Southwest failing in Denver?

inflightboi175

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Southwest's surprise bid for Frontier has been the talk of the industry during the past week. But despite Southwest's bold move – which puts it into competition with Republic Airways – some prominent industry observers say they think Southwest is acting not from a position of strength, but from a position of weakness. TheStreet.com is one of the outlets to report on that angle, writing "Southwest's bid to buy out bankrupt Frontier in Denver may be viewed as a sign of its failure in the market." The Wall Street-focused publication claims that "by nearly every measure, Southwest has underperformed in Denver."

"Southwest is losing money in Denver," Denver-based aviation consultant Mike Boyd claims in a statement to TheStreet.com. He adds: “When Southwest came to Denver, Frontier stood and fought. Frontier is a hometown team, they have a better product and people in Denver are enamored with them. They gave Southwest a bloody nose and a lot of heartburn."*****

Respected aviation blogger Holly Hegeman echoes that sentiment in her PlaneBuzz blog, writing*****Frontier "has given Southwest fits. I think it's clear that Southwest thought they were going to go into Denver and kill Frontier. Didn't happen."

Hegeman goes a step farther, dismissing previous comments by one Wall Street analyst who went on record as saying Denver "has been among (Southwest's) most successful markets." Her view on that? "I'm not sure who this guy is, or what his background is, but according to the Wall Street analyst who I think knows Southwest Airlines' the best from stem to stern -- this is not the case," Hegeman writes.

She puts her money with analyst Gary Chase of Barclays Capital. Hegeman quotes one of Chase's research notes on the subjects. It says*****"our analysis suggests that Southwest is losing a significant amount of money in Denver while Frontier has been profitable year to date. Frontier has made substantial cost progress during its bankruptcy proceedings and currently enjoys a significant revenue advantage to Southwest in Denver markets.”*****

But Chase isn’t the only Wall Street analyst taking that view this week. TheStreet.com quotes Avondale Partners analyst Bob McAdoo as saying Southwest has "overscheduled Denver, resulting in weak margins and high breakeven load factors." He estimates Southwest lost $38 million in the Mile High City in the first quarter of this year, adding that his data suggests*****about $7.2 million of that came on just the carrier’s nonstop routes to San Francisco and Denver. “If you look at the 15 worst markets in the entire Southwest system, six of them are in Denver," McAdoo says.
*****
Joining the argument is Bill Swelbar, a research engineer at the MIT International Center for Air Transportation. In Swelblog aviation blog, Swelbar*****makes what*****is perhaps one of the most-comprehensive cases supporting the idea that Southwest may be on the defensive in Denver.

He offers a detailed interpretation on how he thinks Southwest’s cost-structure stacks up in relation to its rivals, and about the role he sees that playing in Southwest’s bid for Frontier. (Swelblog: Pondering Southwest’s Potential Play on Frontier) One of Swelbar's key points is that "if Republic is successful in gaining control of Frontier, it would produce, overnight, a new and potentially threatening competitor to Southwest's domestic dominance. … Frontier would provide Republic a tremendous opportunity to transform not only itself but the U.S. domestic market. For Southwest, the Frontier play is not so much transformative as it is defensive" for three primary reasons, according to Swelbar.

One of those reasons, Swelbar writes, is that he thinks Southwest's move is – in part –***** to "(thwart) future competition by ensuring that Republic (currently a regional carrier flying for bigger partners) remains a capacity provider to the nations’ legacy carriers – at least in the near term."

Many of the latest comments coming out this week run in contrast to the analysis provided*****by another camp of*****industry*****observers*****who made their comments shortly after the*****bid was announced.*****Many, including the one quoted by Hegeman, suggested that Southwest had the upper hand. Many of the latest comments also say the elimination of Frontier would ultimately be a net benefit for United, for a variety of reasons. That thinking also counters some of the initial analysis*****that came out just after Southwest's bid. (Related link: United, beware! Southwest's bid for Frontier spells trouble, analysts say)

For Southwest's part, spokeswoman Brandy King tells TheStreet.com: "While we have been able to stimulate leisure demand and boost load factors with promotions and fare sales, our overall unit revenue results have been down dramatically due to the deep, prolonged recession." She adds to*****TheStreet.com that in newer markets like Denver, Southwest has "an expectation that it could take some time before a market is performing in line with our more mature markets." (See the full TheStreet.com report for more details.)

