Delta restarting SEA to ANC and LAS

[ackattacker]

I gotta admit Andy, that while I don't disagree with your analysis, it's a bit strange to bring it into this thread.

You may have a point about the big boys smelling some blood in the water, but I don't see SEA-ANC or SEA-LAS as direct competition with VX out of SFO. I think it's more about the point-to-point traffic and is certainly more of a shot across the bow of UA, AS, and WN who operate those routes currently. Obviously any added capacity to ANC and LAS is bad for VX, but it seems like a pretty roundabout way to go hurting them.

 

[Andy]

I gotta admit Andy, that while I don't disagree with your analysis, it's a bit strange to bring it into this thread.

You may have a point about the big boys smelling some blood in the water, but I don't see SEA-ANC or SEA-LAS as direct competition with VX out of SFO. I think it's more about the point-to-point traffic and is certainly more of a shot across the bow of UA, AS, and WN who operate those routes currently. Obviously any added capacity to ANC and LAS is bad for VX, but it seems like a pretty roundabout way to go hurting them.

I normally wouldn't have tied these new routes with VX but if you look at just about every new route announced by DAL, UAL, LUV, and JBLU, almost all of them both originate and terminate in cities served by VX.

If you look at new VX routes that have been announced, you'll notice that at least one other carrier has responded by either initiating or adding service to that route. The only exception has been LAX-LAS.

In response to EWR-SFO, UAL has added flights to the point where they offer near hourly service.

In response to AUS-SFO, both UAL and JBLU have added service.

In response to ANC-SFO, UAL has added service. Indirectly, DAL has added LAX and SEA - ANC service.

In response to SJC-LAX, DAL and JBLU have initiated service. UAL and LUV have added service.

All of those additions have occurred within a week or two of VX's announcements. Coincidence? Maybe, but each additional announcement overlapping new VX service makes it less coincidental.

 

[slaquer5]

Or maybe RA is trying to prevent one Delta Connection carrier (AS) from dominating a hub again, like Comair once did.

I hardly would put Alaska in the same category as Comair.

 

[CesnaCaptn]

I hardly would put Alaska in the same category as Comair.

When I call AS a DCI carrier it is tongue-in-cheek.

What I'm referring too was the state of DCI before OH went on strike. Back then SkyWest covered SLC, OH covered CVG and I think a little NYC and ASA did ATL and DFW (my memory is a little fuzzy). Anyway, after OH went on strike, DL started mixing up the DCI carriers in each hub. Presumably, that was so that one DCI carrier acting out of line with either costs or performance, wouldn't shut the hub down.

I don't have a clue how the AS/DL codeshare is written, but if AS decided it wanted out, if would effectively kill the SEA-Asia hub for DL. I haven't seen the flight times for the new DL flights out of SEA, but I hear they match up well with the HND flight. Maybe DL is looking to the future and it might not include AS, so they are preparing for that.

Additionally, every time AS carries a DL pax, I'm guessing DL is getting less revenue/profit than if they carried the pax on their own metal. Maybe DL knows that certain times of the day on certain routes, they would just be better off carrying their own pax, rather than splitting the cash.

 

[Flyer1015]

Wow. That's a pretty large number to overcome, everday, day in and day out.

Wow. That's like, a really large number, I wonder where he pulled that number from?

 

[Flyer1015]

I normally wouldn't have tied these new routes with VX but if you look at just about every new route announced by DAL, UAL, LUV, and JBLU, almost all of them both originate and terminate in cities served by VX.

If you look at new VX routes that have been announced, you'll notice that at least one other carrier has responded by either initiating or adding service to that route. The only exception has been LAX-LAS.

In response to EWR-SFO, UAL has added flights to the point where they offer near hourly service.

In response to AUS-SFO, both UAL and JBLU have added service.

In response to ANC-SFO, UAL has added service. Indirectly, DAL has added LAX and SEA - ANC service.

