SWA's Slow Slide

[ivauir]

SWA grew over the past 20 years because they were able to go into choice markets and cherry pick based on price(CASM/RASM spread based on excellent LCC model). People flew SWA because they were cheaper than anyone else, and they were successful because they could make money doing it. Will 2006-10 be any different? Yes, SWA realizes they can no longer be successful based on price alone.
You couldn't be more wrong here. We are going to continue to grow and prosper precisly because we are not listening to folks who think we ought to do what everyoe else is doing.
Their business model of open seating, and lack of IFE will cost them as the playing field levels in the next few years. Many LCC's are already there on unit cost, and the legacys will be there in the next few years.
Our business model of driving costs down (and not offering silly gimicks) will be the key to our future success. When unit costs are adjusted for stage length we still have the cheapest CASM. We are going to continue to drop CASM while offering excellent compensation and careers. Lowecur sell EMB and feel the LUV dude, you'll never see the stock in th low teens again!
Most of their strategic moves lately have been based on driving UAIR out of business. They realize the days of cherry picking 737 routes based on lower cost are limited. Their number one focus has been UAIR. It is my opinion that this focus will be a failure for them. Where do they go next?
This is somewhat of a misunderstanding. We are not "going after" anyone, we simply want to be in the market when the demand peaks. We have something in the neighbourhood of 150 cities in the CONUS that we think we can expand to at a profit we are not going to run out anytime soon. We just picked Philly and Pitt because right now their numbers look best.
Secondly they are in keen competition with AAI to deploy lots of new 737's in markets where they will make money. They may be successful in this arena with the MDW deal, as only time will tell if the ATA deal cost them too much. AAI will now have to go into a market like DFW that will be less profitable due to the overwhelming presence of AA.
There is NO way we lose with the ATA deal. If they suceed we make money if they fail we get all of the gates at a great price.
I think SWA will become frustrated in the next few years as a few more competitors will choose the BK route to waive debt and reduce costs. It stinks because it rewards inefficiency, and punishes those who have done it right for so many years.
Finally something we can agree on... except we're kind o frustrated about this already.
What is the pilot payroll now, $1B+? Give back of 20% is $200M per year from 06-10.
Nice flamebait. Mark my words: there will be no givebacks. Expect no raises and some productivity give and take, lots of clarification of scheduling policies and a big group hug

Gary Kelly says something has to give with lower RASM and higher fuel costs with one of the majors. He clearly has staked his claim that SWA success from 2006-10 will be based on someone elses failure.
The current situation is not stable. There will be turmoil. But ask yourself this: who is better equiped to survive, adapt and take advantage of this turmoil? If you say JB or AAI we'll need to discuss things like capitalization rates, aircarft types, CASM and maybe more importantly the future of CASM. If you say a legacy carrier I'll pee myself laughing.

I tell you again my freind dump that EMB stock and get yourself some LUVin. You'll thank me later.

 

[Mugs]

Nice flamebait. Mark my words: there will be no givebacks. Expect no raises and some productivity give and take, lots of clarification of scheduling policies and a big group hug [/color]

.

Maybe you should just say read my lips?

 

[lowecur]

Starting already?

Very thought provoking piece there Del. Employees seem to always point the finger at mgt when they start losing money. I'm just waiting for that day with SWA, and how they will rationalize it. Reasonable is not in the vocabulary of any airline employee including mgt. It's the perfect industry for the "me" generation and instant gratification. You could throw airline uniforms on all those Vikings in the Capital One commercials..........What's in your wallet?

In investing, I've always tried to stay clear of any stock that is the market leader and has fully appreciated. If you can spot a winner early, that's where to make money. The analogy applies as pilots flock to SWA as the place to be at this point in time.

 

[Falcon Jet 1]

LowerIq,

what was JB,Airtran,and Swa casm 4Q04 (excluding fuel)? On JB website it didnt differentiate so Im assuming the 6.3 they gave was excluding fuel.

 

[lowecur]

LowerIq,

what was JB,Airtran,and Swa casm 4Q04 (excluding fuel)? On JB website it didnt differentiate so Im assuming the 6.3 they gave was excluding fuel.

No, that's not a clerical error, that's with fuel. When your average leg is 1300mi, that's a CASM buster. Of course all the transcons are also RASM busters, as that is just a hair above the CASM. When the 190's come on board, they will run around 15% higher CASM than the 320. You should see lots of north/south in the daylight hours down to Florida, and they will send them to Vegas in the evening. MidAtlantic cities, Midwest, and Southern cities will definitely drive the RASM much higher, as DN has said the 190 will need to charge a small operating premium in ticket prices.

