RJcasualty
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- Jun 29, 2004
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I'm still clueless whether "Envoy" is profitable or not. Is it irretrievably baked in AAL's earnings?WorldTraveler said:
The results are in!
- Thread starter MetalMover
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WorldTraveler
Corn Field
- Dec 5, 2003
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- #92
yes, you did ask that question and, no, there isn't enough information in the earnings report to be able to say whether AE is profitable or not.
Given how closely intertwined mainline and regional ops are, it is very difficult to even be able to determine that - and even internally, costs and revenues of a wholly owned subsidiary like AE can easily be allocated to change the equation.
It is also true that AE's fate is closely tied to AA's overall market strength in its hubs given that the overall ticket revenue affects what gets allocated to AE.
AE will be able to reduce some of its small RJ flying because of BK rejections but still has a large 50 seat RJ fleet which severely affects economics.
AE is probably not in the worst situation but it probably isn't in the best situation either relative to their peers. How close to either extreme they are may or may not make a difference in their long-term future.
Given how closely intertwined mainline and regional ops are, it is very difficult to even be able to determine that - and even internally, costs and revenues of a wholly owned subsidiary like AE can easily be allocated to change the equation.
It is also true that AE's fate is closely tied to AA's overall market strength in its hubs given that the overall ticket revenue affects what gets allocated to AE.
AE will be able to reduce some of its small RJ flying because of BK rejections but still has a large 50 seat RJ fleet which severely affects economics.
AE is probably not in the worst situation but it probably isn't in the best situation either relative to their peers. How close to either extreme they are may or may not make a difference in their long-term future.
RJcasualty
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- Jun 29, 2004
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The idea that AAL has the ability to hide Envoy's markers and thus be used as another tool to extract additional concessions from Envoy's pilots might make business sense now, but is IMHO ethically reprehensible and strategically short-sighted. While shiny, large RJ's might be a panacea for the pilot shortage now, it doesn't address future recruitment. Eventually, desperation will force the industry into hiring "street captains" with minimal flying experience. Further, if the EMB's are so uneconomical why is it the company's intent to hold on to the 145's for several more years? If the company is so concerned about economics, why don't they order Q-400's for intra-Texas? If the company is so concerned about economics why don't they spin off Envoy and PSA?WorldTraveler said:
WorldTraveler
Corn Field
- Dec 5, 2003
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- #94
casualty,
it has never been possible to know with certainty how profitable or not wholly owned subsidiaries of any company are but it is all the more difficult in a network business like the airlines where costs and revenues easily are passed from one unit to another.
I'm not an expert on that part of the subject but federal regs will limit the ability of airlines to hire low time pilots.
There will be some small RJs that will remain in the fleet because the planes can't be parked without writing down their substantial value, there are not enough replacement planes for them, and because there are longterm contracts with regional carriers that can't be just wiped away. Some of those regional companies will modify agreements based on receiving larger aircraft as replacements but they aren't going to accept their major carrier partner just parking the aircraft.
I'm not sure there is any difference with large turboprops relative to RJs.
Also, it is reported that B6 is losing lots of pilots to larger carriers and the smallest planes they fly are E190s. Some have suggested that B6' continued operational problems are really because of a pilot shortage and they cannot risk using a bunch of pilot time every time the weather deteriorates (which it does with fairly high regularity in the NE) so they just cancel at a much higher rate than they used to do.
Given the uncertainty about the regional industry, I dno't think the market is there for a successful spin off of any regional airline at this point.
it has never been possible to know with certainty how profitable or not wholly owned subsidiaries of any company are but it is all the more difficult in a network business like the airlines where costs and revenues easily are passed from one unit to another.
I'm not an expert on that part of the subject but federal regs will limit the ability of airlines to hire low time pilots.
There will be some small RJs that will remain in the fleet because the planes can't be parked without writing down their substantial value, there are not enough replacement planes for them, and because there are longterm contracts with regional carriers that can't be just wiped away. Some of those regional companies will modify agreements based on receiving larger aircraft as replacements but they aren't going to accept their major carrier partner just parking the aircraft.
I'm not sure there is any difference with large turboprops relative to RJs.
Also, it is reported that B6 is losing lots of pilots to larger carriers and the smallest planes they fly are E190s. Some have suggested that B6' continued operational problems are really because of a pilot shortage and they cannot risk using a bunch of pilot time every time the weather deteriorates (which it does with fairly high regularity in the NE) so they just cancel at a much higher rate than they used to do.
Given the uncertainty about the regional industry, I dno't think the market is there for a successful spin off of any regional airline at this point.
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