LUV Halts All Growth

[whymeworry?]

Yeah, the economy.

I'm sure mismangement of those fuel hedges had nothing to do with it. Had they simply strengthened their balance sheet with those wonderful hedges of yesteryear, instead of passing on the saving to the consumer, they wouldn't be in this boat today (Bethune's written numerous articles about this fumble on SW's part).

Additionally, Folks who know airline balance sheets will tell you this is a potential double-edged sword for SW. One of the ways they keep their employee costs down is by contantly plugging new employees into the bottom of the cost structure. First year employees take 12 years to mature in terms of maxing out the payscales. If things stagnate for too long, costs will rise expotentially. Of course, we all suffer from this dilemma. But SW is more susceptible to aggravated increases in costs since their business model was built on growth.

But hey, I'm sure y'all will be fine.

BTW, don't shoot the messenger all you cultic-SWers. I know you believe your company can do no wrong. Yeah.

 

[redflyer65]

How many years have you guys been predicting the downfall of Southwest?

 

[B727Driver]

Since the first -300 came on the property.

Then they started to fly it like a -200 and the rest is history.

If anyone can survive this, I'll bet on Gup and the boys.

 

[Whataburger]

American Airlines to cut jobs and flights, add $15 bag fee


[SIZE=-1]12:00 AM CDT on Thursday, May 22, 2008

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[SIZE=-1]By TERRY MAXON / The Dallas Morning News
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American Airlines said Wednesday that it will slash its domestic flying by 11 to 12 percent in the fourth quarter, eliminate thousands of jobs and begin charging most passengers $15 each way to check their first bag.

MICHAEL AINSWORTH/DMN
Most passengers will be charged $15 each way to check their first bag. 'The U.S. airline industry ... was not built for $125- or $130-per-barrel oil,' said American CEO Gerard Arpey after the AMR Corp. annual shareholders meeting.


Soaring fuel prices prompted the drastic steps to cut costs and boost revenues, according to the airline, and even such steps aren't likely to make American profitable in the face of oil prices skyrocketing over $130 a barrel.
Gerard Arpey, chairman and CEO of American and parent AMR Corp., said the industry is in a "very perilous" period, agreeing with the assessment given last week by retiring Southwest Airlines chairman Herb Kelleher.
"The U.S. airline industry as it is constituted today was not built for $125- or $130-per-barrel oil," Mr. Arpey said after the AMR annual shareholders meeting in Fort Worth.
"The industry will not and cannot continue in its current state," he said. "The fact that four more airlines have liquidated this year and one is operating in Chapter 11 is clear evidence of that fact.
"So we are moving to construct a business plan that, to the extent possible, is constructed for the current reality of slow economic growth and high oil prices," Mr. Arpey said.
News of American's flight reductions and gloomy outlook appeared to shake investor confidence in AMR as well as other U.S. airlines.
AMR's stock fell 24 percent to $6.22 in Wednesday trading on the New York Stock Exchange, dropping to its lowest point since May 2003, shortly after AMR restructured its finances and union contracts to avoid a trip to bankruptcy court.
AMR shares have dropped 56 percent since the first of the year and 77 percent since last year's annual meeting.
For American's customers, the first noticeable impact of Wednesday's announced changes will be the $15 charge for the first bag checked, beginning with tickets bought June 15. Most big carriers recently implemented a $25 charge on the second bag checked by coach customers, but American is the U.S. pioneer on charging for the first bag.
The fee will be charged to everyone except people who belong to elite levels of its frequent flier program, those who bought full-fare tickets and those traveling overseas.
That raises the prospect of a traveler with two pieces of luggage paying $80 round trip just to transport his or her bags; a family of four could wind up paying hundreds of dollars to get its luggage there and back.
Airlines have been turning up new ways to increase revenues, from raising the fee for changing a ticket or making a reservation by phone to checking bags at the curb. They're also trying to find new things to sell on board, such as snacks, meals or consumer goods.
Mr. Arpey unveiled the bad news for American employees, hundreds of whom were outside in a picket line complaining about American executives and their management of the world's largest carrier.
"We're out here today because American Airlines is failing all the constituents that have a vested interest in the success of the company," said Lloyd Hill, president of the Allied Pilots Association, which represents American's pilots. "We're here to deliver a message to the AMR management team: It's time to fix the problems."
Association of Professional Flight Attendants president Laura Glading said pilots and flights attendants were picketing together "to show the company that we're completely unified, that we're going to stand together [and] do whatever we have to do to show the board and the leadership that changes have to be made."
The pilots' union has been negotiating a new contract with the company since September 2006, while flight attendants plan to start their talks June 10. The airline's contracts with its unions became amendable May 1.
Meanwhile, inside the annual meeting at an American Airlines training center, Mr. Arpey was outlining the airline's belief that things are bad and getting worse.
For employees, that means more layoffs at a time when thousands of pilots, flight attendants and workers are already on furlough, the result of cutbacks after the Sept. 11, 2001, terrorist attacks and the 2003 financial restructuring.
With domestic flying now making up about two-thirds of American's capacity, an 11 to 12 percent reduction would mean roughly a 7 percent decline in the airline's overall capacity.
American employed 71,800 people at the end of 2007; a 7 percent cut in workforce would eliminate about 5,000 people.
Mr. Arpey allowed that the layoffs would probably rise into the thousands, answering "I would think so" to a reporter's question. But he avoided putting precise numbers to the scope of the cutbacks and the impact on employees, cities and routes until the airline firms up its plans.
"The objective would be to try to eliminate overheads and costs commensurate with the capacity reduction," Mr. Arpey said. "In terms of what the actual layoffs will be, we don't have a number for you today."
He said the cuts will affect managers and supervisors as well "because of the magnitude of the reductions."
"I think I can say that every work group will be impacted," he said later.
To reduce capacity, AMR will be parking airplanes operated by both American and regional partner American Eagle.
Although there may be adjustments in some international markets, almost all the cutbacks will take place on domestic routes, Mr. Arpey said.
American will park 40 to 45 jets, mainly from its 300-airplane fleet of aging McDonnell Douglas MD-80s. That narrow-bodied plane accounts for 46 percent of American's 654 total airplanes and 39 percent of its seats.
The airline also plans to return some of its 34 Airbus A300s to lessors. American Eagle will retire 35 to 40 regional jets and an unstated number of turboprop aircraft.

