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Boeing Just Made Its Biggest Sale Ever To An Airline You Have Never Heard Of  

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HaveMilesWillTravel
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February 18, 2012 1:56 am  

Gaucho, post: 1216083, member: 3399 wrote: one of the things that is key here is that Lion is mostly a domestic airline.... if these planes dont get paid, you need to seize them, but if they are used mainly for domestic routes, I wonder how Boeing and the US Bank(s) will get them... perhaps send over a Navy Seals Team....

That would be an option 🙂

Where do those planes go for maintenance?

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Jaimito Cartero
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February 18, 2012 5:42 am  

I'm pretty sure that Boeing won't be on the hook for anything. And I'm sure that anyone loaning them money will make sure that they don't just ship them 100 planes without any money up front.

The Indonesian market is really expanding. With Air Asia and Lion Air very active in the LCC sector. Garuda seems to be expanding, plus some pretty cheap international options like Tiger Airways and Jetstar have good pricing and options. I wouldn't use a LCC in the US, but don't mind in Asia one bit. In fact, I like Air Asia service better than most US domestic coach flights.


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Gaucho
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February 18, 2012 9:30 am  

HaveMilesWillTravel, post: 1216952, member: 648 wrote: That would be an option 🙂

Where do those planes go for maintenance?

Good point on maintenance.... do these birds have range to fly from Indonesia to China...? If so, then LH Technik has a huge JV with the Chinese that do aircraft maintenance in various locations throughout China. That would be one option... although if these birds will do mostly domestic flights, then I assume that they could get local maintenance and not be certified to fly internationally...... wonder if they bring expat aeronautical engineers and work on them in Indonesia, if this would be doable or not I have no idea.

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jbcarioca
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February 18, 2012 11:18 am  

Gaucho, post: 1216083, member: 3399 wrote: I know the Indonesian Economy very well..... many Indonesian Business Tycoons have a reputation when it comes to taking on debt, and another (very different one) when it comes to paying, refinancing, etc. etc.

I sincerely hope that the US Eximbank does its homework.... and Boeing also needs to make sure it keeps this on a tight leash.... else, this deal will make headlines for the very very wrong reasons.... one of the things that is key here is that Lion is mostly a domestic airline.... if these planes dont get paid, you need to seize them, but if they are used mainly for domestic routes, I wonder how Boeing and the US Bank(s) will get them... perhaps send over a Navy Seals Team....

I would not try to argue Indonesian finance with Gaucho even if I wanted to. In this case I certainly do not want to. There has yet to be along-term-successful Indonesian airline. There have almost always been serious safety and security concerns. Lion has not been an exception, as:

Jaimito Cartero, post: 1215500, member: 402 wrote: ... a few of JT's pilots have been nailed for using Meth in the last year, so that certainly undermines the publics confidence in the airline.

Jaimito Cartero pithily observes.

Further, Lion is banned from the EU and was refused membership in IATA because of safety problems.

In any event the funding for the Kirana brothers is shrouded in mystery, although they insist it is 100% self-funded.

This article helps explain some context:
http://www.flightglobal.com/news/articles/kiranas-lion-appetite-for-success-209106/


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SirRagnar
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February 18, 2012 11:42 am  

jbcarioca, post: 1217727, member: 4208 wrote:
This article helps explain some context:
http://www.flightglobal.com/news/articles/kiranas-lion-appetite-for-success-209106/

[SIZE=3]The carrier also suffered an embarrassing incident last year when one of its aircraft landed at the wrong airport while on a domestic flight.[/SIZE]

Hehe, that's a good one. I don't think Lion will be my airline of choice for Indonesia.

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MSPeconomist
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February 18, 2012 11:54 am  

HaveMilesWillTravel, post: 1215706, member: 648 wrote: Makes me wonder how the incentive compensation works at Boeing/Airbus. Do the executives get paid based on the number of planes they "sell" or the number of planes that get actually shipped five to ten years down the road?

I would guess based on sales, just as bankers get bonuses based on (conforming) mortgages they write, not their regular repayments.

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MSPeconomist
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February 18, 2012 12:05 pm  

HaveMilesWillTravel, post: 1216952, member: 648 wrote: That would be an option 🙂

Where do those planes go for maintenance?

