DP-Raising nearly One Billion of mostly unsecured financing during this historic economic crisis is incredible and testaments to the confidence people have in the airline.
DK-#1 in OTP among majors for the year
DK-Suspended fuel hedge mid 3rd qtr, 2009 only hedged at 14%. Turned out to be a huge advantage as oil has declined.
DK-Fuel for the 4th qtr expect up 4-8% YOY.
DK-2.4 Billion on hand 800 million restricted
DK- Refi and Prepayment brought down the Loan Covenants from 1.2 Billion to 800 million for restricted cash. Partners in the new finance Airbus, Barclays, Republic many more that are confidential.
DK-2009 should be a much better financial year the 2008.
SK-Dramatic operation improvement, RASM up 4.5%, Domestic should start to out perform international because of capacity reductions. Industry has a Macro economic hedge in that revenue decline due to the economy demand will also cut oil even more. Thinks capacity cuts will offset any demand cuts.
SK- Advance bookings are moving almost daily with the headline news.
Financial Analyst Q&As
PHL Int’l?
Demand remains strong, dramatic ops turn around, much improved strong working relationship with city & airport. Will certainly be able to continue to grow international at PHL.
Carrying less Bags?
40% reduction in 2nd bag, has greatly improved baggage ratio, system is much better able to handle that. Doug jumped in 15% in first bag decline and 25% total bag declines.
2009 Profit likely?
Doug to volatile to say for sure but it is more likely now then 4 month ago.
SWA Overlap and Capacity cuts?
SK, We think it bodes well since ALL airlines are cutting capacity and they usually do not, can only be a positive for US.
Future Bookings ?
Advance bookings are slowing especially in leisure markets but as we get closer to travel dates the bookings pick up, so people are being more cautious but in the end still traveling at this point. Jan advance booking Yields up 16% thinks for the year will be high single digits.
International?
US behind the industry in International exposure, even with a slow down for Int demand we still need to grow our presence. If it get bad could pull 757s back to US flying. We are behind the industry and this is an opportunity to catch up.
M&A question?
DP- Thinks it is still compelling, thinks it will still happen eventually. Thinks right now everyone focusing on the short term.
Fees and pax backlash in SWA cities?
Have seen no differences in complaints in big SWA cities vs others. Nor any discernable booking away. Doug 1st bag charge making 6 Million a week and the fees have more upside for US then possibly other airlines.
Could we reduce Aircraft more if things get worse.?
No our Pilot contracts pretty much lock us in. We could take out about 3-4% on Mainline and also on Regional’s by reduce flying, but not expecting that.
Liquidity anything else on the horizon?
$150 million from previous deals that needs to be completed, that is the current focus.
Soft Drink Sales and Advertising?
Doug has improved the in-flight experience, the money is generated is not huge but not small. Early data 90% took free drinks only 25% paying. Much more time for FA’s to interact one on one. Pax can move about much easier. Previously FAs main focus was get beverage out and trash picked up. No plans for paining outside of Aircraft or have any large onboard advertising.
Media Q&A
LAS
Seeing slowdown there, happier with our reduced schedule and prices have firmed a bit.
Hotel cost one night cost more then airfare in many cases, but with the economy slowing that might help.
4th qtr cuts any new ones?
All have been announced no new ones. 2009 planned cuts all announced too.
IFE still puling it out?
Yes on Domestic and still negotiating with two venders and the trials will now be in the 1st qtr.
Financial meltdown and effects on Shuttle and CLT?
Not seeing in CLT, but the Shuttle have seen a slow down.
Demand?
Slow do in bookings but not as much as capacity cuts. The change in the booking curve, later not earlier assume it is in leisure. Thinks some of the money saved from Hotel rooms will move to airlines.
More PHL Growth Gate?
Much better relationship, can grow with current plan. Not sure what long, long term pan is but will work with city.
DK-#1 in OTP among majors for the year
DK-Suspended fuel hedge mid 3rd qtr, 2009 only hedged at 14%. Turned out to be a huge advantage as oil has declined.
DK-Fuel for the 4th qtr expect up 4-8% YOY.
DK-2.4 Billion on hand 800 million restricted
DK- Refi and Prepayment brought down the Loan Covenants from 1.2 Billion to 800 million for restricted cash. Partners in the new finance Airbus, Barclays, Republic many more that are confidential.
DK-2009 should be a much better financial year the 2008.
SK-Dramatic operation improvement, RASM up 4.5%, Domestic should start to out perform international because of capacity reductions. Industry has a Macro economic hedge in that revenue decline due to the economy demand will also cut oil even more. Thinks capacity cuts will offset any demand cuts.
SK- Advance bookings are moving almost daily with the headline news.
Financial Analyst Q&As
PHL Int’l?
Demand remains strong, dramatic ops turn around, much improved strong working relationship with city & airport. Will certainly be able to continue to grow international at PHL.
Carrying less Bags?
40% reduction in 2nd bag, has greatly improved baggage ratio, system is much better able to handle that. Doug jumped in 15% in first bag decline and 25% total bag declines.
2009 Profit likely?
Doug to volatile to say for sure but it is more likely now then 4 month ago.
SWA Overlap and Capacity cuts?
SK, We think it bodes well since ALL airlines are cutting capacity and they usually do not, can only be a positive for US.
Future Bookings ?
Advance bookings are slowing especially in leisure markets but as we get closer to travel dates the bookings pick up, so people are being more cautious but in the end still traveling at this point. Jan advance booking Yields up 16% thinks for the year will be high single digits.
International?
US behind the industry in International exposure, even with a slow down for Int demand we still need to grow our presence. If it get bad could pull 757s back to US flying. We are behind the industry and this is an opportunity to catch up.
M&A question?
DP- Thinks it is still compelling, thinks it will still happen eventually. Thinks right now everyone focusing on the short term.
Fees and pax backlash in SWA cities?
Have seen no differences in complaints in big SWA cities vs others. Nor any discernable booking away. Doug 1st bag charge making 6 Million a week and the fees have more upside for US then possibly other airlines.
Could we reduce Aircraft more if things get worse.?
No our Pilot contracts pretty much lock us in. We could take out about 3-4% on Mainline and also on Regional’s by reduce flying, but not expecting that.
Liquidity anything else on the horizon?
$150 million from previous deals that needs to be completed, that is the current focus.
Soft Drink Sales and Advertising?
Doug has improved the in-flight experience, the money is generated is not huge but not small. Early data 90% took free drinks only 25% paying. Much more time for FA’s to interact one on one. Pax can move about much easier. Previously FAs main focus was get beverage out and trash picked up. No plans for paining outside of Aircraft or have any large onboard advertising.
Media Q&A
LAS
Seeing slowdown there, happier with our reduced schedule and prices have firmed a bit.
Hotel cost one night cost more then airfare in many cases, but with the economy slowing that might help.
4th qtr cuts any new ones?
All have been announced no new ones. 2009 planned cuts all announced too.
IFE still puling it out?
Yes on Domestic and still negotiating with two venders and the trials will now be in the 1st qtr.
Financial meltdown and effects on Shuttle and CLT?
Not seeing in CLT, but the Shuttle have seen a slow down.
Demand?
Slow do in bookings but not as much as capacity cuts. The change in the booking curve, later not earlier assume it is in leisure. Thinks some of the money saved from Hotel rooms will move to airlines.
More PHL Growth Gate?
Much better relationship, can grow with current plan. Not sure what long, long term pan is but will work with city.
