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Strongest Network US Carrier  
User currently offlineL.1011 From United States of America, joined Aug 2001, 2209 posts, RR: 9
Posted (11 years 8 months 4 weeks 11 hours ago) and read 1598 times:

My vote has to go to CO. They are so near to a totally streamlined fleet. There costs are low and they are ready for growth. I think the economy here will have an explosive December and will rally into 2003; this will strengthen all of them. NW and DL aren't doing that badly but need more common (and modern) fleets (especially NW.) DL could also reduce costs. AA will strengthen but still needs to reduce costs and streamline the fleet. UA and US need serious help. UA traffic is in the black but they need to increase load factors by 10-15 pts. all over the system to return to profit, which means downsized fleet and timetable. I don't know about US load factors but need to do the same as United. It's laughable how the 2 losing carriers teamed up,and are trying to fight the three strongest. What are your thoughts?

19 replies: All unread, jump to last
 
User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 1, posted (11 years 8 months 4 weeks 11 hours ago) and read 1584 times:

UA traffic is in the black but they need to increase load factors by 10-15 pts. all over the system to return to profit

This is the same for all US carriers in November, Continental is hovering around the 70% mark with a breakeven at 83%, November has always been one of the weakest months for air travel.

Jeremy


User currently offlineUnited777 From United States of America, joined May 1999, 1657 posts, RR: 0
Reply 2, posted (11 years 8 months 4 weeks 10 hours ago) and read 1579 times:

I would say United Airlines nationwide and Alaska Airlines on the west coast.

User currently offlineDouglas DC-9 From United States of America, joined Sep 2001, 303 posts, RR: 2
Reply 3, posted (11 years 8 months 4 weeks 9 hours ago) and read 1539 times:

If you ask me, I think that Midwest Express (MEH) is the most well led, and strongest airline in the Midwestern part of the US.


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User currently offlineTbird From United States of America, joined Oct 2001, 851 posts, RR: 19
Reply 4, posted (11 years 8 months 4 weeks 8 hours ago) and read 1498 times:

Greetings:

I agree CO is in pretty good shape right now. As stated their cost structure is low, their fleet is simple, and most importantly they provide good customer service. I believe that in a number of years CO will be the biggest carrier in the U.S. I don't believe UAL is going to make it and CO stands to reap the most benefits. They have a strong HUB on the east coast, and in the central states, all they need is a good hub on the west coast and UAL's demise could provide that for them.

Regards
Tom


User currently offlineOuboy79 From United States of America, joined Nov 2001, 4581 posts, RR: 23
Reply 5, posted (11 years 8 months 4 weeks 6 hours ago) and read 1447 times:

Continental will likely march back into Denver. The rest of the route system of UAL will likely be absorbed into the system with out much being taken over by other airlines. US Airways would probably move into IAD to try to get more Int'l feed into the district area - most domestic routes would probably end up being served by RJs (MDA). Either way, UAL having fairly broad coverage of the country in their network- the industry would see about a 16-20% drop in capacity system wide...which would help strengthen other airlines. In comparison...US Airways would only offer about a 7% reduction and be strictly limited to the east coast - not the broad decrease we need.

User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 6, posted (11 years 8 months 4 weeks 6 hours ago) and read 1434 times:

The failure of US would benefit CO the most, as Delta's domestic coverage from JFK is good but not great. CO would step in to replace US's capacity at CLE and EWR.

Delta would benefit from it in the SE.

The failure of UA at ORD would obviously be picked up as much as possible by AA, but there'd be so much that it would take another carrier stepping in, as I see it.

CO could march back into DEN, but could they do it with sufficient capacity to replace UA? DEN is UA's best performing hub right now.

The West Coast is there for anyone's taking, obviously. DL and AA are both well positioned, and people have mentioned CO might come in with a vengeance to get some Asia routes.

Wow this is all very morbid... UA's my carrier and I don't know what I'll do if they leave me. :-( I've sent a few inquiries to other carriers about preferred status matching in the event of an insolvent UA. Do we really think it will come to this?

N


User currently offlineAzjubilee From United States of America, joined Apr 2000, 3905 posts, RR: 28
Reply 7, posted (11 years 8 months 3 weeks 6 days 18 hours ago) and read 1345 times:

Good lord people... UA isn't going to close its doors!!! Chapter 11 is reorganization - Chapt 7 - is total shutdown. All the airlines are hurting - but the ones that control their costs, match capasity to demand all the while providing good service will be the ones that come out smelling like a rose. NW, DL and CO are the best positioned airlines right now - and NW is the only one that seems to be matching cpasity with demand as well as controlling their costs the best.

