Boyd's take on the F9/WN/UA showdown

[PHXFLYR]

USAir is history, they were purchased by AWA and will be run by Dave Parker. All that will remain in a few years is the paint job.

The paint job..??? I think that was the FIRST thing to go!!
And by the way,it's "Doug" Parker to you, mister


PHXFLYR

 

[Skyrunner]

It'll be called the, 'I'm a really smart pilot who really can't stand to hear anything even remotely negative about any company I may work or wish to work for, so I will dig feverishly to find any amount of information to discredit said opinion(s) or simply ignore them-unless they agree with me, than never mind it's obviously true everyone can see it' Group. I think that may not all fit on the groups charter message, and could possibly be a run-on sentence, I'll run it by a publisher whose work I like to be sure though.

Good point. I don't mind criticism as long as it's from one of my own or a neutral party. Boyd Group is not neutral!!!! How do they get away with calling themselves experts and getting press on FOX and CNN. This is far worse than the crusty old ret. Viet Nam Col. getting on CNN and telling the American public how bad things are for us in Iraq when they have never even been deployed for ONE LOUSY DAY in theatre.

C Ya on my commute. Hope I can repay the courtesy on 3 Jan.

SR

 

[Doug Parker]

The paint job..??? I think that was the FIRST thing to go!!
And by the way,it's "Doug" Parker to you, mister


PHXFLYR

Make that MISTER Doug Parker.........what do you want ??

 

[G4G5]

The paint job..??? I think that was the FIRST thing to go!!
And by the way,it's "Doug" Parker to you, mister


PHXFLYR

Oops. My mistake, I was talking to a guy named Dave when I was typing. It just goes to show I can't do two things at once.

 

[PHXFLYR]

Oops. My mistake, I was talking to a guy named Dave when I was typing. It just goes to show I can't do two things at once.

Don't worry.......neither can I !! Maybe that's why we became pilots


PHXFLYR

 

[michael707767]

say what you want about the Boyd group, but I think the bottom line is this......if they were wrong more than they were right, they would be out of business. No one is going to pay them for bad advice/information.

 

[Spudbud]

What gets me is that all of these "experts" seem to think that DEN is the center of the universe and that SWA's success will depend on their ability to sway pax away from UAL and F9. Last time I checked, we've got a gazillion loyal customers in 60+ plus other cities who probably are thrilled they can now get to DEN on SWA so the so called "battle of Denver" is only 1/2 of the story.

 

[canyonblue]

Nothing wrong with DAVE Parker................

http://mlb.imageg.net/graphics/product_images/p1112341dt.jpg

 

[ivauir]

say what you want about the Boyd group, but I think the bottom line is this......if they were wrong more than they were right, they would be out of business. No one is going to pay them for bad advice/information.

Um that is a pretty flawed premise. Lots of people get paid to tell people exactly what they want to hear. When it comes to SWA the Boyd group has been wrong more than they've been right.

 

[whymeworry?]

You SWA guys are classic. Someone draws attention to flaws in your profit model and you immediately attack his credibility. Kind of like the ATA CEO whining about the Budweiser commercial (discount airline guy). Sure that song was a bit harsh but it was a joke and his crying just furthers the cause of political correctness in this country... which I think we can all agree has gone too far. LCCs have had no problem taking pot-shots at the antics of Legacy carriers over the years. Someone takes a shot at them and everyone starts crying. If you're gonna dish it, ya' gotta' take it to.

Now, about Boyd. I have been followng this guy since 1997. I don't really think of him as an analyst, rather he is more of a strategist. BIG difference. Wall Street analysts have an agenda. Their firm with makes a market in the stock they are promoting or demoting AND their firm usually has an investment banking relationship with that company that is worth hundreds of milions of dollars. No doubt there is pressure from their own firm to be tactful about their opinions. By contrast, Boyd sells his strategic advice to based on the facts. Whether Boyd has deals with Embraer or legacy carriers is not nearly as relevant as is his phenomenal record of using trend analysis to suggest strategies for the future of our industry. You better believe Embraer listened up to Boyd when they decided to ditch the 50-seat RJ in favor of a 70-100 seater. When EMB made this decision, many analysts were predicting their demise since they spent some many billions of dollars producing a plane for which there was not yet any demand. That investment paid off for them big time.

Having followed Boyd for as long as I have, I would say, in general, Boyd is always way ahead of competition. In the 1990s Boyd called the coming of the Age of the RJ. Major Airline pilot groups ignored this observation thereby ignoring the threat to their flying. Even ALPA national missed it. Only when 2500+ RJs were on the scene did Major pilots start to get a clue that their 73/DC9 flying was being replaced. By that point it was too late. Then, in 2002, Boyd reminded the industry that RJ operators are now "vendors of lift", so-called virtual airlines. He began to predict changes to the RJ industry as we know it. He went on to say the heyday of the 50 RJ is coming to an end and that 2003 and 2004 would be "the year of the 70-seater". At that time, Embraer had NO ORDERS on the books for the 70 seater except for a small order from LOT Polish Airlines and Jet Airways of India (Jet eventually cancelled their order). By the end of 2004 Embraer's order book for 70-100 seaters was completely backlogged.

