SWA "masters" at work?

[Bill Nelson]

For those of you wondering about smaller A/C, here it is. This is how you get 737-600's for pennies on the dollar. Throw a little jab at Boeing by hinting that they might look at EMB RJ's.


Dow Jones Business News
Southwest Air Financial Chief: Sep Bookings 'Decent'
Friday September 19, 2:10 pm ET
By Elizabeth Souder, Of DOW JONES NEWSWIRES


.........."Kelly also said Southwest executives will revisit the idea of adding a smaller airplane to the airline's fleet, currently comprised solely of Boeing 737s, in order to serve smaller markets. But he doubts they will add another model. Part of Southwest's low-cost model is to operate only one kind of airplane, which keeps training and maintenance costs low.

He said Southwest will consider a smaller plane, such as Empresa Brasileira de Aeronautica's Embraer 190 jet, to serve smaller markets. The 737 is meant for medium- to large markets.

"It begs the question of do we want a smaller aircraft, and I think that answer is no, we don't," Kelly said."

full story:

http://biz.yahoo.com/djus/030919/1410000630_1.html

 

[lowecur]

I'm beginning to believe you, although not for the same reasons.

Southwest will need a smaller a/c if they are ever to break-out and secure the number #1 spot in terms of size. If DL and the Star Alliance bring their order books to Embraer in the next 45 days, then mfg slots will all but be gone for any more large orders.
Embraer simply doesn't have the mfg capacity to produce the size of an order that WN sould need.

Will the 736 do the trick? I suppose on a temporary basis to replace the 732/735. But that's only 50 a/c, and certainly not enough to keep pace with B6, or DL (should they order the 190). The question is, are their enough city pairs to support a 736 with the minimum required utilization of 11 hrs per day? I suppose as many as the 190 would have brought, but it's gonna cost WN 20% more to operate them than it would have the 190's. Add the new FA contract in 2004, and pilot contract in 2006, and you have a the recipe for a problem. You will see B6 and DL not being afraid to go head to head with WN. If they get those LF's to drop into the low 60's or high 50's, then WN will start a slow bleed.

There's alot of "if's in there, but they can't be discounted.

 

[SWA/FO]

First off, What? Secondly, NO

 

[enigma]

If DL and the Star Alliance bring their order books to Embraer in the next 45 days, then mfg slots will all but be gone for any more large orders.
Embraer simply doesn't have the mfg capacity to produce the size of an order that WN sould need.

If the Embraer 100 seat jet is a monumental success, it will be cloned by every manufacturer who can cut aluminium. The Dorkjet 100 seater, that now appears to belong to the Chinese, is already designed. It's just waiting for a market to support production. Are Airbus and McBoeing incapable of designing and producing a competitor for the EMB190? I doubt it. \

Just because Embraer sells out its production run, that doesn't mean that no 100 seaters will be available.

regards,
enigma

 

[Purple Haze]

...B6, or DL (should they order the 190). The question is, are their enough city pairs to support a 736 with the minimum required utilization of 11 hrs per day? I suppose as many as the 190 would have brought, but it's gonna cost WN 20% more to operate them than it would have the 190's. Add the new FA contract in 2004, and pilot contract in 2006, and you have a the recipe for a problem. You will see B6 and DL not being afraid to go head to head with WN. If they get those LF's to drop into the low 60's or high 50's, then WN will start a slow bleed.

When this happens to me, I ususally have to switch to decaf for a little while.

I am not a smart man, but I know LUV.

 

[Snoopy58]

Southwest will need a smaller a/c if they are ever to break-out and secure the number #1 spot in terms of size.

What behavior on the part of Southwest can you point to that would support the idea that they have any strong interest in becoming the largest airline in the US?

Not to say that they'd regard that as a bad thing, if it happens on their terms, but SWA has always pursured a very measured approach to growth. It seems vastly unlikely that they'd depart from the proven, successful strategy & embark on a risky bid to become the biggest, for no other reason than simply to be the biggest.

I've talked with some of the very senior pilots at Southwest, none of whom find the idea of getting RJ's (or whaddever ya wanna call 'em) remotely likely.

Shoot, even Gary Kelly dismisses the idea as unlikely in his article, though he acknowledges that it is being studied.

