WSJ reports ValuJet as potential MD-95 launch customer

From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works, Menlo Park, California
Date:         07 Sep 95 02:49:29 
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The Thursday, September 7, issue of the Wall St. Journal has an
article (p. A2 in the Western Edition) claiming "ValuJet is willing to
buy 50 of McDonnell Douglas Corp.'s planned MD-95 jets for more than
$1 billion."  (Wednesday's Aviation Daily says ValuJet is looking at
the 737, A319, MD-80, and Fokker 100.  Yes, MD-80 and not MD-95 as
reported by the WSJ.)  The article makes it sound like MD's acceptance
of the order is a bigger issue than VJ placing it:

    "Last year, McDonnell Douglas's directors were said to have set
    several hurdles that would have to be cleared before production of
    the plane proceeds, including the need for a total of 70 or more
    orders from at least two carriers, preferably including at least
    one airline widely recognized as an established carrier."

Northwest was targeted as the MD-95 launch customer the first time the
aircraft was offered, in 1991.  When the market cooled and MD shelved
the MD-95 several years ago, they helped convince Northwest to refurbish
many of its older DC-9s.  Now, MD is pushing for an order for 20 MD-95s
from Northwest, which with a VJ order for 50 would obviously meet the
board's launch criteria.  Just as obviously, Northwest's DC-9 refurb-
ishment program means selling them the MD-95 is not easy!

Another mentioned as a "key factor" in securing an order from Northwest
is whether Pratt & Whitney will be selected as the engine supplier for
the MD-95, and their pricing.  I found this interesting as everything
else I have heard in the past year or so has said the BMW Rolls-Royce
BR700 would power the MD-95.

Finally, the article has a couple of interesting clues on pricing.  The
possible VJ order, as noted above, is 50 planes at more than $1 billion.
At an even billion, that works out to just $20 million per plane.  The
article also mentions an MD-90 order from Taiwan's EVA Air, valued at
$348 million if all 12 planes in the order are delivered, $29 million
per MD-90.

--
Karl Swartz	|Home	kls@chicago.com
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