737 max... what now?

[fdcg27]

Originally Posted by ZeeOSix
Originally Posted by JustN89
The fact of the matter is that the MAX is still much more efficient and cost effective right now for an airline. No airline that owns and operates them is thinking that the MAX "may not be needed".


I could turn out that once the Max gets back to service the airlines will start using them heavily if they are more efficient and cost effective ... could save the airlines some money.


The MAX appears to match the efficiency of the single aisle Airbus NEO, which was Boeing's goal.
Many of the NGs and A319/A320/A321 aircraft in service are high time and high cycle so are ready for retirement anyway.
The delays in putting the MAX back in service probably resulted in a lot of heavy checks and engine work on these older airframes that the airlines would have just as soon avoided.
For now, the majors are parking about half their fleets and some of those aircraft will never leave the desert again other than in pieces. Drastically declining travel demand does suppress the need for new aircraft now and airlines are probably happy not to be looking at the lease payments on the four hundred or so completed but not delivered MAX aircraft.
Still, traffic will rebound by the last quarter of this year and the airlines will be happy to be able to accommodate it with more efficient aircraft with few maintenance needs after whatever Boeing needs to do to make them fully ready for their entry into revenue service.

 

[CT8]

The airlines run the planes as much as they can.

 

[Astro14]

Originally Posted by ZeeOSix
Originally Posted by JustN89
The fact of the matter is that the MAX is still much more efficient and cost effective right now for an airline. No airline that owns and operates them is thinking that the MAX "may not be needed".


I could turn out that once the Max gets back to service the airlines will start using them heavily if they are more efficient and cost effective ... could save the airlines some money.


It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).

 

[edyvw]

Originally Posted by Astro14
Originally Posted by ZeeOSix
Originally Posted by JustN89
The fact of the matter is that the MAX is still much more efficient and cost effective right now for an airline. No airline that owns and operates them is thinking that the MAX "may not be needed".


I could turn out that once the Max gets back to service the airlines will start using them heavily if they are more efficient and cost effective ... could save the airlines some money.


It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).

Are you flying?

 

[ZeeOSix]

Originally Posted by Astro14
Originally Posted by ZeeOSix
Originally Posted by JustN89
The fact of the matter is that the MAX is still much more efficient and cost effective right now for an airline. No airline that owns and operates them is thinking that the MAX "may not be needed".


I could turn out that once the Max gets back to service the airlines will start using them heavily if they are more efficient and cost effective ... could save the airlines some money.


It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).


Guess it depends on how close the existing planes are to being retired. Doubt all the new planes were bought to expand the fleet, some could have been bought to replace old worn out planes near end of their planned life.

 

[edyvw]

Originally Posted by ZeeOSix
Originally Posted by Astro14
Originally Posted by ZeeOSix
Originally Posted by JustN89
The fact of the matter is that the MAX is still much more efficient and cost effective right now for an airline. No airline that owns and operates them is thinking that the MAX "may not be needed".


I could turn out that once the Max gets back to service the airlines will start using them heavily if they are more efficient and cost effective ... could save the airlines some money.


It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).


Guess it depends on how close the existing planes are to being retired. Doubt all the new planes were bought to expand the fleet, some could have been bought to replace old worn out planes near end of their planned life.

I think old plans are at this point worthless. Airline industry will have to reassess a lot of things after this. We are entering recession and JP Morgan today estimates GDP contraction in 2nd quarter of -14%. So, even if hypothetically somehow lif goes back to normal in the summer, economy will need time to recover. Demand for travel will be low for some time, not to mention that it seems whatever help airline industry gets from government it will be with serious strings attached. I am with Astro on this, they will approach this very conservatively. Boeing going to Congress and already begging for bailout tells a lot what they expect. Expect from Airbus same.

 

[Astro14]

Originally Posted by edyvw
Originally Posted by Astro14

It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).

Are you flying?


I go back to work on Tuesday, after a couple weeks off. I'm on reserve next week. No idea what to expect, but since I typically fly a mix of domestic, Europe, and South America, I would guess that it'll be mostly domestic with all of the travel bans imposed by various countries, if I go to work at all. Flying has been cut by 50%. Half the flights have been canceled, and those that are operating have few passengers.

I am deeply concerned about the industry.

The losses are huge. 70% drop in revenue, billions of losses in March alone, for each of the major carriers. This can't be sustained for more than a month or two without collapse of the companies and the industry. Naturally my personal situation is deeply tied to the situation of my company.

