B6 to Sell FIVE A-320s

[Lear70]

not only do you not understand business, you dont even know what is going on in the industry.

Ohhh, OK. You're right. That's why my portfolio hasn't had a losing quarter in the last 4 years.

so all these majors getting rid of a lot of aircraft to focus on profitable routes and lower their payments for crews, aircraft leases, etc are just doing it for kicks? Try again.

Ummm... maybe it's YOU who should try again. Try to actually READ what I posted you ignorant pr*ck.

I specifically stated that IF B6 was getting rid of those aircraft and concentrating on redeploying their aircraft ON PROFITABLE ROUTES, that it would be a good move. Or did you miss that part of my statement? Idiot.

you get your yields up by lowering your costs, focusing on profitable routes, and having less airplanes to fill up. Did you get your MBA from ERAU?

No, but I did stay at a Holiday Inn Express last night... which is obviously a better place than where you obtained yours. Here's a newsflash moron:

YOU DON'T GET HIGHER YIELDS FROM HAVING FEWER REVENUE GENERATING ASSETS. Your exact statement said "you get your yields up by...having less airplanes to fill up". So where's the revenue coming from? Did you say something about rocket science, genius?

Higher yields come from increased revenue. Lower costs are PART of the equation, but revenue is the winner every time when it comes to the yield game. Since we can't control oil prices, the 2nd biggest problem is depressed ticket prices (which is the revenue problem we're having now in this industry, in case you hadn't noticed).

Or maybe you're just a mangement puke preaching lower costs through concessions?

 

[freightdogfred]

Well, I ain't no rocket scientist, my portfolio goes up and down with the stock market, I didn't attend any of the military academies, I probably ain't half as smart as all you fellars here on flight info, but the last 5 jobs I rode into the dirt started "cutting costs by selling airplanes".

 

[IB6 UB9]

YOU DON'T GET HIGHER YIELDS FROM HAVING FEWER REVENUE GENERATING ASSETS.

Why is it so hard for some of you to understand that the airline is not down-sizing? The airline is still growing...just at a slower rate. If you fly aircraft for a living surely you can comprehend this. It's like adding, we are just using smaller numbers for a while to eventually get the same sum. Is it..."I just want them to fail so bad..."?

 

[DIAMONDDD]

Ok first of all Neeleman may be Mormon, but I doubt he has 12 wives, thats just low and uncalled for. Second Raymond Burr was Perry Mason and Ironside, Donald Burr ran Peoples Express.

Are you sure?













( I wish there was a sarcasm font)

 

[arthompson]

yeah I know. I was just pointing out what kind of morons post on this board.

 

[DH2WN]

The bills come due at some point and whether Needleman will have the cash on hand at the time or pull a Kerry Skeen and excerise his "genius" to put the finishing touches on the B6 future.

I was thinking the same thing. Selling 5 aircarft will just increase their debt load though it will look good on the balance sheet for 1 or 2 quarters.

I see a little independence air, people's express, and midway in B6's future.

 

[starvingredtail]

I was thinking the same thing. Selling 5 aircarft will just increase their debt load though it will look good on the balance sheet for 1 or 2 quarters.

I see a little independence air, people's express, and midway in B6's future.

WTF? Getting rid of 5 320's profitably while emphasizing 190 growth and still taking new 320's at the new competitive rates (caused by all the legacy bk's). Might as well throw in the towell. DH2WN--The noted and acclaimed financial guru, citing another genius in financial dynamics, 3210lt, has looked into his crystal ball and after exhausting research has predicted the demise of B6. Might as well have the auction tomorrow.

 

[clickclickboom]

huh?

I was thinking the same thing. Selling 5 aircarft will just increase their debt load though it will look good on the balance sheet for 1 or 2 quarters.

Can someone please explain how selling 5 aircraft will increase debt load?

Read on another post that AA is bailing on 19 757's oh yeah i forgot that is smart business for every company out there except jb..

