Ooouuch!

[lowecur]

SWA load factor sinks to 56% this Jan. This is 2 points below last years 58%. Even with the system-wide sale early in the month, it wasn't enough to help. The disturbing thing is most of the legacy carriers load factors increased as they added back capacity.

AAI's load factor was down 1 point. It will be interesting to see how B6 does. If all three of the major LCC's have drops, this shows that the legacy's are beginning to have an affect while adding capacity.

It is shaping up to be an interesting year of competition.

 

[canyonblue]

More flawed logic.

 

[WhiteCloud]

SWA load factor sinks to 56% this Jan. This is 2 points below last years 58%.

Is this a significant change? I don't claim to have any better knowledge about this but, it seems to me that only 2% points in any given month is basically level performance.

 

[lowecur]

Whitecloud

Is this a significant change? I don't claim to have any better knowledge about this but, it seems to me that only 2% points in any given month is basically level performance.

I think this is a significant change. It is a sign that the legacy's have gone on the offensive from largely a posture in the past few years of survival. It may seem subtle, but believe me it has the full attention of WN's management. That's why the continuation of the nationwide route sale into February.

WN, B6, and FL see this as the cost of doing business. Their plans are not going to change as it's a long term battle of attrition. It's an attrition battle that the LCC's are fully capable of taking advantage of, along with those legacy's that have a strong business plan in place. The pressure WN's mgt will feel is when the stock price continues to shrink, options no longer will pacify the rank and file. This will be a tough year to keep the expenses from overwelming a predictably weak RASM due to competition.

 

[flint4xx]

Why is this on the interview board?

 

[Swerpipe]

sore looser?

Come on lowercur,

Accept defeat. They are not getting the Emb190 at least for a while. 31st consecutive year of profitability, almost 2Bil in cash and management is ready to flip? January is not a good month and neither is February, get over it. Wait until they get to PHL. Obviously the people at SWA are not seeing the 190 like the magical aircraft you seem to think it is. It's difficult to get an experienced animal make rookie mistakes. Don't look for the order.

 

[ivauir]

I can't believe I am going to defend lowcur, but this kind of stuff (to a point) belongs on the interview board because company performance affects growth wich in turn drives hiring.

I am going to react to this news a little differently though. I think lowcur's analysis makes sense on the surface and is the primary reason our stock is so low and probably will get lower. However, I think mgt knew this was coming in some form or another. I agree there are challenges ahead, but I'll bet you a bushel of RJs that our growth continues are planned. In the coming competition what airline is better capitalized? Who is better positioned?

 

[Ty Webb]

C'mon, man, do the research before you go jumping to conclusions.

Seems like you started off with a conclusion, and then tried to find a few "facts" to prop up your faulty conclusion.

AirTran posted record numbers for January. Yes, the load factor was a point lower, but with 16.5% more seats! We actually had almost 10% more passengers over January 2003. Here's the whole story:

Based on RPMs, traffic grew by 14.9 percent, to 570.9 million RPMs, on an increase of 16.5 percent in capacity, based on available seat miles (ASMs). January's load factor reached 62.5 percent, compared to 63.4 percent in January 2003. The airline also enplaned 892,811 passengers in the month of January, a 9.7 percent increase over January 2003, and a record for the month of January.

 

[SWA GUY]

Lowecur,

10:1 SWA makes more than $442 million in 04.

 

[lowecur]

SWERPIPE/IVAUIR

Swerpipe

I must admit that it doesn't look good for ERJ stock. UAIR is requesting that GECAS look for other airlines for the 30 or so 170's and the 25 CRJ 700's. AirCanada is another weak link in the order book. Hopefully the rest of the Star Alliance will strengthen the orderbook in the next few months.

As far as the WN order, well I'm not as confident as I once was. I still believe it makes sense as it allows mgt to reduce payroll costs with a B scale, and keeps the status quo for the 737 payrolls. I know costs to implement the E-series as a 2nd a/c are high, but I still believe it is the viable long term solution. The other choice is the inevitable approach to SWAPA for a payroll reduction at some point in the next 3 years.

Ivauir

I know that wasn't an easy statement to make, but I too am not a fan of sensorship. I am trying to bring some reasonable discussion topics that pertain to the future of the industry.

If the interviews with Mr. Parker are a window into his thoughts, then obviously the E-series is not on the front burner. He didn't rule it out entirely, but obviously they want more financial data over the course of the next few quarters, before they finalize any decisions along those lines. I do however believe the IFE will be picked up long before the E-series from WN. And you're right on the position of WN to capitalize on any opportunity in the next few years.

 

[lowecur]

Ty

C'mon, man, do the research before you go jumping to conclusions.

Ty, I'm not trying to belittle FL's accomplishments. All I'm trying to do is show the trend for a possible return to strength of some of the legacy's. Jan is a notoriously slow month for carriers in general, but capacity is up across the board, and some of the legacy's are gaining back market share.

