Getting back to CAL, another important piece of the puzzle beyond good RASM, is the significant amount of debt maturities from 4th quarter '05 through the end of '07. It is close to 2 billion according to 1 article I read which included quotes of a interview from the CEO, Larry Kellner, about the debt. He admitted a significant amount of is coming due which will squeeze profits.
As a non-expert observer, the growth which CAL is planing I believe is aimed at growing out of this debt. CAL is trying to increase overall revenue over the next 2 years to make the debt which is coming due relatively smaller compared to the larger revenue which will be gained. As long as things stay on track without a protracted rise in jet fuel, a slowly growing economy continuing, and no significant terror/war related shocks, the plan should work. But any of these things could derail the plan. Also, the CEO has stated that '07 will be CAL's most difficult year to get though from the looks of things now, or actually 2 months ago when the interview was done.
As a non-expert observer, the growth which CAL is planing I believe is aimed at growing out of this debt. CAL is trying to increase overall revenue over the next 2 years to make the debt which is coming due relatively smaller compared to the larger revenue which will be gained. As long as things stay on track without a protracted rise in jet fuel, a slowly growing economy continuing, and no significant terror/war related shocks, the plan should work. But any of these things could derail the plan. Also, the CEO has stated that '07 will be CAL's most difficult year to get though from the looks of things now, or actually 2 months ago when the interview was done.