Next on the schedule,*****according to The Associated Press, is that "Southwest …faces an Aug. 10 deadline for submitting a binding bid. If there is more than one qualified bidder, an auction will be held the following day." MIT’s Swelbar advises us to "jeep tuned.” And, if Southwest is successful? Swelbar says he "can’t wait to hear the arguments Southwest uses in Washington to gain regulatory approval, particularly as it will be hard pressed to make the argument that acquiring Frontier would lower airfares in the Denver region."
 

inflightboi175

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Alright didn't mean to make you get all tense simple mistake copying and pasting from my iphone and I did not take credit for writing it.
 
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firstthird

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not all tense, just trying to keep the discussion on track. people like it better if they have some idea of where the cut and pasted article originated. or at least I do.

pretty impressive posting from a phone though. props on that.
 

SRJ

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Southwest....leader of all 737 rates in the industry. 737 for life. The place where pilots went when they could not get on at Delta, AA, United, etc. Now the "top" of the industry. Whooopppeee for you guys. BTW, thanks to SWAPA for the 65 change push. You old ba$tard$ can kiss my _ss.
Eat me.
 

Herkdrv

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Southwest....leader of all 737 rates in the industry. 737 for life. The place where pilots went when they could not get on at Delta, AA, United, etc. Now the "top" of the industry. Whooopppeee for you guys. BTW, thanks to SWAPA for the 65 change push. You old ba$tard$ can kiss my _ss.
Eat me.
Dude you are one angry individual. Can you please let me know what clock tower you'll be operating out of tomorrow so I can avoid it by about a mile radius. Thanks. :eek:
 

firstthird

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My point was that you don't cut and paste articles without giving attribution. otherwise it looks like you thought of and wrote all the stuff. inflightboi was posting on his Iphone. we're good. not sure why you are bringing it up. I wasn't busting Ben for doing his today in the sky thing and amalgamating aviation news stories but the original poster for using Ben's words w/o a hint as to where they came from.

the link you posted was good. lots of Boyd quotes. Boyd is a hometown DEN guy I'm pretty sure and he writes like it.
 
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crj567

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I Boyd said anything, I am not gonna buy it!

-What a loser.
 

Donald

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If the article is true, then why is F9 in bankruptcy? Because of United? This isn't the first market SWA has struggled with after opening. They are doing what many businesses try to do. Buy out the competition. This is not a new tactic for any industry. Its simply capitalism in action.
 

contrail67

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If the article is true, then why is F9 in bankruptcy? Because of United? This isn't the first market SWA has struggled with after opening. They are doing what many businesses try to do. Buy out the competition. This is not a new tactic for any industry. Its simply capitalism in action.

One reason for the F9 BK is that they were unable to lure the loyal United passengers in Denver to fly F9....even with their LOW fares.....then SWA moved into the market and they found out they just cannot show up and everyone hops on their aircraft....and that is why they are struggling too...not to mention trying to compete with the F9 fares. You cannot have 2 low cost carriers in Denver. The one thing that will be interesting is if the current SWA bid holds ground....last week UAL stock went up 40% in 3 days....for what?...will just have to see, but something is up.
F9 going away will actually help United more than anything in Denver...will just have to see if UAL puts up a bid close to the end....may be why they just got the 150 million in the bond on their aircraft parts. You just don't go out and do that without a reason.
 

Scope out RJ's

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I Boyd said anything, I am not gonna buy it!

-What a loser.
Does anyone have their dumbass translator handy?

What is this moron trying to say?
 

crj567

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Does anyone have their dumbass translator handy?

