Saturday, 18 May 2013

Bitish Airways to Get 18 Dreamliners!

On Wednesday April 3rd 2013, I was minding my own business watching the news - like you do, when suddenly an announcement was made. British Airways is to order 18 Dreamliners, to replace its ageing fleet of the Boeing's 747's. I remember thinking - ''You can't be serious!''. ''What's wrong with what Airbus has got to offer - or has Airbus suddenly got nothing to interest British Airways with?'' It's surprising what emotions such an announcement can stir in the average listener to such broadcasted news, but stir them they do. I simply had to find out what British Airways thought it was playing at, ordering so many Dreamliners. They could have sourced planes closer to home, from Airbus; and let's face it, we need the jobs at home in Europe.Just this week I heard that unemployment has risen quite dramatically in the Euro zone. I had to investigate.

                  Boeing 787 taking off and                                  landing.  

Upon further investigation, I find that the order for 18 Dreamliners are meant mainly for the Iberian arm of British Airways. IAG, which stands for International Airlines Group, came into being when British Airways merged with Iberian Airways back in 2011. This merger gave British airways access to the latin American routes and markets. Everyone was doing it back then, because airlines on their own were(it seemed back then)afraid that they wouldn't be able to 'make it on their own', or so they feared. KLM merged with Air France - there are other examples.
The problem for British Airways is its fleet is such an old one. It operates some 52 Boeing 747s, which is more than many other airlines operate, and they are 17 years old, or about that age. It is time for them to upgrade their fleets.
Further investigation reveals that the 18 dreamliners are meant for the Iberian arm of IAG, but it is subject to Iberian airways restructuring it's business to get back into profitability. I wonder when that's going to be?
Iberian Airways wanted to cut 4,500 jobs to even out its cost base. Well, that's fighting talk isn't it? Yes it is, and understandably, strikes ensued. Then a government appointed mediator got in on negotiations, and a compromise was reached. Iberia agreed to a 3,100 cut in jobs, and that seemed to satisfy all, except those whose jobs were cut, but it could lead to the Spanish airline reaching some kind of platform to build profitability from.
The order for 18 Dreamliners is dependent upon Iberia showing some kind of stability, and moving on towards profit, and then - and only then will the Dreamliners be released to Iberia. Like I asked earlier, WHEN? Well, whenever it does, IAG has an agreement to buy the 18 Dreamliners at the catalogue price of $4bn. A discount on that price is expected, though it is subject to shareholder approval. I'm sure they'll get the discount. Discount or not, this is great news for Boeing, even though there are(or was back then) still problems with the Lithium-ion batteries. People still had faith that the Dreamliner will be in business.
The Federal Aviation Administration, the US regulator will be reviewing the changes that Boeing make to the Dreamliner's batteries, with a view to allowing it to resume commercial flights again in either May or June.
This I must see.
So, the deal is all in the realms of IF, could and maybe. It all depends of how well, and how fast Iberia get their act together, and get into profitability. Anybody holding their breath?
I do hope not!

It just goes to show, that all is not what it seemed to be. Nowhere is there any talk of British Airways getting new planes for its own fleet; they are all for Iberia IF they can get their act together and get into profitability. So, I needn't have gotten so agitated and worked up over the news, that British Airways orders 18 Dreamliners. Here at I will be keeping an eye on developments at British Airways and Iberia. If delivery of 18 Dreamliners is dependent on Iberia getting it together, it could take a while!

But what do you think?
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