SWA LF's continue slump

[lowecur]

While other LCC's continue to grow at a much faster pace, SWA just can't seem to find the sweet spot on the LF front. I see they have put the midwest on sale to try and get some marketshare back. In the last quarter the emphasis has been on maintaining price and it should show in their 2nd quarter profit numbers, but Gary and Co are now starting to worry about losing market.

http://biz.yahoo.com/prnews/050706/daw009.html?.v=17

 

[enigma]

While other LCC's continue to grow at a much faster pace, SWA just can't seem to find the sweet spot on the LF front. I see they have put the midwest on sale to try and get some marketshare back. In the last quarter the emphasis has been on maintaining price and it should show in their 2nd quarter profit numbers, but Gary and Co are now starting to worry about losing market.

http://biz.yahoo.com/prnews/050706/daw009.html?.v=17

By your own admission, their second quarter emphasis has been on profit. You also predict that their profits will reflect that emphasis.

If profits continue to climb, what difference does load factor make? Why should a SWA pilot/employee (or any airline pilot/employee since we are discussing this on an aviation venue, not a financial one) care about load factor if they are making money with their presently achieved load factor?

I'd rather look at the numbers and say, "Wow, SWA is so well managed that they can make money with fewer pax than the other guys. Look how much MORE money they'll make when conditions improve".

Anyway, thanks for the link.

enigma

 

[chris69]

Belf 60-63%

 

[lowecur]

By your own admission, their second quarter emphasis has been on profit. You also predict that their profits will reflect that emphasis.

If profits continue to climb, what difference does load factor make? Why should a SWA pilot/employee (or any airline pilot/employee since we are discussing this on an aviation venue, not a financial one) care about load factor if they are making money with their presently achieved load factor?

I'd rather look at the numbers and say, "Wow, SWA is so well managed that they can make money with fewer pax than the other guys. Look how much MORE money they'll make when conditions improve".

Anyway, thanks for the link.

enigma

I agree Enigma. They definitely know how to manage their pricing and capacity. However, they are beginning to realize that it's important to maintain marketshare against those legacys and LCCs that will be a viable threat in the future. With more and more of the public using the internet to price shop, it's no longer taken for granted that SWA has the lowest fare. I think even the unsophisticated buyer that SWA has catered to is shopping around. They will need to be on their toes in order to maintain the right balance between price and loyalty.

 

[lowecur]

Belf 60-63%

I have my doubts about that Chris. I think the BELF will be 65-67%. I'll let you know when the 2nd Q numbers come out.

 

[737 Pylt]

I have my doubts about that Chris. I think the BELF will be 65-67%. I'll let you know when the 2nd Q numbers come out.

Can you also let me know who will get the NL wild card! I need to call my bookie!
SHEESH!
737

 

[410dude]

WOW, sounds like concessions are in order for SWA and it also sounds like they need E-jets!

 

[apdsm]

but Gary and Co are now starting to worry about losing market.

Really, did they tell you that?

they are beginning to realize that it's important to maintain marketshare against those legacys and LCCs that will be a viable threat in the future.

Right, they just realized that within the last couple of months. What a rude awakening for them to finally learn the importance of market share after all these years.

 

[lowecur]

Can you also let me know who will get the NL wild card! I need to call my bookie!
SHEESH!
737

Marlins

 

[SDF2BUF2MCO]

While other LCC's continue to grow at a much faster pace, SWA just can't seem to find the sweet spot on the LF front. I see they have put the midwest on sale to try and get some marketshare back. In the last quarter the emphasis has been on maintaining price and it should show in their 2nd quarter profit numbers, but Gary and Co are now starting to worry about losing market.

http://biz.yahoo.com/prnews/050706/daw009.html?.v=17

So if I read in-between the lines correctly, this means demise of SWA is imminent? If I were ATA I'd get my ducks lined up and buy'em out.

