AA's CFO says Integration going well

[WorldTraveler]

He missed the one upside of 12% increase in the Pacific..
 
http://www.thestreet.com/story/12873007/1/why-american-airlines-aal-stock-is-falling-today.html?puc=yahoo&cm_ven=YAHOO

uh, AA ADDED 14% capacity on the Pacific but traffic (paying passengers per mile) increased by 12% - and thus AA's Pacific LF fell by 1.4 points.

Given that we have discussed that the Pacific is heavily loss making and subsidized, it will not be a bright spot until traffic and revenues increase at a far faster rate than capacity is added.

back to the cargo discussion, The Port Authority of NY and NJ has released traffic statistics for June 2014 and, as I said was likely to happen, DL has passed AA as the largest cargo carrier at JFK, largely a result of AA's decision to remove 767s from the JFK transcon markets while DL added them.

Since FedEx and UPS' cargo operations in NYC are concentrated at EWR, DL actually carries the most cargo of the big 3 passenger carriers from the combined NYC airports.

DL is also the largest passenger carrier at both LGA and JFK and also the largest cargo carrier at LGA.

There may well be a lot of people who will argue that pulling the widebody aircraft from the JFK transcons was necessary but it clearly had a dramatic competitive effect in NYC that undoubtedly has translated into real revenue.

You have to wonder what AA's cargo numbers would look like if they still were carrying the transcon cargo they were a year ago.

 

[eolesen]

Taking another look at the cargo numbers compared to international ASM's...

It might be a totally worthless metric, but just for gits and shiggles: since ASM's are equally influenced by stage length, I decided to create a new metric... CTM's as a percentage ofinternational ASM's. That also normalizes some of the cargo volume to aircraft size, and I think most of us would agree that international widebodies are where the bulk of the cargo is being handled.

AA's CTM's were 2.19% of RPM's. So were DL's. UA's were lower, at 2.06% of ASM's.

Since there's really not a load factor equivalent for cargo that gets published in the public filings, this is the next best I can come up with. The similarity for AA and DL leads me to believe that they're both filling more available volume than UA is, even including the narrowbodies into LatAm.

 

[WorldTraveler]

makes sense, E.

to be clear, AA's lower cargo numbers, IMO, are a result of its smaller long-haul network, not because of a lack of use of what it has.

 

[FrugalFlyerv2.0]

and my question to you is "why does it matter HOW I deliver it if it is the facts"... and these are facts that AA put out, not me.

I've been doing this internet chat thing for many years and I obviously crossed the point where getting the praise of others doesn't motivate me nor does receiving derision work either.

You talking about delivering the facts is one of the funniest statements I've heard in a long time. Good one!
BTW: don't you care what spectator thinks about you?

 

[WorldTraveler]

the fact is that AA didn't fill the increased int'l capacity it put into the market.

Would you like to rewrite my post including all of the information I posted but put in a form that makes people here happy?

I doubt it because no amount f wrapping is going to change the reality that AA's int'l growth plan is not delivering the kinds of bottom line results that it must show in order to be sustainable on a long-term basis.

there are enormous implications to AA and its employees when the realization is reached that AA simply does not have and cannot create in a heartbeat a network that is comparable to DL and UA to continental Europe and Asia where those two are much stronger

it is one thing to integrate the existing operations that AA and US have and do it operationally well.

It is quite another to recognize that the merger is not and will not be what some people here expected it will be in terms of network.

AA has embarked on a great new chapter and I am certain the future is brighter than it was for AA over the 10 years prior to the merger or for US for much of the time they have been out of BK.

 

[FWAAA]

makes sense, E.

to be clear, AA's lower cargo numbers, IMO, are a result of its smaller long-haul network, not because of a lack of use of what it has.

Year to date,  Delta's Cargo Ton Miles are a whopping 1.37% larger than AA's Cargo Ton Miles for the first 8 months.   YTD,  DL's CTM are 1,559,806,000.      AA's CTM for the same period are 1,538,687,000.   At the end of July,  for the first 7 months of the year,  AA's CTM were larger than DL's.   Delta's CTM were higher in August than AA's but I'll wait until the end of the year to declare which airline has more CTM.   

 

[WorldTraveler]

The likely reason why DL saw a big jump in cargo is because DL's TATL system dramatically grows in the summer and then is pulled back later in the year.

and, once again, cargo capacity only works if the passenger capacity is being profitably added.

