. At 6.7 cu.ft. per passenger bag, that leaves the 77W with a net of 5,563 cu.ft. of cargo and 744 with 3,135 cu.ft.
At 10 lbs per cu.ft. the 77W will carry 55.6K lbs of cargo over 744 31.4K. Basically, the 77W has 77% more cargo capacity.
At $4.10/lb with 100% LF the 77W makes $228in one leg vs $129k for the 744. Multiplied by 276 round trips/553 legs and a fleet of 9.5 77Ws and 10 744s, the new 77W fleet brings in $1,198M in cargo vs $711M for the 744. Advantage 77W by $487M a year.
- Lease: Say you leased the two fleets at the standard 1% per month of the aircraft price or $440K/mo for 744 and $3M/mo for 77W. With a 11 744 fleet and 10 77W fleet, you're looking at $58M in annual lease cost for 744 vs $360M for 77W, a 744 cost advantage of $307M.
3. Thus, add everything up and with 100% LF and 100% full cargo 100% of the time on 270 round trips per jet per year between ATL-NRT and the 744 fleet makes you about $183M before maintenance is calculated.
4. Drop to 80% LF and 50% full cargo, and 744 fleet makes $378M more in passengers and saves you $307M in rent. The 77W would save you $109M in fuel and make you $243M more in cargo. The net result is the 744 fleet now makes you $332M more than the 77W fleet. That cargo is absolutely needed on the 77W to close the large gap with such different acquisition prices.
**If the acquisition cost were the same per copy, the 77W wins by about $10M on a 80% LF and 50% cargo and by $159M if you fill it up every leg. **
Simple estimation. Nothing more. But I'm going to have to say I could believe that Delta would agree to this kind of a deal and that, per previous post, Boeing would offer a trade-in to someone and we'd take their 744s.
Sources:
B773 List Price: Boeing List Prices New
B744 Used Price: Guess
Fleet: Assume .5 77W in maintenance and 1 744 in maintenance making the fleet numbers based on 9.5 77W and 10 744s.
Acquisition Option: Cash. Lease would be approximately 1% of
ATL-NRT: Ticket Price ATL-NRT Ticket Price
ATL-NRT: Daily service. 2 flights per day, assume 1 744 unavailable for maintenance and .5 77Ws unavailable for maintenance.
ATL-NRT: DAL 295 ATL-NRT planned distance. DAL 296 NRT-ATL
ATL-NRT Round Trips Per Year: Based on 13.7 hours west bound, 2 hour turn, 12.0 hours return, 4 hour turn, total 31.7 hours or 276.5 flights per year. Totals 25.7 hours per turn, 7107 hours per year, 19.46 hours per day.
Fuel Price Per Gallon: $3.20/gal based on Delta 4Q 2012 Earnings Call Transcript, Paul Jacobson estimate for March 2013 Fuel Price of $3.15 to $3.20/gal.
Fuel Burn: WB Master Dataset Comparison. Not adjusted for seating, estimated fuel burn on 6000nm ATL-NRT flight is 283,954 lbs for 744 vs 210,996 for 777. Equals 41,961 USG for 744 and 31,180 for 777. Equals 6.99usg/nm for 744 and 5.197 for 777. Equals 0.0186/gal/asm for 744 and 0.0168/gal/asm for 777.
B773 Cargo Capacity: B77W Cargo Capacity page 2, 44 LD3 containers plus bulk.
B774 Cargo Capacity: B744ER Cargo Capacity page 3, LD1/LD3 single fuel tank.
Cargo: 6.7 cu.ft. from averages per passenger estimate from non-sourced data, 10lbs cu.ft. average from same source.
Cargo Price: Delta Winter Cargo Rates. Estimate average of heavy <100kg and > 100kg price for ATL-NRT.
Pricing: Boeing Financing Options
Last edited by forgot to bid; 02-24-2013 at 10:52 PM.
02-24-2013 | 10:40 PM
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Here's a thought about 10 new 77Ws vs 11 used 744s rumor, I've got some numbers to play with thanks to the fact these are very popular jets and people love to post data on them.
[indent]
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each.
[indent]
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each.
as your analysis hinges on the list price, any chance you could plug in $200M for the 77W?
if it were a large order 50% off seems feasible, so the $200m would be conservative.
