Leave Airtran for United??

[Andy]

Nobody is matching our costs. The legacies aren't even close. Even SWA has creeped above us now on their costs. We have the lowest non-fuel CASM in the industry, and match SWA on CASM including fuel. The legacies are still far away from matching our costs. We'll weather a recession just fine.

And what's your RASM?

Let's compare CY2007 numbers.
AAI CASM 9.57 cents
AAI RASM 10.18 cents
AAI RASM - CASM .61 cents
UAUA mainline CASM 11.39 cents
UAUA mainline RASM 12.03 cents
UAUA RASM - CASM .64 cents

I haven't pulled up RASM/CASM comparisons for the rest of the legacies, but CASM doesn't mean squat unless you also compare RASM.

As for your claim that no one's lower, check JBLU's 2007 numbers
JBLU CASM 8.38 cents
JBLU RASM 8.91 cents
JBLU RASM - CASM .53 cents

JBLU also has longer stage lengths than AAI which is why their RASM and CASM are lower.

 

[Lear70]

That's the whole point he's making, Andy.

When mainline starts pulling down flights to save money (which you've already said you believed they'd do), those RASM numbers will take a big hit. AAI has a history of GROWING during a downturn, not shrinking, thereby leaving our RASM intact.

The people who survive without heavy damage during hard times are those who have low costs and continue to price their product accordingly, thereby retaining their revenue stream.

No one's saying UA will go out of business, but it's definitely easier to survive and not pull down as much flying when your CASM is one of the lowest, if not *the* lowest in the business.

p.s. The JBLU numbers are total CASM. I believe PCL said AAI had the lowest non-fuel CASM, which is a true statement.

 

[Yuppyguppy]

That's the whole point he's making, Andy.

When mainline starts pulling down flights to save money (which you've already said you believed they'd do), those RASM numbers will take a big hit. AAI has a history of GROWING during a downturn, not shrinking, thereby leaving our RASM intact.

The people who survive without heavy damage during hard times are those who have low costs and continue to price their product accordingly, thereby retaining their revenue stream.

No one's saying UA will go out of business, but it's definitely easier to survive and not pull down as much flying when your CASM is one of the lowest, if not *the* lowest in the business.

p.s. The JBLU numbers are total CASM. I believe PCL said AAI had the lowest non-fuel CASM, which is a true statement.

You just sold 2 airplanes who's pulling who down...what a ********************ing joke!

 

[Andy]

When mainline starts pulling down flights to save money (which you've already said you believed they'd do), those RASM numbers will take a big hit. AAI has a history of GROWING during a downturn, not shrinking, thereby leaving our RASM intact.

Really? Do you have any data to prove this theory? I suspect that your RASM has not survived intact in previous downturns.

And do you not think that AAI selling two of their jets indicates that they might pull down flights?

I think that AAI's customer base is going to feel the downturn more than UAUA's (or any other legacy carrier) customer base. Why? AAI's customer base has more discretionary travelers and serves a lot of secondary airports. Legacies are much more dependent on business travelers; while businesses will curtail travel, it won't be to the extent that you're going to see individuals curtail travel.
AAI is heavily dependent on travel to/from the Magic Kingdom; MCO represents 15% of AAI's operations. With consumers tapped out, those vacations are going to be one of the first things scratched from the family wish list.
AAI is also subsidized by some of the cities that it serves. Municipalities are finding their revenues shrink. Don't be surprised if several cities stop subsidizing AAI for air service.

AAI is not bulletproof.

p.s. The JBLU numbers are total CASM. I believe PCL said AAI had the lowest non-fuel CASM, which is a true statement.

CY2007
AAI CASM Ex-fuel 6.03 cents
JBLU CASM Ex-fuel 5.47 cents

As per the 10Ks.

 

[RIDETHELIGHTING]

You just sold 2 airplanes who's pulling who down...what a ********************ing joke!

