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Legacy Carriers Bad Management/Bad Business Plan  
User currently offlineWorkbench From , joined Dec 1969, posts, RR:
Posted (9 years 2 months 3 weeks 3 days 6 hours ago) and read 3754 times:

All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years. All the carriers are on deaths door step, some more than others. If the past 5 years is enough to take out these airlines, then they should go out of business. They should have planned ahead and known they could go through rough times, and they should have more money in the bank to tough it out. If they dont, then thats bad management and a bad business plan. WN and all of the other LCC, are making $$$, the legacy carriers are not. They should be allowed to go out of business. I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.

83 replies: All unread, showing first 25:
 
User currently offlineFriendlySkies From United States of America, joined Aug 2004, 4106 posts, RR: 5
Reply 1, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3737 times:

So, your solution is to let all of the international legacies fail. Let me remind you, these are the airlines that are carrying our flag around the world. Should we just give up any international market share we have, and let the foreign carriers take all our business? And domestically, everyone has to fly WN. Yeah, really bright idea... Yeah sure

The airlines can be fixed, they just need some fresh new faces in the mangement, not the same 60 years olds with "experience." That "experience" is what's keeping legacies from moving into the 21st century.


User currently offlineDLKAPA From , joined Dec 1969, posts, RR:
Reply 2, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3734 times:

Hey workbench did you know that... nah I'm not gonna waste any time on you ::takes a dump and walks away::

User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 3, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3733 times:

Have you been in a time warp? This post seem like it's from the year 2001.

Exactly "none" of your tax dollars have gone to bail out legacy carriers over LCC carriers.

Legacy carriers have made enourmous strides in lowering costs. In fact, most of them AA/CO/HP/US have margin levels in the LCC range now. The 2Q reports coming in two weeks will show this.


User currently offlineCommavia From United States of America, joined Apr 2005, 11642 posts, RR: 61
Reply 4, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3721 times:

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions.

Perhaps I could see your argument on the pensions at UA, US, and perhaps NW and DL down the road, but to say that your "tax dollars are going to bail out these poorly managed companies," in a blanket statement like that, is just ridiculous.

To date, only one legacy airline -- US -- received any money from the ATSB. And, while I would agree that this money was a total waste as US' inept management squandered it just as they did the money they were flush with in the 1990s, that still doesn't qualify or justify your comments. Not a single other US legacy airline has received any "bailout" from the U.S. government.

Instead, several -- namely AA and CO -- have tried very hard to refine their operations and restructure without the help of the government or bankruptcy. And, at least in the case of these two airlines, they are succeeding -- slowly and surely -- but succeeding, nonetheless.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 5, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3710 times:

HP had a loan they paid back with interest. Recently bankrupt "LCC" ATA recieved a loan as well. They've just cut capacity 50% just like "near bankrupt" Independence air.

Yes those LCCs are doing great.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3687 times:

Quoting Commavia (Reply 4):
Instead, several -- namely AA and CO -- have tried very hard to refine their operations and restructure without the help of the government or bankruptcy. And, at least in the case of these two airlines, they are succeeding -- slowly and surely -- but succeeding, nonetheless.

Boy Commavia, you just can't see forward past the latest Quarterly reports. You ignore guidance, don't account for restructuring charges, totally ignore the fact Delta has gone from having the highest costs amoung the majors to having the lowest costs **midway** through a cost overhaul. You write off Song.

Man I'm going to enjoy the next year...LOL


User currently offline727EMflyer From United States of America, joined Mar 2005, 547 posts, RR: 0
Reply 7, posted (9 years 2 months 3 weeks 3 days 5 hours ago) and read 3675 times:

Let me introduce you, workbench, to a little thing called evolution. The legacies evolved out of nothing into a rigid, regulated, cost controlled network that gave mainline jet service to most of the country. Deregulation came along and they evolved into a few giants that did the job well and wove the country with a network of mainline where it worked and regional prop's in the gaps. The whole time connections to the world sprang out from the best anchors across the country. Newton said for every action there is an equal and opposite reaction. In this case, when the small carriers were eaten up, new ones (LCC's like WN) evolved into their places. The legacy giants, however, were fat and happy with no need to eat these new pests. Rather they brushed them aside, living alongside them. The pests, however, were lazy. They grew large and strong eating only the largest, ripest fruit on the ground, since there were not enough small berries to fight over and the sweet fresh ones still up on the trees were too high to reach without a lot of work. Now, should the giants leave, the pests will have to grow into their place, climbing the trees and picking the berries, unless they want a new beast to evolve around them.

