MIA new focus city...

[BoeingBoy]

Since we made an operating profit in 1st quarter (yeah, I know that's not the same thing as a net profit ), it means that we would burn through the $4 billion slower than otherwise.

Correct me if I'm wrong, jimntx, but wasn't AA was cash flow positive in the 1st qtr? If that continues, you could burn some cash defending the hubs and still have that $4 billion.

Jim

 

[WorldTraveler]

MIA is also a very expensive airport to operate out of because AA has exanded its facilities so much and every airline that flies there has to pay for the facilities that AA has built. A number of carriers tried to sue the MIA airport authority to not have to "subsidize" AA's MIA hub but have lost. The answer is not to fly anymore to MIA than you have to. AA's facility costs at both JFK and MIA are well over $20. It's hard to make money selling $79 fares to the NE when 1/4 of the ticket goes to facilities costs. FLL is a much cheaper airport to operate from but it obviously is pretty maxed out right now.

And yes AA does carry alot of traffic between S. America and Europe but CO and DL are horning in on that business via EWR and ATL and IAH to a lesser extent.

 

[FWAAA]

Correct me if I'm wrong, jimntx, but wasn't AA was cash flow positive in the 1st qtr? If that continues, you could burn some cash defending the hubs and still have that $4 billion.

Sorry to jump in here - but yes, AA's operations were cash flow positive in the first quarter, and the unrestricted cash balance grew by $500 million to $4.3 billion.

Although I continue to suspect that AA is holding some of that cash in case some lucrative Asian routes suddenly become available (agreeing with Jim in Texas), AA announced last week that its pension plans will require an infusion of about $2 billion in cash next year unless the House and Senate bills are reconciled to allow airlines like AA some extra time to payoff the underfunded amounts (WITHOUT freezing the plans, as the bills now require). AA has said it doesn't want to freeze or cancel its plans.

If AA is able to increase its cash balance by half a billion each quarter (which could happen, with the busy summer travel season ahead), AA will be able to afford that pension contribution in 2007 and STILL have a $4 billion cash balance for that possible "rainy day" in Minnesota. B)

My prediction is that AA will soon go on the offensive against B6, but I've been wrong before.


WorldTraveler: Huh? I haven't heard that one before. I strongly doubt that MIA can make every airline pay for AA's improvements, but it is MIA, after all. It's like a different world down there.

 

[sharktooth]

Correct me if I'm wrong, jimntx, but wasn't AA was cash flow positive in the 1st qtr? If that continues, you could burn some cash defending the hubs and still have that $4 billion.

Jim

JIm,

Who owns the "Starship Trooper" concourse just east of "H"? (It looks just like a Starship Trooper battlewagon from the outside).

One person told me it was for the Star Alliance. It could be interesting were that true, a private concourse for all Star Alliance passengers, which could bypass much of the AA related expenses.

OBTW, FLL was crippled by lack of government facilities, not runways.

Forcing connecting passengers to pick up their bags, make their way to our concourse (.5 mile?) then recheck was simply silly, not to mention the negative safety aspects of operating back around the corner without tower control.

That is one of the biggest problems I have with USAirways. They never seem to look at the travel experience from the viewpoint of the passenger. Even the "cockroaches" are briefed on what to expect so that real problems are never highlighted. That is just bad management at USAirways.

 

[BoeingBoy]

That's the new *A concourse discussed in the OP, from what I've been told.

Jim

 

[RAG]

The new "STAR SHIP" looking terminal is also refered to as the "Star Allience Terminal" OR TERMIANL "J" It will house Air Canada, Lufthunsa,United, USAirways and Varig it will have it's own customes and immigration facilities. The idea is to be able to keep all the star allience airlines under one roof and able to transfer all passengers between on anothers flights.
MIA is hoping to lure more compataition into MIA to help lower the operating expenses and be more competitive with FLL they are agressivily tryng to lure USAirways to start up a major operation here with lower landing fees and (free for 2 years) lower rent and other benifites such as exclusive use of the new terminal for the star allience which is schedule to open in October.