I cant even begin to tell how much i hope Virgin America begins operations.. At least I will then be able to read posts about jb that are not complete bash sessions by the one nut wonders on this board that are completely obsessed.

 

[clickclickboom]

one more thing

from here on out lets boycott the use of the phrase ad nauseam in future posts


One guy posts it in another jb bash session and it is being used like free crack in detroit city on a friday night.

http://en.wikipedia.org/wiki/Argumentum_ad_nauseam

 

[DH2WN]

Can someone please explain how selling 5 aircraft will increase debt load?

5 years of putting money in an aircraft to turn around and sell it to buy a new one increases your long term debt. Doesn't matter what the new rates are. It looks good on paper for the short term but the debt increases. Kinda like buying a car but selling it then buying a new one just before you pay it off. It'll save you on maintenance month over but long term debt increases. I cannot dumb it down any more than that.

If you still don't get it. Ask yourself, why doesn't SWA sell all their planes that are 5 years old and just buy new ones? I wonder why Delta doesn't sell all their aircraft and just buy new ones? Mmmmm....B6 is brilliant and everyone else is wasting money. Doesn't increase their debt, right?

At the end of the next quarter go to google.finance.com and look up the quarterly statements. Assuming the 5 aircraft will be on the books that early. Compare it to the last quarter. You will then understand young grasshopper.

 

[DH2WN]

Might as well have the auction tomorrow.

Tomorrow is Sunday. Wait until Monday.

 

[FlyBoeingJets]

Why is it so hard for some of you to understand that the airline is not down-sizing? The airline is still growing...just at a slower rate. If you fly aircraft for a living surely you can comprehend this. It's like adding, we are just using smaller numbers for a while to eventually get the same sum.

I think what we have here is a cash crunch or the intent to avoid a cash crunch.

Everyone freaks out with airplanes going away.....Without all the facts.

But a fact is this is a time of wonderful growth opportunities. Good economy, rising ticket prices and competitors shrinking. JetBlue SHOULD be able to deploy every aircraft they can get.

That said it may be a great idea to temporarily reduce growth.

 

[jetflier]

5 years of putting money in an aircraft to turn around and sell it to buy a new one increases your long term debt. Doesn't matter what the new rates are. It looks good on paper for the short term but the debt increases. Kinda like buying a car but selling it then buying a new one just before you pay it off. It'll save you on maintenance month over but long term debt increases. I cannot dumb it down any more than that.

If you still don't get it. Ask yourself, why doesn't SWA sell all their planes that are 5 years old and just buy new ones? I wonder why Delta doesn't sell all their aircraft and just buy new ones? Mmmmm....B6 is brilliant and everyone else is wasting money. Doesn't increase their debt, right?

At the end of the next quarter go to google.finance.com and look up the quarterly statements. Assuming the 5 aircraft will be on the books that early. Compare it to the last quarter. You will then understand young grasshopper.

Hey Guys,

It could also be a way for management to keep their costs just high enough so that they can go to their employees for concessions....

We've seen that at 'ol NWA many times....

 

[32LT10]

Hey Guys,

It could also be a way for management to keep their costs just high enough so that they can go to their employees for concessions....

We've seen that at 'ol NWA many times....

I am sure the 190 guys are ready to give a little.

 

[FlyAuburn]

I am sure the 190 guys are ready to give a little.

Just like you've been giving it to your management...
Ouch, was that too low below the waist? :laugh:
Misery loves company.

 

[Sonny Crockett]

I am sure the 190 guys are ready to give a little.

Probably right!

Maybe they can sleep on the airplane during RON's to prevent Hotel costs.

 

[enigma]

No matter how you spin in it, this is not good news. It may not be bad news, but is certainly isn't good news. Selling off revenue producers is an admission that the market does not exist to support them.


