Ramon Lopez/WASHINGTON DC
Guy Norris/LOS ANGELES
McDONNELL DOUGLAS (MDC) has launched its MD-95 on the back of a single 50-aircraft order from fast-growing low-cost operator ValuJet Airlines.
The value of the order from the successful low-fare US carrier based in Atlanta, Georgia exceeds $1 billion, and ValuJet holds options for a further 50 of the MD-95-30s which will carry 129 people in a single-class configuration.
ValuJet, which now operates about 40 older DC-9-30 twinjets, is also the launch customer for the BMW Rolls-Royce BR715 turbofan engine, a growth version of the BR710 used on the Gulfstream GV and Bombardier's Global Express.
The 94kN (21,000lb) European engine will now be offered exclusively on the MD-95, BMW R-R having beaten off a challenge from Pratt & Whitney, offering its mid-thrust family of engines. The P&W engine proposal is still in its infancy and, although P&W's bid was cheaper, ValuJet was not prepared to take the risk involved in a completely undeveloped powerplant. BR715 certification is scheduled for September 1998.
It was a see-saw battle, for the short-to-medium range 100-seater, which ultimately won out over the Airbus A319, the Boeing 737-600 and Fokker 100. At one stage, Airbus was in sole negotiation with ValuJet, but the bidding was re-opened when the European consortium failed to commit itself to guarantees on the break-even load factor on the A319.
"After an analysis which considered many factors, the MD-95 was deemed the right aircraft for ValuJet. No one single factor eliminated Boeing or Airbus," says Lewis Jordan, ValuJet's president.
The fact that ValuJet is getting the 50 twinjets discounted to about $20 million each is believed to have been a persuasive factor.
Harry Stonecipher, MDC's president and chief executive, says that launching a new aircraft programme with only 50 firm orders is a small risk to pay. "It will take a while longer," he says.
ValuJet will not receive its first MD-95 before June 1999. In the interim, it is acquiring eight additional used twinjets - five DC-9s and three 167-seat MD-80s - and it is searching the world for more used MDC aircraft.
The requirement for additional aircraft is becoming urgent as the carrier reported impressive performance gains in its third quarter results. Operating revenues grew to $1.09 billion, compared with $400 million in 1994. Operating income advanced to $36 million, against $10 million.
While analysts have been doubting ValuJet's ability to continue delivering performance gains, the carrier reported load factors up from 52.9% to 73.2% and operating margins at 33.6%, compared with 27.2% in 1994.