Trans States signs LOI for up to 100 MRJs
 

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Trans States firms up order for up to 100 MRJs
By Kerry Reals
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US regional operator Trans States Holdings has firmed up its letter of intent for up to 100 Mitsubishi MRJ jets.


The carrier has signed a firm deal for 50 MRJs plus 50 options.
Deliveries are scheduled to begin in 2014.


source: Trans States firms up order for up to 100 MRJs

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More:

Mitsubishi Closes On Big U.S. RJ Deal : AINonline


Mitsubishi Closes On Big U.S. RJ Deal

By: Gregory Polek
February 1, 2011
Aerospace Industry, Regional Airlines, Air Transport and Cargo Aircraft
St. Louis-based Trans States Holdings (TSH) signed a firm order for 50 Mitsubishi Regional Jets and secured options on another 50, Mitsubishi Aircraft announced today during a ceremony held in Nagoya, Japan. The sides finalized and executed the so-called definitive purchase agreement on December 27, almost 15 months after TSA signed a letter of intent to become the first U.S. customer for the 76- to 88-seat family of regional jets.

“We have been very excited about the MRJ program for a long time, and we are extremely pleased to conclude this major order on December 27 last year reaffirming the 100 aircraft commitment we made with our LOI,” said TSH president Rick Leach during today’s ceremony in Nagoya. “Since that launch order, we have learned a lot about the quality of the Mitsubishi Aircraft team and the quality of the MRJ aircraft. Both have given us great confidence. In addition, many good things have happened with the MRJ itself. Mitsubishi Aircraft has entered the production drawing phase for the MRJ and continues to proceed with the manufacturing process.”

Accompanied by Mitsubish Aircraft president Hideo Egawa, Leach also visited the Mitsubishi Heavy Industry’s Tobishima Plant, where the project’s various partners expect final assembly of the MRJ to start soon.

The start of MRJ production—marked by the cutting of the first metal by MHI on September 30--signaled the successful conclusion of last summer’s detailed design review, during which MHI froze the final configuration of the 88-seat MRJ90 and reached conclusions about the changes needed for the 76-seat MRJ70 and the still unlaunched 100-seat MRJ100X. Following MHI’s lead, project partners launched manufacturing of the various components for which they have taken responsibility, based on production drawings now in process.

Plans call for the MRJ90 to fly for the first time in 2012, gain Japanese certification in late 2013 and enter airline service during the first quarter of 2014. The MRJ70 would likely gain certification approximately a year later. The MRJ100X remains in the preliminary design phase. Still lacking a customer, that airplane likely won’t reach the market until 2016 or 2017, depending on when the company decides to launch the program.

Meanwhile, BAE Systems last year signed a multi-year agreement with Mitsubishi Aircraft under which it will initially provide engineering development and integration services related to flight-test equipment and systems for the Pratt & Whitney PW1200G-powered aircraft. The contract complements another deal under which a team from BAE Systems’ Regional Aircraft business at Prestwick, Scotland, supports engineering on a number of work packages, including the powerplant, pylon, nacelle, auxiliary power units and fuel systems.

With the TSA order, Mitshubishi Aircraft has collected firm orders for 65 airplanes, including fifteen 88-seat MRJ90s from launch customer All Nippon Airways, which also holds options on another 10.


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Just as a friendly reminder, Delta sold Compass Airlines to Trans States for $20.5M in 2010.



Delta to sell Mesaba and Compass for $82.5 million

I hope uncle Hulas is biting off more than he can chew with this one and that he can't find any code share to fly them under. I would love to see that scum sucker lose his shirt.

It wouldn't surprise me if the regionals bought these airplanes and leased them to the mainline. A lot of majors can't afford the additional debt load like some regionals can.

Bingo. They would not necessarily lease them, but the mainline would pay a "fee" to operate them. Cash flow the payments and keep the debt off the mainline ledger.

That is the great savings of outsourcing. Dividing the pilots is only an added benefit.

How a major chooses to organize their balance sheet is their business, but who flies the jets is the business of the pilots.

The only way a fake virtual airline could get the credit to actually get planes to lease to other airlines to operate would be through the credit chain generated by rock solid long term deals. I really doubt the investment community is so ignorant and stupid that they can be so easily tricked into thinking an airline can operate brand new planes on a lease as magically "debt free". If it is done that way, every single red cent of the debt associated with DL doing it themselves will still be DL debt because DL will still be 100% committed to it for the exact same dollars, years and terms...PLUS a guaranteed profit for the bogus service to begin with. IOW DL will still bear 100% responsibility for the debt plus the additional overhead of the fake shell corporation that offers nothing other than the illusion of accounting trickery that not even the dumbest first year MBA 101 student would fall for. I really don't think the investment community is that ignorant as to fall for such a simplistic and sophomoric trick.