 

[FlyBoeingJets]

While other LCC's continue to grow at a much faster pace, SWA just can't seem to find the sweet spot on the LF front. I see they have put the midwest on sale to try and get some marketshare back. In the last quarter the emphasis has been on maintaining price and it should show in their 2nd quarter profit numbers, but Gary and Co are now starting to worry about losing market.

http://biz.yahoo.com/prnews/050706/daw009.html?.v=17

Bankrupt UAL Corp.'s (UALAQ: news, chart, profile) United Airlines said that systemwide traffic in June fell 1% while capacity for the month fell 3.4%. Load factor rose 2.1 percentage points to 88.1%, the company said. United's Pacific routes saw a large increase in traffic while North American routes slipped.

AMR Corp. (AMR: news, chart, profile) said that American Airlines' traffic in June rose 7.8% from last year while load factor increased 3.8 percentage points to 82.8%. Domestic traffic increased 5.1% while international traffic jumped almost 13.6%. Capacity rose 2.8% overall but domestic capacity was 0.4% lower.


You're right Lowecur, Southwest is in trouble and the Wright Amendment should be repealed immediately to bail the out. Otherwise bankruptcy may soon follow.

 

[lowecur]

Really, did they tell you that?No, Herb thinks I'm a twit! But I think maybe todays sale kinda let's me read between the lines.

Right, they just realized that within the last couple of months. What a rude awakening for them to finally learn the importance of market share after all these years.

I think they are just starting to realize they can't have it both ways. Check out Jetblue and Airtrans LFs along with their growth this month. You think that hasn't got ol Herbie's attention. My guess is even AWA is kicking butt. Time to pull that Airline show, it's kill'n em.

 

[FlyBoeingJets]

UAL--RPMs North America

6,348,217 6,867,195 -7.6%

SWA--RPMs

5,432,024 4,955,951 9.6 %

 

[T1bubba]

Lowecur,

When I saw the news release this morning with the load factor drop, my first thought was "I wonder how long it will take Lowecur to post some comment about how the other LCC's are beating us on market share?"

The answer, apparently, was about 30 minutes. Don't look now but you're getting even more predictable than usual.

T1

 

[scoreboard]

Go Lance!!

While other LCC's continue to grow at a much faster pace, SWA just can't seem to find the sweet spot on the LF front. I see they have put the midwest on sale to try and get some marketshare back. In the last quarter the emphasis has been on maintaining price and it should show in their 2nd quarter profit numbers, but Gary and Co are now starting to worry about losing market.

http://biz.yahoo.com/prnews/050706/daw009.html?.v=17

This is like saying Lance Armstrong needs to ride fatser to win by an even bigger margin. Geesh...

 

[FlyBoeingJets]

I think they are just starting to realize they can't have it both ways. Check out Jetblue and Airtrans LFs along with their growth this month. You think that hasn't got ol Herbie's attention. My guess is even AWA is kicking butt. Time to pull that Airline show, it's kill'n em.

You are right, seriously, that JetBlue and Airtran deserve some recognition. Good on them.

 

[skykid]

UAL--RPMs North America

6,348,217 6,867,195 -7.6%

SWA--RPMs

5,432,024 4,955,951 9.6 %

UAL pulled down North America about 13% and increased international about the same - a smart move in my opinion. Post your Asian numbers so we can compare those.

 

[kingaira90]

usually not the cheapest on advance purchase

I agree Enigma. They definitely know how to manage their pricing and capacity. However, they are beginning to realize that it's important to maintain marketshare against those legacys and LCCs that will be a viable threat in the future. With more and more of the public using the internet to price shop, it's no longer taken for granted that SWA has the lowest fare. I think even the unsophisticated buyer that SWA has catered to is shopping around. They will need to be on their toes in order to maintain the right balance between price and loyalty.

I have to say that anytime I have been traveling between city pairs Southwest serves, they have never been the cheapest. I usually book a couple to a few weeks in advance, so I guess their real economy might be in the walk up ticket. I can usually find a ticket for a hundred or more less on cross country flights. It seems like they find the balance between price and load that continues to make boat loads of money, good for them.-kingaira90

 

[Flying Illini]

Maybe these airlines with slumping LF's should introduce the "you pay what we pay" deal. It seems to be working for the auto industry!

 

[jball2]

What good is market share if you lose money by having it? SWA doesn't believe in losing money just to have braggin rights on market share. I believe Delta has market share in ATL, at a loss. USAirways has it in PHL PIT & CLT -$$$. Need I say more.

