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Southwest, Virgin America to buy LaGuardia slots

Kev3188 said:
What sort of CASM(s) do WN & VX have?
For the first 9 months of 2013, WN had a CASM of 8.04 cents, excluding fuel and special items (and including profit sharing), so more than a penny less than Delta.
 
 http://www.swamedia.com/releases/southwest-airlines-reports-record-third-quarter-profit
 
VX had a CASM ex-fuel of 6.80 for the first three quarters.   Of course, VX gets very low yields and unit revenue to go along with the low CASM.  
 
 http://www.virginamerica.com/press-release/2013/virgin-america-reports-record-third-quarter-2013-financial-results.html
 
WorldTraveler said:
ORD or DFW... and then on to the west coast.

All of VX' service is in a UA or AA strength market.
VX could also connect to the west coast via DTW, MSP, CVG or MEM.  There probably is an abundance of gate/terminal space in CVG and MEM - and given that DL ran away from there, those airports are less congested and operationally could work nicely for VX.
 
FWAAA said:
 
I don't believe that is accurate.   AA's consolidated CASM for the first three quarters of 2013 is lower than DL's consolidated CASM for the first three quarters.    And that's true whether we look at the all-in CASM or the ex-fuel/items CASM.   
 
All-in CASM for first 9 mo of 2013
 
AA:  14.33
DL:  14.71
 
Ex-Fuel/Items
 
AA:  9.07
DL:  9.09
 
http://news.delta.com/index.php?s=43&item=2144
http://hub.aa.com/en/nr/pressrelease/amr-corporation-reports-third-quarter-net-profit-of-530-million-excluding-reorganization-and-special-items
WT, say it ain't so ....... :shock: :shock: :shock: :shock: :shock: :shock:
 
WorldTraveler said:
psss... Richard Branson has been trying to get DL to buy VX like they did with the 49% of VS... so you might want to consider that. Branson also still has 25% invested in VS and he is very dependent on DL to help turn his airline
Hmmm. I'm sure that DOJ might consider that circumventing their criteria for how the AA assets were to be divested.

If DL winds up buying VX, regardless of when it happens, I'd expect DOJ would step in and require DL to give up slots gained in the AA divestiture.
 
Looks to me like WT is getting schooled by FWAAA.  Just gotta love this stuff man.
 
I don't believe that is accurate.   AA's consolidated CASM for the first three quarters of 2013 is lower than DL's consolidated CASM for the first three quarters.    And that's true whether we look at the all-in CASM or the ex-fuel/items CASM.   
 
All-in CASM for first 9 mo of 2013
 
AA:  14.33
DL:  14.71
 
Ex-Fuel/Items
 
AA:  9.07
DL:  9.09
 
http://news.delta.com/index.php?s=43&item=2144
http://hub.aa.com/en/nr/pressrelease/amr-corporation-reports-third-quarter-net-profit-of-530-million-excluding-reorganization-and-special-items
 
AA's consolidated CASM advantage over DL increases even more if we compare apple to apples, and that's by not excluding DL's profit sharing.   I realize that the DL accountants (and all accountants, for that matter) are sure that excluding profit sharing is the correct approach, but that reasoning is flawed.   Profit sharing is wages. compensation and benefits even though it is contingent on profits.    By excluding profit sharing, we get a bizarre result of higher profits equaling lower unit costs.   That's a perverse result that ignores reality.    Kev and all the other DL employees are owed profit sharing based on the reported profits, and thus it is a legitimate ordinary cost of operations for DL.
 
AA's unions, being just about the most stupid unions on the planet, traded away most of their profit sharing for meager increases in hourly pay.    The reason the unions were stupid to do so is that many of the DL workgroups have higher payrates than the AA payrates.   On top of that, the DL employees are also owed profit sharing.     If you're going to suffer bankruptcy concessions, the most brain-dead thing you can do is to give back the 15% first dollar profit sharing that management offered in its term sheets.  
 
Going forward,  however,  AA's consolidated CASM is likely to rise substantially, as new AA increases everyone's payrates and makes the inevitable capacity reductions that always accompany mergers.    Had the merger been blocked, the five-year 20% growth plan would have lowered the unit costs as capacity expanded.
Your last statement is absolutely correct... and why we have all said the merger didn't make sense.

As for the actual CASM, go look at mainline figures. It shows how well AA will compete with low fare carriers in its markets as well as to London and Latin America. AA won't be throwing regional jets on those markets.

It has been obvious during AA's entire BK that AA has been adding longhaul capacity in order to push CASM down but it hasn't worked to generate revenues.... others have certainly recognized that AA can't continue to support flights that lose hundreds of millions of dollars which AA is doing and analysts recognize. They aren't writing those kinds of articles about other carriers, are they.

Besides, are you really comfortable that AA's CASM is "good enough" given that it is just 2% ahead of DL's on a consolidated basis - and yet DL is removing hundreds of RJs and replacing high cost mainline aircraft just like AA is doing - but DL doesn't have huge low fare incursions in its key markets.

