Airtran to cut growth in 09 and 10

[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!!!

 

[Kharma Police]

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!!!

Yeah!!!, someone else gets it!!

 

[fam62c]

What effect will the growth cuts have on morale and attrition? It seems that one of the most attractive things about AAI was the rapid upgrade to Captain. Based on what is happening now I would say a new-hire is looking at a 10-15 year upgrade. Seriously, this is no joke....do the math. The FO pay scale was never designed for this situation and it sure doesn't sound like the company wants to increase wages given the prevailing economic uncertainty. So what happens, do the FO's stick it out and hope that things turn around or look for jobs where they can make more money as a permanent FO? Even if the economy improves again where is AAI going to grow? Any airport that can support a hub has one already. Since MDW and MKE didn't work out they appear to be "landlocked." Maybe DAl/NWA will happen and free up some space. I hate to see an airline selling off delivery positions for aircraft thay they had a great deal on. If they need those planes in the future the deal will probably never be as good. Anyhow, tough times call for tough measures, at least AAI is in a better position than most to weather an extended downturn.

 

[PCL_128]

Based on what is happening now I would say a new-hire is looking at a 10-15 year upgrade. Seriously, this is no joke....do the math.

I'm doing the math, and it's not adding up. We would have to cancel every single one of the 60 planned deliveries before it got that bad. I'm planning on 5-6 years, and guys hired right now should plan on 7-8 to be safe. I don't think it will actually be that long, but I'd plan on that just in case. Still not horrible if we bring up the FO pay to reasonable levels.

So what happens, do the FO's stick it out and hope that things turn around or look for jobs where they can make more money as a permanent FO?

If you're senior to me, then I wholeheartedly recommend that you look for jobs elsewhere.

I hate to see an airline selling off delivery positions for aircraft thay they had a great deal on. If they need those planes in the future the deal will probably never be as good.

Personally, I think this is part of an advanced plan to order the next-gen 737 replacement. They probably realize that having a bunch of yesterday's 737 technology won't be the best bet if they can hold off a bit during the recession and then place a big order for the 737 replacement when that is announced by Boeing. But that's just a theory.

Guys, the big thing here is that it's impossible to predict any of this. Projecting upgrade times and growth is a fool's errand. UAL's 10 year upgrade could drop to 4 years and AAI's 3 year upgrade to jump to 12 years. You just never know. Trying to game this stuff and jump from airline to airline is usually a very bad idea. Just ask the SWA and UPS guys that jumped to UAL and DAL in early '01.

 

[Andy]

I'm doing the math, and it's not adding up. We would have to cancel every single one of the 60 planned deliveries before it got that bad. I'm planning on 5-6 years, and guys hired right now should plan on 7-8 to be safe. I don't think it will actually be that long, but I'd plan on that just in case.

So what kind of growth are you forecasting in order to make captain in 5-6 years?

When I got hired at UAL in 2000, the time to upgrade was two years. I'll let you know when I'm able to bid the left seat - I'm thinking another 10 years.
What's the time to upgrade for '89 hires at USAirways East? 25 years? Upgrades were happening in less than 2 years when they were hired.

Past performance does not guarantee future results.

AAI's fairly well positioned due to the small debt load that they carry, but as you stated, anything can happen in this business.

 

[PCL_128]

So what kind of growth are you forecasting in order to make captain in 5-6 years?

When I got hired at UAL in 2000, the time to upgrade was two years. I'll let you know when I'm able to bid the left seat - I'm thinking another 10 years.
What's the time to upgrade for '89 hires at USAirways East? 25 years? Upgrades were happening in less than 2 years when they were hired.

Past performance does not guarantee future results.

AAI's fairly well positioned due to the small debt load that they carry, but as you stated, anything can happen in this business.

Andy, I'm not basing my projection on current upgrade times. The latest vacancies went to 3-year pilots. My forecast of 5-6 years is based on receiving most of the currently planned deliveries and a small amount of attrition. I still think that more planes will be deferred or sold, but not a lot of them.

But in all honesty, this forecast is based on us remaining as a stand-alone carrier, and I don't see that happening. I think the DAL/NWA merger will ultimately go through, and that will start a landslide of consolidation. Who we end up with is anybody's guess, but I think the odds of us still being a stand-alone carrier 5 years from now are nill.

 

[SkiFishFly]

I hate to see us deferring deliveries - but they are just deferring them and not cancelling.
As far as cost advantage goes - we are flying very efficient 717s and 737-700s on routes where DAL and NWA have either MD-80s, DC-9s, or RJs. It would seem to me that the increases in the price of fuel would only make our cost advantage even greater - we are using considerably less fuel than our competitors on every flight.

 

[jonjuan]

It would seem to me that the increases in the price of fuel would only make our cost advantage even greater - we are using considerably less fuel than our competitors on every flight.

