Eagle757shark
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AirTran under pressure from Delta
posted by Jason Garcia on Oct 13, 2008 10:10:01 AM
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AirTran Airways is facing growing competition from arch-rival Delta Air Lines, as Delta tries to use the slumping economy to squeeze the smaller AirTran, according to an industry report out today.
A review of airline schedules by the stock-research firm Credit Suisse finds that Delta is scheduling more flights on AirTran routes out of Atlanta, where both airlines have hubs. The review finds that Delta has scheduled a 10 percent year-over capacity increase in markets where it competes with AirTran during the first quarter of next year, compared to only a 4.4 percent increase in non-AirTran markets.
"It is becoming increasingly evident that Delta has identified the worsening macro backdrop as an opportunity to crack down on" AirTran, Credit Suisse analysts Daniel McKenzie and Bryan Brokmeier write in a note to investors. The intensified competition will make it harder for Orlando-based AirTran to boost revenue by raising fares and fees, they write.
Credit Suisse had previously said AirTran was well-positioned to benefit from domestic capacity cuts by other airlines, as the low-cost carrier can make money on routes that legacy airlines deem unprofitable. "However, we now need to see competitive pressure from [Delta] ease to become more comfortable" with AirTran's ability to increase revenue in a poor economy.
AirTran is scheduled to report its third-quarter financial results Oct. 23.
posted by Jason Garcia on Oct 13, 2008 10:10:01 AM
Discuss This: Comments (0) | TrackBack (0) | Linking Blogs | Add to del.icio.us | Digg it
AirTran Airways is facing growing competition from arch-rival Delta Air Lines, as Delta tries to use the slumping economy to squeeze the smaller AirTran, according to an industry report out today.
A review of airline schedules by the stock-research firm Credit Suisse finds that Delta is scheduling more flights on AirTran routes out of Atlanta, where both airlines have hubs. The review finds that Delta has scheduled a 10 percent year-over capacity increase in markets where it competes with AirTran during the first quarter of next year, compared to only a 4.4 percent increase in non-AirTran markets.
"It is becoming increasingly evident that Delta has identified the worsening macro backdrop as an opportunity to crack down on" AirTran, Credit Suisse analysts Daniel McKenzie and Bryan Brokmeier write in a note to investors. The intensified competition will make it harder for Orlando-based AirTran to boost revenue by raising fares and fees, they write.
Credit Suisse had previously said AirTran was well-positioned to benefit from domestic capacity cuts by other airlines, as the low-cost carrier can make money on routes that legacy airlines deem unprofitable. "However, we now need to see competitive pressure from [Delta] ease to become more comfortable" with AirTran's ability to increase revenue in a poor economy.
AirTran is scheduled to report its third-quarter financial results Oct. 23.