 

[SWA GUY]

Lowecur,

Maybe you could go help Mr. Seagull out over at USAir, Lord knows he needs it.

I think Mr.'s Kelleher and Parker have things under control here at SWA.

$442,000,000+ in 04!

 

[FlyBoeingJets]

I love this board because the discussions are usually civilized.

Lowecur,

Maybe this is a blip. Maybe the economy is slipping back into recession. Interest rates show that the Fed is fearful of that prospect. I do know that yield management strategy greatly affects load factors. Guessing what the yield folks are doing is VERY difficult and is often misunderstood. I wonder what SWA needs for a load factor to turn a profit? ATA had a better load and posted a loss.


Why is this on an interview board? If you haven't switched jobs yet in this industry you are young or VERY fortunate. I know folks who left FedEx in '00 and '01 for other carriers just to be furloughed after 9/11. I read about some dumas that got furloughed from USAir, was hired by SWA and then went back to USAir when recalled. Where is he now? You guessed it, furloughed again. Your only defense in this industry is knowledge. If you are concerned about job security, Capt upgrades and whether or not you will make it to retirement, you should be interested.

Also, when you hear rumors about hiring and growth you can give it a common sense test against management interviews and recent business performance. I don't like swinging in the wind with every crazy rumor.

Regards,

FBJ

 

[Ty Webb]

Re: Ty

FL carried 10% more people than last January. In order to know whether we gained or lost "marketshare", you'd have to know the increase in the number of January travelers.

"Marketshare" doesn't mean squat by itself- it's all relative. You can give the seats away until you're broke, but in the end, you have to make money.

DAL has been bleeding itself into bankruptcy by insisting on fighting for every last crumb, regardless of the fact that it is losing $3-5 million dollars each and every day.

BTW, people laughed when I said two years ago (on this board)that if they continued this policy, the shareholders would call for Leo's head . . . . . and they did.

Marketshare is like the old joke about "losing money on every seat, but making it up in quantity".

 

[lowecur]

FLYBOEINGJETS

BELF is not published by WN, but it's not hard to figure. For the 4th Q their CASM was 7.69 and RASM was 12.57. Divide the CASM by the RASM and you get a BELF of 61%. Obviously, WN had very good pricing power in the 4th Q, and they were able to get over the hump. The problem with the 1st Q will be the combination of weak pricing power due to increased competition, some add'l capacity, and traditional small LF's.

ATA had a great CASM of 7.16, but an terrible RASM of 6.98. The switch to lots of Transcons with the ramped up competition from the legacy's and LCC's hurt ATA's pricing power. Therefore, the lousy 4th Q numbers.

 

[General Lee]

I think JAN is a rough month for most because most people go back to school or real in their spending for awhile after over spending during the Hoilidays. The cold weather bites them at the end of Jan, and they ususally set up Spring Break plans, and that rolls right into a busy Summer season. If every month were like Jan, then a lot of us would be in major trouble. Hopefully fares will rise a tad and the Spring and Summer seasons will help everyone. I think it will only get brighter....

Bye Bye--General Lee

 

[SWAdude]

I read about some dumas that got furloughed from USAir, was hired by SWA and then went back to USAir when recalled.

I am sure we will be talking about the same person. This individual actually was a Morris pilot that came over with the buy out. He had upgraded to Captain and had been flying as one for a little while when he got the call back.

I am a little careful of judging ones decision in chosing which airline one should go with when they have a choice. To some I was a freakin idiot to leave the major I was working for to go to SWA. After 9/11 to those same people I became a genius. This is a fragile business and this "dumas" could have been viewed as a "genius" as well.

My personal decision to leave and go to SWA turned out to be the best for me. It doesn't mean that it is for everyone.

Best of luck to all.

SWAdude

 

[lowecur]

Re: Ty

"Marketshare" doesn't mean squat by itself- it's all relative. You can give the seats away until you're broke, but in the end, you have to make money.

DAL has been bleeding itself into bankruptcy by insisting on fighting for every last crumb, regardless of the fact that it is losing $3-5 million dollars each and every day.

Ty, it's very easy to say that with DL as they are really not in a position to compete and make money from operations. Their sole purpose is to stay in the game until they can hopefully get some relief from the payroll/work rule side. If they do get that, this will allow them to carry out a more complete strategic course that will include some big changes in their operation.

AMR, CAL, and to some extent UAL are already in position to carry the fight to the LCC's. If UAL gets the loan guaranty (which I expect), look for them to continue making money from operations.

 

[FlyBoeingJets]

This individual actually was a Morris pilot that came over with the buy out. He had upgraded to Captain and had been flying as one for a little while when he got the call back.

To some I was a freakin idiot to leave the major I was working for to go to SWA. After 9/11 to those same people I became a genius. This is a fragile business and this "dumas" could have been viewed as a "genius" as well.


