Re: Airline decisions on aircraft purchases

Date:         16 Sep 99 16:42:38 
From:         H Andrew Chuang <>
Organization: Concentric Internet Services
References:   1
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JF Mezei wrote:


I won't comment on your other remarks, but I'll on the following.

> Also, in the Singapore example, if the 340s did not perform as
> advertised, wouldn't Singapore get financially compensated for this ?
> Wouldn't such compensation make the accountants happy with the financial
> performance of the aircraft ?

Yes, I believe Airbus has to pay certain warranty payments based
on the original contracts signed with SIA.  Those guarantees were
specific to SIA.  (I strongly believe when Airbus first threatened
not to support SQ's A340s if sold by Boeing, Airbus was really
referring to not honoring those guarantees specific to SIA.)

Although the warranty money will directly lower the operating costs,
airlines do have to worry about operating logistics as well as
customer reactions.  Again using SIA as an example, they were
able to get an extremely good deal with Boeing (i.e., won't lose
money on dumping the fleet) which also help them to simplify
their fleet, it's financially even more attractive to go with
the B777 than staying with both the A340 and the B777.