I don't dispute your numbers but would instead add a few factors that will raise DL
costs versus B6
in the next few years. Please don't take this as anything but an adult debate:
1. Profits earn interest, Losses (debt) require interest payments. This will skew the math in B6
2. With profits, B6
will be able to expand with much lower interest loans than questionable liquidity airlines.
3. Delta is changing their cost structure compared to today's market. In 24 months B6
will have acquired 34 a320's and 25 E190's (or 102 A320's total and 25 E190's versus 68 a320's today or an approximately 2X growth in airframes). While I do think Delta's simplifares are a long term smart idea, they need to be much more nimble about cost cutting than to accomplish it in 24 months from now. Oh, I think DL
will survive. I think that B6
will still have an advantage in 2007.
As a B6
stock holder, I'm VERY happy they pulled ANY profit in this tough climate. Congrats to B6
, Wn, FL
and possibly Alaska.
I think you have a good point with the 7E7/A350 idea. Eventually a LCC will go international long haul. I'm guessing B6
will wait until they have over a Hundred a320's and E190's in the fleet (of each type) before they order a third airframe. This puts them out to 2010 ish (options dependent) before they order in my opinion. But then again, the E190 order shocked the hell out of me (note: I love the E-jet concept. I was just surprised B6
ordered the E190).
: There is an urban myth on a.nutters that B6
received their original aircraft free or with no payments for x months. Untrue. Fact: "new air" was able to negotiate a sweet deal for their first aircraft at unusually steep discounts. "New air" was planning on buying 737NG's as that was the only aircraft flown by LCC circa 1997 when they ordered (admit to being unsure of order year, please correct me if I'm wrong). Airbus was very determined to get their toe in the LCC market; they even admitted in an annual report to discounting the B6
airframes steeply to win the order. But B6
has had to pay for them from day one. FYI, "new air"= B6