As far as fleets... someone explain how NW doesn't have a streamlined fleet? And explain how their current fleet isn't right for them?


AZJ


User currently offlineYbacpa From United States of America, joined Feb 2001, 1108 posts, RR: 1
Reply 8, posted (11 years 8 months 3 weeks 6 days 17 hours ago) and read 1327 times:

CO the largest U.S. carrier? Doubtful, their business model just doesn't work for an entity of that size. UA, on the other hand, isn't going to be #2 much longer, it simply can't be. I have my own opinions on what really needs to be done to fix UA, but this isn't the place (ironically).

As for the Strongest network carrier, I have to go with NW- with the exception of the southwest, they have pretty decent coverage. I have to say CO, DL, and AA are up there too, with their own respective weaknesses.




SkyTeam: The alliance for third rate airlines finally getting their act together!
User currently offlineContinentalFan From United States of America, joined Oct 2000, 357 posts, RR: 0
Reply 9, posted (11 years 8 months 3 weeks 6 days 16 hours ago) and read 1305 times:

I agree that NWA is the strongest right now (grumblings about DC-9s notwithstanding). I wouldn't say CO, since they have a ton of debt. I don't see how they could be positioned for major expansion with all that debt to service first.

User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 10, posted (11 years 8 months 3 weeks 6 days 15 hours ago) and read 1291 times:

I don't see how they could be positioned for major expansion with all that debt to service first.

Debt is not a problem unless you cant afford to pay for it, it is factored into Continentals business plan to pay these debts. Continentals monthly maintenance bill is a millionth of the other majors as are their cancelations, so having new planes is worthwhile to them.
The other thing is that all airlines when expanding take on debt to pay for planes, it is just that Continental just did a major fleet expansion, if UAL or AA were doing a major expansion, then they would carry a lot of debt too. If Delta wanted to buy another 777, they wouldnt go and pay cash for it because they have the money in the bank, they would take terms on it, like everyone else.

Put it this way, CO lost 37m for the last quarter, they currently have 1.3 billion in cash, 1 billion in unencumbered assets, own 53% of Expressjet, 49% of Copa, all of Micronesia (which for those who don't know...is a cash cow). Losses of 37 million can go on a very long time before you run out of money

Jeremy


User currently offlineYbacpa From United States of America, joined Feb 2001, 1108 posts, RR: 1
Reply 11, posted (11 years 8 months 3 weeks 6 days 15 hours ago) and read 1272 times:

Artysman,
I have to agree that CO's debt is not as significant of a hinderance as many think, but the point where I respectfully disagree with you is its effect on its ability to grow. You cite (correctly, IMHO) CO's low maintenance costs and cancellation rate. It would be significantly difficult for CO to grow through acquisition or merger and still retain that rate. At a minimum they would most likely absorb a large part of another carrier's older fleet, possibly hurting their dispatch reliability. Alternatively, they would have to make union concessions, etc., driving up their maintenance (among other things) costs.

As for the new aircraft terms, that is little defined by a carrier's cash position, it is currently extrememly attractive to carriers due to the incredible finance rates available, although with a growning number of not-very-old planes sitting in the desert, depreciation is starting to affect those terms beyond the point financiers, Boeing, and Airbus can control.

Of course all this might make you think I'm a little bearish on CO, which isn't true, I just don't think they are in a position to grow by acquisitions right now.



SkyTeam: The alliance for third rate airlines finally getting their act together!
User currently offlineAzjubilee From United States of America, joined Apr 2000, 3905 posts, RR: 28
Reply 12, posted (11 years 8 months 3 weeks 6 days 15 hours ago) and read 1267 times:

The DC9s are one of the LARGEST reasons why NW is so strong right now. Even with the "old" fleet NW has - they still have an amazing ontime performance and completion factor. So - how does that fact figure into the new plane low maintenance cost argument? In tough financial times, I'd rather drive an old car that does the job just as good as a new car, that is in perfectly good condition than make payments I can't afford on a new car. CO pays their employees far less than they deserve and mgmt has that on their side. Soon, the people of CO will revolt and demand more pay - especially since they are a large part of the turnaround of their airline.


AZJ


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 13, posted (11 years 8 months 3 weeks 6 days 13 hours ago) and read 1228 times:

Of course all this might make you think I'm a little bearish on CO, which isn't true, I just don't think they are in a position to grow by acquisitions right now.