Regional airlines have been operating RJ's purchased by Mainline for years.

Of course. But they have sweetened the pot with outrageously cheaper labor and overhead. A scheme whereby we lease it out to pretend to avoid debt that we will have to pay for 100% anyway and still do it at 100% mainline overhead makes no sense unless the investment/credit community is really that stupid. If they really are that stupid, why haven't we been doing this with all our aircraft for decades?

Isn't this thread in the wrong Forum? Shoud it not be in the Regionals Section?

So TSA will purchase an aircraft that hasn't been built for a customer that doesn't exist, but they won't settle the outstanding and extremely expired pilot contract at TSA. I hope the folks at the Majors scope this BS out of existence. I bet Leach sits in coach while traveling to Japan. Not bad for an ex-ramper, now CEO of a totally crappy company. Guess they'll need to "refocus" some more to get a codeshare agreement to fly these EM-AR-Jay's. Good luck. How do you say pencil whip in Japanese?

The word is that Compass will fly these jets and because of the scope and flow all eligible Compass flow pilots will immediately go to mainline.

I tried reading this four times and ????

These jets WILL NOT be operated by anyone dba Delta Connection. Ain't gonna happen.

I'm gonna second that TSA is a regional carrier and this should be posted in the regional forum.

I posted it under major for more reasons than one.

So as to have this discussion ^^^ since TSA now owns Compass. An airline many DAL pilots are not happy was sold off.

The other reason is what size did TSA buy? And who are they buying it for? Is it themselves? If so, did UAL, USAir and DAL just fund a competitor say in STL? Which means this isn't a regional airline, this is budding national or LCC they're trying to form.

And most major pilots won't go over to the regional thread so they'll miss out on the news.

From ATW:
The LOI was finalized with little fanfare on Dec. 27, 2010, according to the MRJ corporate newsletter that did not identify whether TSH ordered the 70- or 90-seat variant of the aircraft.

In addition to the engine order, Pratt said TSH signed an exclusive 12-year maintenance contract covering the powerplants.


"We believe that the MRJ is a game-changing regional jet with its incredibly fuel efficient next generation Pratt & Whitney PurePower geared-turbofan engines, together addressing the vital needs of the environment, as well as the critical needs of passengers and airline operators," TSH President Richard Leach said in a statement.

If that thing is a regional jet, I am an astronaut.

BINGO! I was waiting to finish reading all the posts, but you beat me to it. Can we finally drop the -RJ from these aircraft designations. There is nothing "regional" about these airplanes. I know it's been said many times, but it bears repeating. These aircraft (and all the others for that matter) belong at mainline.

The question is which pilot group do they think they can sell this turd sandwich to? I doubt they're going to run their own op given the history of these things. Even RAH with a strong balance sheet is having trouble with their Midwest abortion in MKE.

LOL!!! There is nothing "Regional" about "Regional" anymore! Unless you want to call the U.S., Mexico, Caribbean and Canada...The North American Regional. Operationally, there is no difference between Mainline and "Regional" except flying the NAT Tracks. The bread and butter for airlines is flying overseas and as long as they can keep their cost down flying domestically...they will. Using "Regionals". Scope is gone...all you can do is hang on to what you have now and hope that they order more airframes for mainline. If feel sorry for the bottom 25-50% of mainline seniority list, I guess the only hope for progress is retirement because all the growth seems to be outsourced. This whole deal stinks of corporate slime. TSA had these jets ordered way before Compass got sold. But somehow Compass got sold to TSA. Sounds like a game of corporate chess...now to figure out their next move and figure out how management is trying to blur the line between Major and Regional. As long as pilots can do this, you can be stepping side by side with management....we are still to far away from being a step ahead. Too much work needs to be done with unity. Rant over.

Gloopy, it has been done for a few decades now. DAL owns jets, we then let a regional operate them, which in turns pays us a "fee" for this jet, which covers the lease. It does go farther than that, the fact is that after they pay us that "fee" we in kind pay them a them this fee back as an expense of the ASA. This is for the jet we own.

For the jets that the third party carrier owns, we basically pay the lease payment in a "fee" as part of the ASA. DAL is still committed though the ASA to the lease payment and committed to it by that agreement, but now it is a cost item and not one that hits DAL's debt side of the ledger. It is a commitment and part of the operational expense of the ASA.

It is accounting 101. The debt from those jets does not hit delta's debt ledger.

Bringing this forward. Could they do this with new metal? This time doing it with the regional becoming a debt holding company? Maybe. They could also use other outfits as well. Point is that you can take the debt off the balance sheet, make it a cash flow expense item depending on how it is allocated. Yep, delta loses the depreciation of an owned asset. It is not the smart answer. It is always better to own your assets and take the depreciation.

