Lost in WT's missive:
AA's June RPM's were up in almost every region YOY.
LatAm was essentially flat (down 0.1%) which is incredible when you consider the doom and gloom from WT about World Cup.
Sure, load factor was down due to the density increases, but when you're running at 88% LF's, you're well past the point of diminishing returns, so that may not be a bad thing.
Precisely. What I suspect we are starting to see is the beginning of a trend back towards structurally lower load factors. It's a constant balance, but through consolidation and restructuring, the airline industry is finally profitable again as thus I expect the pendulum to swing back somewhat away from very high asset utilization and more towards a higher unit revenue focus - the way it was before 9/11. One manifestation of this is likely to be lower load factors - almost certainly not as low as was standard 15-20 years ago, but probably at least somewhat lower than what the norm has been in the recent past. I think we're already starting to see that with the level of upgauging occurring at AA, Delta, etc. - with greater pricing power and economies of scale, it's somewhat less critical to maintain system load factors of say, 88% as opposed to 85% if that incremental 3% is dilutive to overall-higher earnings.
So in summary, AA is screwed. 🙄
No, it wasn't lost.
I specifically noted that AA is attempting to grow the SIZE of its int'l network by using resources - airplanes and people - that it has no choice but to use or pay high costs to remove.
There isn't another airline in the industry that has decided that consolidation in the industry is justification for reducing load factors.
the simple fact whether you two AA mgmt. loyalists (which is all the more ironic given that everyone knows how much you railed against Parker and the merger and yet you now line up behind him just as strongly as you did behind Horton and co.) is that Parker justified the economics of the merger based in large part based on US' pricing policies and low pay for its employees.
The DOJ pointed out the communications that took place at AA/US over those pricing policies but you couldn't figure out they were a key reason for US' survival relative to the bigger legacies but also are the very reason that AA/US can now claim success in the marketplace - because those pricing policies have now been eliminated?
trash industry pricing for years and then eliminate your strategy and then claim success because you finally had to end the practice or else face the consequences of it?
and then you continually argue AGAINST the reality that other carriers such as WN will now provide the pricing discipline in new AA's key markets such as DCA and DFW. that is PRECISELY what the DOJ intended to do - and has succeeded at. AA/US bragged to the DOJ about their pricing power so the DOJ hit them with competition - exactly what they avoided - in the very markets where they most capable of harming consumers by eliminating US' behavior that kept market pricing in check?
The DOJ didn't require that remedy from DL, WN, or UA.
and the INDUSTRY is benefitting because of the elimination of US' pricing policies while the impact of the divestitures will be born by AA.
as for labor costs, Parker knows full well that he has a small window in which he has labor cost advantages because of AA's BK and before the nAAtives - all of them - expect pay raises as a result of AA's success and in order to make the merger work.
He is doing everything he can to grow AA as quickly as possible, including to fill in the holes in AA's network that US did noting to fix - and to do it all before competition showed up.
No, AA is not doomed, screwed, or anything else.
But AA has not demonstrated that it has what it takes to maintain the same level of success in the industry in the midst of much greater competition than it has today, with higher labor costs, and without the advantage of artificially induced RASM growth based on the elimination of AA/US' own pricing policies and not based on the strength of its own long term strategies.
you and your internet supporters can vote my posts down dozens of times all day long but you would be better served understanding and addressing the strategic basis for what I say than in constantly running around trying to exterminate any bit of rational thought that might question what AA is doing.
it's also worth noting that UA in its most recent traffic report stopped reporting its fuel costs which makes DL the only airline to do so. Given that UA's fuel costs on its traffic reports were always higher than DL's, it might highlight why they stopped - and why Parker doesn't want to show it either.