As economics change, Boyd regularly adjusts his forecasts based on fundamental analysis and trend analysis. If your on the wrong side of his prediction, of course your going to call him the village idiot. But if you're on the right side of the equation, you think he is the best thing since... blah, blah blah. I've been on both sides of his firm's predictions and I can honestly say he is right most of the time. That said, he is right nearly all of the time when you factor in the change in analysis that occurs as a result of a change in economics and the overall business environment. You can ignore this guy if you want but he didn't build a highly reputable firm by dishing out bad advice ansd nonsence. And he didn't just pop up yesterday, hes been around for years.

Don't bury your head in the sand like ALPA/ APA did. ALPA's ignorance on this subject cost tens of thousands of major pilot jobs. If the major pilots made sure they got the new RJ flying, the blood bath over the past few years wouldn't have been so bad. When I say ALPA, I mean the pilots of ALPA. THEY are the ones that ignored the onslaught of the RJ... until it was too late to stop. They were warned in the 1990s. They (we) weren't proactive enough to protect our flying.

Incidentially, I posted the Oct 10th Boyd report, about the end of 50-seat operators as we know it, on a regional airline pilots forum and the post was deluged with comments about what an idiot Boyd is. So over the past 10 years, they loved his predictions as he proclaimed the sheer momentum of the RJ, now that economics have changed and he has had to modify his analysis, they poo-poo his ideas and comments. It appears the RJ pilots are now starting to bury their heads in the sand much the way Major pilots did in the late 1990s.

When I was at the "Regionals" I made six figures as an RJ capt and I had amassed a decent-sized retirement through my compay's 401K match as well. I was senior, holding 17-18 days off a month, home nearly every night if I wanted to be, and and I had nearly 3 months a year of vacation on top of al that. I had a great life and with all the days off an envious lifestyle. Yet I took the pay cut to move on to the majors (first year starting pay) because I listened up to Boyd's advice. Back in 2002, he began to call the end days of the 50 seat RJ as economics began to change. A lot of my friends chose to stay behind at my company because of the schedule, the "senior" lifestyle and hopes of bigger equipment under the belief that "regional" airlines will continue to build critical mass. The jury's still out on what the outcome will be. Whatever it is, Boyd's prediction of dark clouds on the horizon for SJPs confirms even more my belief that I made the right decision to bite-the-bullet and move on. Regardless on the plight of the RJ, I am glad I moved on but I do not wish any ill-fate on my RJ brothers and sisters. I never forget my roots.

 

[SWA/FO]

Flaws in your profit? How can you have a flaw in your profit? Does that mean that UAL, NWA & AA are all flawless, since they don't make profits?

 

[whymeworry?]

Flaws in your profit? How can you have a flaw in your profit? Does that mean that UAL, NWA & AA are all flawless, since they don't make profits?

I was referring to Boyd's statement that the great SWA, without fuel hedges, is actually losing money, hence their business model is not as bullet-proof as all Wall Street analysts have suggested. This was from an earlier Boyd report.

Of course, regardless of Boyd's statement, SWA is making a profit because they did hedge fuel. But Boyd was suggesting that when fuel hedges end, the LCC model will have to change if they intend to remain the darlings of Wall Street. Gee, where do you think management is going to go for those changes?

UAL/NWA/AA all had flawed business models but that was quite largely due to their ignorance about fuel hedging. Ironically, up until fuel price spikes at the beginning of this decade, every airline in the world regularly engaged in hedging practices. But they did so on the advice of Wall Street analysts. When those same analysts were predicting fuel prices to retreat at $30, $40, and $50 price points, it was all the airlines could do but listen to that advice and wait for prices to drop before they resumed fuel hedeging programs. Well, as all of us now know, Wall Street got it wrong and so did the purchasing departments at all the majors.... worldwide! In the meantime, Exxon and Shell made more in the third quarter profit of this year than the airlines have collectively lost in the past 5 years. SW got it right and that has given them the catalyst to maintain momentum with their growth model. If fuel prices drop, and I pray they do, SW has nothing to worry about. But if fuel prices remain high as SW hedges mature, they will have to address their profit model, which means cost-cutting or capacity cuts. By contrast, the Legacy carrier have spent the better part of 4 years overhauling their balance sheets and proactively changing their business models (to the extent that it's possible to do so). This translates into "leaner-n-meaner" carriers that can more apltly compete both here in the US and abroad... even with crude at $60 per barrel.