SWAdude

I wasn't trying to kick a guy that was down, but wanted to illustrate how important knowledge is in making our career choices. I wish him the best.

I pray that none of us, especially me , end up as next in a long line of airline "DUMAS's" 5-10 years down the road.

Happy Landings,

FBJ

 

[FDJ2]

Re: Re: Ty

DAL has been bleeding itself into bankruptcy by insisting on fighting for every last crumb, regardless of the fact that it is losing $3-5 million dollars each and every day.

$3-5M each and every day? Where do you get your numbers?

 

[lowecur]

AWA

Their LF's were up 2 pts, with the addition of almost 5% capacity yr over yr. Since they are really WN's biggest competitor out of PHX and LAS, this probably means they have taken a bite out of WN's nmbers. I'd be interested in seeing the numbers from Manchester and Providence for January to see if the battle of Boston between AMR, DAL, and B6 is having an affect.

 

[General Lee]

Lowecur,

An AWA employee (supposedly) said (on the airliners.net board) that their transcon flights have not been full at all, and most had an average of 39% load factor. I think when LCCs venture off on other paths (not their hub and spoke strategy) they can become bumpy. (even with $299 walk up fares) That isn't true about all new routes with LCCs, though....Airtran likes to go to the Major hubs and try to peel away passengers with lower fares. That may work for awhile, but when capacity does come back---that might be really tough on the LCCs (like Airtran taking on AA in DFW---AA will lower the fares too, but increase fares elsewhere to make up the difference--like INTL routes from DFW). That will be an interesting one to watch....

Bye Bye--General Lee

 

[lowecur]

General

Falling back on international routes has been a nice cushion over the years. I just saw where Alitalia is offering r/t to Rome from Miami for $299. They have the pricing power to do this with the falling dollar, and this will hurt US carriers. AMR has a vast international route structure of which none is more profitable than South America/Carribean/Central America out of MIA ( I see DL is going back to Buenes Aires from ATL). They indeed can use this to cover their losses in the US, but most of the other international routes have plenty of competition.

FL will have a tough time in DFW, but they knew that going in. They have the staying power.

 

[General Lee]

Lowecur,

I understand your point, and I don't want Delta to be a Pan Am (only INTL or defunct for that matter......). The Summer time is usually a cash cow for INTL travel, and you are right there usually is a lot more competition---like AA anouncing today that they will start JFK--Brussels (DL and CO are already flying there from JFK/EWR) and JFK--Rome also. That might hurt us, but usually the INTL carriers do not dive too far for Summer fares. (That is not true for Spring or Fall fares, where they just want to fill seats)

DL offers a good escape from MIA for Latin and South American travel, due to the fact that we have one stop service (thru ATL) to 150 cities---and AA does not have that at MIA. Hopefully we can exploit that eventually.....We are adding more flights southbound (like Buenos Aires), and the Carribean is a good bet ---we are adding JFK--San Juan and Santo Domingo on mainline. People were nervous about some INTL travel during the War last year, and a lot flocked closer to home--in the Carribean.

As far as Airtran and their staying power, I agree that they can fight the long fight (like in ATL), but the Majors will make it harder on them, and probably hurting themselves in the process. Let's wish for a great economy, lower fuel prices, and good negotiations.....


Bye Bye--General Lee

 

[Slug]

loads

Liars figure and figures lie.

SWA load factor went down on and increase in ASM.

DL and NWA LF went up on a reduction in capacity.

Sounds like even steven to me (to a point)

http://www.thestreet.com/_excite/markets/ericgillin/10141646.html?cf=WSIWON1111051500&alias=/ht/nw

 

[Dizel8]

However, DAL entry into the JFK-SJU market does more then just target jetBlue, now DAL is actively moving into AA territory, as DAL is into UAL territory with the JFK-DEN. Somehow, I am sure there will be some sort of response, perhaps AA will target a few DAL flights.

Perhaps this is once, where the big boys will go after each other, normally they just maintain their "prearranged" market.

 

[lowecur]

Slug

Liars figure and figures lie.

SWA load factor went down on and increase in ASM.

DL and NWA LF went up on a reduction in capacity.

Sounds like even steven to me (to a point)

Thanks for the report. You are comparing apples and oranges. DL and NWA are hamstrung with expense problems, and have elected to outsource mainline routes to RJ's to compensate (thus the reduction of capacity). Once these problems are reversed, then you can make that comparison. Try comparing it to two legacy's with their expenses in decent order ie: AA & CAL. Even ALK had an increase in capacity of 4.3%, and increased their LF by 4.4 pts. I don't think you caught the most important paragraph:

For Southwest, the year-over-year drop in monthly traffic, while just 0.5%, marked the first time since November 2002 that the carrier had seen any weakness in the metric and helped the carrier post the weakest January load factor since 1999.