ATA faces trouble on bailout loan

[Carl_Everett]

Dizel8,


I get your point, and I don't think there should be A380s on every mainline route. But, look at Indy Air and their new problems---they aren't producing enough revenue with their 50 seat jets---you can't use 50 and 70 seat jets against larger mainline type aircraft when the low fares are abound. I know the low fares are hurting all of us---but the ability to fill those seats is key if you want any chance to try to squeeze a profit--and the more seats you have--the better chance to spread out the costs. Maybe the A380 would be good for some routes--but not every route.

Bye Bye---General Lee

General,

Could you please tell me where you are getting your information on Independece Air's revenue situation? They have not been flying for a full month yet, don't have the full route structure, and have not released any revenue information. Unless you have some inside information, I have to assume that you are pulling your ideas about large aircraft out of your arse.

 

[storminpilot]

http://biz.yahoo.com/e/040715/atah8-k.html


Form 8-K for ATA HOLDINGS CORP


15-Jul-2004

Other Events

ITEM 5. OTHER EVENTS ATA Holdings Corp. has announced that it does not expect to earn a profit in 2004. This updated guidance is a result of rising jet fuel costs and weakrevenues caused by aggressive pricing in the industry. ATA Holdings Corp. isimplementing cost-cutting measures to reduce the expected 2004 loss.

 

[FlyBoeingJets]

Someone correct me if I'm wrong, please, but aren't debt payments excluded from CASM calculations? Is it easy to look at the quarterly report to figure out how much debt servicing adds to CASM to get a more realistic look at costs?

With high debt at ATA, AA, and UAL (DAL?) costs have to be much lower just to match the costs at Southwest, JetBlue and Airtran. With the Great Fare War finally here I now see what some of us have been predicting. The beginning of the end for a big carrier and, now, maybe even another little one.

But Pan Am stayed alive on life support for years so the end may not be as near as it seems. Look for the sale of profitable routes or airplanes

 

[InclusiveScope]

http://biz.yahoo.com/e/040715/atah8-k.html


Form 8-K for ATA HOLDINGS CORP


15-Jul-2004

Other Events

ITEM 5. OTHER EVENTS ATA Holdings Corp. has announced that it does not expect to earn a profit in 2004. This updated guidance is a result of rising jet fuel costs and weakrevenues caused by aggressive pricing in the industry. ATA Holdings Corp. isimplementing cost-cutting measures to reduce the expected 2004 loss.

Well the solution is simple. ATA needs to fly larger airplanes so they can get their CASM down. Right General?

 

[Dizel8]

179 seats on the B-737, 200 on the 757-200 and 247 on the 300, that is according to their website.

 

[jjbiv]

175 pax on the 737-800 :-D

 

[On Your Six]

General,

Could you please tell me where you are getting your information on Independece Air's revenue situation? They have not been flying for a full month yet, don't have the full route structure, and have not released any revenue information. Unless you have some inside information, I have to assume that you are pulling your ideas about large aircraft out of your arse.

Hey Carl,

Chill out. I think GL is referring to the following article from Aviation Daily. Sure, it's cursory research, but the article makes some good points.


Source: Aviation Daily)
A cursory, unscientific analysis of Independence Air's loads by one investment firm on the Newark-Washington Dulles route suggests the airline has to boost its passenger numbers significantly to reach its breakeven load factors.

Merrill Lynch analyst Michael Linenberg noted in a research report that Merrill employees recently spent a day at Newark to track development of the new service. Independence offers 16 daily flights with 50-seat CRJ-200s from 6:30 a.m. to 9:30 p.m.

The investment firm figured that load factors to Dulles averaged 26.5%, and loads inbound from Dulles ran about 38.5%. "Granted, one day of data does not a trend make," Linenberg said. "It is our estimation that Independence will need to achieve a load factor in excess of 70% to break even. We are nonetheless concerned that the planes are not even half full, given the time of year."

Linenberg allowed that it takes time to build a brand, but Independence's planned 300 departures also warrant significant investment. "We estimate ACAI [Independence Air] will be running its cash levels down by more than 50% over the next six to nine months," he said. Merrill has assigned a sell rating to the carrier's stock.

On the operations side, Independence canceled one flight the day Linenberg was observing the operations. Air traffic control caused delays of four flights. He noted the remaining 12 were on time, with some arriving several minutes early.

Independence started flights June 16, and its year-over-year traffic stats for June fell in every category. Revenue passenger miles were down 24.5%, load factor 1.6 percentage points and block hours 23.1%. "If loads remain depressed into the fall, Independence may have to consider scaling back the scope of its operation," Linenberg said.

Meanwhile, a Maryland-based travel risk management company filed a trademark infringement complaint against Independence for referring to its CRJs as "iJets." The travel company, iJET, filed the complaint in the U.S. District Court for the Eastern District of Virginia. "Litigation was the only recourse that we had to protect our brand from the media blitz being carried out by Independence Air and their very targeted use of our registered trademark," iJET said.