Yes, WN is profitable, B6 does OK, and a handful of others like F9 are giving the legacies a run for their money. But they only serve very specialized markets! In WN's case, they flooded the prime leisure routes in Florida and the Southwest as well as cashed in on high O&D routes. They serve less than 70 cities all together, fly nothing international, and won't touch the small market cities and towns that make up so much root structure of the legacies. Should UA and company vanish tomorrow, Southwest and the like will have to make a major investment to answer to a demanding, yet slim, market at home, and an even bigger investment to bring Americans abroad. This will riddle them with debt create a huge liability they must keep under control. If they don't do it, someone else will, and at a better cost, and they will eat these LCC's from the ankle up.


User currently offlineCommavia From United States of America, joined Apr 2005, 11642 posts, RR: 61
Reply 8, posted (9 years 2 months 3 weeks 3 days 4 hours ago) and read 3646 times:

Quoting Padcrasher (Reply 6):
Boy Commavia, you just can't see forward past the latest Quarterly reports.

You know why I can't "see forward past the latest quarterly reports?" Because they speak for themselves! In the January to March 2005 period, historically the weakest quarter for the travel industry and the seasonally lightest air travel period, AA managed to eke out an operational profit of $23M, one of only three major airlines in the entire U.S. to do so. The other two, for those keeping score, were WN and B6. AA managed to eke out this operational profit, even accounting for a dramatic 36% increase in fuel expense, and a contribution of $138M to its pension plans (which it is still fully funding). And, on top of all that, AA also increased its cash balance by $200M from $3.3B to $3.5B, more than any other airline in the U.S., even WN.

Now, let's contrast that with Delta. During the first quarter, Delta posted an operating loss of $957M -- that's a nearly $1B dollar difference from AA's result. Of this $957M loss, $531M, or about 55%, was attributable to "Pension settlements, asset writedowns, restructuring and related items." That leave's another 45% of their monumental loss that is solely attributable to other non-"restructuring cost" expenses. And, that doesn't even consider their actual net loss of $1.1B, compared with $162M at AA, which glaringly illustrates the enormous debt load DL is carrying at the moment.

So -- please tell me -- what, exactly, am I missing in these mystical quarterly reports that would immediately indicate to me that DL is doing so much better than AA, or CO for that matter?

Quoting Padcrasher (Reply 6):
You ignore guidance, don't account for restructuring charges

Remind me again, Padcrasher -- what are the analyst estimates for loss on AMR and DAL per share?

Oh yeah, that's right, it's an average $.13 loss for AA for this quarter, $.27 loss for next quarter, and $3.39 for the full year, while it's a $2.48 loss for this quarter for Delta, a $2.50 loss for Delta for next quarter, and a whopping $13.21 loss for the year.

Yeah, you're definitely right -- I'm way off base in saying that AA -- and CO -- are in a significantly stronger position than DL.

I think the analysts' guidance speaks for itself.

Quoting Padcrasher (Reply 6):
totally ignore the fact Delta has gone from having the highest costs amoung the majors to having the lowest costs **midway** through a cost overhaul.

On the general question of costs, while I totally dispute your assertion that Delta has the "lowest costs among the majors" -- and have no intention of arguing it back and forth with you going forward, as we have already done this in another thread, and really so no point -- the operation of airlines revolves around not just costs, but also revenue. Delta's costs are still too high, and they are obviously not doing so hot on the revenue side of the ledger, either. Their revenue increased 3.3% YOY in 1Q05, compared to 5.3% at AA and 8.6% at CO. Just for comparison, as well, DL's Q1 costs increased 17.5% YOY, while they went up 9.6% at CO and a comparitively miniscule 5.6% at AA. This is, of course, all including fuel. Please -- let's not get into the debate again about whether or not to include fuel. The day that airline's stop paying the fuel bill, we'll discuss their cost reduction efforts net of fuel.

Quoting Padcrasher (Reply 6):
You write off Song.