The Mystery of Flight: How Much Airplanes Cost, the Secret Price of a Jetliner - WSJ.com
02-24-2013 | 10:48 PM
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From: window seat
Not to punch a hole in your collective bubbles, but the reason DAL doesn't do the flying is you can't compete with the Alaska frequent flyer program on the West Coast. What you're seeing is a FEW added flights to try to suck up some of the overflow. I'm sure Tilden and Anderson agreed to the plan a couple months back when they met in PDX to inaugurate your PDX/Amsterdam service.
And again when he came to SEA to kick off the new Asia service. Your boss is no dummy. He has no intention of seriously competing on the West Coast when he's getting the international feed for free.
But, you guys keep smoking that pipe dream that your LAX operation is going to change any route map colors. That GREEN in your Inflight Magazine is GREEN for a reason. Its MONEY pouring into DAL coffers without having to have metal and labor on the routes.
And again when he came to SEA to kick off the new Asia service. Your boss is no dummy. He has no intention of seriously competing on the West Coast when he's getting the international feed for free.
But, you guys keep smoking that pipe dream that your LAX operation is going to change any route map colors. That GREEN in your Inflight Magazine is GREEN for a reason. Its MONEY pouring into DAL coffers without having to have metal and labor on the routes.
02-24-2013 | 10:50 PM
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From: window seat
They know we like to check our schedules every 10 seconds especially while on reserve. Sometimes they put things on there "knowing" you will check it. Just make sure you keep them honest with things like that.
02-24-2013 | 11:00 PM
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From: Light Chop
FTB, thank you!
as your analysis hinges on the list price, any chance you could plug in $200M for the 77W?
if it were a large order 50% off seems feasible, so the $200m would be conservative.
The Mystery of Flight: How Much Airplanes Cost, the Secret Price of a Jetliner - WSJ.com
as your analysis hinges on the list price, any chance you could plug in $200M for the 77W?
if it were a large order 50% off seems feasible, so the $200m would be conservative.
The Mystery of Flight: How Much Airplanes Cost, the Secret Price of a Jetliner - WSJ.com
But $200M, 100% LF and 100% cargo and $40M 744s?
$64M advantage 744. That's roughly what, $6M each 744? What would the difference in maintenance be? Probably $6M or more. So there the two planes are close together in numbers and the 77W as a new plane would make far more sense unless you couldn't get them.
Given the sales success the 77W is right now and the plausibility behind Boeing not budging on numbers (hey, 787 has got to be killing them) I'd wonder what that price for a $315M 77W would be?
Plus, the 744s can be here sooner probably if Boeing is having another airline trade them in for the 748 which have open slots.
All a guess on my part. I just wonder, when RA and EB refuse to budge on how much they're willing to pay, does the Boeing sales rep say "I've got to go talk to my manager, I'll be right back." "Okay, my manager says, $310M and they'll take a trade in on your A330s if you purchase more 787s... no?... okay, let me talk to my manager... I can tell a monthly payment is the big factor for you..."
02-24-2013 | 11:03 PM
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From: window seat
Here's a thought about 10 new 77Ws vs 11 used 744s rumor, I've got some numbers to play with thanks to the fact these are very popular jets and people love to post data on them.
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each. We're looking at $3,000M for new 77Ws and $440M for 744s. A net difference of $2,560M.
3. Thus, add everything up and with 100% LF and 100% full cargo 100% of the time on 270 round trips per jet per year between ATL-NRT and the 744 fleet makes you about $183M before maintenance is calculated.
4. Drop to 80% LF and 50% full cargo, and 744 fleet makes $378M more in passengers and saves you $307M in rent. The 77W would save you $109M in fuel and make you $243M more in cargo. The net result is the 744 fleet now makes you $332M more than the 77W fleet. That cargo is absolutely needed on the 77W to close the large gap with such different acquisition prices.
So, thats an excel sheet gone mad. But, basically the cost to acquire the 744 fleet saves you hundreds of millions per year.
**If the acquisition cost were the same per copy, the 77W wins by about $10M on a 80% LF and 50% cargo and by $159M if you fill it up every leg. **
Simple estimation. Nothing more. But I'm going to have to say I could believe that Delta would agree to this kind of a deal and that, per previous post, Boeing would offer a trade-in to someone and we'd take their 744s.
