Leave Airtran for United??

[Andy]

What we are comparing is Airtran and United. If anyone is more recession proof, just like after 9/11, it will be Airtran.

I don't know if Airtran will be more or less vulnerable during this recession. My guess is that they will be more vulnerable due to the profile of their average customer.

This recession will not be anything like the post 911 recession. During that recession, there was cheap and easy money available to the consumer. That's not the case this time around. Banks are pulling untapped HELOCs, qualifications for home loans is getting much more difficult, and consumers are not finding it easy to get any credit extended to them. Even student loans are more difficult and expensive to obtain. As a result, the average consumer, who's been running a negative savings rate since 2005, is finally going to have to pay the bill for his excesses. http://www.msnbc.msn.com/id/11098797/
The impact of this is that there will be a massive cutback in discretionary consumer spending. Corporate CapEx will also decline, along with business travel. However, I don't see business travel falling off as significantly as consumer travel.

 

[bladeusa]

IF things go that badly this time around, and there is such a huge drop in people that can afford to fly... (although i bet it will often still be cheaper than driving)... i would would still say being 20-25% up from bottom of list at airtran, is a safer bet than only 1% on the ual list. But im hopefully optimisitc that things arent really going to get that bad. have to see how spring/summer traffic picks up, what happens in the election and what it takes to get oil back to reasonable price.

 

[Lear70]

Lear, what makes you say that the two aircraft haven't been delivered yet? I haven't seen that in any press releases. Nor does it mention that they're being sold for a profit. Source?

Because that's when the next 2 aircraft were scheduled for delivery. The timing is right and is consistent with what the company has done before.

With 15% of AAI's schedule flying out of MCO, I would find it very hard to believe that AAI has roughly the same percentage of business traveler as the legacies.

It's not going to be 15%, the company is redistributing a LOT of flying up to BWI, among other places. It may not be exactly the same, but I'd bet its within single-number percentage difference.

When airlines eliminate low yield routes, it's to maintain RASM, not reduce CASM.

I already said that.

Which is my point. airTran has a history of not doing that as much as the legacy carriers do. airTran has always been smart with the way they position themselves strategically. The way they manipulated the last T.A. was just as brilliant, and would have worked if a handful of guys hadn't stepped up and called bullsh*t.

Senior management isn't stupid, they just don't understand their employee base (especially the pilots). They *DID* underestimate the mechanics, until the mechanics started doing everything 100% BY THE BOOK.

They got a contract within 90 days.

But, when it comes to the finance side of the house for airline strategy, deployment, and competition, these guys have done one of the best jobs in the industry. Merger attempts notwithstanding.

I don't know how AAI will fare during this downturn, just as I don't know how UAUA will fare. I think that management of the two airlines are making the correct moves by slowing expansion at AAI and not expanding at UAUA. I was ticked off at UAUA managment for doing the special dividend in Jan; I wanted to see them maintain a large cash buffer.

I agree, don't think either airline is going anywhere, but I do think that the furlough chances are higher at UA than AAI, as has been previously mentioned.

Hopefully they'll keep the staffing tight so that, when UA does pull down flying, there will be enough to still require the retention of everyone on property.

2 furloughs in one decade is NOT any fun (already did that back in 2001 - furloughed twice the same year from different companies - not fun).

 

[Andy]

IF things go that badly this time around, and there is such a huge drop in people that can afford to fly... (although i bet it will often still be cheaper than driving)... i would would still say being 20-25% up from bottom of list at airtran, is a safer bet than only 1% on the ual list. But im hopefully optimisitc that things arent really going to get that bad. have to see how spring/summer traffic picks up, what happens in the election and what it takes to get oil back to reasonable price.

