AMR

[BoeingBoy]

This is the point I'm trying to make about AA. They need to get to a size equal to UA and DL in order to compete effectively.

I guess it depends on how you define "compete effectively". Being able to offer service to the same markets could be considered competing effectively, but AA merging with any available carrier except DL or UA would be lacking in Far East service. For now, at least, the major airlines seem to have learned that chasing market share at any cost isn't necessarily a good thing - it leads to loses. Hence the capacity restraint where a decade ago a pull-back by one carrier would be met with additional service by others.

You might be surprised that the most financially successful carriers are not the biggest carriers. For network carriers, AS has the highest operating margin with US and AA at the bottom. For low cost carriers, Spirit has the highest operating margin, followed by B6 with WN in the middle of the pack. Note that the biggest in each respective group is not the most financially successful.

Being profitable is more important than being big.

[Note: data is from the BTS for the 12 months ending with the 2nd quarter 2011.]

Jim

 

[UPNAWAY]

Interesting article form an investment reporter.

American Airlines' Bankruptcy: The Endgame Solution: Seeking Alpha writes that, if AA management has the creditors' best interest in mind, it will present a plan that includes a merger with US Airways and one that brings in Doug Parker to run the new airline that emerges.

http://seekingalpha.com/article/311...-bankruptcy-the-endgame-solution?source=yahoo

 

[Iclubbabyseals]

Interesting article form an investment reporter.



http://seekingalpha.com/article/311...-bankruptcy-the-endgame-solution?source=yahoo

Interesting article from an investment reporter and former United scab. Not that being a scab should bias his "analysis" or necessarily subject him to suspicions of working for a certain industry or their players. Just in the interests of full disclosure.

 

[SparrowHawk]

Interesting article form an investment reporter.



http://seekingalpha.com/article/311...-bankruptcy-the-endgame-solution?source=yahoo

I don't completely disagree with his thoughts on the matter. But Vaughn Cordle generally speaking is not someone I want supporting my point of view. His journalistic integrity and personal integrity is at best suspect IMO.

 

[WorldTraveler]

I guess it depends on how you define "compete effectively". Being able to offer service to the same markets could be considered competing effectively, but AA merging with any available carrier except DL or UA would be lacking in Far East service. For now, at least, the major airlines seem to have learned that chasing market share at any cost isn't necessarily a good thing - it leads to loses. Hence the capacity restraint where a decade ago a pull-back by one carrier would be met with additional service by others.

You might be surprised that the most financially successful carriers are not the biggest carriers. For network carriers, AS has the highest operating margin with US and AA at the bottom. For low cost carriers, Spirit has the highest operating margin, followed by B6 with WN in the middle of the pack. Note that the biggest in each respective group is not the most financially successful.

Being profitable is more important than being big.

[Note: data is from the BTS for the 12 months ending with the 2nd quarter 2011.]

Jim

while it is true that the most profitable airlines are not necessary the largest, the correlation between size and profitability really cannot be made because there are a multitude of other variables at play....
that doesn't take away from AS or NK but there are enough things different between them and their peers to be able to draw a meaningful correlation.
.
how in the world can anyone legitimately say that less than a week into AMR's BK that the best value would come from a plan that includes a merger with US?
You should read everything he writes through that obviously biased lens... NO ONE has any idea what AA will look like 6 months, a year, or 18 months from now... same for US.... to say that the highest value would come from a merger between the two is beyond biased.... for an "analyst" it is downright reckless.

 

[AAviator]

I don't completely disagree with his thoughts on the matter. But Vaughn Cordle generally speaking is not someone I want supporting my point of view. His journalistic integrity and personal integrity is at best suspect IMO.

Welcome to the Google-ad-ization of the internet.

You may have noticed some of the marginal players in the Airline Analysis industry pop up on "Seeking Alpha dot com"
What you may not know is that these authors write articles then get paid per "Click"


http://seekingalpha....bmit-an-article

Look for more emotional musings from these "analysts"



Do some research on "Seeking Alpha"

 

[UPNAWAY]

Being a Scab is a bad thing?
Seems like someone made a difficult and noble decision and broke away from mindless group think to feed his family!

 

[Iclubbabyseals]

Being a Scab is a bad thing?
Seems like someone made a difficult and noble decision and broke away from mindless group think to feed his family!

For someone who seems to stylize themselves as independent and knowledgable, increasingly I find it difficult to think that you read at all about the rough and ready life as exemplified by authors like Jack London, Richard Dana or Charles Dickens. Jack London has a great description of what it is to be a scab. You may wish to acquaint yourself with it.

 

[SparrowHawk]

Being a Scab is a bad thing?
Seems like someone made a difficult and noble decision and broke away from mindless group think to feed his family!

Group Think, be it mindless or otherwise is not inherently bad nor good. One could easily argue that "Group Think" led to the Declaration of Independence and the founding of a nation based upon individual freedom and liberty,

The concept of joining together to promote the common good or interests is a time tested and time honored tradition. Joining a group (such as a union) then acting in your best interests, often to the detriment of the group is NOT how one models societies desired traits such as Honor, Integrity, Trust, Credibility and Truthfulness. In fact it undermines the core values of a civilized and orderly society.

