AMR Corporation Announces Initial Round of Capacity Reductions

[MAH4546]

Cutting back MIA and SJU frees up 737's, am I correct?

738s do not fly to SJU, and as of now the only things that have been announced for MIA are increased service; not cuts yet. Considering it's a high O&D operation, I wouldn't expect much cuts from MIA, nor JFK and LGA.

738s do not have to be free'd up, because more are arriving starting in January...34 to be exact.

 

[AirLUVer]

738s do not fly to SJU, and as of now the only things that have been announced for MIA are increased service; not cuts yet. Considering it's a high O&D operation, I wouldn't expect much cuts from MIA, nor JFK and LGA.

738s do not have to be free'd up, because more are arriving starting in January...34 to be exact.

In other words, expect ~30 S80's grounded this fall, and for every 737 received in 2009 expect 1/1 S80 retirements.

 

[MAH4546]

In other words, expect ~30 S80's grounded this fall, and for every 737 received in 2009 expect 1/1 S80 retirements.

The actual number of S80s grounded will be around 35-40. Though you are right that it will be close to a 1:1 replacement, assuming that more S80s aren't retired in 2009.

 

[Veritas]

...assuming that more S80s aren't retired in 2009.

That's the $64,000 question.

Are the newly announced MD80 retirements in addition to the previously announced replacement of this fleet type with 738s or an acceleration of that process resulting in a temporary reduction in service until the new planes arrive?

 

[MAH4546]

That's the $64,000 question.

Are the newly announced MD80 retirements in addition to the previously announced replacement of this fleet type with 738s or an acceleration of that process resulting in a temporary reduction in service until the new planes arrive?

They are an acceleration of the MD80 retirements planned in 2009, not in addition too. Obviously, the hope is that capacity can be built back-up throughout 2009, though some of the 738s will be used on expanding international service, they won't all replace S80s on domestic routes.

 

[eolesen]

The arrival rate on the 738's works out to about one every 10 days for the next two years.

I think you'll see scheduling equivilents of 1:1 pulldowns on the MD80, but Horton hinted pretty strongly that the actual retirement rate will wind up being less than that.

The lease returns will go out the door, but the fully depreciated shells will probably stick around for fleet protection or charter activity.

The 738 is returning to ORD?

I know, plans change.... But I think I see IORFA bringing you a tray with some humble pie for your dessert....

They will not be used at ORD. ORD sees no 738s, and they won't see them anytime soon. It saves millions annually in maintenance by not flying 738s to ORD, and therefore not having to have O'Hare equipped to handle the aircraft. It also saves in scheduling cost by "isolating" the aircraft out of Chicago. They aren't about to change that now, when they need to save money more than eve.

The 738s will be used almost exclusively to boost Miami-Latin America/Caribbean. That is where the money is right now with the way fuel prices are. Why fly block a 738 for 4h10m to fly ORD-LAX, when it can fly MIA-MAR, a route that commands more than double the average fare, in 2h40m?

Look for lot's of new 738 routes from Miami south. MIA-GEO and MIA-CTG, for example, are very likely for November, as are MIA-FDF and MIA-PTP.

AA will be in Guyana next week touring the airport in Georgetown and hoping to finalize a deal.

 

[MAH4546]

The arrival rate on the 738's works out to about one every 10 days for the next two years.

I think you'll see scheduling equivilents of 1:1 pulldowns on the MD80, but Horton hinted pretty strongly that the actual retirement rate will wind up being less than that.

The lease returns will go out the door, but the fully depreciated shells will probably stick around for fleet protection or charter activity.

The 738 is returning to ORD?

I know, plans change.... But I think I see IORFA bringing you a tray with some humble pie for your dessert....

Good for him; as I said multiple times in that thread, plans change and you can't predict anything these days; I didn't deny that 738s might be coming O'Hare, just that there absolutely no plans to do so at that time, which was true.

The plan as of this week is to bring 738s into LGA/DCA/LAX-ORD in late January, and possibly bring them back to ORD-HPN.

While a timetable is not yet set, all runway capable stations in the Caribbean will see 738 flights to MIA phased in, likely over a longer 18 month period, starting with Antigua and Grenada in November.

 

[eolesen]

I'd think long and hard about putting 738's into the beach markets right now. Hawaii is tanking, LAS is tanking, and it's just a matter of time before the beach resort traffic in the Caribbean starts to tank.

With diesel sitting at $4.69 a gallon and gas sitting at $3.75 a gallon where I live, people just aren't thinking about taking a week-long trip to Disneyplanet or an all-inclusive in the islands.

Instead, they're wondering how to finance a new car to replace their not-yet-paid-off Nissan Armada or Ford Expedition that they bought during "employee pricing days" a few years ago using downpayment money they took out using now-underwater home equity loans...

Some dealers around here are even refusing to take trade-ins if they get less than 15 mpg...