Sources:
B773 List Price: Boeing List Prices New
B744 Used Price: Guess
Fleet: Assume .5 77W in maintenance and 1 744 in maintenance making the fleet numbers based on 9.5 77W and 10 744s.
Acquisition Option: Cash. Lease would be approximately 1% of
ATL-NRT: Ticket Price ATL-NRT Ticket Price
ATL-NRT: Daily service. 2 flights per day, assume 1 744 unavailable for maintenance and .5 77Ws unavailable for maintenance.
ATL-NRT: DAL 295 ATL-NRT planned distance. DAL 296 NRT-ATL
ATL-NRT Round Trips Per Year: Based on 13.7 hours west bound, 2 hour turn, 12.0 hours return, 4 hour turn, total 31.7 hours or 276.5 flights per year. Totals 25.7 hours per turn, 7107 hours per year, 19.46 hours per day.
Fuel Price Per Gallon: $3.20/gal based on Delta 4Q 2012 Earnings Call Transcript, Paul Jacobson estimate for March 2013 Fuel Price of $3.15 to $3.20/gal.
Fuel Burn: WB Master Dataset Comparison. Not adjusted for seating, estimated fuel burn on 6000nm ATL-NRT flight is 283,954 lbs for 744 vs 210,996 for 777. Equals 41,961 USG for 744 and 31,180 for 777. Equals 6.99usg/nm for 744 and 5.197 for 777. Equals 0.0186/gal/asm for 744 and 0.0168/gal/asm for 777.
B773 Cargo Capacity: B77W Cargo Capacity page 2, 44 LD3 containers plus bulk.
B774 Cargo Capacity: B744ER Cargo Capacity page 3, LD1/LD3 single fuel tank.
Cargo: 6.7 cu.ft. from averages per passenger estimate from non-sourced data, 10lbs cu.ft. average from same source.
Cargo Price: Delta Winter Cargo Rates. Estimate average of heavy <100kg and > 100kg price for ATL-NRT.
Pricing: Boeing Financing Options
1. Say the 77W costs nearly list price, $300M, and the used 744s cost $40M each. We're looking at $3,000M for new 77Ws and $440M for 744s. A net difference of $2,560M.
What is the opportunity cost on $2,560M in cash if we went that route?
2. Or how long would it take the 10 new 77Ws to best the 11 744s because of better fuel, maintenance and cargo capacity? - Passengers: DAL 744 seats 48J/42Y+/286Y for 376. American 777-300ER is at 8F/52J/30W/220Y for a total of 310 seats. Difference, 66Y class seats. Assume all of the routes of the 744/77W are ATL-NRT in distance, time and price. Assume F/J/W/Y+/Y seating income is the same $2100 average, the difference of 744 x 10 jets x $2100 x 276 round trips = $2,183M vs $1,710M for 9.5 77Ws. A $473M advantage for the B744 "Spackler Jets".
- Maintenance: What if Delta negotiates with Boeing to mitigate the cost difference between the two as much as feasible? Without any data to work with and that possibility there, I call this a push.
- Fuel: Based on this WB Master Dataset Comparison"] I estimate that the 77W would best the 744 on a ATL-NRT type flight with a 25.7% better fuel burn. Or, the 77W would burn 72957lbs/10781gal less fuel at $3.20/gal the 77W saves $34,500 each leg or $19M a year. Multiplied by 9.5 77W and 10 744, the 744 runs $371M in fuel and 77W $262M or the 77W saves $109M in fuel.
- So the 744 at this point would still be up around $364M given its $473M seating advantage but -$109M loss in fuel to the 77Ws superior fuel burn. Note, while the 77W may best the 744 with a 25.7% lower fuel burn, when adjusted for fuel burn per ASM, the 77Ws advantage falls twenty percentage points to 9.8%. The 744 simply has more ASMs to spread the fuel cost over.
- So that leaves cargo. Estimated 7,640 cu.ft. for the 77W and 5,655 cu.ft. per 744. At 6.7 cu.ft. per passenger bag, that leaves the 77W with a net of 5,563 cu.ft. of cargo and 744 with 3,135 cu.ft.
