Trouble ahead for Low Cost Carriers???

[FLB717]

T Bag
Dal CSM from 10.2 to 7.5, in one year? You gotta be kidding me? If that is true would you state how I can read that for my self? It is very hard to believe. Our cost are forcasted to drop with 737 deliveries to 7.8 and we have none of the super huge overhead that DAL does, so I am very curious as to the source of your numbers. Thanks

 

[SWAdude]

SWA flight attendents are looking for a pay raise to industry average....Delta pilots are going to giving back, according to the General, 15 percent.

Who seems to be in trouble. One burb in this economy and who knows what happens to the legacy carriers.

Be happy were doing well. Its the only hope you've had for a while.

"I would be willing to bet that in the 25 years they've been in existence, SWA has made more money for its shareholders than DAl has in 75".

I wonder if Delta made any money. Does anybody have the ability to add up their total net earnings???

SWAdude

 

[SWAdude]

T-bag,

There are so many flaws in your estimate. There is no way chance in hell you guys are going to get your costs that low even if you worked for free.

UAL can't get their costs even close to that and they don't have to pay all their bills!!!!

FDJ2,

" Sure the legacy carriers have taken it on the chin these last two years, but we all know the cyclical nature of the industry."

You call the last two years cyclical. I hope not!! I sure would be nervous about the next cycle.!!!

SWAdude

 

[T-Bags]

FLB,
The cost estimates (which I would contend are actually on the high end) are for EACH ADDITIONAL RPM. The numbers used are base on high end DAL CASM which INCLUDES the higher CASM RJ's.

Consider the entire DAL cost structure. To come to a conclusion concerning the costs of one additional flight, you must consider the costs that are already paid. For example, lets pretend DAL wants to add one flight. Do they need another gate at Atlanta to launch the flight from? No! cost of gate rental for the additional flight = 0 Do they need to go out and buy a new jet for the flight? No, cost of depreciation and Jet rental = 0 (normally approx 15-20% of cost). Cost of sales? Well the notion is that the sales force and infrastructure is there. Maybe a marginal rise in cost due to the addition of one additional Indian salesman for the increased call volume, the small cost of paper (ticket) and the 4% mastercard transaction fee... Employee costs? They are by far the highest. Can DAL add more capacity without hiring more employees? likely. even when they do hire new folks it is done at first year rates. Employee costs WILL go down. Again the estimate is for each ADDITIONAL RPM. the addition of capacity will slowly lower the average CASM, just as it went up when capacity was cut. DAL cut capacity to try to match supply to demand and avoid competing against itself in any given market. the LCC's took that as a good time to pick up some of that capacity. Now as demand starts to increase, DAL should be able to pick up a large part of that new demand by having in some cases LOWER incremental costs than the LCCs

 

[Ty Webb]

It's like punch-line to the old joke, "they're losing money on each flight, but they're making up for it in quantity".

 

[T-Bags]

T-bag,

There are so many flaws in your estimate. There is no way chance in hell you guys are going to get your costs that low even if you worked for free.

UAL can't get their costs even close to that and they don't have to pay all their bills!!!!

FDJ2,

" Sure the legacy carriers have taken it on the chin these last two years, but we all know the cyclical nature of the industry."

You call the last two years cyclical. I hope not!! I sure would be nervous about the next cycle.!!!

SWAdude

SWA dude, did you get your GED from the same place as TY? One more time slowly, EVERY UAL bill, paid or not shows up on the income statement. UAL posted a quarterly operating profit (3rdQ)and an operating profit in October based on costs that are expected to go much lower in the next few months as the last lease deals are worked out. Meanwhile, RASM at UAL is GOING UP, while SWA and JBlu are warning that they are GOING down for the LCCs. So one more time, lets consider the trends. Costs are GOING UP for the LCC's while RASM is GOING down. Meanwhile, Costs are going DOWN for the H&S airlines while REVENUE (RASM) is going UP. Do I fear SWA will suddenly fall on hard economic times? NO (I do think Jblu, AT will within the next couple years). SWA has a VERY durable business model, and SWA has a MONOPOLY on many of it's markets. OTOH, I do expect margins to decrease and the fast times of stock option compensation will be a thing of the past.

 

[General Lee]

Hey, who is this T-Bags guy? I'll tell you who he is: My new Best Friend!!

Bye Bye--General Lee

 

[SWAdude]

"Hey, who is this T-Bags guy? I'll tell you who he is: My new Best Friend!!"

Shocker

"SWA dude, did you get your GED from the same place as TY? One more time slowly,"

Maybe, but if your insinuating that you have a better education than us...I would demand a refund...

General,

Weren't you the one that brought up the cockiness issue??? Talk aobut arrogance!!!

You guys are running scared and it doesn't wear well on you.

SWAdude

 

[T-Bags]

SWAdude,
my remark was based solely on your demonstrated lack of understanding concerning the most basic of accounting rules. when you post information concerning another airline (UAL doesn't pay it's bill's) that is blatantly false and in and of it's self inflammatory, expect a reply. As to a refund, your dad paid for my college.

 

[SWAdude]

" As to a refund, your dad paid for my college."

That says it all.