Airtran to cut growth in 09 and 10

[Citrus531]

I wish some other departments at AAI would get some better pay too...that 50 cent raise every 6 months has really got me close to that yacht I've always wanted

 

[Eagle757shark]

It would seem to me that fuel goes up for everybody so if AirTran had a cost advantage over it's competitors at 65 they should maintain the same margin at 100/bbl. Everybody's ticket prices rise but AAI will still be cheaper. Also, AAI isn't flying old stuff like MD-80's and DC-9's so the fuel increase effect should be less for them. I suppose as ticket prices rise the number of travelers begins to shrink and load factors fall. Still, people choose the cheapest carriers for the most part and AAI will still be cheaper. Maybe as ticket prices rise AAI will actually get more business because former legacy business customers will now have to book AAI. AAI grew fast post-9/11 in a rotten economy, what's changed here?

AirTran grew post 9/11 as a result of carriers being in distress. US Airways, United, Independence Air all were in bankruptcy and shed routes on the east coast. This allowed AirTran to have some success. The difference today vs then: Fuel was not over 100 dollars a barrel, there was not a recession, the dollar wasn't where it is today, there wasn't a credit crunch and the large legacy carriers were at a disadvantage because their cost were out of control. That is not the case today. AirTran is playing on a more level playing field this time. That is one of the reasons why AirTran is selling airplanes and is hunkering down for the economic downturn. The dynamics today are totally different than the dynamics after 9/11. AirTran's main revenue stream still comes from leizure traffic and as the consumer is cutting back on spending, leizure travel is the first to go. AirTran attempted to gain a hub in MDW, and MKE and did not have success. One of those hubs were a major part of AirTran's strategic long term plans. It didn't happen and there is no place to put 60 airplanes right now so it is time to sell airplanes. AirTran can not go into IND, STL, MCI and attempt to start a hub right now. It would be suicide. So it is time to hunker down and wait and see how the industry shakes out through the economic downturn. Of course AirTran is hoping consolidation will kick in and a couple of mega mergers will take place. We shall see.

 

[bleagle]

AirTran grew post 9/11 as a result of carriers being in distress. US Airways, United, Independence Air all were in bankruptcy and shed routes on the east coast. This allowed AirTran to have some success. The difference today vs then: Fuel was not over 100 dollars a barrel, there was not a recession, the dollar wasn't where it is today, there wasn't a credit crunch and the large legacy carriers were at a disadvantage because their cost were out of control. That is not the case today. AirTran is playing on a more level playing field this time. That is one of the reasons why AirTran is selling airplanes and is hunkering down for the economic downturn. The dynamics today are totally different than the dynamics after 9/11. AirTran's main revenue stream still comes from leizure traffic and as the consumer is cutting back on spending, leizure travel is the first to go. AirTran attempted to gain a hub in MDW, and MKE and did not have success. One of those hubs were a major part of AirTran's strategic long term plans. It didn't happen and there is no place to put 60 airplanes right now so it is time to sell airplanes. AirTran can not go into IND, STL, MCI and attempt to start a hub right now. It would be suicide. So it is time to hunker down and wait and see how the industry shakes out through the economic downturn. Of course AirTran is hoping consolidation will kick in and a couple of mega mergers will take place. We shall see.

Leisure travel will not go down... check out AAI and LUV ticket prices. When gas hits $4.00+...like it has out west... people will continue to travel leisurely. Ask the average joe or joan how much they spend on gas per month... I spend a little over $200.00/month. I just checked AAI prices round trip from ATL-LAS for
the last weekend in March... the cost $400.00+.

Have you seen SWA special offers? One way for $49 -$89!

Also, I am not so sure that legacy costs are under control due to higher oil costs, weaker dollar...etc..

I wouldn't sleep on AAI... they made SWA and NWA spoil their MDW and MKE deals respectively. Just ask the SWA guys which airline do they consider there competitor!

 

[bleagle]

AirTran grew post 9/11 as a result of carriers being in distress. US Airways, United, Independence Air all were in bankruptcy and shed routes on the east coast. This allowed AirTran to have some success. The difference today vs then: Fuel was not over 100 dollars a barrel, there was not a recession, the dollar wasn't where it is today, there wasn't a credit crunch and the large legacy carriers were at a disadvantage because their cost were out of control. That is not the case today. AirTran is playing on a more level playing field this time. That is one of the reasons why AirTran is selling airplanes and is hunkering down for the economic downturn. The dynamics today are totally different than the dynamics after 9/11. AirTran's main revenue stream still comes from leizure traffic and as the consumer is cutting back on spending, leizure travel is the first to go. AirTran attempted to gain a hub in MDW, and MKE and did not have success. One of those hubs were a major part of AirTran's strategic long term plans. It didn't happen and there is no place to put 60 airplanes right now so it is time to sell airplanes. AirTran can not go into IND, STL, MCI and attempt to start a hub right now. It would be suicide. So it is time to hunker down and wait and see how the industry shakes out through the economic downturn. Of course AirTran is hoping consolidation will kick in and a couple of mega mergers will take place. We shall see.