At 10 lbs per cu.ft. the 77W will carry 55.6K lbs of cargo over 744 31.4K. Basically, the 77W has 77% more cargo capacity.
At $4.10/lb with 100% LF the 77W makes $228in one leg vs $129k for the 744. Multiplied by 276 round trips/553 legs and a fleet of 9.5 77Ws and 10 744s, the new 77W fleet brings in $1,198M in cargo vs $711M for the 744. Advantage 77W by $487M a year.
- Lease: Say you leased the two fleets at the standard 1% per month of the aircraft price or $440K/mo for 744 and $3M/mo for 77W. With a 11 744 fleet and 10 77W fleet, you're looking at $58M in annual lease cost for 744 vs $360M for 77W, a 744 cost advantage of $307M.
3. Thus, add everything up and with 100% LF and 100% full cargo 100% of the time on 270 round trips per jet per year between ATL-NRT and the 744 fleet makes you about $183M before maintenance is calculated.
4. Drop to 80% LF and 50% full cargo, and 744 fleet makes $378M more in passengers and saves you $307M in rent. The 77W would save you $109M in fuel and make you $243M more in cargo. The net result is the 744 fleet now makes you $332M more than the 77W fleet. That cargo is absolutely needed on the 77W to close the large gap with such different acquisition prices.
**If the acquisition cost were the same per copy, the 77W wins by about $10M on a 80% LF and 50% cargo and by $159M if you fill it up every leg. **
Simple estimation. Nothing more. But I'm going to have to say I could believe that Delta would agree to this kind of a deal and that, per previous post, Boeing would offer a trade-in to someone and we'd take their 744s.
Sources:
B773 List Price: Boeing List Prices New
B744 Used Price: Guess
Fleet: Assume .5 77W in maintenance and 1 744 in maintenance making the fleet numbers based on 9.5 77W and 10 744s.
Acquisition Option: Cash. Lease would be approximately 1% of
ATL-NRT: Ticket Price ATL-NRT Ticket Price
ATL-NRT: Daily service. 2 flights per day, assume 1 744 unavailable for maintenance and .5 77Ws unavailable for maintenance.
ATL-NRT: DAL 295 ATL-NRT planned distance. DAL 296 NRT-ATL
ATL-NRT Round Trips Per Year: Based on 13.7 hours west bound, 2 hour turn, 12.0 hours return, 4 hour turn, total 31.7 hours or 276.5 flights per year. Totals 25.7 hours per turn, 7107 hours per year, 19.46 hours per day.
Fuel Price Per Gallon: $3.20/gal based on Delta 4Q 2012 Earnings Call Transcript, Paul Jacobson estimate for March 2013 Fuel Price of $3.15 to $3.20/gal.
Fuel Burn: WB Master Dataset Comparison. Not adjusted for seating, estimated fuel burn on 6000nm ATL-NRT flight is 283,954 lbs for 744 vs 210,996 for 777. Equals 41,961 USG for 744 and 31,180 for 777. Equals 6.99usg/nm for 744 and 5.197 for 777. Equals 0.0186/gal/asm for 744 and 0.0168/gal/asm for 777.
B773 Cargo Capacity: B77W Cargo Capacity page 2, 44 LD3 containers plus bulk.
B774 Cargo Capacity: B744ER Cargo Capacity page 3, LD1/LD3 single fuel tank.
Cargo: 6.7 cu.ft. from averages per passenger estimate from non-sourced data, 10lbs cu.ft. average from same source.
Cargo Price: Delta Winter Cargo Rates. Estimate average of heavy <100kg and > 100kg price for ATL-NRT.
Pricing: Boeing Financing Options
Did you also calculate the cost of financing and insurance, both directly as well as secondary, from the lower costs of all our other financing we would get from having that much less debt in the first place?
I just did all that again with those figure adjustments and came up with 7. What did you get?
02-24-2013 | 11:03 PM
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From: Light Chop
And your boss is no dummy either. I'm sure he knows if he pursued a war of attrition with a mega carrier he'd lose, hard. Neither wants that, so its in his interest to play nice. The trend vector, wherever it is now, will move though, and probably fairly soon. There's a lot going on and Alaska and their mythological loyalty and frequent flyer program are far from immortal backstops against the reality of competition and/or consolidation.
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