There's a reason. I think it is a financial joke. Maybe you have some deeply secret information I don't have, but I personally don't think Song is a financial success whatsoever. Don't get me wrong -- I think it is performing better financially than the overall DL mainline on a size-relative basis, but that's not saying much. What cost advantage does Song actually have? It pays some employees somewhat less, okay, it flies its 757s a bit longer each day than the average DL plane, and it crams more seats into the plane. But, when B6 can undercut the Song price on flight after flight, route after route, and make money while Song struggles to match and profit, all of that means absolutely nothing. It's costs are almost certainly higher than B6 -- it's primary competitor in most key markets -- and I don't think even you will dispute that. That's why I think it keeps expanding -- while it is still losing money, it is losing less money than DL mainline would be in the markets it serves.

[Edited 2005-07-03 05:54:59]

User currently offlineWorkbench From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 2 months 3 weeks 2 days 22 hours ago) and read 3590 times:

Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will. In my guesstimate, all the legacy will eventually dump their pensions and the tax payers will be left holding the bags of private enterprize.

Why is WN and the other LCC's doing well. They are smart!. They have hedged fuel, they saw the future, the legacy carriers did not, they never thought oil would go up in price. Wow those CEO's at AA/DL/NW/CO are real smart!. They continue to fly routes where they loose money,
"just to compete".

Virtually all of the legacies are bankrupt, yes some have cash in bank but it is all borrowed money.

My whole theory is let them fail.! If 5 years of hard times is causing this much trouble for them then they havebeen and always will be poorly run, and poorly managed with a bad business plan.

Hey lets rake the business man over the coals every time he flies by stiking him with the highest fare possible. No one will ever comeby and undercut our prices and IF they do, they will still flyus. We are American...!


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 2 months 3 weeks 2 days 18 hours ago) and read 3549 times:

Quoting Workbench (Reply 9):
Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will.

Nope, to date the PBGC has used only it's own funds. No Federal bailout has been needed.

Quoting Workbench (Reply 9):
Why is WN and the other LCC's doing well. They are smart!. They have hedged fuel



WN was the only airline that hedged significantly. Other majors and LCC hedged not at all or to a much smaller extent. I don't see how this makes most LCC's "smart".

Quoting Workbench (Reply 9):
Virtually all of the legacies are bankrupt

Let's examine that. Just two US Airways and United are bankrupt. ATA on the LCC side is bankrupt. Southeast airlines less than a year ago closed down. LCC Independence air is the airline most near bankruptcy.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 2 months 3 weeks 2 days 17 hours ago) and read 3527 times:

Geez Commavia it goes right over your head. I'm telling you what you will see in the future as I go by the guidance offered in 1Q reports. You on the other hand retort back by looking at the reports that are snap shots of the "past".

I'm told you 4 Months ago DL has the lowest costs of the majors "presently" If you consider HP and WN as LCCs as most do, then the 2Q report will prove me correct once again. (Like when you got all bent out of shape when I proved to you DL already has costs lower than AA)

Now it's not all about the costs?....OK fine. Let's watch the margins continue to improve for Delta as they continue to be flat for AA and CO.


User currently offline1MillionFlyer From , joined Dec 1969, posts, RR:
Reply 12, posted (9 years 2 months 3 weeks 2 days 17 hours ago) and read 3512 times:

First of all Workbench, I see you ban has expired, too bad.

Secondly, as someone who is supposedly going to law school you are seriously myopic and ignorant to the reality of business.

1. The legacy carriers were growing rapidly in 1999-2000 and profitable like never before, their boards of directors and the stock market demanded (greedily) growth and increased performance, banks extended huge amounts of finanancing as they were attempting to grow also. This was in the time of the .COM boom and the financial markets had very over optimistic ideas of what a company should do to grow.

2. The "management" could not have known about the Asian financial meltdown, 9/11 and SARS, all of which continued to hammer air travel as the economy in the US melted down.

3. Banks and leasing companies as well as the government are now in the Legacy's management drivers seat. The banks DO NOT want airplanes turned in due to a shut down. Because:
A. The glut of planes on the market would ruin lease rates/resale values.
B. Airbus and Boeing would face severe pressure if 400 planes showed up on the used market at rock bottom prices, ruining their sales and affecting EC and US GDP, thus creating a revenue drain on gov't tax coffers.
C. The US government would rather guarentee loans than pay up to 18 months unemployment for 60,000 people, not to mention the egg on the polititians faces when our "economic recovery" was slowed down.
D. You do not "pay cash" for things in business, you use leverage to make a better return on the assets you do have, read a business finance book before you make more of an uninformed impression on people who read this thread.
E. As far as taxes go, deal with it, at some point we have to pay off our deficit, it will just get worst, welcome to reality.