You can tell me the number of widebody int'l longhaul seats per day that AA operated during the month of August but a 5 LF point difference between AA and DL and UA means that there are literally tens of thousands of seats per day that AA did not fill that DL and UA did - and the latter got revenue filling them.

We saw the shoe finally drop with AA making some of the largest winter seasonal cuts that either AA or UA has ever had and I fully expect the same thing will happen next year.

AA simply cannot expect to attain the same level of financial respect if it is willing to keep seats in the market that cannot be profitably filled.

and when passenger flights are pulled, the cargo compartments will go as well.

 

[FWAAA]

I suspect that AA's cargo business might be somewhat seasonal.   For example,  blueberries and other perishables from Argentina fly north on AA's 777s during their summer (our winter) but not during our summer.    There's one small example off the top of my head.   With AA's emphasis on Latin America and Europe (historically smaller Asian network), perhaps the seasonal variations were larger than at UA or DL.   Most imported fresh cut flowers to the USA come from Colombia - and Valentine's Day and Mother's day are both in the first half of the year.   There may be other seasonal factors at work.   

 

[FrugalFlyerv2.0]

Year to date,  Delta's Cargo Ton Miles are a whopping 1.37% larger than AA's Cargo Ton Miles for the first 8 months.   YTD,  DL's CTM are 1,559,806,000.      AA's CTM for the same period are 1,538,687,000.   At the end of July,  for the first 7 months of the year,  AA's CTM were larger than DL's.   Delta's CTM were higher in August than AA's but I'll wait until the end of the year to declare which airline has more CTM.   

Any rational person hoping to make a decent analysis / draw a sound conclusion(s) would do that, but if you have a narrative that you're trying desperately to sell, you need to grab on any sliver of data that supports any kind of DL superiority ......

 

[WorldTraveler]

you don't have to wait until the end of the year to make a conclusion.

Historical traffic reports are available for all carriers.

AA, DL, and UA all include cargo on their monthly traffic reports.

http://finance.yahoo.com/news/american-airlines-group-reports-august-120000673.html

The whole side show about cargo is nothing but an attempt to refuse to acknowledge that AA is adding passenger capacity to its international system that it cannot fill and has been doing it for years.

They did it in BK with the same results, I called it out then, and it has continued into the merger.

It is still very possible that AA committed to its int'l plan before the merger and the routes they are flying now could not be changed by the time the merger was consummated.

But what the traffic reports have consistently shown is that AA's int'l system passenger load factor has fallen more than any other carrier and their RASM reflects it.

http://finance.yahoo.com/news/american-airlines-group-reports-august-120000673.html

http://finance.yahoo.com/news/delta-reports-financial-operating-performance-121400871.html

http://finance.yahoo.com/news/united-reports-august-2014-operational-211500322.html

You can argue about needing to add flights to Asia in order to build a viable network there and say that AA is willing to sustain losses in that region as an investment but there is no excuse that can be used to justify the fact that AA's Latin America and Europe system have had year to date LF drops of 3.5 and 4 points respectively.

If AA employees and stockholders are willing to sustain losses to fly capacity that is not being filled, then they at least need to understand what AA is doing.

When other carriers are operating 3, 4,a and 6 load factor points higher and are already getting yields higher than AA, there is no way that AA can report comparable financial results.

If trying to create a network comparable to DL and UA by flying around tens of thousands of unfilled seats per month is something that AA is willing to do, then they should not expect to be anywhere near comparable to other carriers when it comes to financial results

 

[FrugalFlyerv2.0]

The whole side show about cargo is nothing but an attempt to refuse to acknowledge that AA is adding passenger capacity to its international system that it cannot fill and has been doing it for years.

Oh, I'm sorry, English is my second language, but I could have swore that AA cargo and AA/US integration are separate/different topics.

Oh gee whiz, but I wonder then why spectator brought DL's cargo 'superiority' into the conversation? Or was it you WT that started the sideshow? It's tough to tell you two apart)?
:b

 

[WorldTraveler]

I'm not sure what is your first language but rationality and logic work pretty much the same in most western languages.

Others in this forum have never said that English is not their first language.

