SAA A340s up for sale

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Airwayfreak
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Re: SAA A340s up for sale

Unread post by Airwayfreak » Wed Jan 15, 2020 11:54 am

HJK 414 wrote:
Wed Jan 15, 2020 11:39 am
Airwayfreak wrote:
Wed Jan 15, 2020 11:09 am
I suspect this will result in massive nett financial losses for SAA. A340's are selling at a fraction of their original purchase price and most airlines are hardly queueing to purchase them any more.


On the contrary …….

The asset list of 2017 list the company assets (including equipment at 3.1 Billion rand) = 240 Million US$ or so.
These aircraft will have been depreciated on the P&L over the years and their book value is probably zero or close to it …. Sadly the cash will have been used as operational cash...….That implies that the sale value will appear as a profit in the P&L - and the maintenance reserves for these aircraft will have to be released as well - resulting as an "income" on the P&L.

On the balance sheet the asset value will diminish further …...

JK
So are you saying Coleman Andrews did the right thing a few years ago ? This is not a P&L issue. The market value of A 340's has dropped dramatically in the past few years and nobody is buying. This was my point
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Re: SAA A340s up for sale

Unread post by HJK 414 » Wed Jan 15, 2020 12:26 pm

Airwayfreak wrote:
Wed Jan 15, 2020 11:54 am

So are you saying Coleman Andrews did the right thing a few years ago ? This is not a P&L issue. The market value of A 340's has dropped dramatically in the past few years and nobody is buying. This was my point

No - all I am saying is that the aircraft will have been depreciated - which means that the cash was reserved …..
It is a Cash issue - these planes are no longer needed - and they cost funds / loose value each year - so sell them and use the proceeds to get SAA back on track. With the restricted route network - these planes are simply cash sitting on the platform - so the sale is a good choice

As for the remaining "sales value" …….
If you buy an aircraft for 1000 Rand - depreciate it for 10 years at 75 Rand - you already have 750 rand back / and if you manage to sell the aircraft for the remaining 250 rand - there is no "loss" ……. if you sell it for more than the "250 rand - remaining book value" you will make a profit …..

Normally the depreciated cash will be kept as an investment fund for future purchases - yet SAA have used it all as Operational cash …...

I am sure that the book value of SAA on the 340's will be very low - so they may make a "profit" ….
In any case they can use the proceeds of the sale to lower their debt (and interest burden) / instead of using it as Operational cash (if they are smart)…..


JK
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Re: SAA A340s up for sale

Unread post by gregdeklerk » Wed Jan 15, 2020 1:53 pm

The problem is that no-one will be in a hurry to buy them. Worth about 8 -10 million US each. It may not be an easy sell. Do they want them and the engines and APUs to go as one lot?

Emirates and Turkish managed to clear theirs, but things didn't go well for Olympic A340s.
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Re: SAA A340s up for sale

Unread post by trees » Wed Jan 15, 2020 3:14 pm

They will be sold to recycling companies most likely. Global was interested in buying SNA/B as parts machines a while ago.
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Re: SAA A340s up for sale

Unread post by HJK 414 » Wed Jan 15, 2020 3:28 pm

trees wrote:
Wed Jan 15, 2020 3:14 pm
They will be sold to recycling companies most likely. Global was interested in buying SNA/B as parts machines a while ago.
Partly …..

The 300's will probably end up at the scrap-value level.

The 600's would be a great plane for a start up long haul company - or one that only flies a limited amount of long haul.
The lease value would be low - 300.000 - 350.000 per month or so...…. and that would easily offset the fuel costs ….

JK
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Re: SAA A340s up for sale

Unread post by gregdeklerk » Wed Jan 15, 2020 3:33 pm

For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
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Re: SAA A340s up for sale

Unread post by HJK 414 » Wed Jan 15, 2020 3:52 pm

gregdeklerk wrote:
Wed Jan 15, 2020 3:33 pm
For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
Greg

I have no idea of the residual value of these aircraft.
In the day Airbus guaranteed residual values for some aircraft - but seeing the request for buyers / tenders - I assume that SAA did not have that option.

JK
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Re: SAA A340s up for sale

Unread post by evanb » Wed Jan 15, 2020 5:23 pm

ERASER wrote:
Wed Jan 15, 2020 7:10 am
My reasoning is that they are selling all the spare engines and APU's thus will not have spare engines or APU's to service the remaining Airbus fleet.
Out of the 8 A343, 7 is operational and of the 9 A346's, only 7 is operational. SXH/SNA/SNB = WFU 2017/2018 not in flyable condition
SXD/E/F/G (H)up for sale
SNC/D/F/G up for sale
SXA/B/C must be returned in 2022
SNE/H/I must be returned in 2021
Thus out of the 14 operational 8 is up for sale (excluding SXH) leaving 6 aircraft with no spare engines or APU's.