AA's CASM most certainly will go up and the first few months of the merger with the WA falling, Latin América opening to more competition, etc. are the worst time for that to happen.

whether DL buys VX or not, two Virgin franchises have DL as their strongest US partner. You can hope that VX will come after DL but the evidence is that in their first how many years of operation, AA and UA have been VX's target.
 
WorldTraveler said:
AA's CASM most certainly will go up and the first few months of the merger with the WA falling, Latin América opening to more competition, etc. are the worst time for that to happen.
 
You always seem to be hugely overstating the significance the Wright Amendment falling will have on AA. Yes, it is a big deal for WN, but that's about it. I have not found one actual airline analyst who portends the doom and gloom that you have
 
WN is now able to fly wherever they want to out of ATL, how is that working out for DL? Barely a wrinkle, and in this case, the carriers are actually co-located.
 
perhaps they haven't done the research that would show the impact that the amendments to the WA that included STL and MCI among other cities have done to AA's share of the market.

There is ample evidence that supports that WN has taken significant share in key AA markets over a period of decades and I am not sure why DAL/DFW should be any different.

WN is excited about the event which tells me they aren't going to sit on their hands and miss out on an opportunity they have waited on for decades.

WN has the capacity to put thousands of seats into AA's top markets and reduce fares in AA's HDQ which has been the backbone of its profitability along with its Latin America operation.

That's ok if they don't see it and if you don't want to believe it.

We're less than one year away from the first flight. WN will likely reveal fares and destinations in just a few months.
 
FWAAA said:
For the first 9 months of 2013, WN had a CASM of 8.04 cents, excluding fuel and special items (and including profit sharing), so more than a penny less than Delta.
 
 http://www.swamedia.com/releases/southwest-airlines-reports-record-third-quarter-profit
 
VX had a CASM ex-fuel of 6.80 for the first three quarters.   Of course, VX gets very low yields and unit revenue to go along with the low CASM.  
 
 http://www.virginamerica.com/press-release/2013/virgin-america-reports-record-third-quarter-2013-financial-results.html
 
 
Thanks, FWAAA.   :)
 
WorldTraveler said:
perhaps they haven't done the research that would show the impact that the amendments to the WA that included STL and MCI among other cities have done to AA's share of the market.

There is ample evidence that supports that WN has taken significant share in key AA markets over a period of decades and I am not sure why DAL/DFW should be any different.

WN is excited about the event which tells me they aren't going to sit on their hands and miss out on an opportunity they have waited on for decades.

WN has the capacity to put thousands of seats into AA's top markets and reduce fares in AA's HDQ which has been the backbone of its profitability along with its Latin America operation.

That's ok if they don't see it and if you don't want to believe it.

We're less than one year away from the first flight. WN will likely reveal fares and destinations in just a few months.
 
If a word of what you're saying is true, than WN would be stealing market share away from DL at ATL. But there're not, so they won't, and you're wrong.
 
the reason why they are not stealing share from DL is because DL has been aggressively competitive with FL and WN.... WN entered the ATL market after the FL acquisition with low fares which drove down DL's yields.

WN realized they got nowhere and decided to downsize the hub.

Further, as much as FWAAA once to quote consolidated CASM (including regional carriers), DL competes with WN using mainline aircraft, not RJs. Thus, DL's CASM advantage over AA is a lot more pronounced and DL also has a very small gap in CASM with WN.

Legacy/network carriers including AA also compete with low fare carriers based on their mainline CASM, not their consolidated CASM.

For the most recent quarter, DL's mainline CASM was 7.96 while AA's was 8.48. WN's CASM on the same basis (ex-fuel, specials, and profit sharing) was 7.80.

WN's costs are 2% lower than DL's mainline CASM but 8% lower than AA's.

FWAAA might not like to see profit sharing excluded but that is the way costs are calculated because profit sharing is not a constant.

You need only look at every former AA hub and see the size of WN in those markets. You can also see that WN has given up the local market to another carrier in every one of those markets.

You can also look at JFK to see how poorly AA has been able to compete with B6 which has a lower CASM than even WN. AA has pulled out of one market after another, even since being in BK where they should know where their CASM is going, yet DL has entered one market after another that AA has abandoned and which B6 serves.

In contrast, WN has a limited presence in every one of DL's hubs and DL is also the dominant airline in not only all of its hubs but also its former hubs if you want to lump CVG and MEM into that category.

The simple fact is that AA's revenue has been eroded by low fare carriers over the past decade including by WN, AA's mainline CASM - a far more accurate measurement of the ability to compete against low fare carriers - is higher than DL and WN, and AA will face a far larger number of competitive assaults on AA's network at the same time.

Since you and FWAAA and others think otherwise, perhaps you can tell us when any other carrier had to divest as many slots to low fare carriers as AA/US are doing, Open Skies has come to their key region of the world, a restrictive law such as the WA that doesn't exist in any other city in the US has fallen, and a competitor JV is being launched in AA's largest int'l market - all within a year of each other.

It has never happened before. Anyone who thinks that there won't be a profound impact on AA's revenues at the very time that they are integrating two airlines and watching costs go up are in for a very rude awakening.
 
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