Quoting Workbench (Thread starter):
All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years. All the carriers are on deaths door step, some more than others. If the past 5 years is enough to take out these airlines, then they should go out of business. They should have planned ahead and known they could go through rough times, and they should have more money in the bank to tough it out. If they dont, then that's bad management and a bad business plan. WN and all of the other LCC, are making $$$, the legacy carriers are not. They should be allowed to go out of business. I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defaulted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.



Quoting Workbench (Reply 9):
Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will. In my guesstimate, all the legacy will eventually dump their pensions and the tax payers will be left holding the bags of private enterprize.



Quoting Workbench (Reply 9):
Virtually all of the legacies are bankrupt, yes some have cash in bank but it is all borrowed money.

Duh, all the airlines have borrowed money, what do you think a publicly traded company is? Stock is ownership in a company and is in effect "borrowed money" maybe you should learn how to read a balance sheet.


User currently offlineBraniff727 From United States of America, joined Sep 2000, 686 posts, RR: 1
Reply 13, posted (9 years 2 months 3 weeks 2 days 17 hours ago) and read 3505 times:

Quoting Workbench (Reply 9):
Wow those CEO's at AA/DL/NW/CO are real smart!.

You're right, they aren't smart. The fact is they haven't found a way of competing with UA and US who are charging the flying public less than it costs them to operate while under the protection of Chapter 11.

If only those "dumb" CEOs could find a way to charge less than their chief competitors, while not having to pay bills...

Your statement is absurd on so many levels. There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law. UA alone has been at an unfair advantage for nearly THREE YEARS! Hedging fuel or not, that's a long time of keeping fares artificially low.

You have employees who have been working for the companies for a lot longer, meaning higher pay, where as B6, F9 and FL do not. The airlines have been getting, or trying to get concessions on salaries, but you have to deal with unions and contracts, which as I'm sure you can see is not easy.

All of that is just the tip of the iceberg. There are so many other differences in the costs of legacies versus LCCs that there's no time to type them all out. The fact remains, you have made a blanket statement, based on no facts what so ever.



Climbing
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 14, posted (9 years 2 months 3 weeks 2 days 17 hours ago) and read 3487 times:

Quoting Braniff727 (Reply 13):
There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law.

I'll say this about United. Their restructuring since going into Chapter 11 has been dismal. It's been a joke compared to what AA was able to accomplish without going into bankruptcy and in half the time.

But UA has walked hand in hand with their creditors into court each time, both asking for more time. It's not like the creditors ever offered an alternative plan, or opposed what United was doing. So I don't see this as abuse of the bankruptcy process.


User currently offlineDartland From United States of America, joined Apr 2005, 644 posts, RR: 2
Reply 15, posted (9 years 2 months 3 weeks 2 days 17 hours ago) and read 3481 times:
Support Airliners.net - become a First Class Member!

Well said 1MillionFlyer -- you beat me to it.

User currently offlineCkfred From United States of America, joined Apr 2001, 5242 posts, RR: 1
Reply 16, posted (9 years 2 months 3 weeks 2 days 16 hours ago) and read 3432 times:

You also have to take into consideration the collapse of the dot.coms and the tech sectors. According to a friend of mine at AA, tech companies were flying people like crazy doing work in anticipation of Y2K.

Once the year 2000 came and the vast majority of computers worked, most buyers of computer equipment and services. Tech spending really didn't see any revenue growth until 2004. So that cut into flying.

Then the dot.coms, who were flush with cash from IPOs were flying everywhere either in First Class or at the last minute at full-fare coach. When this sector went under, this revenue stream for the airlines dried up.

And let's not forget the wonderful people at the TSA who have made getting on a flight so time consuming, that many people now drive many short-hop routes.


