Southwest In Talks With Chicago Midway About More Gates

[canyonblue]

By Elizabeth Souder, Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Southwest Airlines Co. executives are talking to officials at both Chicago's Midway airport and Philadelphia's airport about getting more gate space.

Those talks yielded two more gates in Philadelphia this week, boosting the airline's presence to six gates from four, Chief Executive Gary Kelly said in a speech to analysts Thursday.

In Chicago, Kelly said he is considering bidding for gates that bankrupt ATA Holdings Corp. has put on the block. He said he's hired bankruptcy lawyers and advisors to consider ATA's assets.

"We've got some capacity already to continue to grow, but we have already expressed interest with the city of Chicago that we would like more gates," Kelly said. "Our primary interest is real estate at Chicago, but I wouldn't foreclose the possibility of bidding for other assets."

Last week, Kelly announced he will focus growth next year on Chicago, in light of ATA's bankruptcy and the fact that low-cost rival AirTran has bid to buy ATA's assets there to use as a second hub. AirTran is a unit of AirTran Holdings Inc.

Southwest officials said the airline will add 16 daily departures at Midway in the first quarter, boosting total daily departures to 161. Currently, Southwest uses 19 gates in Midway, and ATA uses 14 gates.

And even though AirTran has bid to buy that gate space, the deal is subject to approval by the city of Chicago. A spokeswoman for Midway said airport officials haven't made a final decision about gates, and are talking with other airlines about using those gates.

"If ATA ceases or reduces operations, the city may reclaim or reallocate" those gates, spokeswoman Annette Martinez said, adding that airport officials haven't set a date for making the decision.

AirTran's bid includes ATA assets at New York's LaGuardia and Washington's National airport, where gates are also under special restrictions and allocated by authorities.

Southwest's Kelly reiterated that focusing growth in Chicago doesn't preclude growth in the airline's newest destination: Philadelphia.

Southwest will receive 29 new airplanes in 2005, with fewer than 10 coming in the first quarter. Kelly said even if he devotes all of the first-quarter deliveries to Chicago growth, he could still grow in Philadelphia.

He said the two new gates in Philadelphia are in a separate terminal than the four original gates Southwest rented. Kelly said he's talking to airport officials about reconfiguring the gate space to make connections more convenient.

Further, Kelly said Chicago growth doesn't preclude opening new destinations next year with some of those airplane deliveries.

"We have airplanes available to open up one or two new cities, and we may do that," he said.

Southwest's Kelly said the airline will grow by around 10% next year. Even though the industry's overcapacity is keeping fares low, Kelly said Southwest can continue to grow profitably.

He said he expects to turn a profit in the fourth quarter, and for revenue to rise.

"Our fourth-quarter revenues should grow over last year - I'm just not sure they will keep pace with capacity growth," he said, adding: "although I would argue we are able to grow capacity profitably."

Southwest reported Thursday that demand in October grew faster than supply, with revenue passengers miles up 9.1% as capacity rose 8.4%. The airline's load factor rose 3 percentage points to 66.6%.

 

[Jetjockey]

Looks like SWA will not walk away from the AirTran attempted MDW gate takeover without a fight. Don't forget AWA may still be in the bidding. Don't line up that MDW crash pad yet Ty!

Spin the wheel of bankruptcy, step right up.......who's gonna get the ATA assets..............? AWA, AirTran, SWA, all the above????? All this spinning is making me dizzy.

 

[jetblue320]

Looks like SWA will not walk away from the AirTran attempted MDW gate takeover without a fight. Don't forget AWA may still be in the bidding. Don't line up that MDW crash pad yet Ty!

Spin the wheel of bankruptcy, step right up.......who's gonna get the ATA assets..............? AWA, AirTran, SWA, all the above????? All this spinning is making me dizzy.

Are you forgetting about JB? Maybe they will make a try at getting a few gates at MDW as well.

The plot thickens.

C yaaa

 

[lowecur]

Thank you Jetblue320. I've been saying this for the last year, but even some B6 people said mgt wanted ORD.....Why???