Hey the tool speaks again. I thought you didn't care about FL? So stop reading it DumbA$$$$$$$.

 

[jetblue190]

This from someone who works at JetBlue? WOW! For the record, I am at UA now as well.

There were a lot of ATA Guys who went to Airtran and there are few left. VERY DIFFERENT corporate culture....at least from the old ATA. It's a real shame they could never figure out how to make money. It was a really great place to work.

Airtran is not for everyone. And it was truly not for me.

RV

No...this from someone who USE to work at United and knows better...good luck my friend...You'll figure it out over time....

 

[maxblast72]

And do you not think that AAI selling two of their jets indicates that they might pull down flights?

We are just selling 2 airplanes that have not even been flown by Airtran yet (for a profit). Not really pulling down flights just not adding flights as fast as we would have if we would have received the two jets this year.

We made a profit of 7.2 million after taxes I believe for the two airplanes we sold in 2007.

 

[Lear70]

We are just selling 2 airplanes that have not even been flown by Airtran yet (for a profit). Not really pulling down flights just not adding flights as fast as we would have if we would have received the two jets this year.

Beat me to it...

Andy, sometimes I think you deliberately miss the point intentionally.

Selling two aircraft that were not yet on property and, therefore, were not flying for airTran, is NOT "pulling down flying". It doesn't reduce any current routes or frequency.

Incidentally, I think you'd be surprised at the mix of business traveler that fly on any given airline these days. UA in all likelihood has a very small percentage of business travelers more than AAI. With the reduction in fares at EVERY airline, the majority of business comes from low-fare leisure travel. The "true" business traveler has gone to fractional ownership.

Guppy, I never said that anyone was pulling down anyone else. We were referring to pulling down OUR OWN flying, each airline independently pulling their own low-yield routes to reduce CASM during an economic downturn.

Ease off the caffeine, have a nice glass of wine, and relax a bit...

 

[Andy]

Beat me to it...

Andy, sometimes I think you deliberately miss the point intentionally.

Selling two aircraft that were not yet on property and, therefore, were not flying for airTran, is NOT "pulling down flying". It doesn't reduce any current routes or frequency.

Incidentally, I think you'd be surprised at the mix of business traveler that fly on any given airline these days. UA in all likelihood has a very small percentage of business travelers more than AAI. With the reduction in fares at EVERY airline, the majority of business comes from low-fare leisure travel. The "true" business traveler has gone to fractional ownership.

Guppy, I never said that anyone was pulling down anyone else. We were referring to pulling down OUR OWN flying, each airline independently pulling their own low-yield routes to reduce CASM during an economic downturn.

Ease off the caffeine, have a nice glass of wine, and relax a bit...

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?

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. I don't know what the 'true' business traveler is, but having logged 124K miles as a business traveler in 2007, I can tell you that most of the road warriors that I chatted with place a great deal of value on frequency, route structure and upgrades. They tend to choose legacy carriers that have hubs in their origin city or are most convenient. Plenty of them log 200K+ per year; that's not practical for frac flying and their positions within their companies don't rate white glove treatment. You're talking about individuals who are a very small portion of the flying public.
If you want to read comments from frequent flyers, go to www.flyertalk.com. There are a lot less AAI threads than for other carriers.

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

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.

 

[BigMeat]

UMm you just sold 2 more planes today...4 year upgrade??? what are you smoking?

I dont work for Airtran. I work for CAL. I have friends and family that work there. What we are comparing is Airtran and United. If anyone is more recession proof, just like after 9/11, it will be Airtran. Besides I believe that United has a 5 billion dollar note due in 2012. If we really are in a deep recession then it would be a bad time for it. United has no aircraft on order and if they were going to reduce their fleet they would just replace them with Republics "RJs". Let someone like Republic take the risk at the right price. United sold of its LAX mx base. They would love nothing more than to merge with CAL who just ordered another 19 737s and 8 777's not including the 25 787 coming the next few years.

 

[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