 

[flyingcat]

The new "STAR SHIP" looking terminal is also refered to as the "Star Allience Terminal" OR TERMIANL "J" It will house Air Canada, Lufthunsa,United, USAirways and Varig it will have it's own customes and immigration facilities. The idea is to be able to keep all the star allience airlines under one roof and able to transfer all passengers between on anothers flights.
MIA is hoping to lure more compataition into MIA to help lower the operating expenses and be more competitive with FLL they are agressivily tryng to lure USAirways to start up a major operation here with lower landing fees and (free for 2 years) lower rent and other benifites such as exclusive use of the new terminal for the star allience which is schedule to open in October.

If these incentives have been offered it might be worth a try. However if this happens FLL would finally have the plugged pulled on it.

Of course to make it a true new focus city than it will have to have flights to key O&D's not just other hubs/focus cities.

Wasn't there a second wave of cities that FLL never saw? If the MIA project starts then it will need those cities.

However I wonder how crazy the response would be from AA? :unsure:

A lot of analysis needs to be done, however MIA is where the yields are at and it would be cool for US to make an aggressive move.

 

[Bear96]

Just curious but because MIA is an American Airlines hub, shall no other airline go in there and challenge them? Are they really that hard to compete with?

That's the conclusion UA apparently reached a couple years ago.

 

[US1YFARE]

That's the conclusion UA apparently reached a couple years ago.

Remember UA's MCO experiment...US is not the only goofy one

Just curious but because MIA is an American Airlines hub, shall no other airline go in there and challenge them? Are they really that hard to compete with?

Just look at what they've done in DFW/LUV. DFW's fares are outrageous and increase every year.

They are ruthless.

 

[Travelpro72]

Well I guess AA is untouchable and should not be messed with. The are a force not to be reckoned with. Someone has to compete.... I'd like to see US go head to head and not be a follower for a change. US has always been known to react instead of ACT.

 

[FCYTravis]

There was also supposed to be a joint Star Alliance Gold lounge in the new terminal, but now that UA closed its MIA Red Carpet Club it's anyone's guess if it'll happen.

 

[FWAAA]

Well I guess AA is untouchable and should not be messed with. The are a force not to be reckoned with. Someone has to compete.... I'd like to see US go head to head and not be a follower for a change. US has always been known to react instead of ACT.

I don't think that AA is untouchable at DFW or anywhere else. But not too many legacy airlines have ever taken on an established fortress hub airline at their hub. Low-fare (maybe low-cost) upstarts have done so, like Airtran at ATL or Spirit at DTW. WN has moved in when it smelled blood in the water, but it offers much lower costs and a complete absense of BlowFares/ExtortionateFares.

As WN and B6 continue to expand quickly (even with the announced slowdown by B6, its expansion is still huge), someone needs to pull down capacity, so growth is really a fantasy for all the legacies. They can re-allocate some domestic ASMs to international flights to try to hide from WN and B6, but that's not expansion. UA, NW, DL and US all contracted last year, offering fewer total ASMs than in 2004. My guess is that many legacies will continue to shink.

If you're slowly shrinking, you really can't move into established hub cities in any meaningful way, unless you want to spend lots and lots of borrowed cash.

AMR is not invincible, but I don't see UA, DL, CO, NW or US picking any fights with AA right now. Nor do I see AA picking fights with any other legacies.

I do predict that AA might finally turn the screws on B6, but I've often been wrong before.

 

[US1YFARE]

US doesn't have the planes to compete against the likes of AA.

 

[LGA777]

From what I have been reading I don't even know if Varig will still be around when the new MIA gates open, there situation sounds bleak !

Regards

LGA777

 

[Doc]

US doesn't have the planes to compete against the likes of AA.

What's that supposed to mean.

LCC's cost are in line to compete anywhere.
Although I would not because of the facility charge there it just cost too much per psgr. That was one of the problems with PIT.