LCC & AMR Market Action

[back2CLT]

I guess you missed the obvious sarcasm. Try to understand AA doesnt want CLT, or Usair. You may believe it is the jewel of the South East, but it hasnt saved LCC from having to file bankruptcy twice, or saved it from still losing tons of money, when oil is no where near 130 a barrel.

But ATL saved DL from bankrupcy? Oh wait. It didn't, but it has been referred on here as a desirable asset. At this point, I'm no longer sure what the argument objective is. If it's AMR would downsize CLT if they acquired US, then I think that's crazy. If it's, would AMR buy US just because they need CLT to survive, well, that's crazy too. The fact is, CLT is profitable, but it's not going to save any carrier that is bleeding loads of cash.

I guess I don't understand what posts like contribute. "CLT wouldn't be proftable if it didn't have low costs, and didn't have little low-fare competition, and didn't have a pro-US airport exec." The fact is, it does have those things, therefore it is a profitable and attractive asset. I think maybe the common ground is that CLT is a greater asset for Charlotte (the city) than Charlotte is for CLT.

 

[cltbwimob]

I guess you missed the obvious sarcasm. Try to understand AA doesnt want CLT, or Usair. You may believe it is the jewel of the South East, but it hasnt saved LCC from having to file bankruptcy twice, or saved it from still losing tons of money, when oil is no where near 130 a barrel.

Nope...I caught the sarcasm. My reply was to clarify earlier remarks that I made. It seems as if some people think that I am advocating that AA acquire US based totally on CLT. That is far from accurate. I am simply stating that if AA did acquire US, they would have a good ready-to-go hub in CLT, all they would have to do is change the paint scheme on the planes. Why would AA dimantle one of US's best assets if they acquired US [IF they acquired US is the key phrase]? What would be the point of dismantling CLT if it's a profitable asset in an industry plagued by unprofitability?

Bottom line is that if any airline wants a hub in the SE, it will be either ATL, CLT, or an organic buildup of some other airport like RDU. ATL is out of the question for anyone but DL. A buildup of RDU, inspite of how easy many on this thread think it would be would cost a lot of money (More planes, added gates, thousands of new employees to hire). Acquiring the US hub in CLT is the only practicle option. This is not to say that an airline should purchase another based on one airport (or that they would even want to), but CLT is a profitable operation. Irregardless of what makes the hub profitable, it is a moneymaker, and would be for another airline hub as well. So my question is once again, IF AA were to acquire US, why would it not want CLT if CLT is a moneymaker despite it's lower O&D? I can assure you that in today's market profitability is 10000 times more important than what hub has the best O&D. LAS has better O&D than CLT, yet when hub closure time came around LAS was the one that got axed. I doubt very seriously that would have happened if CLT had less potential to make profits than LAS.

CLT must have something going for it. US Airways says its a jewel, United specifically stated back in 2000 that one reason they wanted US was to acquire the southeastern hub at CLT. It must not be too bad of an airport to have a hub at.

 

[AirbusAVE]

Nope...I caught the sarcasm. My reply was to clarify earlier remarks that I made. It seems as if some people think that I am advocating that AA acquire US based totally on CLT. That is far from accurate. I am simply stating that if AA did acquire US, they would have a good ready-to-go hub in CLT, all they would have to do is change the paint scheme on the planes. Why would AA dimantle one of US's best assets if they acquired US [IF they acquired US is the key phrase]? What would be the point of dismantling CLT if it's a profitable asset in an industry plagued by unprofitability?

Bottom line is that if any airline wants a hub in the SE, it will be either ATL, CLT, or an organic buildup of some other airport like RDU. ATL is out of the question for anyone but DL. A buildup of RDU, inspite of how easy many on this thread think it would be would cost a lot of money (More planes, added gates, thousands of new employees to hire). Acquiring the US hub in CLT is the only practicle option. This is not to say that an airline should purchase another based on one airport (or that they would even want to), but CLT is a profitable operation. Irregardless of what makes the hub profitable, it is a moneymaker, and would be for another airline hub as well. So my question is once again, IF AA were to acquire US, why would it not want CLT if CLT is a moneymaker despite it's lower O&D? I can assure you that in today's market profitability is 10000 times more important than what hub has the best O&D. LAS has better O&D than CLT, yet when hub closure time came around LAS was the one that got axed. I doubt very seriously that would have happened if CLT had less potential to make profits than LAS.

CLT must have something going for it. US Airways says its a jewel, United specifically stated back in 2000 that one reason they wanted US was to acquire the southeastern hub at CLT. It must not be too bad of an airport to have a hub at.

Completely spot on.

 

[Winglet]

The extremely toxic labor problems alone make US Air poison. I can't even imagine how bad any sort of integration would be.

 

[Pacemaker]

I have to wonder if we are to believe CLT is a moneymaker and it's taken for granted PHL is a "goldmine" then where did Airways manage to lose 4+ billion dollars in the 1990-2005 period?

 

[gaucho99]

I have to wonder if we are to believe CLT is a moneymaker and it's taken for granted PHL is a "goldmine" then where did Airways manage to lose 4+ billion dollars in the 1990-2005 period?

Must have been PIT.

 

[AirbusAVE]

1990-2005 is a long time. A very long time in aviation... mergers (Piedmont/America West), September 11th, recessions, oil prices rose dramatically, etc. etc.

 

[jimntx]

A buildup of RDU, inspite of how easy many on this thread think it would be would cost a lot of money (More planes, added gates, thousands of new employees to hire). Acquiring the US hub in CLT is the only practicle option.