 

[edyvw]

Originally Posted by Astro14
Originally Posted by edyvw
Originally Posted by Astro14

It will be interesting to see their decisions - run the old gas hog with oil at $30/bbl? Or make the lease payments on a $100+ million machine to save fuel?

The economics may favor delaying delivery of the Max until the traffic returns. Most of the legacy airlines have already cut capacity by 50%. Within the 50% that remain in service are some very fuel efficient airplanes. So, why take delivery of the new airplane when you've got airplanes that are already paid for? It's like trading a good used 35MPG Corolla in on a Prius, when the Corolla is paid for and the Prius comes with lease payments...and gas is $.50/gallon (which is where Jet A just ended up today - $26.15/BBL).

Are you flying?


I go back to work on Tuesday, after a couple weeks off. I'm on reserve next week. No idea what to expect, but since I typically fly a mix of domestic, Europe, and South America, I would guess that it'll be mostly domestic with all of the travel bans imposed by various countries, if I go to work at all. Flying has been cut by 50%. Half the flights have been canceled, and those that are operating have few passengers.

I am deeply concerned about the industry.

The losses are huge. 70% drop in revenue, billions of losses in March alone, for each of the major carriers. This can't be sustained for more than a month or two without collapse of the companies and the industry. Naturally my personal situation is deeply tied to the situation of my company.

They will have to go bailout route. There is no doubt about that. I just hope they tie well being of pilots, crews, mechanics into bailout.
This will not be sustainable for more than a two months, if even that. I was telling my wife, this is flattening the curve, but what people do not realize is that virus is going to stay, at least until vaccine is at hands. So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once. I think any industry related to mobility will suffer greatly for next two years. It will be interesting to see what happens now in South Korea as they dropped number of cases dramatically.
Would you retire now? I think part of bailout should be retirement at levels of 01/01/20. Government should pick up tab there and let airlines pay that overtime.

 

[Mr Nice]

Quote:
" So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once."



The healthcare system is already overwhelmed.

Everything is being rationed and hospitals are going through normal supplies at 5X the rate of what they normally use.

Much of their supplies from big manufacturers like Medline and Cardinal Health come from China.

 

[edyvw]

Originally Posted by Mr Nice
Quote:
" So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once."



The healthcare system is already overwhelmed.

Everything is being rationed and hospitals are going through normal supplies at 5X the rate of what they normally use.

Much of their supplies from big manufacturers like Medline and Cardinal Health come from China.





Wait few more weeks.
Right now all colleges should graduate senior nursing students and last year MD's.
PPE is being collected everywhere to stock pile it. HHS approved any mask that meets N95 standard to be used in hospital. I just found two brand new in garage and we are collecting it in neighborhood (this is new development o people actually have it and there is A LOT of retired military which are DIY inclined).
I have been in hospitals during the war, and I am not sure people understand what is coming in few weeks. Also, this might be even worse than war because virus can easily be transferred to medical staff. That is why I said, senior nursing students should be graduated as well as MD's, other students should be put on stand by.

 

[Astro14]

Originally Posted by edyvw

They will have to go bailout route. There is no doubt about that. I just hope they tie well being of pilots, crews, mechanics into bailout.
This will not be sustainable for more than a two months, if even that. I was telling my wife, this is flattening the curve, but what people do not realize is that virus is going to stay, at least until vaccine is at hands. So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once. I think any industry related to mobility will suffer greatly for next two years. It will be interesting to see what happens now in South Korea as they dropped number of cases dramatically.
Would you retire now? I think part of bailout should be retirement at levels of 01/01/20. Government should pick up tab there and let airlines pay that overtime.


So, let me be clear: there is no defined benefit plan for me. If I were to retire now, I would get by on what I have in my 401(k) and savings.

The pensions at most major airlines were liquidated during the bankruptcies - turned over to the PBGC. PBGC is like the FDIC - a Federal Corporation that takes over and administers failed assets. Companies pay insurance premiums to the corporation and if the bank (or pension) fails, that insurance, along with the assets, are used to pay the depositors/pensions. There is no more defined benefit retirement, nor defined benefit retirement accrual, at any major airline.

My PBGC retirement benefit on 01/01/20 is $800/month, but I can't get that until I'm 62. If I work for nine more years (I'm 56, mandatory retirement age is 65), I will get $800/month.