User currently offlineLawnDart From United States of America, joined May 2005, 970 posts, RR: 3
Reply 17, posted (9 years 2 months 3 weeks 2 days 15 hours ago) and read 3425 times:

Quoting Commavia (Reply 8):
Now, let's contrast that with Delta. During the first quarter, Delta posted an operating loss of $957M -- that's a nearly $1B dollar difference from AA's result. Of this $957M loss, $531M, or about 55%, was attributable to "Pension settlements, asset writedowns, restructuring and related items." That leave's another 45% of their monumental loss that is solely attributable to other non-"restructuring cost" expenses. And, that doesn't even consider their actual net loss of $1.1B, compared with $162M at AA, which glaringly illustrates the enormous debt load DL is carrying at the moment.

Delta has a couple of "environmental" issues that American doesn't, namely they compete with low-fare carriers on a far greater percentage of their network than AA.

By low-fare, I'm talking WN, FL (not as successful as many people would believe), B6, Independence and mostly USAirways. Under protection of the bankruptcy courts, US has been able to abrogate a lot of their financial contracts and obligations, and then turn around and price their product below cost in many cases.

Independence Air's management is smoking crack...I certainly can't figure out what their LCC business plan is, but it sure as hell ain't successful. A top executive at Independence (before they went "Independent") once said that an airline based on CRJ flying without a major partner would never succeed - I guess he was correct. Hmm...hope they can accelerate the delivery of those remaining A319s.

Delta is also the largest carrier serving Florida, not the highest yielding market in the U.S., but certainly one of the most competitive.

Quoting Commavia (Reply 8):
but I personally don't think Song is a financial success whatsoever. Don't get me wrong -- I think it is performing better financially than the overall DL mainline on a size-relative basis,

You think, but you don't know. Neither do I, because Song's financial results are not broken out from mainline. Song is a reaction to increase encroachment on the aforementioned Florida market...it may be a good response, it may not. But credit Delta with trying to do something, and acknowledge the generally positive reviews from passengers. Now, if Delta could take that marketing a transfer it to mainline...

Quoting Workbench (Thread starter):
All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years.

ALL the LEGACY carriers??? Upstart carriers, by and large, are known for their bad management, that's why 99% of them fail within years of starting service. The fact that legacy carriers HAVE been in business for 70+ years testifies that they've done something correctly in the past, and maybe, just maybe, they'll survive into the future.

And your rant about your tax dollars bailing out the airlines doesn't hold water when you consider the fact that the commercial airline industry is one of the most, if not THE most, heavily taxed industries in this country. YOU owe the airlines a couple of billion $$$.


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3805 posts, RR: 29
Reply 18, posted (9 years 2 months 3 weeks 2 days 14 hours ago) and read 3395 times:

Quoting Braniff727 (Reply 13):
Your statement is absurd on so many levels. There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law

True except for one thing: the biggest thing working against the legacies is themselves, namely their own bad management and business plans, as Workbench maintains. The biggest reason for such insanity in my own observations, as well as some of the more astute minds on Wall Street, is that legacy airline CEOs have a pronounced tendency to let their hyper-inflated egos do their decision-making.

Therein lies what may be the biggest difference between the legacies and Southwest. Herb Kelleher undoubtedly had/has an ego maching those of the CEOs of the legacy airlines; however, Herb did not allow his ego to get in the way of making sound business decisions or to dupe him into making foolish knee-jerk decisions, ala the typical legacy CEO. Thanks to Herb's success in keeping his ego out of business decision-making, he even foresaw the 1999-2000 period as the anomaly that it was and steered clear of building a house of cards that was sure to collapse, ala the legacies.

My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise.


User currently offlineAa777jr From , joined Dec 1969, posts, RR:
Reply 19, posted (9 years 2 months 3 weeks 2 days 14 hours ago) and read 3394 times:

Move to Canada and work on your wood.

User currently offline1MillionFlyer From , joined Dec 1969, posts, RR:
Reply 20, posted (9 years 2 months 3 weeks 2 days 14 hours ago) and read 3378 times:

Quoting Tango-Bravo (Reply 18):
True except for one thing: the biggest thing working against the legacies is themselves, namely their own bad management and business plans, as Workbench maintains. The biggest reason for such insanity in my own observations

You apparenty didn't read my post, go back to 1999 and see what you would have done. It is ridiculous to think this is just a black and white discussion.

Quoting Tango-Bravo (Reply 18):
My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise

I am not a legacy lover, just a realist, You are the people placing generic straw-men statements onto this board with no idea what you are speaking about.

The legacies bet on growth and got spanked, check Daimler Crysler, Krispy kreme Donuts, Sun Microsystems, and many other non-avaition related companies and you will see the same thing.


