Could AA buy AS?

[jcw]

Let's explain this as you know one certain poster likes to pick a number our of context to make a point.
 
Let's compare December 2013 to December 2014 traffic data - you can pick any two months to compare - I know I will hear how you need to pick peak season so I will show July to July as well
 
In Dec 2014 AS carried 13,109 k in passengers vs 12,080k in December 2013 for an increase in passengers of 939k or 7%
 
In Dec 2014 DL carried 3,707 k in passengers vs 3,106 k in December 2013 for an increase in passengers of 600k or 19%
 
You can see it looks like DL is growing by leaps and bound when you only look at %'s - see it's easy to show high growth %'s when you have such a small base - for AS they were able to attract more passengers than DL by almost 30% higher rate
 
If you compare July 2014 to July 2013 here is it is
 
AS 12,392 k vs 11,848 k for an increase of 544k or 4.5%
DL 3,371 k vs 3,035 k for an increase of 366k or 11%
 
Once again AS was able to attract more passengers than DL - DL continues to grow nicely in SEA however they have not even passed Horizon Air although close
 
You can see DL is 3.5 times smaller at SEA than AS - so DL is not even close to the size and scope of AS
 
Good luck to DL - you just have to take all the grandstanding with a huge bucket of salt
 
So to make sure we know how absurd picking one percentage out is this example:
 
At ATL here are the growth numbers between DL and US:
 
US grew 8% vs 1% for DL - (once again just comparing Dec 14 to Dec 13) that does not make US a huge success at ATL - DL being as large as they are at ATL is very hard to put up huge growth % numbers
 
If you look at DFW here are the growth rates for AA/US compared to DL:
 
AA/US 39,873 k vs 35,511 or 2,362 k for 6%
DL 1,447 k vs 1,246 k or 201k for 16%
 
If you don't believe DL is going to overtake AA at DFW with a 16% growth rate however they had a great growth rate at DFW
 
What is interesting is AA put up very impressive growth rate at a large hub compared to DL's growth in ATL

 

[eolesen]

Is SEA profitable? 
 
Oh, and for all that amazing operation DL has at SEA, they still can't fill a B767 over 50% to make the 'seasonal' HND flights work, but yeah, we hear ya, DL rules!

SEA is profitable for AS. Not so much for DL.

I won't bother repeating the stats here, but go over to the DL forum to see some real load factors for markets where DL and AS are head to head.

http://www.airlineforums.com/topic/58329-delta-will-take-over-alaska-airlines/?p=1158077

 

[AirwAr]

I hope AA is not considering merging with AS for both our sakes.  There's no reason that AA needs to get into a fist fight with DL in SEA...and in the end, I believe AS service would be greatly reduced.
 
As such, I really wish AS could become a stronger code-share partner and be brought into oneworld.  I believe that would be the best outcome for both carriers.
 
If AA were to look at purchasing another carrier...I would think Jetblue would be at the top of the list.  Although, with US at the helm, I'm not sure they put as much importance in the NYC market as AA used to.

 

[WorldTraveler]

E has no clue whether DL is profitable in SEA and if you want to throw comments about whether carriers are profitable in a particular hub or region or not, I'll throw out that AA is very likely NOT profitable flying to/from S. America right now. Difference is that we will have some idea of how close AA is to being profitable in S. America since it is a pretty significant part of the Latin America region which is reported but E will never see any data specific enough to say whether that is true about SEA or not.

DL's profitability in SEA or on a system basis isn't going to be broken by its performance on a single flight to JNU or even several LAS flights.

and Air, you make a lot of sense... but the same reason why AA couldn't merge with AS for antitrust reasons will be equally true with B6; the two control too much of the NYC market to get past the DOJ.

your point is valid that AA and AS can't merge without dramatically shrinking AS' network because of AA's much higher costs and the same principle is true with B6. AA's CASM is well above the levels of both AS and B6 and even if a merger were permitted, it would require significant cuts to the network being acquired.

It isn't competitively worth it for the big 4 to mere with anyone else.

 

[jcw]

E has no clue whether DL is profitable in SEA and if you want to throw comments about whether carriers are profitable in a particular hub or region or not, I'll throw out that AA is very likely NOT profitable flying to/from S. America right now. Difference is that we will have some idea of how close AA is to being profitable in S. America since it is a pretty significant part of the Latin America region which is reported but E will never see any data specific enough to say whether that is true about SEA or not.

