United Airlines 4th Quarter Results

Tough news for BBD, but not surprising after some recent news articles came out saying UA was interested in 737-700's. A few lingering questions on the order though, maybe @Seggy has any idea?

When UA started the process, it seemed like they were following the Delta trajectory of picking up new small narrowbodies (E190/CS100) as a 100-seat platform, which would also help add incremental 76-seaters in the regional fleet (per the pilot contract). It doesn't look like the 737-700 fits this bill - unless:

(1) the pilot contract meaningfully changed, and UA could retire 50-seaters and add more 76-seaters without a new small narrowbody? (unlikely?)
(2) UA has decided they don't need more 76-seaters, they are content with just phasing out 50-seaters and upgauging via the existing 76-seat fleet + new 737-700's
(3) an order could still be coming for the "new small narrowbody" to allow for incremental 76-seaters

ClarkGriswold said:
http://www.theglobeandmail.com/repo...-of-bombardier-c-series-jets/article28256722/


Ehh time will tell
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Nice quote from RA on the call the other day, but I wouldn't read a whole lot into it. Everyone acknowledges that the CSeries is a well designed airplane, best in-class - to say otherwise would show a gross lack of basic aircraft design principles. CSeries an unfortunate victim of poor current market dynamics (low fuel) and previous mismanagement (failing to use other cash cows to support the development/ramp of CSeries). With the E190's already coming I'd be surprised if BBD could get a foot in the door at DL now, but maybe this UA news will motivate them.
 
Ecl!pse said:
CSeries an unfortunate victim of poor current market dynamics (low fuel)
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I was reading an article in the latest Economist that the airlines are actually continuing purchasing more fuel efficient aircraft because of bad hedge contracts that have come due. They said the airlines have about 20% of the fuel hedged at higher prices and that the newer aircraft will help offset those bad hedges.
 
Cessnaflyer said:
I was reading an article in the latest Economist that the airlines are actually continuing purchasing more fuel efficient aircraft because of bad hedge contracts that have come due. They said the airlines have about 20% of the fuel hedged at higher prices and that the newer aircraft will help offset those bad hedges.
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I don't think its as much dependent on bad fuel hedges, per se, as buying new fuel-efficient aircraft is effectively another form of fuel hedging - look at Delta's latest fleet moves, taking on many used aircraft, even with their massive hedge losses. It all depends on the individual airlines fleet strategy and capabilities. If you're a carrier that has limited resources to bring in used/NG equipment, then ordering new is usually the simpler method (and prevents against future oil shocks). But if you're like Delta/United/IAG, and can handle bringing in both new and old equipment, it doesn't make sense to spend the extra money for fuel efficient aircraft, as with fuel at these levels it will take much longer to recoup that investment. Instead, buy cheap used aircraft (or cheap, out-of-favor new aircraft in the case of UAL), put those savings to work today in other places (internal investments, buybacks, balance sheet restructuring, etc), and revisit the discussion down the road as the fuel picture becomes more clear.
 
Nark said:
I never have flown a bombardier product with wings. God willing, I never will.

However, their trains and sleds are fine in my book.
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I dunno their IAH train killed someone.... Might have been user error.
 
L-16B said:
How much extra fuel burn is the small 73 versus an embraer?
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It depends on the airlines configuration, but I would say generally the 737-700 burns probably ~15-20% more gallons/hr than the Embraer. From a gallons/seat or gallons/ASM perspective, though, the -700 is more efficient as it carries 20 - 40% more seats (98-100 seats on the E190 vs. 118 - 143 seats on the 737-700).
 
I dunno, the press videos I've seen for the C-Series look impressive and I hope it's a good airplane. If it's a first rate jet, I'd like to see it be successful.
 
Fuel hedge losses are expected at this point. Commodities have imploded. That being said, compared to past costs (2014-2009) fuel is cheap. Future hedges should be fruitful. But that's fuel. In terms of aircraft, it's now an issue of interest rates on loans. Boeing got their deals. Bombardier is in a pinch. That means a sweetheart deal on the C-series to keep the company afloat and bring in new business by performance. I'd expect both DL and Alaska to strike C-series deals in the next 3 months.
 
higney85 said:
Fuel hedge losses are expected at this point. Commodities have imploded. That being said, compared to past costs (2014-2009) fuel is cheap. Future hedges should be fruitful. But that's fuel. In terms of aircraft, it's now an issue of interest rates on loans. Boeing got their deals. Bombardier is in a pinch. That means a sweetheart deal on the C-series to keep the company afloat and bring in new business by performance. I'd expect both DL and Alaska to strike C-series deals in the next 3 months.
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Alaska? And abandon the single fleet type?
 
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