User currently offlineGreasespot From Canada, joined Apr 2004, 3084 posts, RR: 20
Reply 21, posted (9 years 2 months 3 weeks 2 days 14 hours ago) and read 3371 times:

Everyone says the legacies have bad managment or policies.....Can someone please tell me what that was, other than Delta guarenteing theri pilots would be the best paid in the industry forever....people always post that is because of managment that the legacies are where they are....but never elaborate....I would like some example of concrete bad managment policies.

I believe they are where they are just because of evolution in the industry. there was nothing they could do to stop it. It, the industry has just changed to much thanks to the internet. IE: people now have more power to find the lowest fair with minimal work. Before they had to call each airline or go through a tavel agency. All time consuming so people just stayed with their favorite airline.

GS

Note:
Unless they change the laws ....I believe in two years all legacies will have been into bankruptcy or going there.....2 words....Dump pensions... since UAL and US did it they will do it also....See these two if they ever emerge from bankruptcy will have a cost advantage the others will not have...



Sometimes all you can do is look them in the eye and ask " how much did your mom drink when she was pregnant with you?"
User currently offline1MillionFlyer From , joined Dec 1969, posts, RR:
Reply 22, posted (9 years 2 months 3 weeks 2 days 13 hours ago) and read 3355 times:

Thanks Greasespot!

I love how people come into the thread throw out broad accusations with no idea what they are talking about.

Workbench was recently kicked off the site for saying that airline workers were "servants", as a 16-20 year old I am sure he is an expert in airline management  Smile


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 23, posted (9 years 2 months 3 weeks 2 days 13 hours ago) and read 3340 times:

Quoting Tango-Bravo (Reply 18):
My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise.

Blah blah blah blah blah. Workbench just got about every one of his assertions blown out of the sky. You Southwest fans love living in the past. Talking about now, or what will happen in the future really puts a damper on the Southwest hype.


User currently offlineCommavia From United States of America, joined Apr 2005, 11642 posts, RR: 61
Reply 24, posted (9 years 2 months 3 weeks 2 days 13 hours ago) and read 3327 times:

Quoting LawnDart (Reply 17):
Delta has a couple of "environmental" issues that American doesn't, namely they compete with low-fare carriers on a far greater percentage of their network than AA.

Oh, believe me, you won't get any argument about that from me. I have heard that DL draws about a third of their revenue from just Florida, the mecca of low-fare and leisure-focused air traffic. Furthermore, I completely agree that DL faces arguably more exposure from and competition with low-cost airlines -- like B6, FL (at their own hub!), DH, NK, etc. -- of any of the legacy carriers. This, cumulatively, is part of why I said that it has not been able to adequately correct its finances the way AA and CO have in the post-9/11 world.

Quoting LawnDart (Reply 17):
You think, but you don't know. Neither do I, because Song's financial results are not broken out from mainline. Song is a reaction to increase encroachment on the aforementioned Florida market...it may be a good response, it may not.

That's true, and I'm the first to say it -- I have absolutely no firm, statistical proof that Song is still a money-loser. However, I feel pretty safe in making that assumption as Song without a doubt has a significantly higher CASM than B6, its main competitor, and because I can't imagine how much of a cost savings Song can actually realize over DL mainline. They crammed some more seats into the 757s, pay the FAs a little less, and fly the 757s a little more (although I doubt it is all that much more utilization). As to your comments about the reason for Song, I completely agree and don't dispute it for a second. DL reacted to the new breed of low-fare competition the face with a new concept -- cheap flights to popular cities on high-density aircraft and with some nice amenities like AVOD and meals for purchase. Whether or not it works, I don't know -- I have my doubts -- but I don't know.

Quoting LawnDart (Reply 17):
But credit Delta with trying to do something, and acknowledge the generally positive reviews from passengers. Now, if Delta could take that marketing a transfer it to mainline

I give DL all the credit in the world for "trying to do something," I just personally think it was the wrong something. While several other airlines -- ironically, the ones doing better financially -- have all tried to fix the mainline operation rather than segmenting off a particular piece of the flying to a lower-cost subsidiary, DL has chosen the same basic approach as they did in the 1990s: if you can't beat 'em, emulate 'em the best you can.


