flynlow said:
Just watch what happens to AAI LF's in BUF/ROC once the 190s arrive.FlyBoeingJets said:I don't follow how the legacies will "do well" the next couple of quarters with what is going on. Just look at the stock prices of AMR and CAL. Wall St is looking for them to possibly make money in the 2nd and 3rd Q because of recent fare hikes. NWA is a fence sitter at this point until labor is settled. UAL will need a further reduction in domestic capacity to get their $2.5B loan. RJ's are replacing mainline at DIA with ASMs decreasing 24% by year end, as F9 continues to grab marketshare. What I read says the legacy recovery will likely be in 2006. Another BK or two will drag everyone into poor performance and make the legacies look relatively better. DL and NWA may have to go that route to get the necessary expense reductions, but they can hang on for quite a few years in bk. DL will be forced to reduce their size unless they can come up with investors (I have my doubts). I think it will be five years or so until one of the originals rolls over. Maybe that explains the stock moves. But the revenue trends still look ugly.
monthly traffic at SWA grew 500 million seat miles.
monthly traffic at Airtran grew 271 million seat miles.
monthly traffic at AWA grew 246 million seat miles.
AAI/AWA are SWA's biggest LCC competitors. Add the two together, and it looks like SWA is the big loser head to head on putting butts in the seat.
Who added more seats? From a stock picking perspective the percentages favor the smaller companies. But SWA is still outpacing the above.
Yes trends are important. Which one of the above has the capacity to soak up a decrease in capacity by USAir and UAL? Previous trends have shown that the carrier with the frequency and seats available will.
From a stock picking perspective the percentages matter. From a real perspective SWA is still growing more. They may be growing more but the growth is not bearing fruit so far.
IMHO, Southwest will continue to take advantage of fuel hedges in place until the start of 2006. If I'm not mistaken the low load factor strategy has worked for years with recent success in 2003 and 2004. With fewer hedges at a higher price in 2006, they will focus more on load factor and less on capacity increases ahead of passenger growth. JetBlue and Airtran will breath a sigh of relief when SWA eases up.
BTW, Jetblue has started to suffer under the back end loaded leases on the Arbi. JetBlue now has 1.9B in debt. Almost as much as SWA's 2.0B.
Could Airtran start beating up on JetBlue in 2006?
I'm going to have to give you a lesson in CASM/RASM there Jack. Yes the CASM will rise slightly as more and more 190s come on line, but be aware that the 190 should average out to around 7.5 cents. Their real advantage will be the reduction of Jetblue's average stage length from around 1100 miles to 900 miles in the next 4 or 5 years. The shorter routes are RASM friendly, and will kick the margins back up to double digits.apdsm said:
lowecur said:I'm going to have to give you a lesson in CASM/RASM there Jack. Yes the CASM will rise slightly as more and more 190s come on line, but be aware that the 190 should average out to around 7.5 cents. Their real advantage will be the reduction of Jetblue's average stage length from around 1100 miles to 900 miles in the next 4 or 5 years. The shorter routes are RASM friendly, and will kick the margins back up to double digits.
.....FlyBoeingJets said:Lowecur,
YGTBSM! SWA is the big loser in head to head competition? You can tell that by 1 or 2% points? That is 1 to 3 passengers per flight. FBJ, SWA has taken the approach they will not leave money on the table by offering fewer fare sales in the last month and particularly this summer. They will forego the higher load factors in favor of more revenue for now. Dumb?, time will tell, as SWA history is low fares to attract customers and it will be interesting to see if they will be able to manage their yields under those conditions and not upset loyal customers.
Growth not bearing fruit? How much money did Airtran and AWA make last quarter? It's not about making money in this environment, it's about growing marketshare and not losing a boatload.
Put you money where your mouth is. I invested in AWA at $4.19, but sold at $5.75. Go buy some DAL, UAL and NWA stock with your analysis of their success the next couple of quarters. Those are three stocks I wouldn't touch with my big toe. The key is to value invest in companies with a viable future. UAL shares will be declared worthless when they emerge, and it's possible DL and NWA may have to go that route. Not smart investing.If I had more nerve AMR/CAL would have been a good bet in hindsight, but they are both up too high for my taste. Don't forget, Wall St. is looking ahead 6 months. If you're right you will make a killing. Add it to your shares of ERJ.
