AA Wants to Sell Union on Codesharing, Bigger RJs
- Thread starter SeanD
- Start date
Pilotforhire587
Lycra Man
How many of us have been preaching that the regionals will be gone in 10 years... Its gonna happen..
Trip7
Well-Known Member
Everybody is getting rid ofthe regional jets and AA wants to fly them more. No wonder they're in bankruptcy........
Everyone is getting rid of 50 seat regional jets. E175/CRJ900/700 etc etc aren't going anywhere. The regionals are definitely going to get smaller though because of the vast amount of 50 seats out there. The flying will still get covered, but by a combination of mainline/large regional jets.
Trip7
Well-Known Member
http://www.centreforaviation.com/an...ational-flights--product-to-be-enhanced-73496
American Airlines' bright outlook: 1Q yield grows as international flights & product to be enhanced
CAPA > Aviation Analysis > American Airlines' bright outlook: 1Q yield grows as international flights & product to be enhanced
10th May, 2012
American Airlines recorded first quarter revenue results that rivaled those of its legacy peers and brought its yields to commensurate levels. But its loss for the quarter is evidence of the cost disadvantage it has and is seeking to overturn in bankruptcy protection, just as its competitors achieved in a now well-trodden path. Yet this balance, simple on paper, is dismissed by American's over-zealous detractors. Even Southwest, the darling of the US industry, feels this narrowing cost gap.
But American is not entirely blame-free. Its disclosure of welcomed plans to increase international flights 6 ppts to 44% during the next five years will bring it in line with today's Delta and United. Like other moves, this latest seems to be one page behind in the playbook already worn in by the carrier’s legacy peers, although American is catching up with a premium economy option and surpassing with a new business class product. If it can reign costs in, American has a clear future.
Another quarterly loss, but positive revenue signs
American’s quest to remain competitive as a stand-alone entity continues as it works to reach labour accords with work groups that have now aligned themselves with US Airways in its quest to take over the company.
Overall during 1Q American continued its string of unprofitability, recording a loss of USD1.7 billion and USD248 million excluding restructuring and other special items. But the carrier recorded robust overall revenue growth, recording a 9.1% increase year-over-year to USD6 billion. Although the USD8.6 billion in revenue posted by United in 1Q was higher than American’s results, it was only 4.9% growth year-over-year. American’s revenue growth was just shy of the 10% growth achieved by Delta, which recorded USD7.2 billion in revenue growth.
The larger net revenue from Delta and United is partially reflective of their larger sizes and scale. Their ability to typically, in recent quarters, turn a profit while American records substantial losses is indicative of American's higher cost base it is now seeking to change under bankruptcy protection laws.
American grew its unit revenues 10% year-over-year in 1Q, which was almost double the 5.2% growth recorded by United but below the 14% increase enjoyed by Delta. American’s 7.3% increase in yields to USD15.2 cents was below United’s USD15.9 cent yields, but United only recorded 5.2% yield growth year-over-year. Delta, which is enjoying the completion of its integration with Northwest, saw its yields rise 9% to USD16.7 cents during 1Q.
Latin America continues to be the star in American’s network, as unit revenues grew 10.8% in 1Q on a 5% rise in capacity. Similar to its rivals, American wised up and cut trans-Atlantic capacity by nearly 5% in 1Q, which helped it achieve unit revenue growth of 6.5%. United achieved a close 6.2% growth in Atlantic revenues on essentially flat capacity while Delta’s trans-Atlantic unit revenues shot up 22% on a 9% reduction in capacity.
United can be expected to pull away from American in terms of revenue performance during the next year or two as it works through the full integration of its merger with Continental. Now that a painful cutover to a new passenger service system is complete, United can begin cross-fleeting to place the correct aircraft on routes to maximise revenue potential. If American succeeds in its quest to emerge from Chapter 11 as a stand-alone entity, it will start with a disadvantage out of the box and will continue to try and play catch-up with United and Delta.
Even as it grows international flights, American's competitive disadvantage will remain
American believes its needs to adjust the balance of its domestic and international flying, and has laid out a course to increase its international operations to 44% of its total operations by 2017, compared with its current split of 38% international and 62% domestic. It aims to keep its domestic capacity flat until 2014.
The carrier’s main rivals United and Delta are already enjoying a higher level of lucrative international flying than American, having recognised many years ago the best strategy to combat the rise of low-cost carrier encroachment was to revamp their domestic networks to support the higher-yielding international flying. International operations accounted for about 48% of Delta’s flying in 2011 and about 49% at United.
In testimony to the US bankruptcy court, American seems to beat an old drum, outlining the creep of low-cost carriers into its markets, and how that has impeded its ability to compete, and now estimates it has LCC competition in 49 of its 50 top markets. The carrier claims it learned from “bitter experience” that if it failed to match LCC fares, it would lose traffic, and when it matched fares it did so at the cost of lower yields and profitability.