So, my airline retirement, along with nearly everyone in the industry, is 95% based on my 401(k) balance, which, has taken a hit. The PBGC benefit is a tiny percentage of what my pension would've been. I think people forget that many major airlines went through bankruptcy, and in that process, pay was cut*, benefits were slashed, contracts abrogated, and liabilities shed through the court.

My 30 years of active and reserve service in the USN is my defined benefit plan. 19 years of working two careers/two jobs, simultaneously has provided my defined benefit plan.

Very few airline employees have that.

The employees took the brunt of the bankruptcies 15 years ago. Pay slashed, benefits cut, pensions liquidated.



*In my case, my pay was cut by 65%. You read that right, by 2003, I was left with a paycheck that was about 1/3 of what I had in 2001.

In addition, my company stock, which I couldn't sell under the ESOP, was liquidated for $750. It had been over $100,000.

 

[ArrestMeRedZ]

Astro, you nailed it. One of the big divides between Millennials and Boomers is the lamented loss of retirement plans between generations. What is lost in the discussion is with the exception of military and government plans (which remain essentially the same between generations), private companies rarely paid out those generous retirements.
You mentioned bankruptcies as a reason the airlines voided their pensions. Probably as common were buyouts and mergers where the pirate swooping in raided the "overfunded" pension fund, stripped it of value, then ended up passing it on to the PBGC when things did not go as well as imagined. More common was the method defense contractors and aircraft manufacturers used to avoid paying out pensions by using a manufactured excuse to fire or lay off workers (especially engineers) after years of dedicated service just before they became vested in a retirement plan.

Even with the recent market downturn I believe 401k plans instead of defined benefit plans (with the exception of military/government) puts the power into the hands of employees. Engineers and others can move from company to company every few years to capture real salary increases rather than staying in place and being offered raises that don't match industry standards. No longer do the golden handcuffs that turn out to be brass force employees to stay in a bad position.

 

[fdcg27]

Originally Posted by Astro14
Originally Posted by edyvw

They will have to go bailout route. There is no doubt about that. I just hope they tie well being of pilots, crews, mechanics into bailout.
This will not be sustainable for more than a two months, if even that. I was telling my wife, this is flattening the curve, but what people do not realize is that virus is going to stay, at least until vaccine is at hands. So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once. I think any industry related to mobility will suffer greatly for next two years. It will be interesting to see what happens now in South Korea as they dropped number of cases dramatically.
Would you retire now? I think part of bailout should be retirement at levels of 01/01/20. Government should pick up tab there and let airlines pay that overtime.


So, let me be clear: there is no defined benefit plan for me. If I were to retire now, I would get by on what I have in my 401(k) and savings.

The pensions at most major airlines were liquidated during the bankruptcies - turned over to the PBGC. PBGC is like the FDIC - a Federal Corporation that takes over and administers failed assets. Companies pay insurance premiums to the corporation and if the bank (or pension) fails, that insurance, along with the assets, are used to pay the depositors/pensions. There is no more defined benefit retirement, nor defined benefit retirement accrual, at any major airline.
My PBGC retirement benefit on 01/01/20 is $800/month, but I can't get that until I'm 62. If I work for nine more years (I'm 56, mandatory retirement age is 65), I will get $800/month.

So, my airline retirement, along with nearly everyone in the industry, is 95% based on my 401(k) balance, which, has taken a hit. The PBGC benefit is a tiny percentage of what my pension would've been. I think people forget that many major airlines went through bankruptcy, and in that process, pay was cut*, benefits were slashed, contracts abrogated, and liabilities shed through the court.

My 30 years of active and reserve service in the USN is my defined benefit plan. 19 years of working two careers/two jobs, simultaneously has provided my defined benefit plan.

Very few airline employees have that.

The employees took the brunt of the bankruptcies 15 years ago. Pay slashed, benefits cut, pensions liquidated.



*In my case, my pay was cut by 65%. You read that right, by 2003, I was left with a paycheck that was about 1/3 of what I had in 2001.

In addition, my company stock, which I couldn't sell under the ESOP, was liquidated for $750. It had been over $100,000.



