Boyd says LCC's have their problems approaching

[abe44]

Sorry Abe, minor BS flag on the play.....

At least for now,even with the huge concessions, DAL and NWA pay more for every widebody CA than Airtran pays the most senior 717 CA. Same for UAL(747-400 & 777) with the exception of 767 CA which is $4/hr less than AT 12yr 717CA.

Not that any of this matters, just trivia............

I stand corrected (for now)! The bleeding may not be over yet for NWA and DAL, but you're right about the current rates.

Abe44

 

[abe44]

Originally Posted by YourPilotFriend
How did the employees choke the life out of it? SWA has the highest paid employee's in the industry. Don't worry GuppyWN you can join the rest of us here in the paycut world soon. In my opinion, SWA will be in or near bankruptcy by 2008-2009.

Originally posted by Abe44
My prediction (you heard it here first!) is that LCC pilots/flight attendants/mechanics/gate agents/etc will be crying about their company coming to them for givebacks in the near future because they can't compete with the so-called "legacy" carrier costs.

C'mon guys. Delta started losing money in '01 and just declared BK in '05, almost 5 years of losses. Do you really think BK in 3 years will happen at a SWA? A carrier that now pays cash for a majority of their new aircraft (8% growth) and still posts a profit. With those pesky fuel hedges strong until the end of 2007 and some until 2009. IMHO, if you want to predict BK in 3 years pick a carrier posting losses with a less robust balance sheet.



Abe44,

Your assertion makes more sense, but I disagree. See the above paragraph. Mostly, I think the near future is too soon. The human nature factor will loom large and IF pay cuts are on the table, you are right, the whining will be louder than a T-37 during the second engine start.

Also, look at www.airlinepilotcentral.com Airtran, or any other pax carrier, does not pay narrowbody captains more than legacy widebody captains. Maybe ABX does.

For the record, I don't predict any LCC bankruptcies anytime soon (or ever), I just feel that many of the LCC cost advantages are disappearing (pension funding, pay rates, scheduling efficiences, to name just a few). At some point in the near future, many of the legacies will be able to produce the product for as little (or almost as little) as the LCC's can, while still enjoying a revenue advantage. At that point, some LCC managers will be looking for givebacks.

Abe44

 

[SWA/FO]

LCC might have a problem, but LCCs' in general NO.

 

[abe44]

AirTran's 2006 fiscal year average profit estimate ranges anywhere from a low of $0.70 per share (AirTran's own website: http://phx.corporate-ir.net/phoenix.zhtml?c=64267&p=irol-estimates) to a high of $0.88 per share (http://moneycentral.msn.com/investor/invsub/analyst/earnest.asp?Symbol=AAI). The spread from individual analysts varies from $0.24 per share (http://finance.yahoo.com/q/ae?s=AAI) to $1.44 per share. Of course, AirTran may surprise all of the analysts and post a loss for the next fiscal year, but even with the lowest estimate for 2006, profits should approximately double FY 04 results. None of the analysts that I saw are forecasting a loss in FY 06 at AirTran.

You are correct, sir! I don't know what I was looking at when I posted. I see now that '05 was basically a break-even year (with a slight 4th quarter loss), while predictions for '06 are exactly as you say.

Abe44
....gotta stop posting here after Super Bowl parties

 

[Uppercrust]

Of course, AirTran may surprise all of the analysts and post a loss for the next fiscal year,

Which anal-cysts are these???. ... Ty Girl Webb and Fletch152??

 

[Chronic Jetlag]

Boyd puts out his two cents worth after the fact; rarely does he have anything insightful to say. He looks at numbers then he makes a few predictions. Fun to read at best but nothing worth paying for.

 

[800Dog]

ATA, World, Omni, etc.

Not enough airframes but, nice try.

 

[Marko Ramius]

One big glass of haterade for all!!!!!!!!!

Boyd is an analyst, who like all analysts from Ray Neidl to Terry Bradshaw are right sometimes and wrong others. And just like a bunch of football fans getting mad getting mad because Bradshaw or someone else picked against their team, pilots, FA's, etc get all hot and bothered when Boyd says something that gores their ox. Unfortunately these are our careers, not games, so ignoring what people are saying and railing against the messenger carries a greater penalty. Funny how no one cares when Boyd or some other analyst talks against a carrier like United, but say something about a regional or an LCC and it's Red Storm Rising. Boyd was out there railing about issues with the first gen RJ's long before it became obvious to us really smart pilots. Is he obnoxious about things, no doubt, but people only care when he's shining the light on their a$$. Personally I think he makes some extremely valid points about the issues facing the LCC sector going forward. I think what he outlines primarily are issues, and not so much conclusions just yet. That seems appropriate because this is the first time in our industry that LCC's have played such a prominent role in the overall airline landscape, these issues are new to them, and it remains to be seen how their management teams will respond/handle them. It didn't look to me like he was forecasting mass BK's or the end of the world.

Gordon Bethune pointed out where this was headed back around late 2002 early 2003, when he started to question what would happen when the LCC's recieved so many aircraft that they had to fly them on less than optimum routes revenue wise, increasingly bumping into each other, all converging with restructured legacy carriers. I remember reading about in one of those industry forecast issues in Aviation Week. No one really cared because pilots and most analysts are alike in this manner: we don't care or believe unless it's right in front of eyes-anything else is bs. Air Transport World has been running various articles the last year or so questioning certain aspects of the LCC model. Beyond the aforementioned fleet issues, they also pointed to LCC's in parts of Asia failing, oversaturation and failures in some European markets, and the potential for Indian and Middle Eastern carriers being too exuberant. Their opinion seemed to be the primary reason it hadn't happened in the US yet was that the overall market was larger so it could support a higher percentage of LCC carriers before the issues showed, and the incompetence of US Network major carriers management vs. their counterparts across the world. They predicted the same convergence of the issues that Bethune, AvWeek and others did. For a good portion of 2004 both the CEO's at Southwest and AmWest pointed out that they felt the US had a few too many LCC's. Their moves since that time pretty much jibe with their leaders opinions. Airtran tried to get in on some of those moves, so it wouldn't surprise me if their management feels that way as well. Boyd isn't alone on this one, so why is everyone so mad. We're all just employees anyway, so we should just take in all the info and make the decisions or adjustments to our respective careers.

 

[FlyBoeingJets]

Very good post, Marko!!

I thought last quarter was going to be great for all LCCs. It's failure to deliver is very telling. We had great load factors everywhere yet JetBlue, Alaska, and even Airtran did not do well. (Yes I know they broke even, but how do you not make money while Delta is in such a retrenchment mode?) SWA didn't make as much as they should have. The legacies were constrained and couldn't cut fares further. '06 looks like a great year for LCCs but it may be the last before the coming storm. It may not even be as great as predicted.

We are definitely about to bump into each other and blood will be spilled. I predict the number of LCCs, including the really small players, to be cut in half in 3-4 years. Hopefully thru mergers but there will likely be some liquidations.

 

[Ty Webb]

Which anal-cysts are these???. ... Ty Girl Webb and Fletch152??

Yawn . . . . . you know, Crustypants, you started off OK, but lately, your stuff has just been so lame. . . . maybe you should just give it a rest for a while.