AA leads capacity cuts to Brazil

[WorldTraveler]

"American Airlines has by far the largest position in Brazil of any U.S. carrier, so the weak Brazilian economy is a particularly big problem for it. In the past year, American has cut its service to Brazil significantly.
"In Q2, American Airlines' capacity to Brazil was down a stunning 20% year over year, yet unit revenue still tumbled 24% in the market. As of July, American's management was planning for capacity declines to moderate in the second half of 2015 as the carrier overlaps the initial cuts made last year.
American's sales manager for Brazil recently told Bloomberg that the airline is planning month to month and offering bigger and bigger promotions to fill empty seats on its planes.

http://www.fool.com/investing/general/2015/09/22/brazils-economy-tumbles-how-are-airlines-respondin.aspx?source=eogyholnk0000001


beyond what is included in the article, Azul has abandoned plans for GRU-MCO service.

 

[DNTULSA]

Did we finally beat Delta at something?

 

[topDawg]

Generally when you are the largest in the market you cut the most % when times are bad. 
 
Even with a 20% cut AA is still much larger than DL or United. 

 

[Glenn Quagmire]

Generally when you are the largest in the market you cut the most % when times are bad. 
 
Even with a 20% cut AA is still much larger than DL or United.

Exactly. It would be like saying Delta cuts the most at ATL.

Meh.

 

[WorldTraveler]

I don't think there is any doubt that AA is and will remain larger than not only DL or UA but any other Brazilian carrier. And this is not just a US carrier issue since TAM and Azul have cut US capacity while Gol doesn't have widebodies and doesn't fly nonstop to the US.

But note that AA's PERCENTAGE cuts are deeper according to the article than other US carriers. AA's marketing director says they are having to increase the amount of discounting so the bottom has not been reached. Given that Brazil is one of AA's largest longhaul markets, there is a significant effect on AA's staffing and fleet planning when 20% of the capacity in a market that is almost all longhaul widebody flying has been pulled and more might have to come out.

 

[Kev3188]

Meh.

 

[Kev3188]

I saw on another page that DL is exiting BSB altogether, for a 100% reduction. Haven't found a confirmation yet, so hopefully, it proves incorrect...

 

[WorldTraveler]

I hope that is not true Kev but if it is it highlights that the bottom has not been reached in Brazil and the cuts haven't and won't affect any single airline.

Given that Brasilia is like Washington DC and Berlin that are governmental center but not the location of the largest economic centers of the country, BSB is more heavily dependent on connections and does not have the value in local traffic that other cities in those countries have.

 

[jcw]

is this the DL board

 

[WorldTraveler]

How about instead we focus on one of the core reasons why traffic between the US and Brazil is down as much as it is?


Here is the change in the USD/BRL (Brazil Real) exchange rate over just the past month.

http://finance.yahoo.com/echarts?s=USDBRL=X&t=5d&l=on&z=m&q=l&c=#{"range":"1mo","allowChartStacking":true}

A loss of 18% in one month in a currency is absolutely bound to have implications on trade and tourism.

 

[Kev3188]

is this the DL board

Nope.

I brought up BSB. Sorry 'bout that...