I know it has something to do with the number of aircraft they can get. Does it mean that they can get that many more or cancel that number of aircraft in their order? Can someone elaborate?
2007-01-28 06:21:31 · 11 answers · asked by evofan 2 in Cars & Transportation ➔ Aircraft
Traditionally, what it means is that the customer and the manufacturer agree that the customer may purchase additional aircraft at the same price and with the same terms and conditions as the "firm" orders.
So, in December 2005, when Boeing and Australian carrier Qantas made a public an agreement for up to 115 Boeing 787 Dreamliners. The agreement included 45 firm order aircraft with 20 options plus purchase rights for an additional 50 airplanes.
So, of the three types (firm, option, "purchase right"):
Qantas will take delivery of 45 aircraft at dates specified in the contract at a price and configuration fixed in the contract. As it happens, these will be delivered between 2008 and 2011.
They may choose to take another 20 aircraft, again at a price and configuration specified, but they have to confirm that they want them sufficiently in advance. These would be typically be aircraft to be delivered in 2012 and 2013, so Qantas would confirm them no later than (say) 2010 or so.
Finally, the "purchase rights" are for aircraft that aren't yet configured; they could be shorter range 787-3s, long rang 787-8's, or ultra-long-range 787-9s. The formula for pricing them has been agreed, as are the date by which they must be ordered if Qantas wants them. The other reason Qantas got "purchase rights" is that it reserves them a space in the queue: 787 production is booked up through 2013, so being able to get priority treatment for deliveries in 2014 is valuable...
In summary: a firm order is simple, and is expensive to cancel. An option costs some money, but has no penalty for cancellation, and a "purchase right" costs less money again, and basically only locks in the price.
2007-01-28 07:33:46 · answer #1 · answered by Malcolm W 2 · 3⤊ 0⤋
When an airline orders planes, they often will order as an example, 10 with options for 10. I think this is the situation you are referring to.
What this means is they have placed an order for 10 actual planes that have been placed in the build order and will be built. The other 10 can be added into the build order at the request of the airline. They usually pay a small fee for the option to do so, significantly less than an actual order. This leaves them the option to change the model or type of planes they may need in the future depending on then current circumstances, yet provides the manufacturer with a possibility of additional planes to build.
2007-01-28 06:33:33 · answer #2 · answered by gabster_65 2 · 2⤊ 0⤋
When you read about an airline "buying 10 firm with options for 5 more" that means the options are not inked on the contract, but for a fee (usually 10%) they can reserve a spot in the line up, instead of going to the end of the line if they decide to purchase the options.
2007-01-28 08:50:27 · answer #3 · answered by strech 7 · 0⤊ 0⤋
I think it's because A380 sales have been dismal and Airbus probably gave them away to keep the production line running smoothly. Even though it is a firm order they may not take delivery of that many. If demand for the A380 picks up they might sell some of their delivery position to other airlines and make a profit on the deal. They might simply cancel some of the orders paying penalties to Airbus. Emirates is one of the few airlines in a position to place that big an order which gives them a strong bargaining position in negotiating the price.
2016-03-29 06:36:18 · answer #4 · answered by Anonymous · 0⤊ 0⤋
The opportunity to buy planes in the future. It takes years from the order of planes until the delivery of new planes. By purchasing options you will get a guaranteed place in line for future deliveries if you decide to take them. If not you just go to end of available delivery dates. Every airline gets different equipment on their own fleet so the manufacturer needs to know what equipment to put on each plane. Each airline has slightly different equipment (ie different avionics, engines etc...) installed on each aircraft so they cannot be just sold to a different airline without some modification.
2007-01-28 08:51:40 · answer #5 · answered by Doug G 3 · 0⤊ 0⤋
From what I understand, when an airline places an order with a manufacturer with options, they are obligated to buy a certain number for sure, with an option to buy more but not have to.
2007-01-28 06:36:00 · answer #6 · answered by Levi F 3 · 0⤊ 1⤋
yeah. besides the number of airplanes, there's the airplane's specifications.
interior arrangements/designs like electronic enhancements, seats and/or balancing the cargo bays size to the passenger area size.
besides the interior arrangements/designs, there is also the exterior aspects. such as the wing configuration which includes the sweepback angle, anhedral/dihedral angle, aerofoil type.
Hope this helps, Peace.
2007-01-29 18:49:13 · answer #7 · answered by urbanvigilante 3 · 0⤊ 0⤋
The buyer puts down money to buy more planes if the buyer should wish it and this buyer's order would have priority over an order placed later by someone else. If the buyer doesn't want any more planes the money is refunded.
2007-01-29 04:11:52 · answer #8 · answered by brian L 6 · 0⤊ 0⤋
the options that the airline orders are for the type duty they use them for.
cargo flight- no seats all deck
passanger flight- seats carpet, the whole thing ect.
2007-01-28 06:27:07 · answer #9 · answered by boostnutt 3 · 0⤊ 2⤋
how many seats should be in the plane.
2007-01-29 06:35:41 · answer #10 · answered by Prince of Persia 2 · 0⤊ 0⤋