25 Workbench : This is my point exactly. In the same time period you did not see WN go out and add hundreds of flights all over the place. You did not see WN go out
26 Braniff727 : Can you please site a source that no legacy carrier has any money in the bank that isn't earned? Thanks.
27 Workbench : Take AA for example, they started 2001 with roughly $3 billion cash. Since then they have lost $7 billion. Do the math. They have mortgaged everythin
28 1MillionFlyer : You are completely missing the point, Southwest has LOTS of borrowed money again, Financial leverage is needed and helps a company when managed, Sout
29 LawnDart : Whatever happened to Transtar? WN didn't even bother to integrate them, they just took the DAL facilities and then walked away...same thing they'll d
30 Padcrasher : What does "walk away" mean? AA is still in RNO and STL. WN bought Morris Air and reduced their SLC operation. workbench is like 0 and 5 with this thre
31 SonOfACaptain : Squandered? That loan is the main reason why US is still flying. They didn't "squander" it. They lived off of it until they could initiate their reco
32 Post contains images BoeingFever777 : You have no idea what you talk of to start with! You are a student in your profile, since when does high school/college pay ppl to attend school? You
33 Post contains images Coa764 : 16-20 and a student, I can't imagine you really give up to much in tax
34 Commavia : Yes -- squandered. Period, end of story, in my book. US (mostly Dave Siegel) took the money the government and U.S. taxpayers gave them and ran with
35 Luvfa : WN just pulled out of Morris' unprofitable routes and added frequency on our more popular routes, SLC-LAX, PHX, LAS
36 PlaneSmart : Focus on the words legacy & well managed. Most of these airlines, or their ancestors had enormous assets. Hotels, land, other buildings, shareholdings
37 Milemaster : Somehow I doubt tax dollars generated by a 16-20 year old are going to be contributing to much of anything, let alone any cause you may fear would be
38 Ikramerica : I actually find it interesting that the big legacy in the best shape pre-911 is also one of those in the best shape now, namely CO. The reason is, the
39 Post contains links SonOfACaptain : Soooooooo how are they still flying, especially when everybody was writing their obituary three years ago! It is a miracle that US is still flying, a
40 Commavia : They are still flying because they have managed to beg and borrow bribe money from multiple companies to keep them in the air, and because GE is so d
41 Aa757first : The problem with US Airways is that they have no clear business plan. There plan is basically to cut costs anywhere and everywhere they can and then e
42 1MillionFlyer : I am glad to see all the informed posts from intelligent people, Workbench may have learned a lesson this time. US suffers from the most LCC competiti
43 EALSYS1 : Why don't we all just ignore this teenaged son of a lawyer (now THAT'S an insult!) and let him go back to his room and pop his pimples. He only posts
44 Tango-Bravo : Bottom line is, bewteen Reno Air and TWA, AA has squandered $3 billion to shrink. No such parallel with WN and their acquisition of Morris Air. The b
45 Commavia : Yes, CO has financed its operations post-9/11 largely through mortgaging assets and drawing down lines of credit, but so has every legacy carrier. IM
46 Post contains images EA CO AS : For the love of God, don't encourage him!
47 Aa757first : The flight attendant concession package involved a 0.0% paycut and Continental, aside from Southwest, is the only airline to have been voted in Fortu
48 Tango-Bravo : Not only this (holiday) weekend; day-to-day load factors are at record levels as well, to the extent that service has taken a dive, thanks to the leg
49 1MillionFlyer : there is major over-capacity why do you think yeilds are so low? there are way too many seats, are you saying there are not enough?
50 Aa757first : I truly don't think there is an overcapacity problem in the United States. Think about it, passenger levels are past those pre-9/11, and TWA, Midway,
51 Post contains links 1MillionFlyer : There is a total oversupply why do you think seats are so cheap? It's pure simple micro-economics. http://www.netmba.com/econ/micro/supply-demand/ if
52 Jetdeltamsy : The author is between 16 and 20 years old. Nobody really expects him to "get it."
53 Aa757first : In France, the UK, Germany, Italy, Switzerland, Denmark, Ireland, Netherlands, Portugal, Spain and Belgium there are 362 million people. Between EasyJ
54 EA CO AS : Because airlines are too busy chasing market share by undercutting one another, that's why. Airline A wants to increase their share of the market, so
55 Boeing7E7 : It's easy to make money in high capacity markets. Which is more difficult? Making money between New York and Los Angeles or New York and Rapid City?
