UALPHLCS... I think you overestimate the structural strengths of United. United does have its strengths, but it is not nearly as clear cut as it seems for you.
First of all, on a stand-alone basis, there aren't as many blindspots in AA
's domestic network as their are in UA
's. Take the east coast, for example, AA
has very large operations at Boston and New York (JFK
). In these markets, UA
is not even the third largest, domestic or international carrier. In part, because of the market strength that AA
has been able to build in these markets, it finally made sense to launch a shuttle service of its own in the Bos/NY/DCA
There is at least one major hole in AA
's network and that is the southeast. On a stand alone basis, however, it is also a major weakness of United's network. AA
is somewhat better off in that it reaches into some of these markets with Eagle from DFW
. Given additional flexibility by its pilots to utilize Eagle, we may see Eagle enter more of these markets. That's a more viable retail option now that Delta has more or less turned most of the southeast over to ASA and Comair. United's only option is to rely on USAir for transfer traffic.
You assume that having access to 50% of the total US population through one's hubs is the optimal network strategy. It is not. The network planners at AA
did not design the network to gain access to the most people. They designed it to maximize yields. That is why, for example, one can fly direct from Chicago to some points in the west, such as Tuscon, but one cannot fly direct from LAX
to those same points. Even the thinking behind the purchase of the STL
hub was directed by this network strategy. STL
was not seen as an asset because of its cachement area, but because of its potential to strengthen the east-west connections of the entire network. Some of AA
's most profitable routes continue to be its transcon routes (non-stop or connecting through DFW
or Chicago). As an east-west connecting hub, St. Louis is better located geographically than DFW
Internationally, both carriers have their strength and weaknesses. UA
, of course, has quite an extensive Asia-Pacific network; AA
does not. However, this is not as much of a strength as it might have been in the 90's. On cost and quality of service, UA
does a poor job of competing against Asian carriers. Carriers such as Cathay, Singapore, Qantas and JAL capture much of the premium traffic in their respective home markets. UA
's only edge in these markets used to be connectivity, or the ability to get you from Singapore to Dallas on one ticket. With the advent of codesharing and anti-trust immunity, however, United's edge has almost completely vanished. For instance, Qantas and American, through codeshare, now operate a more extenstive Austral-asian/NorthAmerican network than United. Same will soon be true in Hong Kong, where Cathay wlll soon offer American's passengers access to China and American will offer Cathay's passengers numerous destinations from all of Cathay's gateways.
This, of course, brings me to my next point. Apart from BA
gets good feed from all of its oneworld partners and extra-alliance codeshares. AA
has been able to expand at LAX
in part because of the feed its gets from JAL, Cathay, Qantas, and EVA. Plus, now that AA
can codeshare on all beyond routes through their respective hubs, the advantage that LH
/UA once had completely disappears. Despite its capacity restraints, LHR
(London) is still the most preferred, and thereby largest, transatlantic market. Attribute that to geographic location, cultural affinity, geopolitics, or what you like; but, the fact remains that with this codeshare AA
are poised to increase their domination over a market that is already larger and more lucrative than Frankfurt or CDG
About the asset/cash thing. Prior to 9/11, AA
had a much better balance sheet than UA
can thank Bob Crandall for that.) Therefore, it had more assets to hoc before it had to resort to bankruptcy. Even now, there is still more value locked up in AMR than there is in UAL. AMR, afterall, owns both American Eagle and American Airlines.
Finally, I wonder what structural changes you think UA
has made. About its only accomplishment so far in bankruptcy has been new contracts with its various unions. Meanwhile, over at AA
, they have been busy depeaking their hubs, introducing web-check in, reducing distribution costs even more through the EveryFare program, etc. That is $2 billion in structural costs cuts from all operational initiatives. Add to that the $1.8 billion that AA
got from its employees and the yet to be valued concessions that AA
is negotiating with its vendors, bankers, et al., and you begin to see that at this point AA
is way ahead of United in doing the things that are necessary to survival.
I think in the end both carriers will survive this downturn. But, because of the decisions that AA
has made in the past (e.g., the takeover of all of its regional affiliates, international expansion through codeshare, international growth only out of core markets, etc.) and the decisions it is making now (e.g., depeaking of the hubs, creating a consistent product with MRTC and other fleet modifications, etc.), it will end up a much more simple and efficient organization than United.