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Quote:

Originally Posted by stage5 (Post 1359639)

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

Okay, first, I screwed with the post over and over since I posted it. i think I have the numbers correct now.

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..."

Quote:

Originally Posted by forgot to bid (Post 1359638)

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.

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.

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

http://cache.gawker.com/assets/image...l-hunting2.jpg

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?

Quote:

Originally Posted by gloopy (Post 1359642)

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.

Can Alaska customers use miles on Delta? Best I can tell yes and once you get hooked on that option as a Alaska HVC...

Alaska Airlines

Delta Air Lines

Earn Mileage Plan™ miles when you travel on on Delta Air Lines and Delta Connection carriers to 354 destinations in 65 countries. Delta operates flights with First, BusinessElite (Business), and Economy classes of service. Learn more about WHERE DELTA FLIES (HINT, EVERYWHERE YOU WOULD WANT TO GO) and book your next flight at delta.com.

Just loaded in the system- daily LAX-SJO-LAX in a 757 starting Dec 19. Redeye down there and morning return leg.

Bros before eskimos!

That's quite the terrain to deal with after an all nighter!

Quote:

Originally Posted by johnso29 (Post 1359564)

I guess that is an option. But if he saw it by logging on to icrew and viewing his schedule, then how will he justify not showing up? :o

Nevermind... I just don't get enabling scheduling to not do their job properly.

Quote:

Originally Posted by forgot to bid (Post 1359609)

Also, I can see where Boeing would offer us 744s to, imho, help another customer move into those 748s slots they're not filling. After all didn't Boeing buy A330s from SQ to help them into 777s? I'd bet those Airbus came at a good price to whoever bought them from Boeing.

Maybe we can get some good deal like we got with the 717s. Have someone convert them for us and all that. I think once the 787s start flowing again, there will be some 767s and 777 available too.

Quote:

Originally Posted by iaflyer (Post 1359680)

Maybe we can get some good deal like we got with the 717s. Have someone convert them for us and all that. I think once the 787s start flowing again, there will be some 767s and 777 available too.

Good point. Once the 787s flow maybe good 763s become available at a good price and we're there like a bunch of hyenas asking "you done with that?"

http://images3.wikia.nocookie.net/__.../ea/Hyenas.jpg

Quote:

Originally Posted by johnso29 (Post 1359564)

I guess that is an option. But if he saw it by logging on to icrew and viewing his schedule, then how will he justify not showing up? :o

Seeing it on your schedule is not considered notified if he did not acknowledge it. From "When Scheduling Calls"

Quote:

Originally Posted by Whidbey (Post 1359634)

Thanks for the analysis Sailing.

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?

I think you are missing a couple of things. First Alaska if I recall puts more passengers on our flights then we do on theirs but it is still small total numbers. I do understand that small numbers of passengers are often the difference on the viability of a international route but losing the Alaska option does not mean you lose the passenger on every flight. You also have to keep in mind that passengers on most airlines have always been able to interline book. Used to be common on almost every flight. You could still book Alaska even without a codeshare agreement and even interline your bags.
As far as going it alone Delta is simply not in a position to challenge Alaska. We don't have the gates at the moment. That may change in a few years with a new terminal in the works but it remains to be seen how many gates it will have. Even if we get the gates you are talking a long term blood bath. Alaska has pretty deep pockets to survive a blood bath however Delta has a bigger network to spread the losses. Call that a draw. Alaska has a better product inflight so that gives them some advantage. I don't think RA will go to war with Alaska. Time will tell.

Quote:

Originally Posted by forgot to bid (Post 1359638)

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.

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.

Nice overall picture of the option between the two aircraft. I think however you are off on two points. Maintenance on a 4 engine older design is going to be far higher then on the 777. An order of magnitude higher. Boeing is not going to cover it. The second is purchase price. Delta still holds a large number of 777 delivery positions. Typically Delta pays about 60 percent of list price so that puts the price in the 180 million range. Even with the demand for the 777 they are being sold at a deep discount to list price.