Quote of the Day
- Thread starter BDLDFW
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The current revenue environment is so bad that you simply can't cut expenses enough to return to profitability using cost cuts alone, says Phil Baggaley of Standard & Poor's. There's going to have to be some improvement in the revenue picture.
Can someone say CAPACITY is the problem not just your labor cost?
Oliver Stone''s Apprentice
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- Aug 19, 2002
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Dave, since you've obviously supported Baggaley's opinion by posting that, here's another quote from him which was published in a report on UAL's potential liquidation:
Should United Airlines eventually default, the effects would be conflicting, Baggaley said. The firm's competitors would suddenly find new revenue, but it would depress the value of their airline assets should they enter bankruptcy and have to renegotiate contracts.
Falling airline asset values may result in lenders taking a bath on their DIP loans, an uncommon occurrence. Recently, it occurred in the telecom industry when Winstar Communications' assets plummeted in value and left lenders, including Citigroup and JP Morgan Chase, with a fraction of their loan. In the telecom industry, however, there was a glut of supply, whereas the airlines are experiencing a steep fall-off in customer demand.
"You hear many people talking about overcapacity [in the airline industry] and that's true, but it's mostly because there's been such a fall-off in traffic demand," Baggaley said.
Conclusion: over-capacity is only a symptom. The problem is demand.
Can anyone think of a few reasons why there is no demand for travel?
Should United Airlines eventually default, the effects would be conflicting, Baggaley said. The firm's competitors would suddenly find new revenue, but it would depress the value of their airline assets should they enter bankruptcy and have to renegotiate contracts.
Falling airline asset values may result in lenders taking a bath on their DIP loans, an uncommon occurrence. Recently, it occurred in the telecom industry when Winstar Communications' assets plummeted in value and left lenders, including Citigroup and JP Morgan Chase, with a fraction of their loan. In the telecom industry, however, there was a glut of supply, whereas the airlines are experiencing a steep fall-off in customer demand.
"You hear many people talking about overcapacity [in the airline industry] and that's true, but it's mostly because there's been such a fall-off in traffic demand," Baggaley said.
Conclusion: over-capacity is only a symptom. The problem is demand.
Can anyone think of a few reasons why there is no demand for travel?
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On 4/14/2003 4:54:59 PM WXGuesser wrote:
I favor re-regulation myself, and also believe this will be the ultimate outcome.On 4/14/2003 4:54:59 PM WXGuesser wrote:
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Do you want AA to be the company that solves the industry''s capacity problem by going out of business
TANSTAAFL
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Do you want AA to be the company that solves the industry''s capacity problem by going out of business
TANSTAAFL
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On 4/14/2003 4:57:30 PM RV4 wrote:
I favor re-regulation myself, and also believe this will be the ultimate outcome.
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On 4/14/2003 4:57:30 PM RV4 wrote:
I favor re-regulation myself, and also believe this will be the ultimate outcome.
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ROTFLMAO!
Really? You really think this country will do away with the Southwests and jetBlues and go back to the "Grand Age of Air Travel" where only the rich and famous jet-setted back and forth across this country? As Bill Cosby''s Noah once said: "Riiiight."
There is no big groundswell of support in this country to get rid of the ability for people to fly where they want, when they want for as little as possible.
Or better still; let''s have the government run it and turn it into AMAIR (the aviation counterpart of AMTRAK). Then we can really see how bad things can get.
Sheesh!
TANSTAAFL
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On 4/14/2003 4:49:07 PM BDLDFW wrote:
Doesn't too much capacity = too much labor?
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YES, last time I checked it did.On 4/14/2003 4:49:07 PM BDLDFW wrote:
Doesn't too much capacity = too much labor?
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But I am not the one attempting to protect every job on planet either, my local union is.
And Carty thinks BIG IS BETTER.
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On 4/14/2003 3:55:45 PM RV4 wrote:
The current revenue environment is so bad that you simply can''t cut expenses enough to return to profitability using cost cuts alone," says Phil Baggaley of Standard & Poor''s. "There''s going to have to be some improvement in the revenue picture."
Can someone say CAPACITY is the problem not your labor cost?
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On 4/14/2003 3:55:45 PM RV4 wrote:
The current revenue environment is so bad that you simply can''t cut expenses enough to return to profitability using cost cuts alone," says Phil Baggaley of Standard & Poor''s. "There''s going to have to be some improvement in the revenue picture."
Can someone say CAPACITY is the problem not your labor cost?
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Can somebody say they both are? It''s obvious to just about everyone that both costs need to decrease and revenue needs to increase. Labor is around 40% of the cost structure, correct? And most of the rest of that is to a large extent outside the company''s control (fuel, etc.) So where do you cut? Cutting a few perks from executives isn''t going to get it done.
Do you want AA to be the company that solves the industry''s capacity problem by going out of business? I would think that would affect your bottom line more than it will the management people. They can get jobs somewhere else without starting at the bottom; would you be able to? There''s a question each person needs to answer before they vote.
TANSTAAFL
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On 4/14/2003 3:55:45 PM RV4 wrote:
"The current revenue environment is so bad that you simply can''t cut expenses enough to return to profitability using cost cuts alone," says Phil Baggaley of Standard & Poor''s. "There''s going to have to be some improvement in the revenue picture."
Can someone say CAPACITY is the problem not just your labor cost?
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On 4/14/2003 3:55:45 PM RV4 wrote:
"The current revenue environment is so bad that you simply can''t cut expenses enough to return to profitability using cost cuts alone," says Phil Baggaley of Standard & Poor''s. "There''s going to have to be some improvement in the revenue picture."
Can someone say CAPACITY is the problem not just your labor cost?
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Are you willing to let AA liquidate in order to get the capacity down?