I'm just glad I had miles to cash in for our summer trip to my BIL's wedding, because what would have cost us $1250 in airfare is now over $1800 and climbing... The flipside is it could shape up to be a great summer for nonrevving...

 

[s80dude]

The follow routes end in September and have been removed from AA.com's schedules:

San Juan to Baltimore, Fort Lauderdale, Los Angeles, Newark, Orlando, and Washington.

Flights to Caracas, Hartford, Philadelphia, and Tampa remain; flights to Miami continue at 7x daily; all other SJU-Mainline routes see frequency cuts, typically one daily cut off the remaining.

Also, mainline will end service from San Juan to ANU, STT, SXM, and SDQ. Eagle will still run those; so no more intra-Caribbean mainline flying.

As for 738s at ORD, yes, that is now in the plan again, starting with flights on ORD-DCA/LGA/LAX, probably starting around 31JAN09.

My condolences to the folks at DCA-I. I am guessing that since their BWI and IAD to SJU flights are ending, the base will close.

 

[MAH4546]

I'd think long and hard about putting 738's into the beach markets right now. Hawaii is tanking, LAS is tanking, and it's just a matter of time before the beach resort traffic in the Caribbean starts to tank.

Good thing the Caribbean isn't any of those. Jamaica, Dominican Republic, they fit the description. You aren't going to see more capacity going there. In fact, at least from New York, capacity is being reduced to those markets, and that trend will likely continue.

Fort de France, St. Kitts & Nevis, Bonaire - those are high-yielding, limited competition, upscale destinations that aren't feeling the hit. They are niche markets and attract a wealthy tourist-base, not only from the U.S., but from all over Latin America and Europe, too.

MIA-SKB's break-even loadfactor in 2006 was approximately 45%. It's still below 60% even at today's fuel. UVF, CUR, and some others have similarly very low break-even loadfactors. MHH and GHB have break-evens under 40% on ATRs. If only all routes could enjoy that luxury.

PUJ, MBJ, CUN, AUA, SJU, STT - those are the primary ones that don't benefit from low BELF.

Also, correction on Baltimore-San Juan, it is not ending, at least not for now.

 

[AirLUVer]

The actual number of S80s grounded will be around 35-40. Though you are right that it will be close to a 1:1 replacement, assuming that more S80s aren't retired in 2009.

Unless the dollar drastically improves in the next 7 months as well as a sharp drop in fuel prices, expect nothing less than a 1 for 1 S80 retirement for every new 737 AA gets in 2009/2010. Expect at minimum 30 S80's retired this fall without any repacement and about 10 A300's grounded. So by end of 2009, there will be closer to 230 operating S80's.

 

[FA Mikey]

If there is not a turn around, or the slightest signs of one by September, We will see a more drastic pull down of planes and service.

 

[Hi-C-Camp]

If there is not a turn around, or the slightest signs of one by September, We will see a more drastic pull down of planes and service.

I wouldn't be surprised to see at least 75 more S80's being retired, than what was previously announced. If things don't turn around quick, everyone is in trouble... Good Luck to all..

 

[eolesen]

Fort de France, St. Kitts & Nevis, Bonaire - those are high-yielding, limited competition, upscale destinations that aren't feeling the hit. They are niche markets and attract a wealthy tourist-base, not only from the U.S., but from all over Latin America and Europe, too.

If you say so, but even the wealthy aren't immune from what's going on right now...

MIA-SKB's break-even loadfactor in 2006 was approximately 45%. It's still below 60% even at today's fuel. UVF, CUR, and some others have similarly very low break-even loadfactors. MHH and GHB have break-evens under 40% on ATRs. If only all routes could enjoy that luxury.

PUJ, MBJ, CUN, AUA, SJU, STT - those are the primary ones that don't benefit from low BELF.

If you're an employee, you might want to think twice about posting that level of detail... It's likely to get you fired.

If you're not an employee, you're putting someone else at a lot of risk if AA gets a hard-on for finding out who is giving it to you...

 

[MAH4546]

If you say so, but even the wealthy aren't immune from what's going on right now...



If you're an employee, you might want to think twice about posting that level of detail... It's likely to get you fired.

If you're not an employee, you're putting someone else at a lot of risk if AA gets a hard-on for finding out who is giving it to you...

Hardly. This information is easily publicly available by using DOT data from the DMS website and running very simple calculations. Airline data isn't as secret as people think it is. The Department of Transportation website can give you load factors, average fares, O&D numbers, etc., etc.

A break-even loadfactor is easily calculated by taking an airline's CASM, fuel burn for a particular route, and the route's average fare. The only guess work required is figuring out how much cargo revenue lowers the break-even, which is almost universally in the 20-25% range for high-demand cargo markets like LatAm/Caribbean.

It is absolutely nothing secret.