I don't disagree with the majority of what you suggest, I would add that Continental would really only like to swallow Denver and the Heathrow access, other than that, I don't think they want anything else. With Denver, we have loads of employees that are commuting in from Denver that would love to be back at work there instead of IAH, secondly, there is room for capacity growth within the current fleet without too excessive expansion. I do not see CO taking on any of UAL's fleet, just taking the routes if they should become available. They do not need to have the over-capacity that UAL have, and they can still route excess through the other hubs whilst growing into the new one.

That said, this is speculation and quite unlikely

Jeremy


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 14, posted (11 years 8 months 3 weeks 6 days 13 hours ago) and read 1212 times:

Even with the "old" fleet NW has - they still have an amazing ontime performance and completion factor

I would be absolutely astonished if Northwest doesnt doesn't have a much higher cancelation rate, and much higher maintenance cost per month than Continental. I do not know where to look to find this information on NW, but I will say that I do know the facts for Continental.

Each time I do see published Monthly reports on cancelations, it usually reads along the lines of:

UAL - 1327
AA - 1215
DL - 798
CO - 7

I can't remember the numbers for Northwest, so if you can access them, I would love to read that

Jeremy


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 15, posted (11 years 8 months 3 weeks 6 days 13 hours ago) and read 1209 times:

Soon, the people of CO will revolt and demand more pay - especially since they are a large part of the turnaround of their airline.

From the inside, I don't see signs of a revolt. While I agree there will always be some who want to fight for higher pay, the industry is actually balancing itself out now. Industry standard means jack, what companies can afford is what counts.

The general consencus is that the airlines will come back to CO's pay schedule, rather than the others reaching to UAL's

Jeremy


User currently offlineAzjubilee From United States of America, joined Apr 2000, 3905 posts, RR: 28
Reply 16, posted (11 years 8 months 3 weeks 6 days 11 hours ago) and read 1178 times:

Month to date #s at NW are as follows (as of Richards 11/24 recording):

Arrivals within 14 - 86.9%
Completion factor - 99.2%
bags - 2.8 per 1000

Year to date completion factor is 98.5%

Not too bad for an airline with an "old" fleet. You also need to take into consideration how many spares CO is keeping on hand and how much padding is in the blocktimes. I'm not denying CO is running a great airline, but I'm telling you it isn't only because they have a young fleet. NW has proven that... who was the most ontime airline for the 90s? NW was.

AZJ


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 17, posted (11 years 8 months 3 weeks 6 days 11 hours ago) and read 1173 times:

Excellent figures, well done to Northwest, although they are still behind Continental on Completions, great all the same.

Jeremy


User currently offlineLadevale From , joined Dec 1969, posts, RR:
Reply 18, posted (11 years 8 months 3 weeks 6 days 9 hours ago) and read 1133 times:

Arstyman states, "The other thing is that all airlines when expanding take on debt to pay for planes, it is just that Continental just did a major fleet expansion, if UAL or AA were doing a major expansion, then they would carry a lot of debt too. If Delta wanted to buy another 777, they wouldnt go and pay cash for it because they have the money in the bank, they would take terms on it, like everyone else."

This statement is inaccurate. It is true that Continental bought more planes than UAL or AA during the same period in the 90's. What is not true is that Continental took on the same kind of debt as AA or UA to finance these purchases.

For the most part, AA and UA funded their purchases of new aircraft in the 90's through cash flow. In some cases, they did opt for capital leases or sale-lease back arrangements when the financing terms where no more prejudicial to them than had it been in an all cash transaction.

On the other hand, Continental spent beyond its means. Its wholesale replacement of its fleet in the 90's was financed through more expensive operating leases and also through capital leases whose terms on average were less favorable than those that AA and UA negotiated. Though Continental's cash-flow improved through much of the 90's, Continental seems to have opted for operating and capital leases since it did not require as much upfront capital as if they had paid cash or entered into any number of sale-lease back arrangements. As a result, they were able to accelerate the delivery of planes.

Continental's cashflow through much of the late 90's gave them ample resources to pay the lease payments. Post 9/11, Bethune and Co. are now realizing the error of their ways. It is easier to park a plane one owns. One also loses less per flight on a fully-owned plane. A plane one owns is also considered a tangible asset, or collateral for a loan.

As long as current cash flow can cover the current lease payments, Continental will be OK; however, some baloon payments, like those that face UAL, will be due by the end of the decade. Unless the airline business returns to '97 levels, Bethune and Co. are going to have a lot of trouble making those payments.



User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 19, posted (11 years 8 months 3 weeks 6 days 8 hours ago) and read 1111 times:

A plane one owns is also considered a tangible asset, or collateral for a loan.

Not in the current climate, virtually all US carriers are junk status, and the 3 billion on unencumbered assets at UAL etc are worth zero. They cannot borrow a penny against them.


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