While Organized Labor is often not the best standard bearer for the above, people have risked their very lives in order to be a union member and that needs to be remembered. What also needs to be remembered is the 40 hour week, employer paid healthcare, overtime were all brought forth by "Group Think" that the rich are getting richer and those at the bottom aren't getting their fair share. A classic no union group think is the Tea Party movement which I assume you're OK with??

 

[PullUp]

I'll even take it one step further by saying an AA/US merger will be challenged by the DOJ more so than folks realize. The resulting three carriers will be UA, DL, and AA. Combined they will control at least 75% of the industry. That may be too much for the DOJ to approve.

I think it is facinating to watch how deregulation has developed and shaped the airline industry since it was implemented.
It's original intent was to drive fares lower (which it did) via the opportunity for new entrant companies to fly between any city pair of their choosing (that happened,too). What the progenitors of dereg didn't do was carry it far enough into the future, where opportunity still exists, but free market forces have created mega-corporations that dominate markets, thus producing a dis-incentive to new entrants. I chuckle when I look around and see the latest result of deregulation: oligopoly.
Cheers.

 

[ChockJockey]

One could easily argue that "Group Think" led to the Declaration of Independence and the founding of a nation based upon individual freedom and liberty,

Not really. "Groupthink" is not simply collaborative effort but more specifically the phenomena of individuals in a group either consciously or unconsciously going along with the group consensus out of fear of being ostracized or seen as counter-productive to the group's efforts. It's an example of what some call "peer pressure". Even when a group claims to welcome dissent or alternative points of view a groupthink mentality can still punish anyone who actually does. In groupthink the group becomes an echo chamber where opinions and plans become self-reinforcing because there's general agreement; quite bad ideas have gone quite far simply because no one was willing to commit heresy against the group's adopted doctrine. The escalation of the Vietnam War was in part due to groupthinking in multiple administrations..

The decision to declare independence on behalf of the united colonies was a very long and fiercely argued issue. Of course, only a single man penned the original version of the DOI, Thomas Jefferson, with changes in committee by Ben Franklin and J. Adams, after which it had further revisions under general debate before being adopted in the version we're all now familiar with. There was a lot of collaboration and passionate debate but not really any "groupthink" as defined above.

I strongly recommend getting your hands on the HBO original series on John Adams; Part II covers the Second Continental Congress and it is infinitely excellent.

 

[USA320Pilot]

Gary Kelly on SWA and the Big 3

Terry Maxon/Reporter
[email protected] | Bio
11:54 AM on Mon., Dec. 5, 2011 | Permalink

Southwest Airlines chairman and chief executive officer Gary Kelly offered some surprising observations Monday about his three biggest competitors:

• The old, legacy carriers, Delta Air Lines and United Airlines, don't exist anymore. They've been replaced by better versions with lower costs.

• American Airlines won't survive if it doesn't convert itself as they did.

• Southwest has to find a way to overcome the lower costs of its competitors.

In a letter to employees and in a separate hotline, Kelly said Southwest will have to fight to keep its competitive spot against major competitors who have transformed themselves, like United or Delta, or will transform themselves, as American must do.

In the letter he said:

"American isn't the only airline not to survive without bankruptcy. Let's look back to 1989, the year Southwest became the newest member of the old major airline club, based on annual revenues.

"All the majors from 1989 have gone bankrupt. Pan Am. Eastern. Braniff. Continental. America West. TWA. US Air. United. Delta. Northwest. And now, American. Every single one failed.

"Why? Not because of Customer Service, but because of high costs. Great Customer Service cannot overcome high costs. That is the imperative I wrote about a decade ago: low costs."

On the hotline, he added about American Airlines:

"I am sure they will shrink. I am sure they will be forced to reduce their costs or else they will be shut down and liquidated. It'll be long. It'll be painful for them. Along the way, they lost their way. As the world changed over the last decade, they were simply not able to adjust and especially with their labor contracts."

"In the near term, they'll be very distracted. That may be somewhat good for us. It may be very good for us in some markets.

"But I can assure you, over the longer term, we're going to face a more formidable opponent, just like we now face with United, who is performing the best they have in 20 years, and also Delta, also performing very well and in some ways better than Southwest Airlines."

Southwest has to "get our costs down through increased productivity to compete against these new legacy airlines," Kelly said on the hotline.

"Their costs are much lower than they were. Their labor costs are lower than ours. Actually, they aren't what you would call legacy airlines. They are new. They are different. The old legacy airlines are dead and buried," he said.

 

[jimntx]

USA320pilot: Does it ever occur to you to check to see if something has already been posted by someone else? Or, is your ego such that it isn't real until you know about it? Your breathless post of part of Gary Kelly's letter was posted early this morning. There is a whole thread devoted to nothing else.

You can read the whole text here.

 

[Harry Callahan]

USA320pilot: Does it ever occur to you to check to see if something has already been posted by someone else? Or, is your ego such that it isn't real until you know about it? Your breathless post of part of Gary Kelly's letter was posted early this morning. There is a whole thread devoted to nothing else.

He's on an ego trip :blink:

 

[Iclubbabyseals]

He's on an ego trip :blink:

and, that would be something "new"?