While other US carriers face ample LCC competition and co-exist with those carriers, it is because they have a competitive cost base that was achieved through the bankruptcy protection American is now in. Even the country's epitome of LCCs, Southwest Airlines, is feeling pressured as its cost gap is narrowed by carriers that reduced their cost base through bankruptcy protection.
As Southwest CEO Gary Kelly said in Nov-2011: “In the good old days, when the Legacy Carriers’ costs were higher, we brought our low costs and low fares to their markets, stimulated demand, and expanded dramatically. Now, while our costs are still lower, our advantage has been cut in half. We currently do not have a sufficient cost advantage to stimulate the market because our fares are much closer to our New Airline competitors.”
Maybe those AA management heads actually do have a plan!
American Airlines' bright outlook: 1Q yield grows as international flights & product to be enhanced
CAPA > Aviation Analysis > American Airlines' bright outlook: 1Q yield grows as international flights & product to be enhanced
10th May, 2012
© CAPA
But American is not entirely blame-free. Its disclosure of welcomed plans to increase international flights 6 ppts to 44% during the next five years will bring it in line with today's Delta and United. Like other moves, this latest seems to be one page behind in the playbook already worn in by the carrier’s legacy peers, although American is catching up with a premium economy option and surpassing with a new business class product. If it can reign costs in, American has a clear future.
Another quarterly loss, but positive revenue signs
American’s quest to remain competitive as a stand-alone entity continues as it works to reach labour accords with work groups that have now aligned themselves with US Airways in its quest to take over the company.
Overall during 1Q American continued its string of unprofitability, recording a loss of USD1.7 billion and USD248 million excluding restructuring and other special items. But the carrier recorded robust overall revenue growth, recording a 9.1% increase year-over-year to USD6 billion. Although the USD8.6 billion in revenue posted by United in 1Q was higher than American’s results, it was only 4.9% growth year-over-year. American’s revenue growth was just shy of the 10% growth achieved by Delta, which recorded USD7.2 billion in revenue growth.
The larger net revenue from Delta and United is partially reflective of their larger sizes and scale. Their ability to typically, in recent quarters, turn a profit while American records substantial losses is indicative of American's higher cost base it is now seeking to change under bankruptcy protection laws.
American grew its unit revenues 10% year-over-year in 1Q, which was almost double the 5.2% growth recorded by United but below the 14% increase enjoyed by Delta. American’s 7.3% increase in yields to USD15.2 cents was below United’s USD15.9 cent yields, but United only recorded 5.2% yield growth year-over-year. Delta, which is enjoying the completion of its integration with Northwest, saw its yields rise 9% to USD16.7 cents during 1Q.
Latin America continues to be the star in American’s network, as unit revenues grew 10.8% in 1Q on a 5% rise in capacity. Similar to its rivals, American wised up and cut trans-Atlantic capacity by nearly 5% in 1Q, which helped it achieve unit revenue growth of 6.5%. United achieved a close 6.2% growth in Atlantic revenues on essentially flat capacity while Delta’s trans-Atlantic unit revenues shot up 22% on a 9% reduction in capacity.
United can be expected to pull away from American in terms of revenue performance during the next year or two as it works through the full integration of its merger with Continental. Now that a painful cutover to a new passenger service system is complete, United can begin cross-fleeting to place the correct aircraft on routes to maximise revenue potential. If American succeeds in its quest to emerge from Chapter 11 as a stand-alone entity, it will start with a disadvantage out of the box and will continue to try and play catch-up with United and Delta.
Even as it grows international flights, American's competitive disadvantage will remain
American believes its needs to adjust the balance of its domestic and international flying, and has laid out a course to increase its international operations to 44% of its total operations by 2017, compared with its current split of 38% international and 62% domestic. It aims to keep its domestic capacity flat until 2014.
United and Delta are already enjoying a higher level of lucrative international flying...
In testimony to the US bankruptcy court, American seems to beat an old drum, outlining the creep of low-cost carriers into its markets, and how that has impeded its ability to compete, and now estimates it has LCC competition in 49 of its 50 top markets. The carrier claims it learned from “bitter experience” that if it failed to match LCC fares, it would lose traffic, and when it matched fares it did so at the cost of lower yields and profitability.
While other US carriers face ample LCC competition and co-exist with those carriers, it is because they have a competitive cost base that was achieved through the bankruptcy protection American is now in. Even the country's epitome of LCCs, Southwest Airlines, is feeling pressured as its cost gap is narrowed by carriers that reduced their cost base through bankruptcy protection.
As Southwest CEO Gary Kelly said in Nov-2011: “In the good old days, when the Legacy Carriers’ costs were higher, we brought our low costs and low fares to their markets, stimulated demand, and expanded dramatically. Now, while our costs are still lower, our advantage has been cut in half. We currently do not have a sufficient cost advantage to stimulate the market because our fares are much closer to our New Airline competitors.”
Maybe those AA management heads actually do have a plan!