Hawaiian Reveals Service Plans for Airbus Fleet

posted: 30 November 2007 05:31 pm ET

: Hawaiian Airlines has signed MOUs with Airbus and Rolls-Royce to order six A350-800s and to reserve purchase rights on six more, with the aircraft to be delivered starting in 2017. The MOUs also provide for Hawaiian to order six A330-200s and to reserve purchase rights on six more, with deliveries to begin in 2012. Credit: Hawaiian Airlines
: Although Hawaiian Airlines isn't due to receive the first A330-200 from its direct order with Airbus until 2012, CEO Mark Dunkerley said Hawaiian was already in discussions with leasing companies over leasing new and used A330-200s before then. The lease on four of the airline's Boeing 767-300ERs are due to end in the 2009-2010 period. Credit: Hawaiian Airlines

Hawaiian Airlines will use the Airbus A330-200s and A350-800s it is ordering to extend its route network to destinations in the eastern United States and throughout Asia, and to provide additional seating capacity on its existing long-haul routes.

The airline announced on Wednesday that it had signed a memorandum of understanding (MOU) to order six Airbus A330-200s and six A350-800s, the MOU also including purchase rights for an additional six aircraft of each type. Hawaiian Air also signed an MOU with Rolls-Royce to provide engines for all of the 24 Airbus widebodies covered in the deal.

New destinations that Hawaiian is likely to serve on a nonstop basis from Hawaii with its A330s include cities in the eastern United States, Sydney and Shanghai, as well as the airline's recently announced new route to Manila, said Mark Dunkerley, Hawaiian Airlines' CEO.

The 18 Boeing 767-300ERs that Hawaiian now operates on long-haul routes can reach these destinations, as well as airports in the eastern U.S., but only by incurring payload penalties in certain weather conditions, said Dunkerley.

However, the hot-selling A330-200, which he said was "half a generation" more advanced technologically than the 767-300ER, has no such payload restrictions. Dunkerley said Hawaiian's A330-200s and A350-800s would offer higher seat capacity, better fuel-efficiency, lower seat-mile costs and longer range than the airline's 767-300ERs.

Once Hawaiian converts the MOUs into firm orders, it will become an Airbus customer for the first time. It is also only the second U.S. airline (after US Airways) to commit to the A350 XWB, Airbus' competitive response to the Boeing 787.

Leases of additional A330s planned

Dunkerley said in a conference call with analysts that the airline also is planning to lease new -- and potentially also used -- A330-200s before the first A330 is delivered under its yet-to-be-finalized firm order.

The MOU with Airbus calls for Hawaiian to receive its first new A330-200 in 2012, and its first A350-800 in 2017. However, the airline expects the leases of more than half of its 767-300ERs to expire in the 2009-2014 period.

Hawaiian already has begun conversations with leasing companies with a view to introducing new or used A330-200s to its fleet "earlier than 2012," said Dunkerley. Its leases on four 767-300ERs terminate "in the 2009-2010 timeframe," and its leases on another four end in 2012.

Since Hawaiian could not be certain of the future availability of 767-300ERs, and wanted to assure long-term availability of aircraft before the major U.S. airlines begin placing large-scale orders for widebody aircraft to replace their aging existing fleets, the airline embarked on "an exhaustive RFP (request for proposals) process" with Airbus and Boeing, he said.

An important consideration for Hawaiian was that the Airbus-Rolls-Royce deal offered the airline a high degree of flexibility to grow or reduce the size of its long-haul fleet to respond best to future market conditions, added Dunkerley. The combination of aircraft availability dates, fleet flexibility, aircraft pricing and aircraft performance that Airbus offered provided the best deal for Hawaiian on a net-present-value (NPV) basis.

"I think the 787 is a terrifically capable aeroplane," said Dunkerley. But "we summed the NPV of the benefits from the aircraft types," and the Airbus offer proved the better of the two. "The decision we've made should in no way be taken as a criticism of the Boeing product," he added.

Hawaiian's Airbus seating plans

Dunkerley said Hawaiian would configure its A330-200s with approximately 305 passenger seats, adding that the airline envisages a 322-seat "hypothetical configuration" for its A350-800s. Each of the airline's 767-300ERs has 260 seats.

Although the trip-mile operating cost for each A330 will be slightly higher than for each 767, Hawaiian expects the A330 to offer approximately 5 percent lower fuel-cost per seat, as well as significantly improved cargo capacity.

The airline expects the A350-800 to offer a fuel efficiency approximately 20 percent better on a per-seat basis than its 767s. The A350-800 would allow Hawaiian to serve some Asian destinations nonstop from Hawaii that even its A330-200s would not be able to reach, said Dunkerley. The airline is interested in launching routes to Singapore, Hong Kong and other southeast Asian destinations with its A350-800s.

But while the A330-200s and A350-800s will offer Hawaiian longer ranges and more seats than its 767-300ERs, "the aircraft order will (also) help us on our existing routes," said Dunkerley.

"I feel very comfortable in saying the aircraft we have ordered will perform better in our existing markets than our existing aircraft," he said. "We have the U.S.'s very highest load factors -- traditionally they run from the mid-80s to the low 90s. This gives us a higher level of confidence we can fill a slightly larger aircraft."

Dunkerley said Honolulu-based Hawaiian Air expects to complete negotiating purchase contracts for the 12 firm-order aircraft early in 2008.