 

[lowecur]

enigma

<If the Embraer 100 seat jet is a monumental success, it will be cloned by every mfg who can cut aluminium.>

The Dorkjet as you call it is a 70-85 seat a/c. The Chinese will need at least another $400M to bring it to market. They will need to build a few a/c for certification purposes, and barring no problems, you may be looking at 2007 for deliveries. Boeing is already doing a deal with the Russians for their RRJ. These are 60-100 seat a/c, with certification of the 60 seater expected in 2007 (again, barring no problems). The remaining variants will be years behind the 60 seater. I'm not aware if the Donier 928 (110 seater) has been also purchased by the Chinese.

My point is, there are no alternative choices at this time or probably until 2010, for a pure 100 seater like the 190.

 

[lowecur]

purple haze

I don't even like caffine

I LUV LUV myself. It's just I don't agree with a philosophy that has worked for 30 years, necessarily means it's going to work for another 30 years. WN has to understand that their are pressures building that were created in the last few years that they need to address. AAI, B6, AWA, F9, eventually Alaska, and probably Richard Branson will be formidable competitors in the next 5 years. This new breed of competition is well managed/capitalized, and would be very happy to see WN keep the status quo. Add to that the continued viability of a few of the legacy carriers, led by DL, CAL, and eventually NWAC. They are not what they once were, but the additional cut-rate capacity they will be able to through at the market is enormous.

WN will face continued increased salary demands. I saw Parker on Bloomberg last week, and he mentioned the pilots contract coming up in 2006. He stated that they will want to be the best paid pilots in the industry. He also said that in 2006, the existing contract may well see them as the best paid pilots without an increase. This takes into consideration the renegotiated contracts at AMR, UAL, and US Airways. I guess he figures that DL, NWAC, and to some extent both ALK and CAL will follow. So he is already drawing a line in the sand.

It will be tough to grow revenues beginning in 2006 unless there is a legacy failure. I still believe that is 4 to 5 years away.

 

[lowecur]

snoopy 58

I think they want to be the most profitable first and foremost. I don't rule out that they also want to be the #1 in size, but not at the expense of profitability.

It seems that mgt has gone out of the way not to rule out the smaller 100 seater, but for now it's a no go. The point I made on the limited production capacity by Embraer is valid. Of course with a significant order from WN, I'm sure they will build out the production line to accomodate them. Afterall, the 190 will not be available until 3Q/05. I'm sure they could double production capacity by then if it were necessary.

This is spec, but wouldn't it be a hoot if Parker/Kelly were throwing a head fake to the competition, and actually were in negotiations with Embraer.

 

[flyingitalian]

The smaller airplane models the other carriers are using dont apply to wn. Why? There is very little hub and spoke, and wn services each market with flights in every **CENSORED****CENSORED****CENSORED****CENSORED** direction, and the efficiencies lost in the wn model would be too large to justify a second type of aircraft. Even jet blue who says they are a point to point carrier which I find hard to support, looking at their route map, should be looking at a larger airplane not a smaller one. Who has a 91% load factor and buys a smaller plane? If they are so happy with airbus and want a smaller airplane buy the 318. Oh, but you will have a hard time paying your pilots and other employees less if you have just a different airbus that is shorter. Instead buy an airplane that is the same length but thinner and a different type and now it becomes easier to pay everyone less. Personally I think the big man at jet blue got a hell of a deal on the emb190s and his biggest payback on the airplane is not seat mile cost, but cost of capital.

...but I could be wrong.

 

[PHXFLYR]

You know,once upon a very long time ago a little aircraft manuufacturer in Seattle designed a 12 passenger low wing
twin-engine airplane with retractable landing gear called the Boeing 247 . The entire production run was purchase by United Airlines. Along comes TWA President Jack Frye and he too is interested in Boeing's little 247 but alas there are none to be had because they were busy filling the order for United .TWA talks to another small aircraft manufacturer out on the West Coast and as a result, the DC-2 and later on the DC-3 come on the scene making the Boeing 247 obsolete overnight.

Hope Embraer can keep up with the demand for their new airplanes and doesn't have the same problems Boeing had back then.


PHXFLYR

 

[lowecur]

What ever happened to the DC 1?

 

[MenudoRocks]

Hey Willlie N.

Hola Bill,

Your title says, "SWA masters at work". Good thread. What do you mean by "masters"? Do you mean masters, as in, Master Yoda? Herb and Yoda together. D@mn, what a team!!

M

 

[cl-65link]

Boeing missed the RJ boat years ago. They concluded there was no profit in it.