Easyjet call to ban 'dirty' planes

[nomorethanbablue]

Just came into the inbox


On the day that easyJet collects its 100th Airbus 319 in Hamburg, the airline is calling on European governments to remove almost 700 of the oldest, dirtiest aircraft from Europe’s skies by banning any aircraft built before 1990 from operating within the European Union after 1st January 2012.

Through the 1970s and 1980s, the industry was able to substantially reduce noise emissions from aircraft through the prohibition of the noisiest aircraft types, through the identification of aircraft “Chapters”. This incentivised airlines to demand ever-quieter aircraft from manufacturers. Because of this concerted action today's aircraft are typically 75% quieter than jets in the 1960s

It is time to apply the same logic to CO2 emissions. It is an unavoidable fact that the oldest aircraft are the least fuel-efficient and, therefore, the most environmentally damaging.


PR or the next step after the EU-wide ban on the noisiest aircraft?

BABlue

[Hotel Mode]

Thats almost Michael O'Leary logic. 1990 is a bit arbitrary. The CFM56 powered AirBii built in 1988/89 cant fly but Easys similar brand new ones can. How convenient.

[what next]

Hello!

I think, constantly rising fuel prices will make sure this happens long before these (hypothetical!) future EU-regulations come into effect.

Greetings, Max

[WHBM]

So no more airshows then ?

Thank you Easyjet :rolleyes:

[wiggy]

Sounds like the usual guff you often as not get at the front of Easy's inflight mag....the CEO ( whoever it is this week) has his monthly pop at his major shorthaul competitor, reminding punters that by flying EZE you are saving the planet, unlike Big Bad B, bla, bal bla, ...All very well but the record is getting a bit stuck and funny how he never mentions how bad Easy can be in getting baggage off the aircraft at LGW late at night ( two hours is my record)
Me, sod the Carbon emissions, I use 'em when Staff Travel is tight with my lot:}
(and, apart from the baggage, very good they are too:O )

[Algy]

Well this week it's Andrew Harrison, as every other week since September 2005, and for the previous five years it was Ray Webster. You must find the world a very difficult place to keep up with!

[stalling attitude]

Also the call is to ban them from EU airspace so they will go to Africa, Asia etc . This is supposed to be a global problem so how does pumping it out elsewhere help, there is after all only one earth's atmosphere.

[befree]

Easyjet have a mixed fleet and will at some point soon wish to sell on some nearly new 737s. Banning all the oldest planes will firm up the market for nearly new. Sometime I think Easyjet and Ryanair make a lot of money bulk buying planes on the cheap and reselling them after 3-5 years.

I am not so sure that the likes of silverjet will be so happy as they have said they wish to go from 2 to 10 planes in the next 3 years. Most startups have got going with very old planes till they could aford better.

[Groundloop]

Sometime I think Easyjet and Ryanair make a lot of money bulk buying planes on the cheap and reselling them after 3-5 years.
Actually Easy make the money much quicker than that. They pay Airbus for a brand-new A319 at Hamburg (at a very low purchase price) and IMMEDIATELY sell it on to a leasing company at a considerable profit! ...and then immediately lease it back.

[Sleeping Freight Dog]

Gee, and I thought for a minute there that EZY was looking to have
Air France banned:uhoh:

[Few Cloudy]

It is just Easy's way of saying, "Look people - what a young modern fleet we have!" - and a way of having a dig at the opposition - something they have been doing for years.

As for what to do with the old ships - how about scrapping them? That is what happens to cars - with the exception of a few old timers.

FC.

[Lucky Strike]

Quote:
Sometime I think Easyjet and Ryanair make a lot of money bulk buying planes on the cheap and reselling them after 3-5 years.
Actually Easy make the money much quicker than that. They pay Airbus for a brand-new A319 at Hamburg (at a very low purchase price) and IMMEDIATELY sell it on to a leasing company at a considerable profit! ...and then immediately lease it back.
Didn't Air Europe do the same thing?:E

[wiggy]

Well I asked for that:} I blame Stelios or whoever was in charge when I could keep up. Mrs Wiggy should be airborne with EcoEasy this very moment on her way home - darn the pollution, just hope the presents make it.