There's airplane maintenance in Singapore but AFAIK for Airbus. PMNW sent A330s there for work.

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jbcarioca
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February 18, 2012 12:08 pm  

MSPeconomist, post: 1217754, member: 3132 wrote: There's airplane maintenance in Singapore but AFAIK for Airbus. PMNW sent A330s there for work.

Further, with NG's being sold by the thousands there will be maintenance in SIN or somewhere near before too many of these are flying around SEA. I imagine none of us really doubt that.


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MSPeconomist
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February 18, 2012 12:37 pm  

jbcarioca, post: 1217757, member: 4208 wrote: Further, with NG's being sold by the thousands there will be maintenance in SIN or somewhere near before too many of these are flying around SEA. I imagine none of us really doubt that.

OTOH, maintenance in Singapore could be too expensive when China also offers maintenance facilities in the region. Lion flies already to HK and CAN, so it should be pretty easy to rotate planes to CAN for maintenance in China.

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jbcarioca
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February 18, 2012 12:45 pm  

MSPeconomist, post: 1217774, member: 3132 wrote: OTOH, maintenance in Singapore could be too expensive when China also offers maintenance facilities in the region. Lion flies already to HK and CAN, so it should be pretty easy to rotate planes to CAN for maintenance in China.

Logistically that is why I see no major maintenance scheduling issues. there are several plausible options, aren't there?


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yaychemistry
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February 18, 2012 12:55 pm  

Jaimito Cartero, post: 1215500, member: 402 wrote: Unknown? Maybe to them. I've heard of them, and have even flown them.

I'm not totally sure that JT will ever get all of these planes, though. It's very much an emerging market in Indonesia, and a few of JT's pilots have been nailed for using Meth in the last year, so that certainly undermines the publics confidence in the airline.

I've always wondered where JT will get enough pilots to fly all of these planes. Indonesia may be the 4th largest country (by population), but do they have the pilot training facilities to keep up? Or are they going to have to import a lot of pilots (perhaps from Australia? Maybe they can nab some of the Air Australia/Strategic pilots)?


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MSPeconomist
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February 18, 2012 12:57 pm  

jbcarioca, post: 1217776, member: 4208 wrote: Logistically that is why I see no major maintenance scheduling issues. there are several plausible options, aren't there?

However, given the owner's comments about cheap labor in Indonesia and therefore not outsourcing anything, I do have the frightening vision of the guy who owns and controls his own airport setting up his own maintenance shop for these planes using all that cheap labor. Perhaps the EU ban was the correct decision.

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jbcarioca
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February 18, 2012 12:59 pm  

MSPeconomist, post: 1217787, member: 3132 wrote: However, given the owner's comments about cheap labor in Indonesia and therefore not outsourcing anything, I do have the frightening vision of the guy who owns and controls his own airport setting up his own maintenance shop for these planes using all that cheap labor. Perhaps the EU ban was the correct decision.

Check out their history. Not encouraging. The good news is that they cannot get approval to do the maintenance without Boeing and the financiers agreeing. The crews? ah, well...


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MSPeconomist
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February 18, 2012 1:00 pm  

yaychemistry, post: 1217783, member: 37709 wrote: I've always wondered where JT will get enough pilots to fly all of these planes. Indonesia may be the 4th largest country (by population), but do they have the pilot training facilities to keep up? Or are they going to have to import a lot of pilots (perhaps from Australia? Maybe they can nab some of the Air Australia/Strategic pilots)?

A lot of overseas airlines are hiring foreign pilots. For young and aspiring pilots, it's a way to get flight hours and can be more attractive than flying RJs for just above minimum wage in the USA. However, these foreign workers aren't always treated well and can have less attractive contracts and fewer legal protections than locals or vice versa. One has the impression that middle eastern airlines, for instance, are largely flown by foreigners.

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MSPeconomist
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February 18, 2012 1:02 pm  

jbcarioca, post: 1217789, member: 4208 wrote: Check out their history. Not encouraging. The good news is that they cannot get approval to do the maintenance without Boeing and the financiers agreeing. The crews? ah, well...

I find the question of who really is financing this operation to be just incredible. It's hard to imagine that many countries would issue a commercial airline operating license or whatever papers are required without financial disclosure and more transparency.

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