The airport authority wants B6 in there...period. They are not going to agree to any one carrier like AirTran forming another biopoly(my own word) like LUV and ATA had. I also don't see LUV getting anymore gates for the same reason. These 14 gates will be split between probably 3 carriers.....AirTran, Jetblue, and AWA. This makes the most sense, as none of these carriers individually has the airplanes or money to be viable immediately at all 14 gates.

 

[Jetjockey]

Since the Red Sox won the world series, anything is possible. I haven't heard JB ever mentioned, but you just never know in this industry.

Expect the unexpected, and the only constant is change.

 

[canyonblue]

I also don't see LUV getting anymore gates for the same reason. These 14 gates will be split between probably 3 carriers.....AirTran, Jetblue, and AWA.

MDW was nothing after the shutdown of Midway Airlines. Herb stepped in and saved the place, Daley will listen to him and what he wants. If Gary wants some gates we will get them. What happened lowecur, those Florida hurricanes give you mental problems?

 

[atafan]

I have heard that there are other private investment groups looking to reorganize ATA and not sell anything to anybody.

Time will tell.

 

[General Lee]

I know this sounds dumb, but a friend of mine at United said they are interested in some of the MDW gates too----for TED. No joke. Why? I don't know.



Bye Bye--General Lee

 

[Boeingman]

I know this sounds dumb, but a friend of mine at United said they are interested in some of the MDW gates too----for TED. No joke. Why? I don't know.



Bye Bye--General Lee

Because they have no business plan and are grasping at straws?

 

[Ty Webb]

Don't line up that MDW crash pad yet Ty!

Daamn! I had just worked out a scchhweeeet deal with Mr. C's. They were going to let me turn their top floor into a crashpad . . . . .

Seriously, MDW would be a two-leg commute for me, you can bet I would avoid that like General Lee would avoid putting an a sticker on his flight bag.

 

[tz800ca]

Daamn! I had just worked out a scchhweeeet deal with Mr. C's. They were going to let me turn their top floor into a crashpad . . . . .

Sorry, it has already been done.......

 

[lowecur]

MDW was nothing after the shutdown of Midway Airlines. Sounds like my first wife in front of the judge. Herb stepped in and saved the place, Daley will listen to him and what he wants. Herb will have to fill him with some of that rockgut he drinks before that happens. 19 gates later, I think Chytown has more than paid it's dues. If Gary wants some gates we will get them. Don't count on it genius! What happened lowecur, those Florida hurricanes give you mental problems? Does Herb make some of his widebody pilots buy an extra seat on their flights till they lose some weight, Canyona$$???

.....

 

[jetblue320]

Thank you Jetblue320. I've been saying this for the last year, but even some B6 people said mgt wanted ORD.....Why???

You're welcome. I'll try to answer your question; The original thoughts months ago with regard to ORD vs. MDW was simply demographics. There are more humans that use ORD. Then when the semi-recent cutbacks of flight schedules at ORD were imposed by the Feds, it changed the landscape so to speak. It made MDW look all that more attractive but MDW was still under going a lot of construction. Now I think the construction is all completed (maybe not I really haven't investigated) and add the ATA bankruptcy and it really opens things up.

I think the plan is possible flights from NY to MDW, probably from JFK because our LGA slots are being used to Florida. We have 4 slots from LGA available but it makes more sense (or cents) to use them to Florida right now as winter is upon us.

C yaaa

 

[lowecur]

You're welcome. I'll try to answer your question; The original thoughts months ago with regard to ORD vs. MDW was simply demographics. There are more humans that use ORD. Then when the semi-recent cutbacks of flight schedules at ORD were imposed by the Feds, it changed the landscape so to speak. It made MDW look all that more attractive but MDW was still under going a lot of construction. Now I think the construction is all completed (maybe not I really haven't investigated) and add the ATA bankruptcy and it really opens things up.

I think the plan is possible flights from NY to MDW, probably from JFK because our LGA slots are being used to Florida. We have 4 slots from LGA available but it makes more sense (or cents) to use them to Florida right now as winter is upon us.