News from the unions are that Solidarity is insisting to have their own Business Rescue Practitioner appointed and to bring back the EX CEO - Jarana. According to the unions his vision/business plan is no international flights for SAA, (maybe London only) and cut domestic, to be operated by Mango. Rumour has it that 250 pilots must go, then cabin and ground staff to follow.........a sure indication of route cuts as they would have kept the pilots & crew if other a/c was about to arrive.......everything is just speculation at the moment. Think only time will tell..............
Right, but the current schedule can be fulfilled by the A330/A350s. They'll need two more if they bring back daily HKG which seems unlikely in the short term. So why would getting rid of the A340s result in a further reduction in long haul flying?
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Re: SAA A340s up for sale

Unread post by evanb » Wed Jan 15, 2020 5:25 pm

Airwayfreak wrote:
Wed Jan 15, 2020 11:54 am
So are you saying Coleman Andrews did the right thing a few years ago ? This is not a P&L issue. The market value of A 340's has dropped dramatically in the past few years and nobody is buying. This was my point
This is entirely different to what Andrews did. Andrews sold assets at inflated prices to lessors who then leased them back to SAA in leases with back end balloon payments. This had the effect of inflating SAA's profits in the short run, and suffocating them in the future.
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Re: SAA A340s up for sale

Unread post by SandPiper » Wed Jan 15, 2020 7:17 pm

gregdeklerk wrote:
Wed Jan 15, 2020 3:33 pm
For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
Def not, the take off would make a spectacular YT video.
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Re: SAA A340s up for sale

Unread post by Joker11 » Wed Jan 15, 2020 9:29 pm

gregdeklerk wrote:
Wed Jan 15, 2020 1:53 pm
The problem is that no-one will be in a hurry to buy them. Worth about 8 -10 million US each. It may not be an easy sell. Do they want them and the engines and APUs to go as one lot?

Emirates and Turkish managed to clear theirs, but things didn't go well for Olympic A340s.
The Olympic A340s were owned by the Greek government. They had issues with the paper work. Something about being uncompleted. 2 have been scrapped and the other two were sold to an airline in Iran.

Turkish Airlines and Emirates are professional airlines that keep their reconds up to date. I assume SAA does the same.

Unles SAA finds a buyer. These A340s will end up scrapped.
In the battle between aeroplanes and the ground. The ground has yet to lose.

Aviation would be great, if it wouldn't be for passengers.
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Re: SAA A340s up for sale

Unread post by African Flyer » Wed Jan 15, 2020 9:51 pm

[/quote]

The 600's would be a great plane for a start up long haul company - or one that only flies a limited amount of long haul.
The lease value would be low - 300.000 - 350.000 per month or so...…. and that would easily offset the fuel costs ….

JK
[/quote]

So for a company like Hi Fly, it would be a good plane to lease?
Positive rate! :D
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Re: SAA A340s up for sale

Unread post by African Flyer » Wed Jan 15, 2020 9:53 pm

gregdeklerk wrote:
Wed Jan 15, 2020 3:33 pm
For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
343 uses CFM 56 engines. 332 and 333 use Rolls Royce Trent 700's
Positive rate! :D
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Re: SAA A340s up for sale

Unread post by trees » Wed Jan 15, 2020 11:20 pm

African Flyer wrote:
Wed Jan 15, 2020 9:51 pm

So for a company like Hi Fly, it would be a good plane to lease?
I think an ACMI company would rather own aircraft then lease. I think it was Evanb who was making a point in another thread that it was unusual for Hi Fly to have their A380 leased rather than owned.
gregdeklerk wrote:
Wed Jan 15, 2020 3:33 pm
For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
I’d be interested to know what spares commonality there is between the T500 used on the 346 and the T700 on the 330’s. Visually the front half of those engines look almost identical.
Last edited by trees on Wed Jan 15, 2020 11:23 pm, edited 1 time in total.
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Re: SAA A340s up for sale

Unread post by gregdeklerk » Wed Jan 15, 2020 11:22 pm

African Flyer wrote:
Wed Jan 15, 2020 9:53 pm
gregdeklerk wrote:
Wed Jan 15, 2020 3:33 pm
For much less than $8 million each then? I am assuming the 343 engines can't be used on the 332 and 333?
343 uses CFM 56 engines. 332 and 333 use Rolls Royce Trent 700's
Thank you. I am happy to learn.

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