I was 7% up the list when 911 happened. I knew that I'd get furloughed, but wasn't expecting the pilots on property to increase the number of hours they work; that kept me on furlough for an additional two years or so. In C2003, the pilots gave management a HUGE window with which to work the pilots min: 65 max 89 (WB)/95 (NB). Management continues to work the pilots on property close to the max.
Management will try to minimize downgrades/training events in the case of shrinking block hours. I'd anticipate those mandatory (through PBS scheduling) 89/95 lines to turn to 80 and then 70 hour lines prior to any furloughs. So there could be a 20% decrease in block hours before triggering furloughs - management knows that furloughs are expensive and will try to avoid them until it makes more economic sense to furlough. They'll first offer liberal leave of absence packages followed by early retirement incentives before any furloughs take place. All of this takes time, so I don't see the having new hire classes one day and furloughing the next - more likely a year or so between hiring freeze and furloughs. Those at the bottom of the list will have the chance to find other jobs and take leave of absence prior to being furloughed. For anyone at the bottom of the list, I'd recommend seeking another job as soon as a liberal leave of absence package was offered. It would allow you to beat the rush for jobs.
Attrition has slowed significantly; only 2 retirements in Jan, not enough to offset mil lv/lv of absence returnees. The mil lv/lv of absence returnees will slow significantly after this fall.
United's regional partner contracts also allow them to drop regional block hours without penalty. Management will weigh the effects of subbing in 737s vice RJ70s and I'd expect most of the RJ50s to disappear - the 50 seaters are incredibly expensive in terms of CASM. I wouldn't expect much of anything below 50 seats to be around very long (Saab 340, Emb 120). Those thin markets that are served multiple times daily with smaller aircraft are likely to have reduced frequency with larger guage aircraft.

I honestly don't know which airline would be better as to where to stay. If you're concerned about being furloughed, AAI is probably your best choice - but I can't say that for sure, because there are some weaknesses that I see at AAI, just as UAL has weaknesses in other areas. If you would rather live in UAL's domiciles and would prefer to evntually fly international widebodies, then UAL is clearly the better choice. No matter what the decision, just make sure that you have made multiple backup plans.
I viewed my furlough as a chance to do the things that I've wanted to do - I started a failed business (this is why you need multiple backup plans), successfully invested full time in the markets (I'll do this before starting another business), and have been able to accumulate enough active duty AF time for an active duty retirement.
I'm now ~9% from the bottom of the list and have multiple backup plans brewing in case of future furlough. When one door closes, another opens.

 

[Andy]

2 furloughs in one decade is NOT any fun (already did that back in 2001 - furloughed twice the same year from different companies - not fun).

4 yrs 11 mos on furlough from UAL for me. In that time, they drew down the total number of pilots from ~10,500 to <7500 today. The pilots are a lot more productive; probably at max FAR productivity. With the way that Contract 2003 was written, management has a lot of flexibility in the number of hours that they work the pilots. This will slow any furloughs.
Furloughs are very expensive for companies; they would prefer to avoid furloughing.
This time around, UAL is in a much better position to weather a downturn; they have more cash on hand and less debt to service. They've still got orders for A319/320s, but they're not firm, so they don't have a lot of future capital requirements. They've got an interior refurbishing program underway on international aircraft (overdue), but they can get away with stopping the program after refurbing the 767 and 747. The 777 interior can last a few more years without a refurb.
The contracts with the regional carriers now allow UAL to drop flying without cause - this is a change from pre-911 contracts. I expect regional flying to be the early victim of any cutbacks.

 

[Lear70]

Can't argue with you there, especially the 50-seaters, they just suck and are going away eventually anyway on anything but the shortest routes domestically (and the Q-400 does even those more efficiently).

I'm still on furlough from my first carrier (Express One). They don't even have 727's anymore, and our furlough was "officially" permanent as of 3 years ago (no one is going back).

Good luck to everyone! UA was one of the carriers I most wanted to be at once upon a time. Glad it didn't work out (would have been hired right before 9/11 if I'd passed the interview), as I'd have been on the street for a long, long time, then recalled into very uncertain conditions (current UA).

Funny how life turns out; you never know you've made good career choices until you kick the bucket.

 

[maxblast72]

I guess we can put this thread to rest for a while considering the recent developments at United. I hope you didn't leave Airtran yet.

 

[Long Time Gone]

Haven't any of you listened to George lately????

THIS IS NOT A RECESSION!!!!!

SIMPLY AN ECONOMIC SLOWDOWN!!!!!

Geez................

 

[Captain Overs]

Haven't any of you listened to George lately????

THIS IS NOT A RECESSION!!!!!

SIMPLY AN ECONOMIC SLOWDOWN!!!!!

Geez................

We all know how many times he's been right in the past 8 years......none.

 

[airlinepilot]

Why would anyone want to leave HOTLANTA