56 1millionflyer : This is not the cause of lower prices. Airlines have too many seats and need to fill them, they are not increasing the number of new planes at the ma
57 Jdaniel001 : All I know is that legacy carriers move at a snail's pace, while the LCC's can change procedures overnight to correct a situation. If you want to make
58 Post contains images EA CO AS : (with apologies to Dan Aykroyd) 1millionflyer, you ignorant slut! While the analysis I've posted above was a highly simplistic one, the concept remai
59 Luv2fly : This is 110% of the reason right here! Also airlines are going after business based on price and nothing else. Not on service, it is bottom line pric
60 1MillionFlyer : You are analyizing the symptom not the cause here, you are right - your point is very simplistic. The reason why carriers cannot raise fares is that
61 Slider : Exactly--Workbench laid down the flamebait and everyone responded. People, don't feed the troll!! *************************** On topic of "excess cap
62 Post contains images EA CO AS : Incorrect assessment on your part. And it's analyzing the symptom, not analyizing the sympton. Actually, it's not. It's because they're unwilling to
63 Tango-Bravo : Thanks EA CO AS for covering for me while I was away from this topic that has the legacy-lovers grasping for all of their usual straws in telling us
64 LTBEWR : One of the great problems in many businesses in general is that they get too short-sighted as to profits and avoiding problems. The airline industry i
65 Post contains links Padcrasher : http://finance.yahoo.com/q/bc?s=LUV&t=my&l=off&z=l&q=l&c= LUV down over the last three Months, down the last 6 Months, down the last Year, down the la
66 1MillionFlyer : I probably forgot more about it than you knew to start with. REVENUE Yield , we are talking about REVENUE yield, stick with me, each flight can gener
67 Post contains images EA CO AS : Perhaps, perhaps not - but either way your poor posts show you've certainly forgotten far more than you should have permitted yourself to! True. USIN
68 Post contains images 1MillionFlyer : That is the problem. The airlines are stuck with the airplanes they have. It is too late to change the fleet mix, so guess what? OVER SUPPLY of seats
69 Post contains images Tango-Bravo : Please get back to us when your beloved legacies become profitable on any semblence of a sustained basis. Or when the combined market cap of all of t
70 1MillionFlyer : These are valid arguments. These legacy networks were built, now they have to deal with them. They are stuck with the planes because the banks don't
71 Post contains links and images 1MillionFlyer : All you and EA CO AS have proven is that you do not grasp the true nature of the problem. http://www.netmba.com/econ/micro/supply-demand/ read all ab
72 Tango-Bravo : Since you have chosen to ignore my suggestion (in reply 69)... No need for the link to the cyberlecture on supply and demand. I learned of this law l
73 1MillionFlyer : You are absolutely not getting it, the equilibrium price is messed up because there are too many ASM's which causes excess supply. This condition in
74 Boeing7E7 : Lets have Southwest and Jetblue add some 50-70 seat RJ's and fly the same routes and see how they do financially. He doesn't believe in buying a hous
75 Ckfred : Workbench: Under your theory, we should just get rid of the bankruptcy code and let any business that gets behind in their debts go belly up and any i
76 AJRfromSYR : what's wrong with Mesa, nice suburb of Phoenix
77 Tango-Bravo : If these are such an obstacle to profitibility as implied, who's forcing the legacies to operate them in ever-increasing numbers by way of their "Exp
78 Post contains links Boeing7E7 : http://wwwa.accuweather.com/forecast...&traveler=1&zipcode=85201&metric=0 These markets are actually integral to profitability. To keep it simple for
79 Tango-Bravo : Well then, if this is so, shouldn't the legacies be thankful that the Southwests and jetBlues have not invaded their turf in places like, RAP, MSN et
80 Boeing7E7 : You just don't get it do you? Take them away and see what happens. You want to talk about airlines going away.
81 1MillionFlyer : Listen, I love WN and F9 and I moved to a major city several years ago, I am not a legacy lover. That being said they are apples and oranges, and 7E7
82 Boeing7E7 : You gotta agree, that at some point as airports become more congested SWA will no longer serve them because of utilization concerns affecting their p
83 1MillionFlyer : Absolutely, they left SFO about 2 years ago? I think LAS is going to cause them pain soon also. MDW is another one that is turning into a nightmare.
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