It could also be that TSH just wants to get in line for all of these jets so they can sell the slots at a premium to their mainline partners.

Yes, mainline seniority list pilots flying at the regionals operating 100 seat jets. From a business perspective this makes a lot of sense, especially if all the liability falls on the regional.

Too Funny, Shell games, liability, debt, assets, a bunch of young Trumps we have here, why are you all pilots? (I know, some come from money) Those jets are coming because of the future scope concessions from mainline, period. With what I have seen, I have no reason to doubt it. Sorry.

remember, just because you sign an LOI to buy, doesn't mean you'll ever take delivery....

Just ask a DAL 737-800 pilot.

Its no longer an LOI it is a firm 50 orders with 50 more options. I still dont think they will ever take delivery. They will most likely sell the slots off when the time comes. 2014 is pretty optimistic for a plane that has not even come off the design board. (ask boeing)

Like I said earlier, they could have done it just to be the first in line. If the jet proves successful, those slots will be worth a decent amount of money if sold.

Guess we'd better polish up our resumes. :rolleyes:

Somehow I get the feeling you haven't really seen much of anything...

Got it all figured out, eh?

Let's just ignore history and hope for something better, that should work

Who's ignoring history? I conclude that enough of us have learned and gotten hosed by scope sales in the past to never sell scope again.

You think that something that has happened in the past will simply repeat itself without looking at the big picture.

Problem is that if the mainline willfully sells 100 seat flying, these same pilot will knowingly be selling their own jobs. Not sure if I see that happening. Not even for money. Everyone that I have talked to understands that after the last decade of stagnation.

That is $4.5 million more than ALPA sold those Northwest Pilots' jobs to management for in concessionary negotiations. But hey, I got a stock award out of the merger. :cool:Maybe, but... Two points:

* Cancellation penalties. TSA had better be bankrupt if they default on the contract. Pratt will be building engines, gear struts will be forged, the supply chain spins up 12 to 18 months before the thing comes together. They don't work for free.
* What is the history of mainline order cancellations contrasted with those at regional carriers? If past performance is a predictor of future results, I'd place bets with the regional management team. They've been right more often than not.

It appears to me some parties are placing big bets that some version of 100 seat flying gets outsourced. Do not know, what they know. But usually they place bets with inside information. My understanding is that proposals for 100 seat jet operations are the buzz amongst the executive offices of a number of small narrow body jet operators.

Now my question, could these be a replacement for the E170/175's? If so, Delta management was right in stating the airplane had a limited economic life. Also, if these next gen narrow body jets are truly a "Guppy Killer" ... SWA might be a target. They've got a bit of blubber and TSA's always been a poacher.

After Go Jets, TSA should be ALPA's enemy #1, but we no longer function with that level of moral indignation.

How ironic would it be if TSA was contracted to fly MRJ's for RAH? :D

Honesty it would be horrible. Even though we like our "Red Meat Moments" and the LUV pilots expense, remember that this industry and these scope clauses has proven to be a set of dominoes set in close succession.

I do not wish that on any pilot group. Period.

I both hope and think you are right on that. However it will require significant diligence because the carrot will be huge and the packaging very attractive. I think every pilot can put 2 and 2 together and realize that if the 100 seater is outsourced, there won't be any 101 seaters at mainline. Far from it. The traditional outsource seat gap will mean the A319 and 320 and 737, MD88/90 will be drastically reduced with mega furloughs and downgrades and subsequent pay cuts and across the board concessions for those remaining as the foundation for their pay and work rules wipe away any temporary cookie they would get as a result of what before could be labeled ignorance but can now only be called outright treachery. Even in another Chapter 11, there are no pensions to cut, which was the single biggest hammer the last time.

All eyes on CAL/UAL. Even if they fold and allow the 70's, if they still keep the 76's locked out and limit the 70's, DL and AA will be on very solid ground WRT scope. There is absolutely no contract I will sign off on with a single seat of scope relief not because I am righteous or uber moral, but rather because every penny of initial bribery management may offer to sell a given amount of scope will have to be paid back with mob loan levels of interest in direct proportion to what was sold, because the very act of selling scope sows the seeds of your own economic devastation. Its like selling both your kidneys for 100 grand, only to have to go out and pay cash for 20 grand worth of dialyses every year for the rest of your life. Pain and suffering included.

this to show how quick things can change smh

Expressjet was dangling the MRJ carrot for a while too. Had posters up in the crew rooms and everything for a plane that was 5 years out.

I don't know if signing for MRJs and going under 9 years later is a "how quick things change" kind of situation.

The funny part is the MRJ is still a long way from service.