Southwest Is Waiting in the Wings

[Tanker Clown]

there ya go, unbridled expansion in a place where another airline's just trying to hang on is really "spectacular".

what flavor's the kool-aid today?

So much for trimming capacity.

When DAL/NWA, AMR, and UAL/LCC say they are trimming capacity that's either code for "We are yeilding the domestic market to SWA and other LCCs." It's gotta be that, or they are completely retarded. Everyone knew someone would fill the vacum.

But then again, the majors decision making history isn't exactly stellar. Take Song for instance.

 

[roughneck]

I heard today that there was more to come. One part of the conversation was that Continental has approached SWA to see if we are interested in their hanger that is currently leased to Frontier.

I hear we said yes and Frontier will be vacating the hanger soon.

Rumor only.

 

[Zdriver]

Maybe Diamonddd was trying to say this?
http://www.youtube.com/watch?v=qItugh-fFgg&NR=1

uhhh watched that clip.... Is there a drug policy at your company??? dammm

 

[DIAMONDDD]

uhhh watched that clip.... Is there a drug policy at your company??? dammm

I thought the same thing when I first saw it. It still doesn't make a bundle of sense to me but that phrase grew legs and I've seen it pop up in different places. I get a kick out of the way different twists on it come out. For example, USC football usually recruits very well. I saw one USC poster use the phrase "WE ARE USC! ALL YOUR RECRUITS ARE BELONG TO US!".

 

[RiteSideUp]

This may explain the origin a little better....

http://en.wikipedia.org/wiki/All_your_base_are_belong_to_us

 

[Deadalus]

Southwest Is Waiting in the Wings

By JEFF BAILEY
Published: May 6, 2008

The big cities that Southwest Airlines has invaded in recent years — San Francisco, Denver, Pittsburgh, Philadelphia and Washington by way of Dulles International Airport — all happen to be air travel markets that were dominated by either United Airlines or US Airways.

“If somebody shuts down, you need a giant number of new aircraft,” Gary C. Kelley, Southwest’s chief executive, said of the airline’s total fleet of 527 planes.

It was no coincidence. United and US Airways are among the weaker competitors in the airline industry, and they put up little fight when Southwest arrived and started grabbing market share.

Now United and US Airways have been holding merger talks, and the prospect that they might combine pleases Gary C. Kelly, chief executive of Southwest. He said in an interview that he relished the prospect of the two hub-and-spoke carriers cutting back flights to reduce costs and also the likelihood that such a merger could result in a period of operational chaos for the combined airlines.

That would give Southwest an opening to seize yet more market share.

“I would welcome that kind of a combination,” Mr. Kelly said.

To politicians who worry that domestic competition would suffer if United and US Airways merged, Mr. Kelly said, “We can put those fears to rest.” He said Southwest would quickly move in to expand service.
A US Airways spokesman declined to comment on merger talks, as did a United spokeswoman.

Other carriers are giving Southwest a wide berth, according to Daniel McKenzie, an analyst at Credit Suisse. Overall domestic airline capacity is down about 3 percent, Mr. McKenzie noted in a report issued Monday, but capacity cuts have been twice that large in markets where hub-and-spoke airlines compete against Southwest.

Southwest, the healthiest company in an increasingly sickly industry, does not know what its next major competitive move will be, because it will probably result from another airline’s severe misfortune.

In anticipation, Mr. Kelly is trying to keep his powder dry, with about $3 billion in cash on hand and the ability to expand Southwest’s fleet of Boeing 737s this year by hanging onto, rather than retiring, 22 older planes. Southwest has 29 new 737s arriving this year; its fleet totaled 527 planes as of March 31.

Southwest has already reversed a decision to retire two older 737s, choosing instead to add service from Denver to Indianapolis and Portland, Ore.

If Frontier Airlines, based in Denver and operating under bankruptcy protection since last month, is forced to shrink operations significantly, Mr. Kelly wants to be ready to expand Southwest’s flights there rapidly.

“If somebody shuts down,” he said, “you need a giant number of new aircraft.”

“We’ve done a lot of contingency planning,” as oil has soared toward $120 a barrel, sending the airline industry deep into the red, Mr. Kelly said. Southwest is alone among major airlines in having most of its fuel costs hedged at lower prices — 70 percent of its needs at $51 a barrel for 2008.

Gains of $302 million on hedges during the first quarter allowed Southwest to report a small profit of $34 million, or 5 cents a diluted share. United, meanwhile, posted an unexpectedly huge loss of $537 million and US Airways lost $236 million.

While higher fuel costs are pushing some carriers to seek mergers, notably Delta Air Lines and Northwest Airlines, Mr. Kelly said his interest in an acquisition, tepid to begin with, had all but vanished because of rising fuel prices. Southwest does not have enough fuel hedges to protect a merger partner, so it would inevitably be buying a money-losing operation.

“My enthusiasm for that is just not there,” he said. “The thought of simply acquiring outright another airline that is destined to lose money this year just doesn’t seem like a good opportunity.”

Southwest has its own problems, though the fuel hedges are buying it time to address them. Mr. Kelly needs to raise Southwest’s revenue by about $1.5 billion aside from any growth at the airline, and that higher revenue must mostly come from higher ticket prices.

Southwest is ditching some routes altogether, like Philadelphia to Los Angeles International Airport, and flying others less frequently. Round trips between Oakland and Ontario, Calif., have been cut to 12 each day, for instance, instead of 14.

It is adding $10 to $30 to its highest fares for the right to choose a seat early on its flights. It has also increased, to 15, the number of fares it might have on any one flight, nearly double the old number, allowing it to compete more effectively against hub-and-spoke carriers that list as many as 26 fares.

Brilliant. The plan is to cut capacity so ticket prices can be raised. If Southwest steps in to fill the capacity how are airlines going to raise prices? Kelly just said they need to raise prices didn't he? Eventually Southwest is going to get hammered too and nobody is going to feel sorry for them after this kind of stupidity. When Southwest started years ago I remember thinking it was obvious that their plan was to bankrupt other carriers and be the last one standing so they could do whatever they wanted with fares. Haven't they learned that the creditors and government will never let the core legacies die. I'm walking out the aviation door looking back just shaking my head. I should add I never interviewed at Southwest it's not sour grapes.

 

[Flopgut]

There exists the possibility that CAL/AA and BA might form up in worldwide affiliation. It will be interesting to see how much "enthusiasm" SWA has for that sort of competition (if it comes to pass). My prediction: The SWA political machine will go into full opposition mode. SWA favors the illusion there is competition, not actual competition.

 

[mach zero]

There exists the possibility that CAL/AA and BA might form up in worldwide affiliation. It will be interesting to see how much "enthusiasm" SWA has for that sort of competition (if it comes to pass). My prediction: The SWA political machine will go into full opposition mode. SWA favors the illusion there is competition, not actual competition.

There also "exists the possibility" that we might form up in worldwide alliance with Richard Branson's airline empire. Rumors are flying around here that he has been talking with Herb. My prediction: We will be ok competing with your mega CAL/AA and BA trainwreck although the name Virgin might need to be reconsidered if we are to be in this group.

 

[vixin]

Why, VIRGINLUV sounds good to me!!imp: :nuts:

 

[ultrarunner]

Great.

So much for reducing capacity through mergers to help bring ticket prices up a little......

Uhhhgggg...I was thinking the same thing Lear.

However, if the industry becomes a bit more monopolistic, hopefully we'll see a significant increase in ticket prices even with the current number of seats on the market.

I think once oil gets to a buck 50 or 200 and remains at that level, that will essentially mean a quick death to a few carriers and we'll get that reduced capacity.

It won't take much longer.....