The good news is that B6 management is attempting to address their present market. If I were a blue dude, I'd much rather see slowed growth instead of overexpansion leading to failure.

enigma

 

[clickclickboom]

5 years of putting money in an aircraft to turn around and sell it to buy a new one increases your long term debt. Doesn't matter what the new rates are. It looks good on paper for the short term but the debt increases. Kinda like buying a car but selling it then buying a new one just before you pay it off. It'll save you on maintenance month over but long term debt increases. I cannot dumb it down any more than that.

If you still don't get it. Ask yourself, why doesn't SWA sell all their planes that are 5 years old and just buy new ones? I wonder why Delta doesn't sell all their aircraft and just buy new ones? Mmmmm....B6 is brilliant and everyone else is wasting money. Doesn't increase their debt, right?

At the end of the next quarter go to google.finance.com and look up the quarterly statements. Assuming the 5 aircraft will be on the books that early. Compare it to the last quarter. You will then understand young grasshopper.

Sorry i look at it in terms of depreciable assets.. The 5 year planes are depreciated, going in for $$ mx inspections, engine changes etc etc.... It's really no different than when you or I sit back look at the big picture and get rid of unnecessary debt ( motorcycles, boats, planes etc etc ). In my opinion it really does make sense. While I would prefer that every airline out there takes delivery of 100 planes a year and never sells them upgrades everyone to captain working 10 days a month the reality is that the managers have to make decisions each and every day. Fortunately for B6 pilots these decisions do not involve cutting the pilots.

Please feel free to pick apart this reply quote it and apply it to your jb bashfest as necessary

 

[metrodriver]

What JB does is the same as what people do with their cars after a few years just before all the expensive maintenance items come due. Your monthly payments remain largely the same (except for inflation), you still have a car ( a brand new one with all the warranties) and no required maintenance for a while.

Remember: a C-check is a very expensive affair, we're talking several million $$$, and can easily take 6 weeks to accomplish. So now you have to pay for the check, send a check to the bank, have a revenue generator out of service and employees to pay (unless you furlough them, not uncommon at smaller outfits). You can lease an airplane to cover the network but that will cost extra.

So what JB does makes perfect sense: get 12 planes, use 5 for replacement and 7 for expansion. The increase in payments that have to be made for the new ones that replace the older 5 is probably less than it would have cost for doing the C-checks, and now everything has a brand new warranty with no mx to worry about.

Continental just announced orders for new aircraft to replace older (less fuel efficient, higher mx) ones. So did Alaska. SWA is slowly doing away with the -200 for the same reason. Foreign airlines do it consistently and are profitable. Seems like JB isn't the only one. Maybe something for DL? Replace the 737-200, MD 80's?

 

[active_herk]

Remember: a C-check is a very expensive affair, we're talking several million $$$, and can easily take 6 weeks to accomplish. So now you have to pay for the check, send a check to the bank, have a revenue generator out of service and employees to pay (unless you furlough them, not uncommon at smaller outfits). You can lease an airplane to cover the network but that will cost extra.

So what JB does makes perfect sense: get 12 planes, use 5 for replacement and 7 for expansion. The increase in payments that have to be made for the new ones that replace the older 5 is probably less than it would have cost for doing the C-checks, and now everything has a brand new warranty with no mx to worry about.

Bloomberg News


Airbus' 156-seat A320s are valued at about $20 million each when sold used, according to data from the Teal Group, an aerospace consulting firm based in Fairfax, Va. A new A320 has a list price of $62 million to $66.5 million.

Disclaimer: I don't profess to be an expert at airline finance, and this reply is not meant to be part of a Jetblue bashfest.

Unless the C-check costs over $40 million, I would say your logic is faulty; especially over the long term. It seems to me you are taking on over $200 million in long term debt to get rid of the C-checks on five aircraft. Is that an incorrect assumption? Please explain.

As for the example set forth by ClickClickBoom regarding selling debt (i.e. boats, motorcycles, airplanes, etc.). That only works when you don't turn around and buy a new "toy" to replace the old "toy". If you do, you haven't gotten rid of debt but increased it.