DL's profitability in SEA or on a system basis isn't going to be broken by its performance on a single flight to JNU or even several LAS flights.

and Air, you make a lot of sense... but the same reason why AA couldn't merge with AS for antitrust reasons will be equally true with B6; the two control too much of the NYC market to get past the DOJ.

your point is valid that AA and AS can't merge without dramatically shrinking AS' network because of AA's much higher costs and the same principle is true with B6. AA's CASM is well above the levels of both AS and B6 and even if a merger were permitted, it would require significant cuts to the network being acquired.

It isn't competitively worth it for the big 4 to mere with anyone else.

 
Just like you don't know if AA is profitable flying to LATAM - although you keep trying to forget that public information continues to show they are making money in LATAM
 
So once again facts completely refute your fantasy land - at with the load factors clearly demonstrated for DL in SEA it's clear they can't be making money in SEA

 

[wings396]

Haven't we all learned by now, that DL is the only carrier that can, and will be profitable anywhere and everywhere that they fly. Hell, between AA losing money in the Pacific, South America, and being second fiddle to DL in LAX & NYC, they may as well pack it in now. I'm sure that it's only a matter of time before PHL & DFW go by the wayside too. How stupid of AA management to keep on trying to survive at all.

 

[WorldTraveler]

maybe AA should pack it and maybe not.

given predictions that Brazil, AA's largest market in Latin America could be in a recession for 2 years and maybe much longer, the huge profits that have fueled AA's profitability could be gone for a while. Argentina and Venezuela will be equally challenging markets.

add in new low fare competition that is developing - from Latin America to the US - and the pressure on AA's largest region over the next few years will be enormous.

and we haven't begun to see the public impact of WN's growth at DAL on AA's DFW finances but DOT traffic data for the end of 2014 shows that AA's strategy to counter WN's growth at DAL has been to throw capacity into many of the DFW markets which WN has started from DAL. the result is that AA's LF is down in many markets and up in others but it helps make it clear why AA's domestic RASM is down as much as it is... and we aren't even in the peak rampup of WN's schedule additions at DAL.... but DOT data does show that WN is doing very well on its DAL flights.

low fuel prices might well make a big difference in the impact of all of the competitive additions in AA's key markets as well as offset economic weakness in Latin America but those same low fuel prices will help other carriers' who don't have the same competitive pressures as well.

let's see how it plays out but I still think that as the year goes on and the reality of the economic changes in AA's key markets play out, a certain amount of shine will be taken off of AA's financial results more so than will occur with other carriers.

and specific to AS and the west coast market which seems to be the main benefit of an AS partnership for either AA or DL, AA is still in the position of having to fight to grow LAX - the only market where AA has even a chance of developing a west coast to Asia presence - while DL and UA both have larger TPAC presences not just from LAX but also from SEA and SFO, respectively as well

I doubt if AA will shut their doors - but you can suggest that option to them if you think it is necessary - but it appears that DL and UA have out-strategized AA on the west coast just as they did in NYC.

 

[USFlyer]

I'm not terribly worried about AA's ability to co-exist with WN.  Say what you will about Parker, he managed to keep HP and then US alive against a large WN presence in PHX and elsewhere in legacy WN territory.  He knows how to deal with WN probably better than the UA or DL leadership.

 

[WorldTraveler]

HP and US both had much lower costs than AA has.

the evidence is overwhelmingly AGAINST your statement about AA or US' ability to succeed in markets competitive with WN.

WN is the largest carrier at PHX in both local passengers and local revenue.

WN's pax share of just the local PHX domestic market at 41% is higher than at any other legacy carrier hub airport.

US, not WN, folded up LAS as a hub. Ditto for BWI, RDU, BNA, STL, and SJC between AA and US.

and AA/US lost the distinction of being the largest carrier in the local market, something that DL has not done in CVG or MEM.

many of WN's top 10 markets are former AA or US hubs.

no, my friend, the evidence overwhelming says that AA and US have done a very poor job of defending its hubs against WN whether it was when Parker was in charge or not. and AA/US has also lost the local markets in those former hubs, almost entirely to WN.

the likelihood is fairly high that WN will take 30% or more of the combined local DAL/DFW domestic market (up from the current 20%) before WN is thru building out DAL and AA's share will fall from its current 47% to 40%.
DL's share of not only the ATL, DTW, MSP, and SLC local markets is well above 40% but so also is CVG and MEM

 

[robbedagain]

then explain why the flip did US beat out WN at philly since in your own biased opin they cant do $h!t right  only DL can

 

[WorldTraveler]

after giving away a half dozen hubs between AA and US to WN, one of them was certainly going to get done right.