C yaaa

Interesting.

Much depends on the timing of the ATA pullout. The judge will probably continue to let them operate until an acceptable deal is hatched for the shareholders. The only bump in the road could be the ATSB. I'd be interested to hear if they could demand immediate re-payment of the loan and over-ride the BK judge if they feel Chapt 11 is being dragged out because of indecision.

If a deal is hatched prior to delivery of the 190's, I see part of that scenerio playing out. I look for B6 to get 4-6 gates in the deal. My guess is JFK, BOS, IAD will get the bulk of the flights. A surprise could include the small town grouping of Burlington, Syracuse, Rochester, and Buffalo. Burlington has 3 UAL flights per day, and the upstate tri-fecta all have around 12 n/s flights apiece using RJ's on both UAX and Eagle. These are all RASM friendly routes, as $600-800 r/t fares are not uncommon on less than a weeks notice. If booked after 1 week, the fares spiral down to the $233-$288 marker for r/t. One way travel is around $300 each way. B6 would probably put a hurtin on both UAX and Eagle, forcing them to reduce flights to cover just connecting traffic out of ORD. Of course the 190's would take over these routes at some point, and offer more frequency. As B6 grows and some of the other airlines capitulate, I see them opening up at ORD also.

 

[Bill Nelson]

Don't you think it would be more prudent to come up with a viable game plan and insure that you can make money with your existing route structure before you think of investing in a head to head battle (which you will probably lose) with SWA?



Jet Blue is forcasting a 4th qtr lose if I read the news wires correctly.

 

[BLUE BAYOU]

How short is the longest runway at MDW; we already have some operational contraints in using the A-320 on 7000 foot fields, I can't imagine anything shorter than that. So if the runway is less than 7000, don't expect B6 to be in there anytime soon-- until we get the 190, that might be an option, and only then...

 

[lowecur]

Don't you think it would be more prudent to come up with a viable game plan and insure that you can make money with your existing route structure before you think of investing in a head to head battle (which you will probably lose) with SWA? NO! Jetblue will not use MDW to go head to head with WN. With 4-6 gates, they can't afford to go head to head. There are still plenty of legacy routes into Chicago that they can go after without tangling with WN. The ones I mentioned earlier, and you can add Sacramento, San Jose, and Salt Lake City to the mix. Of course inevitably the twain shale meet, and the 190 will show it's stuff!



Jet Blue is forcasting a 4th qtr lose if I read the news wires correctly. They could also lose money into the 1st and 2nd Q because their RASM is falling off the table. The losses will be minimal, and for 2005 they will still make money. Once the 190's go into service on the RASM friendly shorter routes and smaller cities, B6 will begin making continuous profits again. The stock could get cut in half if oil remain high. Good investment at that point.

.....

 

[lowecur]

How short is the longest runway at MDW; we already have some operational contraints in using the A-320 on 7000 foot fields, I can't imagine anything shorter than that. So if the runway is less than 7000, don't expect B6 to be in there anytime soon-- until we get the 190, that might be an option, and only then...

I think they are under 6500'. Other carriers don't have a problem operating the 320 into MDW, why would B6? Most flights would be short duration and not require heavy fuel loads. Are these operational constraints only particular to B6?

 

[Bill Nelson]

The 7000 foot limitation is imposed by the FAA due to the lack of experience of Jet Blue Crews.

 

[BLUE BAYOU]

Most folks operating the 320 into MDW aren't always full like we are; our typical landing weights with a full load (156 pax) are around 137-140,000 pounds... Which is very doable into MDW when the weather is good. If there are any contaminates (snow), then we're diverting to ORD. The only airport that we consistently operate with a 7000' runway is Boston-- which already requires a TOGA takeoff to Florida on a good day. We also landed in LGB with only a 5500' runway, but someone one nearly ran off the end of it this past summer. I don't think our management is keen on MDW for those reasons, specifically, margin of error (like ATA's 757 running through the blast fence earlier this year, or the SWA Burbank incident). It would be a great place for the EMB-190s however, because they ought to have the range to hit the coasts from there...