What is this moron trying to say?
Well, to translate to dumbass-just for you, Scope (GenLee):

"That thar internets arrr-tic-le whut wuz posted up top in this here yarn, was a-quotin from that dang-fool Mike Boyd arr-line aynal-ist. So you see, just bout every time dat dang city-boy durn numnut dun open his mouth, he be jus drippin stupid right offn his lips. Dat durn Boyd group aynal-ist city-boy fool dun has bout worse sense then most ground squirrel-so you best just not pay him no 'tention a-tall."

-In other words: "Mike Boyd is always full of crap."

-Glad to be of service, dumbass....
 

Scope out RJ's

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Well, to translate to dumbass-just for you, Scope (GenLee):

"That thar internets arrr-tic-le whut wuz posted up top in this here yarn, was a-quotin from that dang-fool Mike Boyd arr-line aynal-ist. So you see, just bout every time dat dang city-boy durn numnut dun open his mouth, he be jus drippin stupid right offn his lips. Dat durn Boyd group aynal-ist city-boy fool dun has bout worse sense then most ground squirrel-so you best just not pay him no 'tention a-tall."

-In other words: "Mike Boyd is always full of crap."

-Glad to be of service, dumbass....
Golly Tanker Clown, who helped you with all the big words?
Was it someone in the office, or just another co worker at Wendy's??
Either way, time for the colonel's nightly cup of coffee!
 

luv2fly

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One reason for the F9 BK is that they were unable to lure the loyal United passengers in Denver to fly F9....even with their LOW fares.....then SWA moved into the market and they found out they just cannot show up and everyone hops on their aircraft....and that is why they are struggling too...not to mention trying to compete with the F9 fares. You cannot have 2 low cost carriers in Denver. The one thing that will be interesting is if the current SWA bid holds ground....last week UAL stock went up 40% in 3 days....for what?...will just have to see, but something is up.
F9 going away will actually help United more than anything in Denver...will just have to see if UAL puts up a bid close to the end....may be why they just got the 150 million in the bond on their aircraft parts. You just don't go out and do that without a reason.
UAL can't put up a bid. The deadline was Aug 3rd. The only players are WN and RAH
 

crj567

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Golly Tanker Clown, who helped you with all the big words?
Was it someone in the office, or just another co worker at Wendy's??
Either way, time for the colonel's nightly cup of coffee!
-I won't interfere with your personal life, Gen.... Congrats on snagging "the colonel" as your new squeeze-he is quite a catch (if swing that way.)
 

JumpJetter

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F9 is in bankruptcy because the credit card company they deal with required a larger "holdback" for each ticket sold. That move last year put them in to bankruptcy almost overnight. The move by the credit card company was based on wall street rumors that now that SWA was in the market, it was over for F9, despite the fact that since SWA has entered the market F9 has actually gained market share.....

....purely my opinion
 

scoreboardII

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I chuckle everytime I see the thread title... who is buying who again?
 

firstthird

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F9 is in bankruptcy because the credit card company they deal with required a larger "holdback" for each ticket sold. That move last year put them in to bankruptcy almost overnight. The move by the credit card company was based on wall street rumors that now that SWA was in the market, it was over for F9, despite the fact that since SWA has entered the market F9 has actually gained market share.....

....purely my opinion
here is a question for you. if the credit card company that SWA uses decided to 'increase the holdback' overnight, do you think SWA would be in bankruptcy soon thereafter? how about jetblue or airtran or DAL?

not today or tomorrow they wouldn't. maybe if it was 5 years from now and SWAs unencumbered cash dwindled to such a level that we were close to bankruptcy anyway, knock on wood, then maybe.

my point is that the precipitating event, in this case a credit card company decision, is separate from the underlying cause, F9 didn't have sufficient cash reserves to withstand even a small shock to the system. that is not the sign of a healthy company. not the fault of F9 pilots or FAs or employees, but these little narratives about how F9 was/is poised to dominate the world if only X hadn't happened or Y wasn't the case. I don't think they help. they assuage but they don't explain.
 

JumpJetter

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never said they were healthy, nor poised to "dominate". Just pointing out what actually pushed them into bankruptcy.
 
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