Boomer said:
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FWAAA,
Are you on drugs? The failure of both/either U or UAL will increase the pressures on the remaining Legacy Carriers Exponentially.
Both UAL and U have both/either A320/B737 fleets that will be down and not turning a profit for their lessors. AMR has too much cash to enjoin the comfort of BK; too little trust with their Unions to negotiate a timely deal; and, too many restrictions to capitalize on the crises.
Both/either LUV or JetBlue have the cash: we don't. They could snap up favorable leases on the tin U and UAL leave on the ground and use it to increase a more heavily leveraged face off with AMR and the rest of legacy carriers.
The lessors get an amount certain versus nothing; and with it, the rationalization in capacity going forward to give certainty to current obligations.
[post="243984"][/post]
If it were still 1998-2000, I'd be inclined to agree with you.
Who cares about their fleets? There's hundreds of airplanes in the desert, and nobody is flocking to lease them. Airbus is not cranking out A320s at maximum capacity - anybody who wants some can get them. 737 production has slowed to less than half of Boeing's capacity.
The inevitable shutdown of USAir and UAL does not necessarily mean that AA needs to add hundreds of flights to benefit: AA could benefit simply by cherry-picking some of the top-yielding customers and placing them on AA's existing flights.
AA's flights are already full, you say? Then AA could afford to be a little more discriminating as to customers. If AA could add 5% or 10% more at the top of the yield curve, it could jetison the bottom 5% or 10%. That alone would work wonders.
Think of each legacy airlines' pax as a spectrum. Each airline has some (too few, to be sure) pax paying high fares. And each one has too many pax paying too little. A shutdown at UAL would enable AA to try to attract some of UAL's higher yielding pax and would allow AA to leave behind some of the lowest-yielding pax.
Here's what I see happening when UAL shuts down. AA would own ORD the way it owns DFW and the way DL owns ATL. Sure, some LCCs would move into ORD. But so what? The UAL pax who pay more than 5 cents/mile would gravitate toward AA. At least some of them would.
AA doesn't have any cash? Have you seen the $3 billion of unrestricted cash? That cash can be used to bid on UAL's overseas routes. WN and B6 won't be in a position to do that. Other bidders will include CO, DL and NW.
To the extent that AA does need to add some capacity, that would be simple. How many thousand AA pilots are on furlough? AA's got some MD-80s in the desert, along with the "permanently retired" 762s. AA could pick up some UA 762s and 763s to quickly add some capacity. Within weeks, nobody would miss UAL.
You're right - the LCCs would pounce. But UAL and USAir still fly SOME pax who pay high fares. And their shutdown would mean those pax would be up for grabs. Think they would all gravitate toward WN or B6? If so, then YOU are the one who is high.
Would a shutdown at UAL and USAir solve AA's problems forever? NO. Will AA survive if UAL and USAir are kept on life support forever? NO.
But a shutdown of those airlines will buy the remaining survivors some breathing room to keep up their transformations into long-term survivors.
There's no competitive need for 6 different legacy airlines to fly pax from SAN to LGA. Or between any other city pairs.
