Re: PR aircraft

Posted by Eurest on
URL: http://philippine-aviation-forum.259.s1.nabble.com/Airlines-in-the-Philippines-tp2p407.html

An Option is an agreement to buy additional aircraft at a specified time at the same price as the firm orders.
Unlike orders, aircraft purchasers may either have deposits or not to secure options, and if the options are declined, they don't carry the same stiff penalty as a cancelled order.
If their was no deposit to secure the options, then there usually is no corresponding penalty this way as in this case, it is the aircraft manufacturer that included the option as an additional incentive to secure the firm order.
It's usually options that have deposits received by the manufacturer that are disclosed in the manufacturer's respective financials.
As a strategy, purchasers will likely decline options if the bluebook value of the aircraft has decreased since signing the order with the options.
Unlike orders, you cannot defer delivery dates for the options, there is actually a timetable to exercise these options or to decline them so as not to constrain the manufacturer's delivery slots.

So PR had 20 options for A321 NEOs during the initial 54 aircraft order which included 10 A321 NEOs.
When it converted 5 2015 A330s into A321 NEOs instead, it declined 8 of the 20 options for A321 NEOs leaving 12 options. Now, PR has further declined 8 of those options leaving the 4 remaining options mentioned in the article.

If anyone is interested, or might ask. An MoU just merely outlines the general terms and principles in an upcoming order. It's like a promissory note to buy aircraft except their are no financial penalties usually. Though, the airline manufacturer will usually decrease its' discounts to that purchaser that reneged on the MoU when it enters into a new transaction with them.

If NAIA congestion continues, we might see CEB and DVO revert to A330s and cancell out 2 to 3 A321 frequencies, opening up new routes for expansion.
So instead of 10 frequencies to Cebu with most of them operated by narrowbodies, you might see 5-6 frequencies instead with most of them widebodies so that PR allocates those 4-5 frequencies' landing and takeoff slots on to other destinations for expansion.
So the notion that PR bought too many A330's may not hold true, and in fact it may not be enough.
And now that the A330 NEO has launched requiring Airbus to fill up the backlog before the NEO's EIS, Airbus has increased the discounts on the A330 CEO further so that may indeed be cheaper than when PR odered in 2012.