In response to SJC-LAX, DAL and JBLU have initiated service. UAL and LUV have added service.

All of those additions have occurred within a week or two of VX's announcements. Coincidence? Maybe, but each additional announcement overlapping new VX service makes it less coincidental.

Here is VX's adjustments.

New flights announced:

LAX-LAS Roundtrips
New city SJC to LAX,
New EWR (3x daily each from SFO and LAX)
New ANC (daily roundtrip except Tuesday)
New AUS daily

It seems SFO-FLL will be reduced to one flight daily in May, and the second flight will start again in October.

Also in May, SFO-PHL will be one flight daily. No news on when the second flight will be reinstated, probably next year. No change for the two daily LA-PHL flights.

SFO-MCO becomes about 4 times per week in May, and then is cancelled mid July with no plans to restart this. No change for the daily LA-MCO flight.

Daily flight #3 for ORD and BOS resume in May, which is normal. The winter/slow season sees ORD go to 2 flights a day, now back to 3 flights for the spring/summer/fall period.

So the only true cut is SFO-MCO. Again, LA to MCO daily flight has no change. With only 1 Airbus coming this year, and the new ANC/AUS/EWR/SJC service, the schedule changes were necessary. These seem to be positive changes, as they are responding to the market and adjusting flights as necessary to fine-tune the network.

 

[Flyer1015]

I don't see this entirely as a shot across AS's bow.
I've noticed that almost all new routes announced by airlines both originate and terminate in cities served by Virgin America (VX). These two routes meet that criteria. It just looks like another way to scrape off a couple more points of load factor off of VX. So if you live in SEA, you can either fly direct to ANC/LAS via DAL or connect through SFO or LAX via VX.



I'm going to assume that you mean Virgin America. VA = Virgin Australia. VX = Virgin America.

No one's going to buy VX. I've been following them closely for the last 3 years hoping that they'd do an IPO because this company is unable to turn a profit in spite of load factors in excess of 80%.

Their net stockholder equity at the end of 3Q2012 was -$579M.
Their long term debt is $823M.
Their current liabilities are $257M.
Their leases are some of the highest in the industry (comparing comparable equipment), paying more than $11,800/day/aircraft in lease payments.

While they've been paying some of their interest quarterly, a large chunk of it has been rolled into long term debt. Virgin Group is probably allowing their interest payments to be rolled into long term debt. The other investor in VX is VAI Partners, mostly comprised of Cyrus Capital Partners after Black Canyon sold its stake in the airline back in 2010. Cyrus Capital only has $2.1B assets under management so they are probably currently drawing interest payments and I suspect that there are some additional lines of credit that they are also paying interest on.

VX's CEO reminds me of The Boy Who Cried Wolf; in his case, it's The CEO Who Cried VX Would Be Profitable 'This' Quarter. He's made that statement just about every quarter in the last 4 or 5 years. The only profitable quarter that VX has had was 3Q2010.

There was a rumor floating around last September (I quote): Rumor : A few sources have said that VX has been given the ultimatum of turning a profit in 1 year or they will be shut down by the investors. The sources also said that all new plane orders are going to start being deferred and or cancelled. Anyone hear anything like this ?

We all know VX is struggling but Cush keeps promising profits that never come. Not sure what is next for this company.

I didn't pay attention to the rumor until VX announced aircraft cancellations in November. While the rumor will never be able to be confirmed, it's looking like there may be something to it.

VX's load factors are looking pretty grim for 4Q2012. Only Oct and Nov domestic numbers have been posted so far but VX's Oct loads are 1.47% lower than 2011 and Nov loads are 6.93% lower than 2011. VX burned through $14M in cash 4Q2011; the poor loads indicate that VX likely burned through more than $14M in 4Q2012.

VX's problem is that it's going through cash faster than Charlie Sheen on a Vegas bender. And while 4Q is looking bad, VX's 1Q has always been their worst quarter.

