Hypothetical AA/US merger and bases

[zymotic]

You Mean Pizza the Hut!!!

Yes....

 

[Groucho]

While CLT is a weak O&D Hub, AA needs a domestic hub in the South East. CLT has extremely low operating costs. Here is what Fitch Ratings says about the CLT cost structure:

Strong Revenue Profile: The airport's hybrid airline use agreement framework allows for strong debt service coverage metrics at or above 3.0 times (x), and the ability to accumulate exceptional liquidity while still translating into an extremely competitive cost per enplaned passenger (CPE) levels at or under $1.00.

Conservative Debt Profile: The airport's debt structure consists of 83% conventional fixed-rate debt with level-to-declining debt service.
Extremely Low Leverage: This favorable attribute is demonstrated by net debt/cash available for debt service (CFADS) at or near 1.50x. Balance sheet strength is also derived from approximately 2,348 days cash on hand as well as a below-average $37 long-term debt per enplanement.



Fitch Ratings on PHX is as follows:


Airline cost per enplanement remains competitive as airport management
continues to use a conservative approach in financial planning. The $5.00 cost per enplanement in FY2009 is below the Moody's U.S. airport median of $7.36 for Hub Airports, and it is expected to remain below the median even after the expected completion of airport's current large capital program in FY2016.


We all consider the seat mile cost of an airline but when it comes to hubs the ability to generate traffic must be considered against the cost of handling that traffic. This situation is what killed PIT for US Airways. PHX looks good with a lower than average cost and CLT looks spectacular with a below $1.00 cost.

 

[Flybywire44]

We'll dump PHX, it doesn't make money with SWA there, CLT prob. would get downsized, it makes cash because it's cheap to operate there but there's no O and D. Sadly as much as we don't like PHL it makes tons o cash and you can't ignore that size a city on the east coast, esp. when your already there and control it. Can't speak for the AA bases

SWA is getting ready to go head to head in Atlanta with Delta. Both airlines may devote a lot of resources fighting each other in Atlanta. There has been no indication that LCC would dump PHX in a merger, but I would assume that SWA may be open to trade the majority of their gates/slots in LAX, PHL, BOS, LGA and DCA for market dominance in PHX. Less competition in PHX may allow SWA to divert more resources towards competing in Atlanta.

Didn't Gordon Bethune draw down CLE to make CAL's route structure more efficient? Merged American would gain tremendous efficiency by being able to route more traffic in and out of one hub instead of two that are 370 miles apart.


http://www.gcmap.com/mapui?P=lax,+phx,+mia,+clt,+dca,+lga,+ord,+dfw&MS=wls&DU=mi