 

[canyonblue]

From my earlier post from the Wharton School of Business...............

Wharton professors, however, add that not all discounters are created equal. With the exception of Southwest, no discount carrier is a lock to survive. Allen suggests that it is wise to reserve judgment on JetBlue until it flies for a few more years. While JetBlue has been a big success thus far, the airline is still young; until it expands into new markets and has to maintain an aging fleet of airplanes -- known as a maintenance cycle -- the jury is out. In addition, salaries will increase as employees gain experience. All of those factors will raise JetBlue's costs, says Allen. Southwest has already proven it can navigate those changes.

"Everything looks good for JetBlue so far," Allen adds. "It has an all new fleet and everything still smells good. The test will be the maintenance cycle. Southwest has been around and proven itself. JetBlue still has to do that."


There you go Lowecur, "From the Wharton School of Business". Not the Lowecur School of Miss Cleo. Given your track record I am glad you are not out trumpeting Southwest. We won't find you on this board in 5 years, the Moderator should of moved you before any FedEx thread anyway.We need a new section, the "Fantasy Airline League" and Lowecur I will even let you be the commissioner. I'll pick first and take Southwest.

 

[lowecur]

From my earlier post from the Wharton School of Business...............

Wharton professors, however, add that not all discounters are created equal. With the exception of Southwest, no discount carrier is a lock to survive. Allen suggests that it is wise to reserve judgment on JetBlue until it flies for a few more years. While JetBlue has been a big success thus far, the airline is still young; until it expands into new markets and has to maintain an aging fleet of airplanes -- known as a maintenance cycle -- the jury is out. There's no jury in the airline business. Business Models are changing with the drop of a hat. If they are looking at history as an indication of the future, they better come to my Cleo School. In addition, salaries will increase as employees gain experience. All of those factors will raise JetBlue's costs, says Allen. Southwest has already proven it can navigate those changes. Yes, through the magic of fuel hedge.

"Everything looks good for JetBlue so far," Allen adds. "It has an all new fleet and everything still smells good. The test will be the maintenance cycle. Southwest has been around and proven itself. JetBlue still has to do that."


There you go Lowecur, "From the Wharton School of Business". Not the Lowecur School of Miss Cleo. Given your track record I am glad you are not out trumpeting Southwest. We won't find you on this board in 5 years, the Moderator should of moved you before any FedEx thread anyway.We need a new section, the "Fantasy Airline League" and Lowecur I will even let you be the commissioner. I'll pick first and take Southwest.

Sounds like your get'n a little nervous there Canyon. Must be Section 6 isn't look'n so good.

 

[ivauir]

Maybe you should just say read my lips?

Don't misunderstand me here amigo. We are not going to "get tough" with the company, nor are we drawing a line in the sand. The fact of the matter is that the COMPANY doesn't want nor need givebacks. If the need arose I would expect the pilot group to step up to the plate and keep this company profitable. But, despite the amount that SWA spends on labor we have the lowest CASM (adjusted for stagte lenth) in the industry. Every pilot every where should be excited about this; we are proof that a well run company can provide excellent return on investment capital, outstanding service to the public AND STILL PAY ITS People WELL. We do all of that without the "magic" of BK.

Our current system of raises is tied to profitability I wouldn't be shocked to see more agreements like this come out of our section 6.

 

[lowecur]

Our current system of raises is tied to profitability I wouldn't be shocked to see more agreements like this come out of our section 6.

Is that an adjustable system, or has it been predetemined when the contract is signed? I think it would be a grand idea if a 4 year contract could be adjusted on an annual basis by the previous years performance, or could be adjusted mid-year if an emergency arose. Tie everthing to a 10% profit margin. This could only work where the employees trust mgt implicitly.

 

[Jim Smyth]

Our forth quarter profit was a profit but by our past preformance it wasnt that great at all. Granted it looks good to some people and comparing it with the other carriers red ink it isnt that bad, however.

Fuel is the big key and if something doesnt change in that arena we will "all" have big problems. All the unions have gotten nice raises in the past few years and yields have gone down. Not a good formula and I cant see it continuing that way for much longer. I personally dont look forward to a section 6! Nothing good can come from it IMO and we are going to waste millions of our union dues for nothing!