And the reason why WN didn't succeed at PHL was because they enjoyed a huge domestic expansion run in the post 9/11 period because of their fuel hedge gains which allowed them to enjoy very cheap operations relative to the legacy carriers.

WN doesn't enjoy that now which is why they can't invade ATL or PHL or any other legacy carrier hub, they know that and they aren't trying, and that is why they want to dominate DAL to the exclusion of any viable competitor.

so, yes, US finally reached the place where it successfully defended its hubs and WN is not in a position to inflict any more damage in legacy carrier hubs but just like the IAM's track record at UA, AA/US' track record in a half dozen hubs easily shows that AA/US has not done a very good job of defending its hubs over the decades while DL has done a much better job regardless of the overall economic situation of the industry or WN's benefits. Further, WN's success at DAL proves that their long proven model of dominating an alternate airport still works - and the geography of DAL relative to DFW is making it easy for WN to accomplish its goals in N. Texas

 

[jcw]

how one comes up with these story lines are hillarious

 

[jimntx]

AA/US' track record in a half dozen hubs easily shows that AA/US has not done a very good job of defending its hubs over the decades while DL has done a much better job regardless of the overall economic situation of the industry or WN's benefits.

Or, it could be that with the possible exception of ATL, DL has hubs in cities that no one else, particularly WN, cares about. Or, they are as firmly established in a city as they wish to be. Knock yourself out at SEA building up a new hub. We are happy with the jam-packed flights we already have there.

 

[WorldTraveler]

that is a great line but the simple fact is that AA's DFW hub is the only one that generates anywhere close to the amount of local revenue as DL's top 4 hubs.

in other words, the ranking of local revenue for the top AA, DL, US hubs is DL at ATL, then AA at DFW, and then DL's hubs at JFK, DTW, and MSP and then AA at ORD and MIA.

DL's MSP hub generates 10% more local revenue than AA at ORD and MIA and US at MIA - since all 3 of those AA/US hubs are approximately the same size in terms of local revenue.

so as much as you and others are fixated on the notion of having hubs in big, sexy cities, DL gets more local revenue out of its hubs than AA does out of its hubs.

it's also worth noting that DL's average fare from both DTW and MSP is 20% or more higher than what AA gets from ORD.

and DL's LGA hub generates more local revenue than US' CLT, PHX, or DCA hubs.

 

[jcw]

It's amazing with all this revenue advantage that is claimed in every aspect of DL's operation - DL's revenue should be say 50% higher than AA
 
Once again your story line does not pass the giggle test let's list the top airports passengers moved to see how DL is winning in MSP/DTW over the AA hubs (you will quickly see how that is not true):
 
City/ #1 Airline / Mainline Passengers Carried for Dec 2014
 
ATL  DL - 60868
DFW AA - 38141
CLT AA - 24290
MSP DL - 15807
PHX AA - 14918 (missing AA data - therefore probably larger than MSP)
MIA AA - 14185
DTW DL - 13316
ORD AA - 12017 (missing US data - therefore probably larger than DTW)
PHL AA - 10797
SLC DL - 9376
LAX AA - 8561 (really tough one)
BOS AA- 6532 (another tough one)
JFK DL 6223
DCA AA - 5955
LGA AA - 5512 - (WOW AA carries more mainline passengers than DL)
SEA DL - 3706
 
Out of 16 airports - DL is #1 in 6 of them - just doesn't fit the story line - DL was just 44% of the passengers carried out of these hubs - if we added UA in it would look even worse
 
ATL  DL - 60868
DFW AA - 38141
CLT AA - 24290
IAH UA - 15925
MSP DL - 15807
PHX AA - 14918 (missing AA data - therefore probably larger than MSP)
ORD UA - 14680
MIA AA - 14815
SFO UA - 13946
DTW DL - 13316
DEN UA - 11706
EWR UA - 11473
PHL AA - 10797
SLC DL - 9376
LAX UA 9110 (if you exclude US)
BOS AA- 6532 (another tough one)
JFK DL 6223
DCA AA - 5955
LGA AA - 5512 - (WOW AA carries more mainline passengers than DL)
IAD UA - 5533
SEA DL - 3706