Are you sure about that? Have you seen the gorgeous remodeling and expansion of the RDU terminal that is already taking place? When I laid over there last week, I didn't recognize the place. Puts those dated corridors at CLT to shame.

Planes can always be reallocated (see also what AA is doing to us at STL) or leased or purchased. In today's economy, hiring new employees should not be a problem. We could start with all the AA employees laid off over the past 2 years to protect the executive bonusses.

The reasons that AA has never gotten a Southeastern hub to work has very little to do with the cities they put them in. My personal opinion? The BNA and RDU hubs didn't succeed because AMR did not devote the resources--particularly time and advertising--needed. They did not give the hubs enough time to work. Another example is recent cancellation of the Chicago-Moscow route. I have friends who are Platinum or better in AAdvantage who weren't even aware that AA was flying that route. You never saw any advertising for it outside of Chicago. But, that comes more from the fact that AA is run by accountants, not airline people.

 

[Dog Wonder]

It is astounding how much meaning has been read into the actions of the people who make a business out of wangling money from others on the stock market.

Maybe, could it be, business as usual?

 

[FA Mikey]

A buildup of RDU, inspite of how easy many on this thread think it would be would cost a lot of money (More planes, added gates, thousands of new employees to hire). Acquiring the US hub in CLT is the only practicle option. This is not to say that an airline should purchase another based on one airport (or that they would even want to), but CLT is a profitable operation.

Both options cost money so both options are DOA. Given your this or that, what would be the most beneficial for AA? To acquire an over burdened, money losing, heavily indebted operation, with waring pilots and a fleet totally incompatible airbus planes, or redirect current excess, fleet and with all the new boeing's coming on line to building up RDU or BNA or some where else. What city wouldnt LOVE to hear anyone was coming to town and wanting to hire workers and increase there tax base? Now which one has less risk, aggravation, potential problems and liability?

 

[BMIBABYgirl737]

Hey Mikey,
Is AA replacing the Super 80's with a new fleet of Boeings? Wouldn't a nice young fleet of A320 family aircraft be a suitable replacement? Size, range and etc? Could be a way of replacing the Super 80 more quickly and efficently than waiting for factory fresh Boeings to come off the assmebly lines? Just my .02 cents. Cheers!

 

[Edward]

ff: Lets get back to the op or if there is nothing else to be said we can just close it.

 

[cltbwimob]

Both options cost money so both options are DOA. Given your this or that, what would be the most beneficial for AA? To acquire an over burdened, money losing, heavily indebted operation, with waring pilots and a fleet totally incompatible airbus planes, or redirect current excess, fleet and with all the new boeing's coming on line to building up RDU or BNA or some where else. What city wouldnt LOVE to hear anyone was coming to town and wanting to hire workers and increase there tax base? Now which one has less risk, aggravation, potential problems and liability?

"Money losing"
AFAIK AA isn't exactly swimming in a sea of profit...That's what consolidation is all about. Two companies pool their good resources and eliminate their unprofitable or redundant assets.

"Heavily indebted"
I am pretty sure AA is mortgaged to the hilt

"Warring Pilots"
Labor issues tend to fall by the wayside when it comes down to survival. If UA and CO merged and left AA and US as lone unmerged airlines plus $150/bbl oil came back, pilots from both airlines would probably be told either to live with it or go home.

"Totally incompatable airplanes"
Simple solution to that. Consolidation is used to get rid of redundant routes, why not get rid of old metal along with them. US gets rid of its 737-3s, 737-4s, AA gets rid of its MD-80s. The combined AA/US replaces the old planes with the newer A319/320/321s and 737-8s. The combined fleet ends up being newer, more reliable, and more fuel efficient which reduces maintenance and fuel costs. US already has Airbus guys, AA has boeing guys. Have US crews operate the Airbii and AA crews operate the Boeings. The combined carrier could have these types of aircraft...737, A320 (series), 757, 767, A330, 777. I don't think DL/NW had any similar airframes, with the exception of the 757, yet they are merged.

"Redirect current excess, fleet...or somewhere else"
Once again, consolidation is the name of the game. Adding a hub costs money, consolidation is meant to save money. RDU would need large amounts of money invested into it to build a hub of CLTs scale from the ground up. From dozens of extra gates, to extra fuel capacity, to extra baggage handling capacity, to extra just about everything, Raleigh would have to undertake an ambitious expansion plan at RDU. The city isn't going to do possibly 100s of millions of dollars worth of work for free. They are either going to get AA to pay for it upfront, or pay for it through increased landing fees. [High landing fees are arguably what caused PIT to go under (PIT undertook an ambtious expansion for US and ended up making US unprofitable at their station hence their demise)]. So for what they spend in RDU to add 400-500 extra flights, they could buy a large number of shares in US, maybe even controlling stake and be well on their way to gaining PHL, CLT, and PHX hubs and focus citys in LAS, DCA, LGA, and BOS. They can own RDU for hundreds of millions, or they could spend a little more and own virtually the entire east coast from BOS to MIA by buying US.

"What city wouldn't love..."
If they ramped up the hub in CLT to compete with ATL, it would require the addition of workers there. Charlotte has a higher unemployment rate than Raleigh right now and could stand a few extra jobs.

Besides RDU wouldn't be profitable anyways according to clueby4. He stated that CLT is 20-30 WN flights away from unprofitability. RDU already has met that 20-30 WN flight criteria.

 

[Ralph]

Ok. The request was made to go back to the original topic--current action in AMR and LCC stock. The request was ignored. The thread is closed.