We have to remember that every large US carrier except for Southwest went through a Ch 11 reorganization, in the case of US/AA a total of three times between both carriers prior to their merger. US gained control of AA during AA's reorganization proceedings.
Employees took it on the chin and lost their old defined benefit plans along with having to endure years of low wages and poor working conditions.
If we want to have a viable air transport system when things begin to return to normal, then we're going to have to pony up some support in some form for the carriers, to include their employees, their subs and their suppliers.
Classical economics tells us that in the long run, this situation would resolve itself, with new entrants picking up the foreclosed capital assets and returning them to service in response to demand.
OTOH, as Lord Keynes once said in response to this view, in the long run we shall all be dead.

 

[edyvw]

Originally Posted by Astro14
Originally Posted by edyvw

They will have to go bailout route. There is no doubt about that. I just hope they tie well being of pilots, crews, mechanics into bailout.
This will not be sustainable for more than a two months, if even that. I was telling my wife, this is flattening the curve, but what people do not realize is that virus is going to stay, at least until vaccine is at hands. So, we will experience a lot of deaths, the thing is just not to overwhelm the healthcare system at once. I think any industry related to mobility will suffer greatly for next two years. It will be interesting to see what happens now in South Korea as they dropped number of cases dramatically.
Would you retire now? I think part of bailout should be retirement at levels of 01/01/20. Government should pick up tab there and let airlines pay that overtime.


So, let me be clear: there is no defined benefit plan for me. If I were to retire now, I would get by on what I have in my 401(k) and savings.

The pensions at most major airlines were liquidated during the bankruptcies - turned over to the PBGC. PBGC is like the FDIC - a Federal Corporation that takes over and administers failed assets. Companies pay insurance premiums to the corporation and if the bank (or pension) fails, that insurance, along with the assets, are used to pay the depositors/pensions. There is no more defined benefit retirement, nor defined benefit retirement accrual, at any major airline.

My PBGC retirement benefit on 01/01/20 is $800/month, but I can't get that until I'm 62. If I work for nine more years (I'm 56, mandatory retirement age is 65), I will get $800/month.

So, my airline retirement, along with nearly everyone in the industry, is 95% based on my 401(k) balance, which, has taken a hit. The PBGC benefit is a tiny percentage of what my pension would've been. I think people forget that many major airlines went through bankruptcy, and in that process, pay was cut*, benefits were slashed, contracts abrogated, and liabilities shed through the court.

My 30 years of active and reserve service in the USN is my defined benefit plan. 19 years of working two careers/two jobs, simultaneously has provided my defined benefit plan.

Very few airline employees have that.

The employees took the brunt of the bankruptcies 15 years ago. Pay slashed, benefits cut, pensions liquidated.



*In my case, my pay was cut by 65%. You read that right, by 2003, I was left with a paycheck that was about 1/3 of what I had in 2001.

In addition, my company stock, which I couldn't sell under the ESOP, was liquidated for $750. It had been over $100,000.


Geez, I mean I was expecting that your retirement took a hit from Ch.11 and of course this downturn hit 40x plans a lot (I opened mine 7 days ago and did not want to look at it anymore).
Let just hope they bailout with condition to keep workers in and then hope this will rebound.
I just cannot see this being long term option considering Southeast keeps living like nothing happened.

 

[meadows]

I think the virus has just started. Canceled all summer plans today.

 

[ragtoplvr]

Incompletely trained doctors and nurses are way better than nothing, They have no experience, people will die that an experienced Dr could have possibly saved. Nursing mistakes will occur from a lack of experience. Some means needs to exist to protect these trainees from career ending mistakes until this is over and they have the chance to complete their training.

Rod

 

[CT8]

My Neighbor who retired as an AA captain and a life long friend that was a UAL A&P lost a huge chunk of their retirement $$$. The airline industry is brutal. Unless the Airplanes are running near full the cost to feed them is unbelievable.

 

[Mr Nice]

Originally Posted by meadows
I think the virus has just started. Canceled all summer plans today.


Cancelled business trips on American to Austin, San Diego , Milwaukee and Charlotte.

 

[fdcg27]

Originally Posted by Mr Nice
Originally Posted by meadows
I think the virus has just started. Canceled all summer plans today.


Cancelled business trips on American to Austin, San Diego , Milwaukee and Charlotte.


Just as well since those flights would have probably not operated anyway.
To think that over Thanksgiving week through mid-December we took a couple of five thousand mile round trips on AA with packed flights and busy airports and there were cheap one-stop connections from little DAY to just about anywhere in the world you might want to go.
How things have changed in just a few months.

 

[Yah-Tah-Hey]

Our skies are usually filled with contrails of east/west flights but haven't seen one in several weeks now.