 

[skykid]

What good is market share if you lose money by having it? SWA doesn't believe in losing money just to have braggin rights on market share. I believe Delta has market share in ATL, at a loss. USAirways has it in PHL PIT & CLT -$$. Need I say more.

Great point. Another great point is the fact that SWA can make money (or not lose as much money) at such low load factors. An even better point is that you could easily argue that among pax flying pilots, SWA pilots are well compensated, and EVERYBODY else's compensation sucks.

 

[canyonblue]

Our load factors are still higher than they were in the late '90's early 2000, when everyone was making money like crazy. It's the yield, and Gary hasn't told me how well the yield has been lately, so I would not assume the worst yet.

 

[Publishers]

Let's talk about yield per market or the percentage of growth as compared with added markets. Anything that has to do with the production of a bottom line positive number.

Reminds me of a meeting I was once at. A bunch of CEO's in the same industry were asked what market share they were going to get. The numbers all added up to a cummlative 133% of the market. Someone was obviously wrong.

 

[lowecur]

What good is market share if you lose money by having it? SWA doesn't believe in losing money just to have braggin rights on market share. I believe Delta has market share in ATL, at a loss. USAirways has it in PHL PIT & CLT -$$$. Need I say more.

I noticed you didn't include AirTran, Jetblue, or AWA in those comparisons.

 

[lowecur]

Our load factors are still higher than they were in the late '90's early 2000, when everyone was making money like crazy. It's the yield, and Gary hasn't told me how well the yield has been lately, so I would not assume the worst yet.

SWAs bottom line will do just fine in the next two reporting quarters.......hell it's that money making time of year.

What is causing a buzz up in ol Herbie's head is the trend. Remember the trend is your friend when it's going up. When it's going down in a strong ridership market, then there is reason for concern.

 

[TrumanSparks]

Southwest flew 5.7 billion revenue passenger miles (RPMs) in August, a 13.7 percent increase from the 5.0 billion RPMs flown in August 2004. Available seat miles (ASMs) increased 12.2 percent to 7.5 billion from the August 2004 level of 6.6 billion. The load factor for the month was 76.1 percent, compared to 75.1 percent for the same period last year.

For the eight months ending on August 31, Southwest flew 40.3 billion RPMs, compared to the 36.3 billion RPMs recorded for the same period of 2004?an increase of 11.2 percent. Available seat miles increased 12.0 percent to 56.4 billion from the 2004 level of 50.3 billion. The year-to-date load factor was 71.5 percent, compared to 72.1 percent for the same period last year.

 

[mdf]

UAL pulled down North America about 13% and increased international about the same - a smart move in my opinion. Post your Asian numbers so we can compare those.

That post your asian numbers thing is getting tired as lonly wacker himself.

But on a serious note. I really think it is about on time performance. Full airplanes all the time have been making it hard to turn airplanes in 20 minutes. Raise prices to bring down the lf a little, and help on time performance. Also make a few extra bucks for a couple of quarters.

 

[pilotyip]

Everyone better cancel their SWA interviews and pull out of the SWA pool. Things are getting really bad at SWA. Then all the prospectives that have confidence in SWA's future will go to the front of the line.

 

[wndshr]

stones and glass houses....

Great point. Another great point is the fact that SWA can make money (or not lose as much money) at such low load factors. An even better point is that you could easily argue that among pax flying pilots, SWA pilots are well compensated, and EVERYBODY else's compensation sucks.

SKYKID...be very careful about throwing stones in glass houses. SWA, B6, Airtran (fill in the name) are ALL extremely vulnerable in today's airline industry. SWA will not be profitable after the fuel hedging expires. I remember some of us at the legacy carriers who were pretty cocky after our contracts came out in the early 00's....we foolishly complained that SWA was keeping the bar low with their pay....whoa! now look at us....history has a very evil way of repeating itself, so enjoy the ride at the top and try to force yourself to be humble!

carry on!

 

[Gate 69]

I would rather speculate on the NL wildcard. Nationals take it on last day of the regular season.