Without another $100M or so, I doubt that VX can survive past 2013. This company has been around more than 5 years and has had load factors in excess of 80% during most of its existance, yet only turned a profit in one quarter. If they haven't been able to be consistently profitable in the current environment, I don't see any hope for them.

Can I also get next week's lottery numbers? Thanks

 

[Old School 737]

I hear that JetBlue is taking some of VA's delivery slots ..???!!!

 

[Flyer1015]

I hear that JetBlue is taking some of VA's delivery slots ..???!!!

Wouldn't surprise me. VX was the North America launch customer for the A320NEO with the initial order of 30 in 2016-2019. Now those 30 NEOs have been deferred to 2020-2022. Theoretically I guess that opens up another airline to acquire the delivery slots for 30 NEOs from 2016-2019, and it could be JetBlue.

 

[bri5150]

I don't see this entirely as a shot across AS's bow.
I've noticed that almost all new routes announced by airlines both originate and terminate in cities served by Virgin America (VX). These two routes meet that criteria. It just looks like another way to scrape off a couple more points of load factor off of VX. So if you live in SEA, you can either fly direct to ANC/LAS via DAL or connect through SFO or LAX via VX.



I'm going to assume that you mean Virgin America. VA = Virgin Australia. VX = Virgin America.

No one's going to buy VX. I've been following them closely for the last 3 years hoping that they'd do an IPO because this company is unable to turn a profit in spite of load factors in excess of 80%.
K
Their net stockholder equity at the end of 3Q2012 was -$579M.
Their long term debt is $823M.
Their current liabilities are $257M.
Their leases are some of the highest in the industry (comparing comparable equipment), paying more than $11,800/day/aircraft in lease payments.

While they've been paying some of their interest quarterly, a large chunk of it has been rolled into long term debt. Virgin Group is probably allowing their interest payments to be rolled into long term debt. The other investor in VX is VAI Partners, mostly comprised of Cyrus Capital Partners after Black Canyon sold its stake in the airline back in 2010. Cyrus Capital only has $2.1B assets under management so they are probably currently drawing interest payments and I suspect that there are some additional lines of credit that they are also paying interest on.

VX's CEO reminds me of The Boy Who Cried Wolf; in his case, it's The CEO Who Cried VX Would Be Profitable 'This' Quarter. He's made that statement just about every quarter in the last 4 or 5 years. The only profitable quarter that VX has had was 3Q2010.

There was a rumor floating around last September (I quote): Rumor : A few sources have said that VX has been given the ultimatum of turning a profit in 1 year or they will be shut down by the investors. The sources also said that all new plane orders are going to start being deferred and or cancelled. Anyone hear anything like this ?

We all know VX is struggling but Cush keeps promising profits that never come. Not sure what is next for this company.

I didn't pay attention to the rumor until VX announced aircraft cancellations in November. While the rumor will never be able to be confirmed, it's looking like there may be something to it.

VX's load factors are looking pretty grim for 4Q2012. Only Oct and Nov domestic numbers have been posted so far but VX's Oct loads are 1.47% lower than 2011 and Nov loads are 6.93% lower than 2011. VX burned through $14M in cash 4Q2011; the poor loads indicate that VX likely burned through more than $14M in 4Q2012.

VX's problem is that it's going through cash faster than Charlie Sheen on a Vegas bender. And while 4Q is looking bad, VX's 1Q has always been their worst quarter.

Without another $100M or so, I doubt that VX can survive past 2013. This company has been around more than 5 years and has had load factors in excess of 80% during most of its existance, yet only turned a profit in one quarter. If they haven't been able to be consistently profitable in the current environment, I don't see any hope for them.

I will discredit your whole post with one sentence. We made an operating profit 4q2012. It isn't announced yet, but it happened. That is what our investors and board are looking for. Also, 1q2013 looks waaaaay better than usual. We'll see when announced.