Don't shoot the messenger. I my earlier comments were just referring to Boyd's report.

 

[Slug]

Profit without hedge

Actually, we made a profit the last two quarters without the hedging. I don't know the exact numbers, but if you take out some of the tax liability and whatnot, the bottom line is we were profitable. Gary Kelly even said so.

At first look, I know it doesn't appear that way, because hedging profit was greater than total profit. However, there are some costs/taxes from hedging that isn't reported as such.

Boyd is ill informed and opinionated against us. I don't really care about that, but it hurts us with the public when a so-called expert puts out a negative spin. This paragraph alone (talking of seat assignments, or lack thereof) shows that Boyd is biassed and uninformed about us.
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But it's woefully outclassed in long-haul and transcon markets. That family of four that didn't have a computer to check in early at WN, might find that little Johnny may have to sit in 34E, six rows from mamma, between two Mohammed Atta look-alikes on their way to a jihad convention in 'Vegas.


Oh well, every talking head is always right, right? We'll do okay, don't worry, be happy.


Slug
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[Skyrunner]

Slug,

Were you in Viking 9? Profile looks a little suspicious.

CYa

SR

 

[ivauir]

You SWA guys are classic. Someone draws attention to flaws in your profit model and you immediately attack his credibility. Kind of like the ATA CEO whining about the Budweiser commercial (discount airline guy). Sure that song was a bit harsh but it was a joke and his crying just furthers the cause of political correctness in this country... which I think we can all agree has gone too far. LCCs have had no problem taking pot-shots at the antics of Legacy carriers over the years. Someone takes a shot at them and everyone starts crying. If you're gonna dish it, ya' gotta' take it to.

Um, WTF? Why are bringing up a BEER ad? Overall Boyd has been off base WRT SWA. I guess we'll see, but I betcha the folks in Dallas are pretty sure DEN will work out OK for us this time. If not they'll have a lot of egg on their face ...

 

[Slug]

Viking IX

Yep, I'm a niner, or a IXer. '88 - best to date, pep rally!


Slug


Give me a hint, were you a IXer, too?

 

[buttercup]

Boyd is overrated. He made his reputation off of the whole RJ craze, since then his legions of followers have been hugging his nuts as if he's the Alpha and the Omega!!

 

[whymeworry?]

Actually, we made a profit the last two quarters without the hedging. I don't know the exact numbers, but if you take out some of the tax liability and whatnot, the bottom line is we were profitable. Gary Kelly even said so.

At first look, I know it doesn't appear that way, because hedging profit was greater than total profit. However, there are some costs/taxes from hedging that isn't reported as such.

Boyd is ill informed and opinionated against us. I don't really care about that, but it hurts us with the public when a so-called expert puts out a negative spin. This paragraph alone (talking of seat assignments, or lack thereof) shows that Boyd is biassed and uninformed about us.
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But it's woefully outclassed in long-haul and transcon markets. That family of four that didn't have a computer to check in early at WN, might find that little Johnny may have to sit in 34E, six rows from mamma, between two Mohammed Atta look-alikes on their way to a jihad convention in 'Vegas.


Oh well, every talking head is always right, right? We'll do okay, don't worry, be happy.


Slug
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Ummmm... Dude, did you even read the Boyd article? He praises SW mgmt for knowing it's business well and for recognizing all the threats they face. Furthermore, he praises SW mgmt for paying their employees well and for being a formidable player. All he is saying is that the economics of competition for the LCC are changing and it's not going to be an easy process to make it in DEN. If anything, he ripped UAL apart for that operation called TED. I don't see how he was all that negative about SW so how can you say he hates you guys. Rather, he was exposing the fundamentals of y'alls business models with respect to future market expectations.

 

[whymeworry?]

Boyd is overrated. He made his reputation off of the whole RJ craze, since then his legions of followers have been hugging his nuts as if he's the Alpha and the Omega!!

Yeah, your the expert, right? Uh-huh and so I guess Wall Street knows their sh!t and Boyd is over-rated, right? Have you ever taken the time to read any Boyd reports? Then track their usefulness? He doesn't just predict RJ prowess, or lack thereof as is the case of late, he address every segment of aviation.

You've got a lot to learn. Keep burying your head in the sand though. See how well ignorance worked for ALPA pilots of major carriers.

 

[T45Flyer]

Look at the numbers.

Last three quarters: CASM (excluding fuel) has dropped every quarter. Yes folks, this does include those pay raises!

Last 4 years: SWA has gained around 90 aircraft and has REDUCED employee headcount from 36,000 to 31,000. Productive.

Summary: Just because SWA has industry high employee pay RATES, does not mean that we have industry high employee COSTS. SWA is tirelessly working on every aspect of costs 365 days a year.