[curser]

Clearfinalsno1, it is all explained by monty pythons "meaning of life" Chapter on birth and specifically the machine which goes "ping". Monty Python - Hospital Sketch (http://www.youtube.com/watch?v=arCITMfxvEc)

[CAT III DUAL]

@clearfinalsno1
The deal is very simple. EasyJet signed the initial big order at a time when
nobody was interested in airplane purchases and Airbus at the same time
was faced having an empty production plant in Hamburg. For Airbus it was
almost the same either laying off staff and paying them millions of euros in
compensation under social law or keep the production running and instead
give a large (new!) lowcost customer a fat discount on their airbuses.
They agreed on option 2.

1) Exact financial terms are classified, but rumours suggest the discount on
a single A319 is roughly 50% of its list price, which means ezy pays $23M
against $45 List price.

2) Narrowbody production is more or less sold out for 4 years. So leasing company
interested in buying an airplane has the problem: "where is the
economy in 4 years if we order today?"

Understood so far? Now the sale-leaseback deal kicks in:

-EZY buys aircraft for $23M and sells it away to lessor for $30M.

-EZY a minute later has $7M in the bank and lessor owns the new airplane
immediately (and not in 4 years), still securing themselves a 30% discount.
-Lessor at the same time has the airplane leased out on a long term contract
to a financially very stable airline. Till here clearly a win/win situation.

Further benefits for EZY:
-Immediately $7M in the bank, improves balance sheet and interest partly
pays off monthly low leasing rate, which somehow reflects the 30% discount
of the leasing company. (consider Ezy signed for 172 aircraft so far, that
is 172 x $7M guaranteed profit......without the need to even fly the airplane!)

-Instead of purchasing the airplane, you keep your money in the bank and
hence improve financial flexibility and improve credit ratings.

-Lease rates are tax deductible for easyjet.

-EZY just pays for the use of the airplane, this is financed by the monthly
profit of the airplane AND the interest of the initial sale profit.
No need to guess the value of the airplane at the end of the rental
contract, which might be lower than book-value at this time depending
on the market conditions. So quite clearly leasing doesnt affect your
balance sheet and at the same time the airline hedges against a possible
loss in airplane value.

-No need to depreciate your airplanes, because you only rent them long term.

-Lease terms usually stay the same for the complete contract, so financial
needs are very predictable.

In the long run (over a 12 year cycle) owning an aircraft usually works out
cheaper than leasing, as it saves the airline from paying a premium to the leasing company.
On the other hand, in the event of a downturn in the industry, an aircraft can become
a liability on the airlines balance sheet. This is where a plane on lease is an advantage,
because leasing companies are generally amenable to renegotiating lease rentals. A mix of owning and leasing the fleet
is how most airlines prefer to hedge their risks.
CIIID

[harrogate]

Let's hope in the same eco-spirit, Eastyjet will embrace other enviromentally oriented innovations within europe, like penalties for consistent load factors below a specified percentage on certain routes.

I look forward to seeing Stelios' signature at the top of the proposal.

Great!

[boeing boeing.. gone]

Tesco's do the same thing with their store they build using there own money then immediately sell to a third party and lease, then use the money to build another store. (they usually make money on the build/lease back also). it a great way to expand with little to no risk.

[CamelhAir]

Its also how ryanair make most of their money. Without this method, ryr would be only marginally profitable.

[tacr2man]

I believe T#### also do a similar thing with vehicles. generates in the order of £6m

[Taildragger67]

Leasing is biiiig business.

In the above example, the lessor makes a buck: - from the rental payments; from any tax loss between what they bought it for and the value they can get for it at the end of the lease period (residual value). Keep in mind they've also been depreciating the asset along the way.

Even better if you can borrow the funds from a bank with some sort of export-credit agency guarantee behind you - so you're essentially a AAA-rated borrower.

Here (http://www.eads.com/xml/content/OF00000000400004/2/38/30100382.pdf) is a presentation by EADS called "The Anatomy of Aircraft Financing".

[Wiggly Bob]

Shipping industry has been doing this for years. (I used to be a Merchant Mariner) although it's alot difficult though to see who actually owns the vessel as it's leased, subleased, chartered and maned by any number of agents and companies. However in the Shipping Business at the moment lease companies are making BIG bucks on older vessels. The price for scrap steel in India and Bangladesh has risen along with the price of virgin steel throughout the world. 20 + years ago when the lease companies vessel was built steel may have been around $200 dollar a tonne, scrap merchants in India are currently offering $350+ a tonne on vessel anything up to 80,000 tonne!!
Don't think its the same for old aircraft though:p

Whatever business you in there seems to be a good case for leasing, whichever party you are.