Hot off the press

 

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American Airlines to cut jobs and flights, add $15 bag fee


[SIZE=-1]12:00 AM CDT on Thursday, May 22, 2008



Hot off the press

The date on your article is almost a year old.

 

[Whataburger]

The date on your article is almost a year old.

I know, but common sense usually doesn't prevail here, so who cares how old the article is right?

 

[727C47]

what is it about SWA,that brings out all the haters?,sorry folks, I DH all over the country,And LUV puts the best overall product out there,(I'm not dissing DAL,AA and sundry),they will weather this storm.

 

[satpak77]

I don't know if I would say SWA will weather the storm, but I will say that SWA is best capable to weather it.

In time, this storm may sink all the ships in it's seas....lets say a prayer for everybody folks, we are talking moms and dads trying to put food on the table.

good luck

 

[bravodude]

Quimby,

You're welcome! Living down in the Dallas Fort Worth area, it’s kind of hard to get away from all the LUV news. Yes, there’s little doubt that there is a certain amount of envy from across town at how LUV’s management has handled their airline over the last decade. Their management has been the envy of all especially in their hedging department.

But, the times are a changing as they say. Herb has now stepped aside. Their hedge advantage which has been propelling their growth the last five years has been lost. Their productivity advantage has been minimized through the legacy bankruptcy contracts. Yes, LUV is still a great airline, but they are one of the big boys now along with all the associated troubles. They’re not as nimble as they once were. Like it or not though, LUV is the bellwether for the industry. As LUV goes, so does the rest of us now.

We all hope the growth cycle will last forever, though it’s a numerical impossibility. This is what the rest of us realized as we fought so hard over the Age 65 rule. Believe me, over at AA – we know stagnation!! A good amount of us will hit our 20 year point still throwing gear and topped out at a 68% cap. It’s pretty amazing how fast the house of cards can tumble down. Over at AA, we faced the same dilemma after 911 when the economy dumped.

For the most part, over at AA, we’ve been moving backwards or stagnated for the better part of a decade. We had some slight movement the past year as a bunch of senior guys locked into a higher B-Fund price as the stock market plunged. We also had a limited number of recalls but that looks like it’s done for the next four years as Age 65 rears its ugly head over here.

Let’s face it, the career has changed. The junior folks over at LUV will have a much different career that that of their senior pilots. I just hope SWAPA holds the line on scope. Our careers are depending on it.

AA767AV8TOR

how can we hold` the line on scope when you guys gave it up.

 

[brokedash]

I don't know about you guys but here in Las Vegas I hear about a friend or neighbor that is loosing their job ever three to four days. Construction here is at a standstill for new projects. It just isn't looking good.

Vegas is taking a beating for many reasons. One is that fact it is a tourist driven destination. Two most of all the growth, espically home wise, was all instigated by pure greed on the part of speculative leeches who jacked the rates to far more than the homes would ever be worth simply because LAS is a nice, warm place year round and there were plenty of people that would pay to live there (even if they couldn't afford it) simply to avoid brutally cold weather elsewhere.

While I emphathize with those looking to be warm year round, I don't think many of those descending on LAS should have gotten the mortages they did. Had they not been able to obtain those mortages, perhaps housing prices would have fallen when the speculators started getting choked out and further the home buyer would have had a realistic mortage they could afford and that probably wouldn't have sent our economy inot a tail spin.