Leisure travel will not go down... check out AAI and LUV ticket prices. When gas hits $4.00+...like it has out west... people will continue to travel leisurely. Ask the average joe or joan how much they spend on gas per month... I spend a little over $200.00/month. I just checked AAI prices round trip from ATL-LAS for
the last weekend in March... the cost $400.00+.

Have you seen SWA special offers? One way for $49 -$89!

Also, I am not so sure that legacy costs are under control due to higher oil costs, weaker dollar...etc..

I wouldn't sleep on AAI... they made SWA and NWA spoil their MDW and MKE deals respectively. Just ask the SWA guys which airline do they consider there competitor!

 

[Ty Webb]

Eagle757Shark:
You usually post some pretty insightful stuff, but I think you are making some assumptions here that are at odds with what we are seeing on the line . . . and these observations are backed up by the load factors.
Part of the reason that AAI did well after 9/11 is that the BUSINESS travelers cut back . . . or found cheaper alternatives . . . . like AAI. More and more teleconferencing goes on every day, but you can't teleconference a wedding, a funeral, a family get-together. . . .
February is usually slow . . . my flights last week were either oversold, or were within 10 seats of being full . . . people are traveling, and will keep traveling. Also, we're not selling airplanes out of our fleet, just taking fewer deliveries. TW

 

[Eagle757shark]

Leisure travel will not go down... check out AAI and LUV ticket prices. When gas hits $4.00+...like it has out west... people will continue to travel leisurely. Ask the average joe or joan how much they spend on gas per month... I spend a little over $200.00/month. I just checked AAI prices round trip from ATL-LAS for
the last weekend in March... the cost $400.00+.

Have you seen SWA special offers? One way for $49 -$89!

Also, I am not so sure that legacy costs are under control due to higher oil costs, weaker dollar...etc..

I wouldn't sleep on AAI... they made SWA and NWA spoil their MDW and MKE deals respectively. Just ask the SWA guys which airline do they consider there competitor!

There is not much difference today between legacy and so called low cost carriers. Don't by into that any longer. Most aviation experts will tell you there is no real difference other than the product that each airline offers. You say, "I am not so sure that legacy costs are under control due to higher oil costs, weaker dollar...etc..". I don't understand your argument. High fuel cost are hurting every airline. Southwest is hedged the best and will be able to use that to their advantage. AirTran does have some fuel hedged. Which airline does Southwest consider to be their competitor: American, Delta, Northwest, Jetblue, Spirit, AirTran, US Airways, Continental, Alaska.... My point, AirTran is no more or less of a threat than all the other carriers I just mentioned. AirTran has a hub in Atlanta and is a domestic only carrier. Southwest is a domestic carrier but it is not a hub and spoke carrier it is a point to point carrier. It has a true national network. AirTran does not. I don't mean to bust your bubble. AirTran is doing ok! But they are not this super low cost carrier that is going to shake up the airline industry. Management will have to manage to navigate this airline on an even playing field through the upcoming downturn in this industry. IN OTHER WORDS, just call me cautiously optimistic.

 

[Eagle757shark]

Eagle757Shark:
You usually post some pretty insightful stuff, but I think you are making some assumptions here that are at odds with what we are seeing on the line . . . and these observations are backed up by the load factors.
Part of the reason that AAI did well after 9/11 is that the BUSINESS travelers cut back . . . or found cheaper alternatives . . . . like AAI. More and more teleconferencing goes on every day, but you can't teleconference a wedding, a funeral, a family get-together. . . .
February is usually slow . . . my flights last week were either oversold, or were within 10 seats of being full . . . people are traveling, and will keep traveling. Also, we're not selling airplanes out of our fleet, just taking fewer deliveries. TW

Thanks....all I'm saying is that AirTran has done ok the last 8 years. The challenge going forward is that the economic situation post 9/11 is different than what we face today. After 9/11 the country wasn't facing $100 dollars a barrel, a credit crisis, and the dollar wasn't in the tank compared to the euro. We crewmembers always associate load factor with making money. Not the case. Lets evaluate the yield. Yes, people are filling up are airplanes I see that on the line as well. True AirTran is not selling airplanes currently in its fleet, but AirTran is selling airplanes on order. All I'm saying is because the dynamics are different than post 9/11, AirTran is hunkering down to see what happens. That may not be a bad thing, we will just have to see what happens. Reality is, where is AirTran going to put all those new airplanes right now? Rather than lose money in a economy that is struggling, AirTran is hunkering down and thats all. Just cautiously optimistic!

 

[instructordude]

"I would say right now I'm not sure we would put that agreement back on the table. That was a $65-a-barrel agreement, and that's not where we are," Fornaro told analysts at the Raymond James Annual Institutional Investor Conference in Orlando. "We're taking a fresh eye as to what we're going to put on the table."

Wow that sucks, maybe you guys should have taken the first offer. Seriously.

 

[Eagle757shark]

Wow that sucks, maybe you guys should have taken the first offer. Seriously.

NO THANKS!

 

[PRINCE AKEEM]

Wow that sucks, maybe you guys should have taken the first offer. Seriously.

You are hilarious! Whoever you are, I know your rhetoric is fake, but funny at that. I always laugh at the guys that get worked up over your input. Keep 'playing with fire' baby!!!