Here is my original post.... again, cargo might have been mentioned but it is minor compared to a number of other sentences which address AA's passenger performance on its int'l system.


 

AA just released its August traffic results.

System load factor was down almost 1% driven by a 3.5 percentage point decrease in AA's int'l system load factor. AA increased int'l capacity by 4.2% so most of their int'l capacity could not be filled at current fares.

http://finance.yahoo.com/news/american-airlines-group-reports-august-120000673.html

AA's RASM is reported to be flat to up 2%. UA does not report monthly RASM any more but DL said its RASM for the month was up 2%.

DL and UA both reported reduced LFs on their int'l systems and both also increased capacity. AA's int'l system LF decrease was the largest of the big 3 US int'l carriers.

AA also reported the lowest cargo traffic behind DL and UA.

AA said that its third quarter pre-tax margin excluding special items would be between 10 and 12%; other big 3 and big 4 US carriers have estimated margins of 15% or higher.

You like they fail to address the issue of underperforming routes which has far larger significance to AA and its employees than whether AA is a few percent smaller or larger than DL or UA in cargo.

Feel free to keep trotting out Spectator as well. It doesn't exist any more.

In case you struggle to connect the logic of Spectator as much as you fail to connect the logic of this discussion, Spectator existed to prove the point that the so-called reputation score which some people on here hold as evidence of others' supposed superiority over others cannot change the basic facts of the discussion - which those very same people have tried for years to use the post voting system to avoid acknowledging.

whether you or they "GRASP" it or not, AA has been throwing int'l capacity into its system for years in one region or another in an apparent attempt to build an int'l network that is able to compete with DL and UA.

Parker did it with US and then cut fares based on low labor rates. AA did it up to and in BK to avoid cutting the staff that would have to be cut if AA settled for the route system it has and can fill using industry standard pricing.

Parker is now faced with the reality that he cannot trash pricing in the marketplace because other carriers can now do the same thing to AA's much larger network.

He still has to deal with the overstaffing that is part of the new AA and he also has to deal with the demands of labor he agreed to which involve significant pay raises to labor as part of their support of the merger.

The cost of flying unprofitable routes for AA is higher than it was for US and it continues to grow.

Until AA deals with the problem of excess capacity in its network and with it the overstaffing that is behind it, a few percent difference in cargo won't make a hill of beans worth of a difference.

 

[FrugalFlyerv2.0]

Here is my original post.... again, cargo might have been mentioned but it is minor compared to a number of other sentences which address AA's passenger performance on its int'l system.


You like they fail to address the issue of underperforming routes which has far larger significance to AA and its employees than whether AA is a few percent smaller or larger than DL or UA in cargo.

Feel free to keep trotting out Spectator as well. It doesn't exist any more.

Cargo is indeed a relatively minor component of AA/US, DL and UA, yet you could not resist to point it out and tout a certain carriers 'superiority' with respect to how much cargo they carried although it was over a limited amount of time. Selective data mining is a wonderful thing, but I do wonder what happenned to the 'wholetruth'? Was that a charade?

I won't address the issue of underperforming routes, at least not for now, since AA/US integration is still in progress. In reality, not much has been done to adjust the route network, save for the seasonal adjustments. I would have thought a know it all like you would grasp that before making any conslusions.

Spectator is a gift that keeps on giving, so yeah, I will keep on trotting him out ...... 🙂

 

[WorldTraveler]

charade is a pretty big word for someone who is a 2nd language speaker... or do you selectively trot out the 2nd language excuse when it is convenient but never seem to be bound by it when it is time to throw dirt at someone else?

If you don't want to address route integration, why are you participating in the discussion at all. You want to harp on issues that are clearly way off to the side but you won't acknowledge that AA's own traffic results prove they have too much capacity in markets.

The seasonal adjustments are a start but there will have to be a whole lot more cuts to get AA's financials in line with other carriers.

And when the passenger capacity is cut, cargo capacity will go too.

 

[eolesen]

a few percent difference in cargo won't make a hill of beans worth of a difference.

And yet, you've latched onto that for the past two pages, and continually bring it up as a talking point.

Didn't you just point out last week that Emirates getting a half a percent discount on the interest rate of their aircraft financing was one of the biggest issues DL is taking on in Washington?

Either a few percentage points in a line item make a difference, or they don't. Do try to be a little more consistent...