Song to add capacity & destinations 2004

[General Lee]

T-bags,

I hope United does get better and finances improve, but do we really see the "whole story" when United still doesn't have to pay for certian things under Chap 11 protection? I honestly don't know.

Bye Bye--General Lee

 

[T-Bags]

GL, not to hijack the thread, but the "they don't pay the bills" line is a bunch of bunk. Take a look at the breakdown of all the expenses in Q3 for UAL, then compare it to the previous year. you'll see they are fairly similar, with modest declines as each jet lease is sorted out. WRT the obligations, it's like if Ty quit paying his QVC bill. The fee's would keep adding up anyway, until that particular bill was thrown out in BK court. IOW, UAL's operating cost will actually be significantly lower than they are now, when they emerge from BK. Lobbying the ATSB for UAL loan rejection was a VERY high stakes gamble on the part of AMR, NWA, and CAL. They were betting on a liquidation. Unfortunately for them (and arguably industry wide wages....), they didn't

 

[General Lee]

T-bags,

Yeah, thanks for clearing that up---I honestly didn't know. And, with the litigation costs so high right now, you are probably right that the costs will be lower after they get this over with. And unfortunately you are right again when you said that airline wages took a big hit also. We are trying to hang on here at Delta, but our debt burden might make us give in a bit.

Bye Bye--General Lee

 

[Andy]

Andy,

This is not a flame but are you on some type of medication?

Ted and I were out back of the maintenance hanger in DEN doing bong hits. But I didn't inhale.

You seem to think that the "legacy" carriers are some type of major military force. In reality they are more like the Russian military, lots of equipment but no money to operate it with. The companies that you seem to think control the industry are the same ones that have their tails between there legs and are trying to save the ship.

This is an extremely capital intensive business. Large carriers aren't able to respond quickly to economic downturns due to their high fixed costs. They immediately cut variable costs, but they do not achieve the same amount of cost savings as new small carriers with a smaller percentage of fixed costs. However, once the economy recovers, the legacy carriers make money faster than they can waste it.

You are entitled to your opinion but I would suggest that you look at history to see that your scenerio doesn't always work the way you think it will. The legacy carriers have NEVER been able to "deal" with Southwest and don't count on them being able to "deal" with them or any other LCC this time around either.

Well, the Wright Amendment was supposed to torpedo Southwest, but Herb Kellaher found a way to make the company prosper due to the Wright Amendment (chalk that one up to the law of unintended consequences).
The only other LCC in existance for more than 10 years that hasn't been run out of business by the legacy carriers is America West.

Remember, the "legacy" carriers you have mentioned (except AA) have already tried the LCC once before. Each time they were disbanded because they lost money and were gaining NO ground against the established LCC's. Heck, Southwest ran MetroJet right out of BWI when Metrojet was already established there. And now AA is out of STL. Please, give me an example of a LCC within a "legacy" carrier that has been successful.

You have chosen to define a legacy carrier's success as being profitable. I strongly disagree with your assertion. It is turf protection.
Do you play chess? The legacy carriers create LCCs in which they 'sacrifice the queen.'
Examples of successes? Shuttle by United contained SWA's west coast growth and also contained FRNT's DEN growth.
AMR's 56 seat F-100s flying out of Dallas Love ran Legend Airlines, with its 56 seat DC-9s, out of business. After Legend went chapter 7, AMR disbanded the operation.

Where in the world did you get the idea that we have lowered transcon fares? Helloooo, they have always been low. However, we can make money with fares that low.

Only restricted fares have been cheap, and even those have been limited. JetBlue's pricing structure has put a big dent in walkup fares.

Originally posted by side stick-n Right now, all of the "legacy" carriers are in damage control mode.

That is rapidly changing. UAL was cash flow positive by $7 mil/day in October (yes, October!). You can do a LOT of damage to LCCs with that kind of positive cash flow. We'll have to wait and see how 'nicely' Ted plays with FRNT. With positive cash flow, Ted can be a real a-hole to FRNT.

Originally posted by side stick-n I respect your opinion but strongly disagree with it.

Side stick-n, I'm open to opposing ideas. Personally, I expect to see FRNT and AirTran around for a long time. The reason for that is because they give the appearance of competition with UAL in DEN and DAL in ATL.
However, JetBlue is a different animal. Not only are they in highly competitive turf where many legacy carriers can use predatory pricing, but they are also undercutting some of the legacy carriers' extremely profitable routes.