Yes, but you are charging passengers less for the fuel that you use (says so on the Airtran fuel trucks in ATL)
"Does the cost of travel have you cutting back in other areas?"
Whoops

 

[fam62c]

[I'm doing the math, and it's not adding up. We would have to cancel every single one of the 60 planned deliveries before it got that bad. I'm planning on 5-6 years, and guys hired right now should plan on 7-8 to be safe. I don't think it will actually be that long, but I'd plan on that just in case. Still not horrible if we bring up the FO pay to reasonable levels.]

PCL 128;

Maybe I'm doing something wrong but here's my assumptions: Let's say there's about 1650 guys on the list right now that's about 825 in each seat. Assuming that some CA's are in management and training positions and there are more CA's than FO's due to more vacation coverage let's say there is 925 CA's and 725 FO's. I'm guessing at the number of CA's, I don't work at AAI so I don't know. If you are a new FO hired today you would need 725 pilots senior to you to make CA before you would be a CA. Let's say they need 6 new CA's with each new aircraft, that's 360 new CA positions for the 60 planned new deliveries (which isn't 60 anymore anyway as I understand it). So 60 new planes only gets you halfway to CA assuming no attrition. Obviously there is some attrition but how much? They are taking 7 new planes a year, even if they took 10 new planes a year 6 years won't get a new FO to CA. I would say that unless the airframe growth is 10% a year and attrition is a factor a 10 year upgrade time for a new-hire is very likely. If you were to cancel "every single one of the 60 planned deliveries" upgrade would never happen for a new-hire unless he/she was in his/her early to mid 20's because AAI has a lot of young CA's.

I may have bad assumptions here so feel free to tell me where I'm going wrong.

 

[jehtplane]

[I'm doing the math, and it's not adding up. We would have to cancel every single one of the 60 planned deliveries before it got that bad. I'm planning on 5-6 years, and guys hired right now should plan on 7-8 to be safe. I don't think it will actually be that long, but I'd plan on that just in case. Still not horrible if we bring up the FO pay to reasonable levels.]

PCL 128;

Maybe I'm doing something wrong but here's my assumptions: Let's say there's about 1650 guys on the list right now that's about 825 in each seat. Assuming that some CA's are in management and training positions and there are more CA's than FO's due to more vacation coverage let's say there is 925 CA's and 725 FO's. I'm guessing at the number of CA's, I don't work at AAI so I don't know. If you are a new FO hired today you would need 725 pilots senior to you to make CA before you would be a CA. Let's say they need 6 new CA's with each new aircraft, that's 360 new CA positions for the 60 planned new deliveries (which isn't 60 anymore anyway as I understand it). So 60 new planes only gets you halfway to CA assuming no attrition. Obviously there is some attrition but how much? They are taking 7 new planes a year, even if they took 10 new planes a year 6 years won't get a new FO to CA. I would say that unless the airframe growth is 10% a year and attrition is a factor a 10 year upgrade time for a new-hire is very likely. If you were to cancel "every single one of the 60 planned deliveries" upgrade would never happen for a new-hire unless he/she was in his/her early to mid 20's because AAI has a lot of young CA's.

I may have bad assumptions here so feel free to tell me where I'm going wrong.

If you do not work for Airtran why do you care?

 

[PCL_128]

Maybe I'm doing something wrong but here's my assumptions: Let's say there's about 1650 guys on the list right now that's about 825 in each seat. Assuming that some CA's are in management and training positions and there are more CA's than FO's due to more vacation coverage let's say there is 925 CA's and 725 FO's. I'm guessing at the number of CA's, I don't work at AAI so I don't know. If you are a new FO hired today you would need 725 pilots senior to you to make CA before you would be a CA. Let's say they need 6 new CA's with each new aircraft, that's 360 new CA positions for the 60 planned new deliveries (which isn't 60 anymore anyway as I understand it). So 60 new planes only gets you halfway to CA assuming no attrition. Obviously there is some attrition but how much? They are taking 7 new planes a year, even if they took 10 new planes a year 6 years won't get a new FO to CA. I would say that unless the airframe growth is 10% a year and attrition is a factor a 10 year upgrade time for a new-hire is very likely. If you were to cancel "every single one of the 60 planned deliveries" upgrade would never happen for a new-hire unless he/she was in his/her early to mid 20's because AAI has a lot of young CA's.

I may have bad assumptions here so feel free to tell me where I'm going wrong.

The problem is that these strict mathematics never work. Lear70 and I were projecting 5-7 year upgrades at Pinnacle a few years ago. Based on the math, it made perfect sense. But our math didn't account for massive attrition, aircraft orders that nobody expected, etc... You simply can't project these things simply on the raw numbers that you have in front of you right now. Chances are good that attrition will continue, because lots of pilots have "shiny wide-body international jet syndrome." We're losing pilots every month to DAL, CAL, and others because they want to fly the big equipment for a legacy carrier. This isn't factored in to anyone's projections. Also, we have 100 age-65 retirements in the next 10 years. I think it's safe to say that most won't make it all the way to 65, so 150 is probably a more accurate number. I would also expect additional aircraft orders in the next 10 years. I would bet we'll place a very large order for the 737 replacement as soon as it's announced. None of these things are accounted for in the raw math.

Projecting upgrade times is a fool's errand.