Airbus fleet to replace Air NZ's Boeing 737

[oz_mark]

AIR New Zealand will buy 14 new Airbus A320 aircraft to replace its domestic jet fleet of 15 Boeing 737-300s

Airbus fleet to replace Air NZ's Boeing 737 domestic line-up | The Australian

 

[Slats7]

I'll miss the 'Classics' but it was definitely time for an upgrade!

 

[docjames]

Interesting. They have commonality with their current fleet of A320s, but surprising as the word out there was that boeing would swing them a deal due to delays on the 787.

 

[samh004]

It says in the article they obtained them at a discount to their US$1 billion + list price, but on wikipedia it states the price as between US$73.2 to $80.6 million. So were they talking about the coughulative price?

 

[oz_mark]

It says in the article they obtained them at a discount to their US$1 billion + list price, but on wikipedia it states the price as between US$73.2 to $80.6 million. So were they talking about the coughulative price?

A $1 billion order would make them around $71.5 million each. So is in the ballpark.

 

[Dee Thom]

A $1 billion order would make them around $71.5 million each. So is in the ballpark.

Also better pricing than Boeing could offer, and upgraded engines as well.
this will give them a total of 26 A320's, and options on another 11 which could be 321's, better for shorthaul International flights........

Cheers Dee

 

[pauly7]

Interesting...

 

[medhead]

The Avaition section of the Australian gives more details on the discount.

AIRBUS was coy this week about suggestions that it had given Air New Zealand a 50 per cent discount on the $US1.08 billion ($1.19bn) list price of its 14 A320s to seal the deal. Reports in New Zealand quoted Macquarie Equities analysts as saying the Kiwi carrier was likely to have paid just $US540 million for the planes.

Airbus knocks 50pc off NZ deal | The Australian

 

[Slats7]

The Avaition section of the Australian gives more details on the discount.



Airbus knocks 50pc off NZ deal | The Australian

Good deal then.

 

[straitman]

The Avaition section of the Australian gives more details on the discount.



Airbus knocks 50pc off NZ deal | The Australian

One has to ask why such a discount :?:

Is Airbus struggling to sell these aircraft :?:

 

[samh004]

One has to ask why such a discount :?:

Is Airbus struggling to sell these aircraft :?:

And if that's profitable? I'd think many other airlines would be asking for the same generous discount, or taking their business elsewhere.

 

[oz_mark]

One has to ask why such a discount :?:

Is Airbus struggling to sell these aircraft :?:

I guess it depends on how much you believe the quoted discount.

 

[medhead]

And if that's profitable? I'd think many other airlines would be asking for the same generous discount, or taking their business elsewhere.

Trouble is profitablility is a moving target. There is the cost of the raw materials and putting the aircraft together. I'd guess that even with the estimated discount that the price included those items. Then there is the cost of the design. I'm sure the desing cost is included in the the list price, which would be based on some assumption of spread the design costs over X aircraft. So in this case, it might have been possible to offer the discount on the basis that design cost was already recovered. Or maybe they have a production gap due to cancellations from GFC and the design cost was 80% recoevered. Or some other combination of factors.

 

[NM]

I assume that aircraft, like many items in many industries, are rarely sold at list price. In the IT industry, anyone purchasing even a smallish quantity of most products can negotiate a reasonable discount below the list price. In my field, for deals that the vendor considers strategic, its common to have >50% discount off list price, and I have seen as much as 75% on hardware and 90% on software in certain competitive deals.

I would say Airbus saw the NZ deal as strategic and wanted to ensure they win the business over Boeing. Keep in mind that NZ will then be purchasing services and parts from Airbus for up to 20 years for these new aircraft. I expect Airbus are not going to be losing money on the deal.